The South African Reserve Bank is investigating India-based Bank of Baroda for holding trust funds of companies controlled by the politically connected Gupta family, Bloomberg News reported Oct. 11, citing "person familiar with the matter."
The probe came after the Indian bank was fined 11 million South African rand in June for violating anti-corruption and anti-money laundering rules. The central bank launched the latest probe after the Organisation Undoing Tax Abuse alleged that mine-rehabilitation funds held for two of the Gupta family's companies were mismanaged and used to repay loans, the person said.
The person added that the bank may have violated its own rules about having significant exposure to certain clients. Bank of Baroda holds as much as 1.75 billion rand on behalf of trusts for the mines, Bloomberg reported. Under the law, the funds must be used for environmental rehabilitation.
Spokesmen for the Bank of Baroda and the Gupta family did not respond to Bloomberg's requests for comment. The central bank declined to comment.
Bank of Baroda has been seeking to close accounts of 20 companies linked to the Gupta family after a number of banks shut the family's accounts over concerns they would be found in violation of the law. The Gupta family is said to have close ties to South African President Jacob Zuma and one of his sons.
As of Oct. 11, US$1 was equivalent to 13.57 South African rand.