How South Africa's biggest banks enabled the Gupta corruption machine

The Gupta family arrived in South Africa from Saharanpur in Uttar Pradesh, India, in 1993. Atul Gupta came first, followed by his brothers Ajay and Rajesh. They started with a computer hardware business in Johannesburg and built outward from there, acquiring stakes in media, mining, technology and energy, relying with increasing dependence on contracts with state-owned companies whose senior executives were either appointed by or accountable to President Jacob Zuma, who had formed a close personal and commercial relationship with the family.

By 2016, the South African public was familiar with the general contours of the Gupta story. What they did not know in full was how deeply South Africa's financial and professional services establishment had embedded itself in the Gupta network, providing the banking, auditing, consulting and public relations infrastructure that allowed billions of rand in state resources to be diverted through a system of corruption so comprehensive that when Deputy Chief Justice Raymond Zondo published his commission's findings in 2022, he used the term state capture to describe it: a systematic effort by a private family to take control of the state apparatus for commercial gain.

How the banks served the machine

The state capture inquiry documented in detail the services that South Africa's banking sector had provided to Gupta-linked entities. Multiple banks had been aware of the reputational and legal risks associated with the Gupta network and had nonetheless continued to provide services because the commercial value of those relationships overrode the compliance concerns that due diligence processes were supposed to surface.

KPMG's role was particularly consequential. South Africa's largest audit firm had provided auditing and advisory services to Gupta-linked entities for years, issuing clean audit opinions on accounts that subsequently proved to be built on fraudulent transactions and misrepresented relationships. In 2017, following a Daily Maverick investigation, KPMG South Africa conducted an internal review and withdrew several reports it had previously produced, including a forensic report commissioned by the South African Revenue Service that had been used as a political instrument to target then-SARS Commissioner Pravin Gordhan's predecessor. The report was found by KPMG's own review to have fallen below the firm's professional standards. Multiple senior partners resigned. Several major clients including SARS and the PIC terminated their relationships with the firm.

The consulting firm McKinsey, the German software company SAP and British public relations company Bell Pottinger were all separately drawn into the state capture ecosystem. Bell Pottinger created a divisive social media and public relations campaign designed to deflect from the Gupta family's role in corruption by framing the conversation as a racial economic transformation issue, deliberately manufacturing social division as a commercial product. Bell Pottinger was subsequently expelled from the Public Relations and Communications Association in the United Kingdom and went into administration, destroyed by the reputational consequences of the campaign.

The Zondo Commission and what it found

The Commission of Inquiry into Allegations of State Capture, chaired by Raymond Zondo, ran from 2018 to 2022, producing six volumes of findings and hearing testimony from hundreds of witnesses. Its central conclusion was that the Gupta family, in close collaboration with President Zuma, had systematically corrupted the appointment processes of state-owned entities including Eskom, Transnet, the South African Broadcasting Corporation and others, directing billions of rand in contracts to Gupta-linked companies.

The commission's findings on the financial sector's role were pointed. Banks had closed Gupta accounts when the reputational and regulatory risk became too great, but too late and after too much money had already moved through those accounts. Absa, Standard Bank, Nedbank and First National Bank had all terminated relationships with Gupta entities between 2016 and 2018. The closures were presented publicly as decisive action. The commission's evidence established they had been years late.

The Gupta brothers themselves were never prosecuted in South Africa. Atul and Ajay Gupta fled the country before arrest warrants could be executed. Interpol issued red notices for their arrest. They were believed to be living between the UAE and other jurisdictions by the time Zondo's final report was published. The state, which had been captured, was left to pursue its captors from a position of institutional weakness that the very state capture they had enabled had helped create.