Bank of Baroda is said to be probed in South Africa over Guptas

Bank of Baroda is being investigated by South Africa’s central bank over money held for companies controlled by the politically connected Gupta family, according to a person familiar with the matter.

The South African Reserve Bank’s probe, which comes after it fined the bank in June for not doing enough to combat financial crime, was sparked after the Organisation Undoing Tax Abuse alleged in court papers that mine-rehabilitation funds held for two of the Gupta family’s companies had been mismanaged and used to repay loans, the person said.

While there’s no clear evidence that the trust funds were used as collateral or mismanaged, Bank of Baroda may have breached its own rules about having significant exposure to certain clients, said the person, who asked not to be identified because the matter is confidential. Bank of Baroda holds as much as 1.75 billion rand ($130 million) on behalf of trusts for the mines and by law that money must be used for environmental rehabilitation, according to the civil society group known as OUTA.

Bank of Baroda, which is the only lender in South Africa still offering services to companies linked to the Guptas, is seeking a court order that will allow it to close the accounts. The Gupta family, who are friends of President Jacob Zuma and in business with one of his sons, have been accused by politicians and civil society groups of using that relationship to influence state contracts and cabinet appointments. Zuma and the family deny wrongdoing.

Bank Of Baroda