Guptas claim corruption allegations are false
Publish date: 21 July 2017
Issue Number: 4268
Diary: Legalbrief Today
Category: State capture
The Guptas have finally found a voice on the leaked e-mails, reportedly telling BBC News they are being subjected to false corruption allegations which are part of a ‘blatantly political campaign’ to damage them. As noted in a BusinessLIVE report, the Gupta-owned companies and family members have not previously responded to accusations that they used their close relationship with President Jacob Zuma to win government contracts and influence Cabinet appointments. ‘There are many false allegations circulating about Oakbay and its shareholders, which are part of a blatantly political campaign against us,’ Gupta family spokesperson Gary Naidoo said in a response to questions by the BBC, reportedly seen by Reuters. The Gupta brothers are the majority shareholders in Oakbay. ‘The allegations against us, that Bell Pottinger used ‘white monopoly capital’, and created Twitter bots on behalf of Oakbay, have nothing to do with Oakbay. Oakbay did not instruct Bell Pottinger to do anything of the kind alleged,’ Naidoo is quoted as saying. Naidoo said that racial inequality was a major problem. ‘Uncomfortable truth though it may be, there is an economic apartheid in SA. Our philosophy is that disruptive companies and more competition is what SA needs to be transformed.’
Meanwhile, revelations continue to come thick and fast. In the latest, the #GuptaLeaks have shone light on the role former acting Eskom chief executive Collin Matjila played in facilitating the Guptas’ access to the state-owned electricity company, says an amaBhungane report on both the News24 and Daily Maverick sites. Matjila was already entangled with Gupta lieutenant Salim Essa in an earlier scandal in 2011 that appears to have ripped off Cosatu and helped force out its general secretary, Zwelenzima Vavi, says the report. Matjila, at that time in charge of Cosatu investment arm Kopano ke Matla, was tasked with securing a new Johannesburg headquarters for the trade union federation and selling the old Cosatu House. Evidence suggests that Matjila, together with Essa, engineered twin transactions that fleeced the union by:
* Choosing a building secured by a middleman well-known to Essa, which was then sold to Cosatu at an inflated price, earning the middleman an instant R17m profit thanks to a back-to-back transfer.
* Arranging for the cost to Cosatu to be offset by the sale of the old Cosatu House, which was then sold to the same middleman at a fire sale price, netting him millions more in value.
Matjila would only say: ‘I did not receive any personal material benefit from the property transaction. I would suggest you refer your queries to Kopano ke Matla.’ Essa reportedly did not respond to detailed questions. Lawyers for the middleman, Ebrahim Joosub, denied all impropriety, saying whether he benefited was ‘immaterial’.
There is also evidence in the leaked e-mails of a complex multibillion-rand tax avoidance scheme with family patriarch Atul Gupta at its centre, according to a Business Day report. It quotes various tax experts as saying the transactions in the leaked e-mails pointed to evidence of a complex practice known as staggering or revolving loans. The Guptas appear to have used personal and intercompany loans to and from their group companies, many of which are located offshore. The report says the practice involves shifting finances and expenses from one company to another prior to the end of a business’ financial year. The loans are then reflected as assets and not as income, which is taxable. An e-mail from Gupta lieutenant Ashu Chawla to Atul Gupta, dated 18 December 2012, contains a spreadsheet with information on loans totalling more than R1.6bn to and from the family’s Sahara Computers. Of this, Atul Gupta, who is a South African tax and exchange control resident and was a director of Sahara Computers, received personal loans totalling more than R144m. The report says sources with knowledge of SARS’ auditing processes, said the fact that Atul Gupta continued to owe Sahara money made him an ‘ideal candidate’ for a tax audit, particularly around his loans. Werksmans Attorneys tax lawyer Ryan Killoran reportedly told the newspaper Atul Gupta could only have received his loan tax-free if Sahara had paid dividends taxes on the loan. He said lifestyle audits by tax authorities of wealthy families such as the Guptas would typically address whether the taxable income supported their assets and their lifestyles.
