Ugly truth about ‘Gupta com­pany’

‘Patently false and dis­hon­est’: A new re­port blows open the Trillian state cap­ture case and a last-gasp bid to halt its re­lease by oust­ing Tokyo Sexwale

Mail & Guardian - - News - Jessica Bezuiden­hout

Se­nior coun­sel Ge­off Budlen­der has ex­posed a string of lies un­cov­ered dur­ing his in­ves­ti­ga­tion into Trillian Cap­i­tal Part­ners, a com­pany at the heart of state cap­ture al­le­ga­tions. And he has dared in­ter­na­tional con­sult­ing firm McKin­sey & Com­pany to come clean about its se­cret ties to the “Gupta com­pany”.

This is de­spite a frus­trat­ing six months of “ob­struc­tion and ob­fus­ca­tion by Trillian” and an 11th-hour bid to oust its nonex­ec­u­tive chair­per­son, Tokyo Sexwale, a move that could have blocked the re­lease of the re­port.

Sexwale com­mis­sioned the in­ves­ti­ga­tion af­ter a Sun­day Times ex­posé that sug­gested Trillian had prior knowl­edge of President Ja­cob Zuma’s plan to fire for­mer fi­nance min­is­ter Nh­lanhla Nene. The probe’s terms of ref­er­ence in­cluded whether there was any truth to state cap­ture claims against Trillian and whether it had any ties to the Gupta fam­ily.

On Thurs­day, Sexwale re­leased Budlen­der’s 67-page re­port, which re­vealed that:

Budlen­der be­lieved the ver­sion of the Nenegate whis­tle-blower, a for­mer chief ex­ec­u­tive in the Trillian sta­ble of com­pa­nies;

no con­tract with Trillian, ev­i­dence showed it had sub­con­tracted lu­cra­tive deals to the com­pany even though it tried to do this at arm’s length by hav­ing the com­pany in­voice Eskom di­rectly;

En­ter­prises Min­is­ter Lynne Brown, in­voices stamped “paid” pro­vided by Trillian showed

that the power util­ity had paid the com­pany R266-mil­lion with­out any sign of ten­ders; and

from its Bank of Bar­oda ac­count did seem to go to­wards the purchase of Op­ti­mum Coal Mine.

The Mail & Guardian was not im­me­di­ately able to ob­tain com­ment from all par­ties named.

Sexwale stepped down on Thurs­day, hav­ing un­der­taken to do so once the re­port was re­leased. He was ap­pointed nonex­ec­u­tive chair in April last year, sev­eral months af­ter the Trillian scan­dal broke in the me­dia.

Fac­ing the me­dia alone, Sexwale said it was im­por­tant to note that Budlen­der had lim­ited pow­ers: he could not sub­poena wit­nesses and there­fore in­for­ma­tion on which he had based some “strong con­clu­sions” may still be tested at a later stage.

“Trillian is one dot in a big­ger scheme. There are many good peo­ple who work in this com­pany but the ac­tions of one share­holder have caused the im­age of Trillian to be tar­nished,” Sexwale said.

The “share­holder” in ques­tion un­suc­cess­fully tried to con­vene a board meet­ing to axe Sexwale on Thurs­day.

Sexwale’s ref­er­ence to Trillian’s ma­jor­ity share­holder, with­out nam­ing any­one, sug­gested he was re­fer­ring to Salim Essa, a Gupta

said that, if Sexwale had been re­moved, the re­port might not have seen the light of day.

Budlen­der said he was not able to cor­rob­o­rate some in­for­ma­tion with Trillian be­cause the com­pany had re­fused to co-op­er­ate. He called for au­thor­i­ties, equipped with sub­poena pow­ers, to tackle some of the claims — in­clud­ing those in­volv­ing McKin­sey.

Trillian said it is com­pil­ing a com­pre­hen­sive re­sponse to the re­port as it had not been given an op­por­tu­nity to com­ment de­spite a re­quest for Budlen­der to de­lay it.

Trillian will con­sider all the al­le­ga­tions in the re­port, “many of which ap­pear to be in­cor­rect”, and then re­lease it’s re­sponse.

against the pro­fes­sional man­age­ment of Trillian, many of them ex­pe­ri­enced fi­nan­cial ser­vice pro­fes­sion­als in South Africa. Mind­ful that even on Budlen­der’s own ver­sion the in­ves­ti­ga­tion is in­com­plete, it will also con­sider whether to ap­point a fur­ther en­quiry to com­plete out­stand­ing work on the re­port or whether to re­fer it to a ju­di­cial com­mis­sion of en­quiry.

Whis­tle-blower’s ver­sion ac­cepted

Budlen­der had hoped to ac­cess Trillian chief ex­ec­u­tive Eric Wood’s phone and lap­top for emails or di­ary notes, to ver­ify or con­tra­dict the whis­tle-blower’s claims that Wood had told her of Nene’s im­pend­ing ax­ing and that the com­pany had planned to cash in on it.

Wood re­fused Budlen­der’s re­quest for ac­cess to his de­vices, say­ing the con­tent would not help in the in­ves­ti­ga­tion. Said Budlen­der: “This is, of course, hardly a mat­ter for him to de­ter­mine, given that he was one of the sub­jects of the in­ves­ti­ga­tion.”

