U.S. sanctions brothers at center of South African graft scandal

JOHANNESBURG (Reuters) - The United States on Thursday sanctioned the three Gupta brothers at the center of the South African corruption scandal that contributed to the downfall of former President Jacob Zuma, saying they had misappropriated state assets.

FILE PHOTO: Police raid the home of the Gupta family, friends of President Jacob Zuma, in Johannesburg, South Africa, February 14, 2018. REUTERS/James Oatway/File Photo

The U.S. decision to impose financial restrictions on the brothers is a public relations victory for Zuma’s successor Cyril Ramaphosa as he tries to clean up politics and attract foreign investment to lift South Africa’s flagging economy.

The relationship between Zuma and the three brothers - Ajay, Atul and Rajesh - is one of the main areas of focus of a judicial corruption inquiry Zuma was pressured into setting up before he was ousted by his own party in February 2018.

Zuma and the Guptas deny the corruption allegations and law enforcement officials have yet to nail down a convincing case against the brothers - fuelling public frustration with government attempts to crack down on graft.

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

The Treasury’s Office of Foreign Assets Control restrictions on the brothers and business partner Salim Essa mean U.S. citizens are prohibited from doing financial transactions with them or entities they control.

“We will continue to exclude from the U.S. financial system those who profit from corruption,” Mandelker said.

The corruption inquiry has shocked South Africans with revelations about the brazen way some people close to Zuma allegedly tried to plunder state resources.

This week, Zuma’s son Duduzane, another business partner of the Guptas, appeared at the inquiry and made light of allegations against himself and the Guptas.

South African Justice Minister Ronald Lamola said it was critical that the country confronted corruption.

U.S. Secretary of State Mike Pompeo said the restrictions demonstrated Washington’s commitment to promoting transparency, accountability and the rule of law.

Rudi Krause, a South African lawyer for Ajay Gupta, said he was preparing a statement. Atul Gupta, Rajesh Gupta and Salim Essa could not immediately be reached for comment.

The Guptas left South Africa shortly after Zuma’s removal from power and are believed to be living in Dubai.

Additional reporting by Mfuneko Toyana; writing by Alexander Winning; editing by Alex Richardson and David Clarke