State to keep Gupta mine, for now

● The National Prosecuting Authority won a much-needed victory in the Supreme Court of Appeal (SCA) this week that allows it to keep the Gupta family’s Optimum Coal Mine and Optimum Coal Terminal in state hands.

The business rescue practitioners (BRPs), the Guptas’ mining company Tegeta Exploration and Resources, Optimum Coal and Optimum Coal Terminal, the National Union of Mineworkers and two companies belonging to former Gupta business associate Daniel McGowan, appealed a high court decision to allow the Asset Forfeiture Unit to preserve the Gupta mine and coal terminal.

The assets, together estimated by March last year to be worth more than R4bn, are the largest in the Asset Forfeiture Unit’s possession.

In a unanimous judgment written by acting appeals judge Raylene Keightley, the SCA this week ruled that the preservation order could not be appealed because it was not a final order, and those opposing it would have the opportunity to challenge the final forfeiture order.

The case was struck off the roll with costs, including that of two counsel.

In the judgment, Keightley writes that one of the appellants’ main arguments was that the preservation order interferes with the BRPs’ powers and obligations “by making [them] subject to the oversight of the curator bonis” and that it “seeks to establish an unlawful state-controlled business rescue process, which does not serve the objects of forfeiture”.

But national director of public prosecutions Shamila Batohi responded by saying the preservation order was necessary and part of her obligation “to deal with the consequences of ... state capture”.

Keightley wrote that Batohi told the court Optimum was acquired by the Guptas through illegal means including fraud, theft and money laundering, and that the preservation order and pending forfeiture order of Optimum was “directed at recovering the proceeds of crime linked to the corrupt scheme that culminated in the acquisition of Optimum by the Gupta family”.

Batohi said if the BRPs were allowed to put their plan into action, “it will facilitate further money laundering”.

McGowan, Optimum’s largest creditor, is alleged to have helped the Guptas buy the mine and now wants to buy it through his company Templar with the help of the BRPs and trade union NUM, which believes that the plan is the only way to save jobs at the mine and help its members receive what is owed to them.

“The current business rescue plan, if put into effect, would allow Templar, which is controlled by Mr McGowan, to use the tainted ... claims to acquire a benefit ultimately for Mr McGowan. It is for this reason, according to [Batohi] that effect cannot be given to the present business rescue plan,” Keightley wrote.

“However, [Batohi] contends that this does not mean that an alternative business rescue plan, excluding Templar and Liberty, should not be pursued, with the curator and the business rescue practitioners working together.”

In an affidavit last year, McGowan denied knowing about the Guptas’ alleged criminal activities before going into business with them and said he “had no reason to believe that the monies we were loaned or paid [for Optimum] were proceeds of crime”.

NPA spokesperson Mthunzi Mhaga said the NPA welcomed the judgment, and that the order enabled the Asset Forfeiture Unit in the NPA to explore the “non-conviction based” section of the Prevention of Organised Crime Act preservation orders as part of an “innovative approach” to ensuring that the proceeds of crime are not benefited from by wrongdoers.

Mhaga said that the NPA contends that a new business rescue plan be devised to “ensure that the proceeds from any new sale of OCM’s business will, after the satisfaction of lawful creditors’ claims, be forfeited to the state, if the pending forfeiture application is resolved in favour of the NPA”.

“The purpose of the preservation order is thus to preserve all the assets of Optimum Coal Mine and Optimum Coal Terminal in the interim.”

Mhaga said the NPA was “exploring all avenues” with a view to finding a speedy resolution of the case as that would benefit all parties involved.

Bouwer van Niekerk, lawyer for BRP Kurt Knoop, said: “We are studying the judgment to decide whether there is merit in applying for leave to appeal to the Constitutional Court.”

McGowan’s lawyer Brett Tate said: “It would be premature for us to comment at this stage. We are still studying the judgment.”