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US imposes sanctions on South Africa’s Gupta family

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Via Financial Times

The US government has imposed sanctions on South Africa’s Gupta business family and an associate over their alleged role in a vast corruption scandal linked to the former president, Jacob Zuma.

The Guptas allegedly stole “hundreds of millions of dollars through illegal deals with the South African government, obfuscated by a shadowy network of shell companies and associates linked to the family”, the US Treasury said on Thursday.

Atul, Ajay and Rajesh “Tony” Gupta, a trio of Indian-born brothers, have been added to the US sanctions list as “members of a significant corruption network in South Africa” accused of looting state coffers. The Treasury’s move will forbid US entities from doing business with the family or handling their assets.

The Guptas have been accused in South Africa of using a friendship with Mr Zuma to control cabinet appointments and public contracts to benefit the mining-to-media business empire they once controlled.

Mr Zuma left office last year after he was sacked by the governing African National Congress.

His successor as president, Cyril Ramaphosa, has pledged to root out the systematic graft, or “state capture”, that became rife under Mr Zuma, bringing critical institutions including the revenue service and the state power monopoly, Eskom, to the brink of collapse.

Global companies including KPMG and McKinsey were caught up in the reputational fallout from the scandal, while the British public relations group Bell Pottinger collapsed following a backlash over its work for the Guptas.

“The Gupta family leveraged its political connections to engage in widespread corruption and bribery, capture government contracts, and misappropriate state assets,” Sigal Mandelker, the US Treasury’s under-secretary for terrorism and financial intelligence, said.

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Ms Mandelker added that the sanctions targeted “the Guptas’ pay-to-play political patronage, which was orchestrated at the expense of the South African people”.

The US sanctions are likely to reignite frustrations in South Africa over slow progress in bringing prosecutions over the scandal.

Mr Ramaphosa has battled to overcome widespread decay in the police and state prosecuting body, as well as resistance within the ANC, where Mr Zuma’s allies retained significant influence.

Salim Essa, a close business ally of the Guptas, was also designated under the US sanctions.

The sanctions were imposed under the Global Magnitsky Act, a law passed in 2017 that allows the US government to sanction individuals involved in significant state corruption around the world.

Ronald Lamola, South Africa’s justice minister, welcomed the US move. “The interest of justice must not be shackled by any boundary or border and justice must be seen to be done without fear or favour,” he said.

The Guptas, Mr Essa and Mr Zuma have always denied wrongdoing. The family has successfully challenged asset freezes that were sought by South African prosecutors. A lawyer who has represented the Gupta family did not immediately respond to a request for comment.

The family left South Africa for the United Arab Emirates last year as Mr Zuma fell from power. They have had to relinquish many of their South African business interests.

A judicial inquiry in South Africa is examining the allegations against the Guptas and Mr Zuma. This week Mr Zuma’s son, Duduzane Zuma, denied at the inquiry that he and the Guptas had offered a government minister bribes to take the helm at the South African Treasury.

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