High court clips Guptas’ wings
THE High Court in Johannesburg has clipped the Guptas’ wings by grounding their infamous Bombardier jet registered as ZS-OAK.
The court ordered the Guptas to return the jet to Lanseria Airport in 15 calendar days for safekeeping by the Canadian export bank that financed it, pending the outcome of legal proceedings in England.
Judge Fayeeza Kathree-Setiloane also interdicted the Guptas from using or disposing of the jet “except for the purposes of implementing the order above”.
If the Guptas fail to comply with the ruling the Civil Aviation Authority (CAA) has been ordered to “cancel the aircraft’s registration with immediate effect for the duration of the interim period”, the order handed down on Monday said. The Guptas were ordered to pay costs.
The exact whereabouts of the aircraft are unknown but once the jet is deregistered in South Africa it will effectively be grounded as it cannot be flown anywhere in the world.
The CAA previously said it would comply with any court order to deregister the jet.
Export Development Canada (EDC), which loaned the Guptas $41million to buy the jet in 2015, brought an urgent application on February 15 to ground ZSAK after the Guptas failed to return it when the bank cancelled their loan agreement.
EDC can- celled the agreement in December last year, citing reputational damage and a number of “trigger” defaults. These included a late repayment, the cancellation of a maintenance contract with ExecuJet, the closure of Gupta bank accounts, delisting of their holding company after sponsors and auditors jumped ship, and preservation orders obtained by the Asset Forfeiture Unit (AFU) against their assets.
Advocate Owen Cook SC, appearing for Atul and Chetali Gupta, told the court on Friday that the Guptas were unable to pay instalments because the bank had unlawfully terminated the loan agreement. The Guptas still owe the bank $27-million.
He accused EDC of engaging in a “facesaving exercise” by cancelling its agreement with the Guptas due to adverse publicity, saying the defaults it cited were “not material”.
Cook also pointed out on Friday that the AFU preservation orders in the Estina matter had been set aside earlier that morning and could not be used to justify grounding the jet. But Judge Kathree-Setiloane disagreed. In a scathing judgment she accused the Guptas of trying to hide the whereabouts of the jet raising the “pungent possibility” that the tracking device was switched off “so that the aircraft can be used for unlawful purposes”.
This increased the risk that it could be seized by the AFU. ECD would not be able to rely on the “innocent owner” defence that repayments could have been the proceeds of crime in the Estina dairy case, she said.
Judge Kathree-Setiloane said ECD had made a strong case that it would suffer irreparable harm if it followed “in the footsteps of Bell Pottinger, KPMG South Africa or HSBC” by keeping the Guptas on as clients. There was also a real risk that the condition of the jet could deteriorate after a multiparty maintenance agreement with ExecuJet was cancelled.
“Execujet terminated the contract in order to protect itself against reputational damage of being associated with Westdawn, which is owned by the Gupta family, who have been embroiled in high-profile media matters of corruption and state capture in the recent past,” Judge Kathree-Setiloane said. “Consequently, the applicants have no contractual nexus with the new operator that has apparently replaced ExecuJet.”
The risk of damage was reinforced by switching off the public tracker to keep the aircraft hidden while being used by the Guptas “to fly to unknown destinations”.
The aircraft has since been spotted in Russia, Dubai and India. She said EDC had met the case for urgency by an escalation of events since December.
The Guptas are likely to appeal the judgment.