NEDCOR:  25,228   -901 (-3.45%)  19/03/2019 00:00

South Africa's Bosasa to cease trading as banks close accounts

(Adds detail, context, banks' responses)

JOHANNESBURG, Feb 18 (Reuters) - South African services firm Bosasa, which is known as African Global Operations, said on Monday it had applied for voluntary liquidation after its banks told it they would close its accounts by the end of the month, citing reputational risk.

Privately-owned Bosasa said in a statement it had suffered "extensive reputational damage" over the past few months, during which time it featured in a South African judicial inquiry into alleged influence peddling.

Its former chief operating officer alleged during the inquiry that he bribed politicians and bureaucrats to secure contracts for Bosasa and was subsequently arrested alongside five others.

Bosasa is the latest firm to be wound up as South Africa tries to deal with years of widespread government corruption and alleged influence peddling, including via investigations and inquiries.

Companies linked to the Gupta brothers, the heads of one of the country's biggest conglomerates, have had their bank accounts withdrawn and collapsed as part of a far-reaching scandal that also dragged down PR firm Bell Pottinger and engulfed global firms like KPMG and consultancy Bain.

"The group will be unable to trade without a bank account," it said, adding there would be a "devastating ripple affect" on 4,500 employees and 3,100 firms in its supply chain.

Absa, FirstRand and Nedbank said they could not comment, citing client confidentiality. (Reporting by Emma Rumney; Editing by Kirsten Donovan and Alexander Smith)

2019-02-18 11:11:32

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