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Noose tightens around Gupta associates

Publish date: 08 February 2018
Issue Number: 597
Diary: Legalbrief Forensic
Category: State capture

The Gupta state capture scandal has left many shredded reputations in its wake, according to Legalbrief which notes the parliamentary inquiry into state capture allegations has left politicians and officials squirming as embarrassing details of their Gupta ties have been laid bare. While the big fish – including embattled President Jacob Zuma – fight for their political and corporate lives, those who’ve shared in the Gupta largesse are also beginning to feel the heat.

Among the one-time Gupta lieutenants who have tried to reinvent themselves is key insider Althaf Emmamally who scored a R900 000 a month deal at the Airports Company of SA, according to a Daily Maverick report. Now, says the report, Acsa is threatening to recover the money amid questions over how he got the deal. The DM says Emmamally scored a back-door ticket to a deal at Acsa right as the state capture noose began tightening last year. The R5.2m contract for specialised procurement services was awarded to Investment Edge Technology as an emergency bid because Acsa seemingly didn’t have time to go out to tender. Aimed at curbing wasteful and irregular expenditure, the six-month contract – it was completed in August – was essentially a first-class ticket to the inner workings of the supply chain system at Acsa. The report says his deal has become the subject of a forensic investigation by the parastatal – along with another, clinched just three months before one of Emmamally’s other companies teamed up with the Guptas.

Full Daily Maverick report

The tightening of the noose around those implicated in state capture intensified as the Hawks received documents from Eskom believed to be critical to unravelling alleged corruption at the state-owned entity, says a Cape Times report. A Hawks spokesperson said there was no ‘search and seizure’ operation at the parastatal, but that information was sought for their ‘state capture’ investigation. This was confirmed by Eskom spokesperson Khulu Phasiwe, who said the Hawks had requested documents relating to previous contracts at Eskom, which it had complied with. ‘At this stage, I’m not in a position to go into the exact specifics on what kind of information the Hawks wanted,’ said Phasiwe. Asked whether the Hawks’ request had to do with the sale of the Optimum coal mine – previously owned by Glencore and then Gupta-owned mining firm Tegeta in 2016 – Phasiwe said he could neither confirm nor deny the link. ‘Suffice to say that (the Hawks’ request) is related to contracts. As you can understand, we do deal with coal generally. So, yes, it has to do mostly with coal contracts,’ Phasiwe said, adding that no documents sought by the Hawks in this latest request had been destroyed.

Full Cape Times report (subscription needed)

Eskom executives and senior managers would be subjected to independent lifestyle and conflict of interest audits as part of the power utility’s efforts to root out corruption, Eskom is quoted in Business Report as saying. Eskom has been embroiled in a number of scandals which point to governance failures and apparent lack of accountability and, the report says, the newly appointed board have vowed to address governance problems at the utility. Phasiwe said the utility’s board had decided to implement the audit, which would affect Eskom’s executive team, senior managers and middle managers. There were 400 senior managers at Eskom, he said.

See Analysis (below)

Full report in Business Report

Another state-owned entity is feeling the weight of its Gupta links and allegations of state capture, writes Legalbrief. Arms manufacturer Denel on Tuesday pleaded for an equity injection as it briefed MPs on Parliament’s Public Enterprises Committee on its annual results, but former Finance Minister Pravin Gordhan said the company's dire financials were linked to its dealings with the Gupta family. Gordhan said these allegations had dented business confidence around Denel, and cash alone – it said it needed R3bn – could not fix the problem, notes a report on the IoL site. ‘A new board needs to be appointed with no e-mails linked to them, or visits to Dubai. Otherwise we keep asking the CFO and the CEO to do the impossible,’ he said. Earlier Gordhan remarked that the defiance shown towards him in his capacity as Finance Minister by Denel chairperson Daniel Mantsha around a partnership with close Gupta associate Salim Essa had been unprecedented. ‘Mr Mantsha was very vocal in 2016-17, precisely at the time when the Gupta e-mails indicated he had a close relationship with the Guptas, particularly at the time when Denel Asia was at play,’ he said. The report notes Gordhan was referring to a joint venture Denel sought to pursue with Denel-Asia, fronted by Essa, in the absence of approval from National Treasury, which eventually shut down the deal.