Although it was not pos­si­ble for him to make a clear find­ing about Trillian’s role in the Nene fir­ing saga, Budlen­der said he had to ac­cept the ver­sion of the whis­tle-blower. One rea­son was: “The con­duct of Trillian man­age­ment in this in­quiry has left me with the im­pres­sion that what it says can­not be trusted.”

McKin­sey let­ter con­tra­dicts its ver­sion

McKin­sey & Com­pany is an in­ter­na­tional con­sult­ing firm that does work for state-owned McKin­sey would chan­nel a per­cent­age of state work to the com­pany. But this fell through when Trillian failed to pass McKin­sey’s risk re­view.

McKin­sey told Budlen­der it did not use Trillian as a sub­con­trac­tor on any projects. But Budlen­der found a document that ap­peared “in­con­sis­tent” with McKin­sey’s claim. This document, a let­ter dated Fe­bru­ary 9 2016, signed by Vikas Sa­gar, a di­rec­tor of McKin­sey & Com­pany Africa, refers to a con­tract for con­sult­ing ser­vices “en­tered into between Eskom and McKin­sey Africa … As you know, McKin­sey has sub­con­tracted a por­tion of the ser­vices to be per­formed un­der the agree­ment to Trillian.” Sa­gar then ad­vises Eskom that Trillian is au­tho­rised to sub­mit in­voices for this work di­rectly to Eskom.

Budlen­der bat­tled to get an ex­pla­na­tion for this let­ter from McKin­sey and, more than two months later, the com­pany said it would be “in­ap­pro­pri­ate” to provide him with more in­for­ma­tion. McKin­sey has not sug­gested that the let­ter ap­par­ently signed by its di­rec­tor is not gen­uine, nor has it pro­vided an ex­pla­na­tion for this in­con­sis­tency de­spite re­peated re­quests, the re­port states.

Budlen­der ques­tioned the con­duct of McKin­sey and con­cluded that the mat­ter re­quires fur­ther in­ves­ti­ga­tion by a per­son or in­sti­tu­tion that has the “le­gal pow­ers to com­pel McKin­sey to provide the rel­e­vant in­for­ma­tion”.

Brown’s re­sponse ‘false or mis­lead­ing’

ques­tions in Par­lia­ment, stated that “no amount” was paid to Trillian to ne­go­ti­ate a set­tle­ment for an in­sur­ance claim af­ter a boiler ex­ploded at the

Over­all, more than a quar­ter of a bil­lion rand was paid to Trillian Cap­i­tal Man­age­ment, a sub­sidiary of Trillian Cap­i­tal Part­ners (TCP). “Yet the min­is­ter stated that noth­ing was paid by Eskom to TCP,” Budlen­der’s re­port says.

Trillian gave Budlen­der a batch of in­voices sent to Eskom in April, Novem­ber and Au­gust last year, to­talling more than R260-mil­lion.

Of th­ese, two in­voices, both dated Au­gust 10, for amounts of just over R122-mil­lion and R113-mil­lion, were stamped “paid” just three days later, on Au­gust 13. He said it seemed that Trillian did not sub­mit any ten­ders for the work re­ferred to in th­ese in­voices.

Based on this, Budlen­der found that the in­for­ma­tion Brown gave Par­lia­ment was ei­ther “false or se­ri­ously mis­lead­ing”.

As for the com­pany’s Gupta links, Budlen­der said th­ese were not just about “blood ties”. Trillian is ma­jor­ity-owned by Essa, who failed to co-op­er­ate with the in­ves­ti­ga­tion, even ig­nor­ing pleas from Sexwale.

Trillian and its sub­sidiaries were listed as hav­ing paid R235-mil­lion to­wards the Op­ti­mum Coal bill in the pub­lic pro­tec­tor’s State of Cap­ture re­port last year, some­thing the com­pany has re­peat­edly de­nied.

Us­ing Trillian’s own state­ments from one of its ac­counts at the Bank of Bar­oda, Budlen­der con­cluded that a R160-mil­lion with­drawal from the ac­count, on the same day that lawyers set­tled the Gup­tas’ bill for the coal mine, sug­gested the com­pany did con­trib­ute to­wards the purchase of Op­ti­mum.

“The with­drawal of the money does not ap­pear to fit within any of the cat­e­gories of trans­ac­tions for which Trillian as­serted the Bar­oda ac­count was used for.”

His sub­se­quent re­quest for sup­port­ing doc­u­ments, in­clud­ing who the money was paid to, why and who had au­tho­rised it, was de­clined.

He adds: “There is no ap­par­ent rea­son why Trillian, a com­pany owned by South Africans and con­ducted in South Africa, and which as­serts it has no link with the Gup­tas, would

“Looked at in iso­la­tion, one would not at­tach too much sig­nif­i­cance to this, but in light of the other ‘ev­i­dence’, it is sug­ges­tive of a con­nec­tion between the com­pany and the Gup­tas.”

‘Big­ger scheme’: Tokyo Sexwale says the re­port will be part of a ju­di­cial probe

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