Three-pronged strike launched against Gupta Inc

An international campaign was launched in Johannesburg last week to bring the self-exiled Gupta brothers back to SA to face trial on charges of looting billions of rands from state institutions. The campaign plans to publish what it calls an 'Orange Book', listing all the organisations and persons that have been involved in state capture (see report below). This, notes Legalbrief, came in tandem with news of a double strike against Gupta Inc by the National Prosecuting Authority (NPA) this week. Its Investigating Directorate (ID) is heading to court to preserve Optimum Coal Mine and Optimum Coal Terminal, the Guptas’ most prized package of assets in SA, and separately seeking to block a debt-to-equity takeover by Daniel McGowan, one of the family’s former business associates, who is on the verge of snapping it up for a symbolic R1. This is the gist of a Daily Maverick report on the ID's two applications for preservation orders under the Prevention of Organised Crime Act that were filed this week. One seeks to grab the Gupta family’s shares in Optimum Coal Mine and Optimum Coal Terminal, following their controversial acquisition – allegedly funded with the proceeds of state capture crimes – just over five years ago. The state contends that cash from Transnet, the Transnet Second Defined Benefit Fund and Eskom was mobilised and channelled through, among others, Albatime, Trillian Capital Partners and Centaur Mining to help the Guptas pay for the 2016 purchase. The second is a parallel application to preserve a R1.3bn creditor claim held by Templar Capital, a Bermuda company through which McGowan now stands to acquire the business of Optimum. Affidavits filed by Hermione Cronje, the outgoing head of the ID, set out details of the state’s double legal bid in anticipation of forfeiture applications likely to follow in the coming months. Both applications are premised on the state’s contention that the deals – the original Gupta acquisition of the Optimum package and the latest being driven through business rescue proceedings – are tainted by the proceeds of crime.

The Optimum deal was signed in December 2015 amid a national storm around the firing of former Finance Minister Nhlanhla Nene and subsequent reports of former Mining Minister Mosebenzi Zwane’s trips to Zurich, allegedly to help seal the deal for the Guptas. With this case, the NPA seeks to have forfeited to the state the proceeds of one of the ‘primary criminal schemes’ identified in former Public Protector Thuli Madonsela’s 2016 State of Capture report, Cronje says, according to the DM report. Three sets of business rescue practitioners (BRPs) – those of Optimum Coal Mine (OCM), Optimum Coal Terminal and the BRPs responsible for Tegeta Exploration and Resources – have refused to grant the NPA section 133 consent for the applications filed at the Gauteng High Court (Johannesburg) on 8 December. This section of the Companies Act dictates the limits within which legal proceedings may be brought against companies in business rescue). Cronje, in court papers, said this was unfortunate but hoped that the BRPs would come round. She warned that some of them may be guilty of an offence under the Prevention of Organised Crime Act should they proceed with implementation of the OCM rescue plan and thereby give effect to the debt-to-equity deal. The NPA requires the court’s leave to proceed with the applications filed. While concerned about the dissipation of assets, Cronje says the immediate risk has been mitigated by an undertaking from the BRPs to give the state notice of circumstances that may lead to the imminent implementation of the business rescue plan. The NPA’s applications come just six months after Paul Holden, of Shadow World Investigations, testifying at the Zondo Commission, urged authorities to attach Optimum.

The NPA move is described as an ambitious plan in a Business Day report. If the preservation order is granted, it will put the most valuable Gupta asset in the hands of the state since the state capture scandal broke. Other Gupta assets frozen by the state include a private jet, a house in Saxonwold, Johannesburg, and a Constantia, Cape Town, house. If the NPA is successful, the preservation of the mine will be a boost for the organisation that has been under fire for not producing speedy results in cases involving grand corruption and state capture.

The Guptas and their families are believed to be living in Dubai, with which SA signed an extradition treaty in June. However, there has been little progress on the country's request to bring them back despite warrants for their arrest. An NDTV report notes there is also speculation that some family members may be in India. The campaign to bring the Guptas back to SA, launched by the Ahmed Kathrada Foundation (AKF), received pledges of support from a number of organisations locally and abroad which fight corruption. As cases continue to be investigated, AKF chairperson Derek Hanekom said the earlier claims that billions of rands looted from state institutions was ‘hopelessly inadequate’. ‘Reports received some years ago about the estimated amounts lost to our economy through state capture proved to be hopelessly under-estimations. Now, we are talking anything up to a trillion rand that was lost to our economy in its various forms,’ Hanekom said. ‘We know that the Guptas played a fundamental role with the full support of the then President of the country and various Ministers of State,’ he said. ‘It is a travesty of justice that the Gupta brothers, who stole so much from our country, are walking free in another country in the world. We want to see justice done – they are effectively fugitives from justice. We do need international co-operation to ensure, with respect to the Gupta brothers, that justice is done and seen to be done,’ Hanekom said.

‘The template that (the Guptas) created, or perhaps perfected, has been rolled out throughout the length and breadth of the country, leaving us with a continuity of this issue that will now be grappled with,’ AKF executive director Shan Balton said, adding that early next year, the foundation would issue the ‘Orange Book’, listing all the organisations and persons that have been involved in state capture. The ‘orange’ signifies the colour of the overalls worn by prisoners as standard dress in South African prisons, notes the NDTV report. Reverend Frank Chikane, who convened the 'Defend our Democracy Campaign' three years ago, said the Guptas had corrupted not just parastatals but even the security and intelligence agencies to avoid arrest. ‘When you do that, it amounts to a coup d'etat,’ Chikane said. Peter Hain, a veteran anti-apartheid activist who led the struggle from the UK after being hounded out by the minority white government in the 1970s, sent a message of support from there. ‘We also must insist that banks like HSBC, Standard Chartered and Baroda Bank surrender the digital trails that will show where the Guptas and Zuma laundered their money,’ Hain said.