Gupta ghosts still haunt mine

TEGETA ASSETS: WHY WOULD THEY BE SOLD CHEAPLY?

Did the brothers plan to buy Optimum out of business rescue for a song?

Did the Guptas plan to buy Optimum out of business rescue for a song?

Last week the High Court in Pretoria dismissed Swiss-based company Charles King SA’s attempt to stop the sale of Tegeta-owned assets under business rescue.

Tegeta owns Optimum Coal Mine, a share in the Richards Bay Coal Terminal and Koornfontein Mines.

It is suspected that in 2017, the Guptas put in place agreements that would allow them to buy the companies back for a song, or direct their disposal.

Charles King SA had a written agreement signed in 2017 to purchase Tegeta for R2.9 billion, with a R66.7 million down-payment (it’s probably worth 50%-100% more). This raises questions over the share sale agreement’s authenticity and who was behind it.

The down-payment was made on October 22, 2017 – R2.3 million short. Business rescue practitioners discovered several anomalies.

The day after receiving Charles King’s payment, the money was withdrawn from the Tegeta bank account to pay salaries at Tegeta, Optimum and other Gupta companies. This is suspicious: normal procedure involves paying the deposit into a trust account pending settlement of the full purchase price and share transfer.

So what is Charles King? In papers before the high court, it gives a Swiss address, and the deponent to the founding affidavit, Amin Al-Zarooni, describes himself as a businessman and chair of Charles King, a subsidiary of Milu Limited, an Abu Dhabi-registered private company. Al-Zarooni is also a Milu shareholder and director.

Al-Zarooni’s founding affidavit sets out his case against Tegeta. There was a share sale agreement concluded on August 22, 2017. The agreement required Charles King to pay a R66.7 million deposit into Tegeta’s Bank of India account before October 22 2017. R64.4 million was paid. Al-Zarooni says the shortfall was due to currency fluctuations. He authorised payment of the shortfall, but it was rejected by the bank “for reasons unknown”.

Tegeta’s directors waived the shortfall, agreeing to add it to the final balance upon share transfer. On this basis, Charles King wasn’t in breach of the share sale agreement, claimed Al-Zarooni.

The agreement was cancelled by business rescue practitioners who took over Tegeta and seven other Gupta companies in February 2018. The practitioners wanted to see evidence that Charles King had obtained Reserve Bank approval for the share purchase.

Among the reasons given for the cancellation was that several suspensive conditions in the agreement hadn’t been fulfilled.

Richards Bay Coal Terminal Company hadn’t given authority for the share sale to Charles King. Eskom was required to sign off the transaction, and no indication was given that Charles King would comply with the 30% BEE shareholding requirements. The Competition Commission’s signature was also required.

Judge J Mphahlele dismissed Charles King’s urgent application to stop the sale of the company to anyone but itself. Charles King now wants to take the matter to arbitration, and reportedly to claim for the R64.4 million deposit it paid.

This comes just as Optimum and other former Gupta assets are being put up for sale.