JOHANNESBURG – River Group is ending its role as governance adviser to Oakbay Resources, citing “association risk” with the company, whose owners are alleged to have used their friendship with South Africa’s president to secure government contracts.
“The reason for River Group’s termination of their services is due to their revised assessment of association risk surrounding the company and its shareholders,” Oakbay said in a regulatory filing on Monday, without giving further details.
Although the Gupta family, who are the majority owners of Oakbay, and President Jacob Zuma have denied any wrongdoing, corporate finance firm River Group is the latest company to turn its back on Oakbay.
The allegations against the Gupta family were investigated last year by the Public Protector, an anti-graft watchdog, whose report in November called for an judicial inquiry but did not say any crimes had been committed.
River Group’s decision gives Oakbay just 30 days from July 31 to find a new sponsor as under Johannesburg Stock Exchange rules a company without a sponsor, or an entity such as River Group that helps it apply the bourse’s listing requirements, could have their listing suspended.
River Group, whose clients include mining firm Petmin and fast-food chain owner Gold Brands, would cease to be a sponsor from July 31, Oakbay said.
Gary Naidoo, a spokesman for the Gupta family, did not respond to calls from Reuters for comment.
Last week investigative journalists at AmaBhungane, a non-profit group that has a strong track record of exposing what it says are government corruption scandals, released some of more than 100,000 leaked emails and documents.
It said they show Gupta-owned companies unduly influence the awarding of government contracts worth hundreds of millions of dollars. Reuters was not independently able to verify the allegations.
Principal partner at River Group Andrew Lianos told Reuters his firm had a history of not being involved in politics and wanted to maintain this track record.
“We feel that politics has no place in business related matters and in view of the ongoing developments over the last 6 months we had no option but to review our position,” he said.
Other businesses that have severed links with Oakbay include auditors KPMG, investment bank Sasfin and all four major banks: Standard Bank, Barclays Africa, Nedbank and FirstRand.
The Gupta brothers, Ajay, Atul and Rajesh, moved to South Africa from India at the end of apartheid in the early 1990s and built a business empire from technology to media and mining.