Govchain Logo

Could Beneficial Ownership Have Stopped the Guptas?

Nicole on 3 June 2024
Could Beneficial Ownership Have Stopped the Guptas?

If you live in South Africa, you have probably heard of the Gupta family (and their crimes and scandals).

What Did They Do?

They built a big business empire in a lot of different industries, but not exactly legally. They used their connections to powerful politicians to win government contracts and make money unfairly. This was called "state capture" and it caused a lot of trouble for the country and economy.

How Did They Do It?

One way the Guptas might have hidden their activities was by making their company ownership confusing.

  • So company A owns company B
  • Company B owns company C

This makes it hard for the government to see who REALLY controls the final company.

To fight this kind of hiding, South Africa introduced a new rule: all businesses have to say who their real owners are (called beneficial owners). This means everyone knows who's really in charge, not just the names on official documents.

How Beneficial Ownership Could Have Stopped the Guptas

No Place to Hide

By revealing who truly owned the companies, the complicated structures wouldn't have been a hiding place anymore. Everyone would see who was pulling the strings.

Keeping an Eye Out

Banks and other financial institutions would have known exactly who they were doing business with. This means they could have easily spotted suspicious activity, like the Guptas trying to hide money.

See Problems Early

Knowing the true owners would have given the government a clearer picture of the Guptas' businesses and helped them catch any illegal activities before it caused a lot of damage.

While we can't say for sure if knowing the real owners would have stopped the Guptas completely, it definitely would have made things a lot harder for them to hide their activities.

These new rules are a big step towards a more honest and fair business environment in South Africa. However, while these rules are important, they can also make things more complex for small businesses.

If you need any help figuring out Beneficial Ownership for your business, the Govchain Support Team is always happy to help!