Full report on the IoL site

MPs also grilled Co-operative Governance and Traditional Affairs Minister Des van Rooyen about his links to the Gupta family and his adviser, Mohamed Bobat, who accompanied him to the Treasury in December 2015 during his short-lived stint as Finance Minister. He was also questioned about his relationship with the Gupta-linked companies Trillian and Regiments Capital on Tuesday when he appeared before the parliamentary committee that oversees his department. Business Day notes the Minister also refused to answer his questions on whether the Gupta-owned Sahara Computers company had sponsored a one-day ‘personal trip’ to Dubai for him, but then claimed that he had disclosed it. This was despite the fact that both his 2015 and 2016 declarations of interest as an MP reflected ‘nothing to disclose’ in their travel sections. Portfolio committee member Kevin Mileham asked Van Rooyen what experience, skills and attributes Bobat had to warrant his appointment as the Minister’s adviser. He also asked when he first met Bobat and whether he had met the Guptas. Van Rooyen invoked the sub judice rule and declined to answer most of the questions. Mileham accused ANC MPs in attendance of protecting the Minister and hinted that he would refer his questions that were unanswered by Van Rooyen to the judicial inquiry on state capture or a court of law.

Full BusinessLIVE report

See also a City Press report

The state capture scandal has resulted in an unprecedented penalty from the SA Reserve Bank for India’s second largest bank, the Bank of Baroda. A report carried on the Daily Maverick site says the R11m fine undermined Bank of Baroda’s reputation and suggested its involvement in state capture featuring Zuma and the Gupta brothers – Ajay, Atul, and Rajesh. As the scandal continues to unfold, Bank of Baroda’s role as the Gupta family’s banker of choice, for their most controversial deals, has attracted increasing attention from SA regulators, investigators and the press, the report notes. It says a joint investigation of thousands of pages of court documents, bank records, SARB records, internal Gupta company correspondence, and interviews with bank officials, by the Hindustan Times, amaBhungane Centre for Investigative Journalism, Finance Uncovered and Daily Maverick’s Scorpio unit reveals a laundry list of potential violations, and a seeming disregard for banking ethics and regulations by Bank of Baroda executives. The report notes, for example, that as early as 2010, Bank of Baroda financed the purchase of a luxurious house that was bought in the name of Zuma’s fourth wife, but paid for by the Guptas through Bank of Baroda accounts operated by secretive trusts. And in November 2016, an investigation by the Public Protector into the Guptas’ controversial purchase of the Optimum coal mine found that ‘the conduct of the Bank of Baroda appears highly suspicious’ in the bank’s role in underwriting the deal. According to the report, bank executives sought personal favours from the Guptas and enjoyed their hospitality, e-mails show, while the family used Bank of Baroda accounts to funnel millions through an international network of secretive companies and trusts.

Full report on the Daily Maverick site

The bravery of the whistleblowers who lifted the lid on the Vrede dairy farm scandal is recalled in an amaBhungane report carried on the Daily Maverick site. It says Moses Chaka appears to have paid with his life while another whistleblower, Doctor Radebe, suffered ostracism, threats and shots allegedly fired at his vehicle by police. In both cases, notes amaBhungane, the investigations have ground to a halt. The report says Chaka, an auditor in the Free State Department of Agriculture, was investigating provincial projects, including the controversial Gupta-linked Vrede dairy farm, when he was hijacked and deliberately maimed in February 2013. He died after three months in hospital. Five years later his murder remains a mystery and his case has been referred to an inquest court after the police failed to make progress in the investigation. The DM report says in June 2014 Radebe was driving through the gate of his house late one evening when police allegedly fired three bullets at his car and drove off. Radebe is a former councillor in Vrede who first blew the whistle on the controversial Estina dairy project. Radebe claims he was also physically assaulted on more than one occasion by the project’s supporters and labelled an ‘enemy of employment’ in Vrede. The cases involving him have never been properly investigated, he says. Legalbrief notes that it was alleged in court papers last month that of R220m paid by the Free State Department of Agriculture to Estina in support of the dairy farming project meant to uplift the poor‚ at least R180m flowed to Gupta companies or individuals linked to the family. R10m was paid directly to Atul Gupta by Estina. In June last year #GuptaLeaks reported that R30m of the Estina cash went towards paying for the Guptas’ Sun City lavish wedding extravaganza.

Full Daily Maverick report