Inside state’s case against the Guptas
Prosecutors say they cannot say where and when the family plotted to defraud the Free State but can still convict them for the Nulane scam
The state has confirmed that it will rely on the criminal law doctrine of common purpose to prosecute Atul and Rajesh Gupta for fraud and money-laundering in the Nulane Investments case, where it is still seeking the fugitive brothers’ extradition from the United Arab Emirates.
Defence lawyers acting for the Guptas’ Islandsite Investments and the company’s financial director and family friend, Ronica Ragavan — accused number seven and eight — have twice since May asked for further particulars on the charges that they colluded with the brothers and their wives to extract R24.9-million from the Free State government and ensure that most of the money made its way to a UAE Standard Chartered Bank account.
In essence, Krause Attorneys, representing the accused, are asking prosecutors to say where, when and how their clients colluded and to explain the role played by each in respect of every fraudulent misrepresentation and every one of the myriad money transfers involved.
“What were each and every participant in the collusion to do in the execution of the collusion?
“Put differently the actus reus of each and every one of the participants are to be stipulated with exact precision,” they demanded in a request for further particulars filed to the Free State high court on 24 May, using the Latin term for the objective elements of a crime.
In the indictment, the National Prosecuting Authority (NPA) alleges that the conspiracy played itself out over nine months, from just before 3 October 2011 to 6 July 2012.
The first is the date when, seemingly out of the blue, the Free State department of agriculture received a letter from an Indian metal wares company, Worlds Window Impex, stating its intent “to participate as a strategic partner in the Project Mohoma Mobung”.
But it first required due diligence to be done by a service provider of its preference.
Some three weeks later, two contracts worth R24.9-million were signed in Sandton. These saw the province breach procurement rules to appoint Nulane Investments, headed by former Transnet board member Iqbal Sharma, who is now accused number four in the case, to conduct the requested feasibility study for a dairy farm project.
This paved the way for the Estina scam in which a further R280million flowed to the Guptas. At the time the study was initiated, the state notes, the province was in financial dire straits and there was no plan and no funding for such.
The second date, in July the following year, saw R19-million transfer from Nulane’s Bank of Baroda account into the account of Gateway Limited, a company incorporated in Ras Al Khaimah in the Emirates. This Standard Chartered Bank account was controlled by Sanjay Grover, a Dubai-based friend of the Guptas who served as the company’s sole shareholder.
But first the money was laundered, with what the state termed “bewildering rapidity”, through the bank accounts of Islandsite, Pragat, Wone Management, Confident Concepts, Tegeta Resources, Oakbay Investments and Arctos Trading. All formed part of the Guptas’ operations, featuring a now familiar cast that includes Ankit Jain, Ravindra Nath and Ashu Chawla. Wone Management and Pragat were mere shell companies.
The state points out that the accounts of Pragat and Islandsite were linked to the Absa Cash Focus Account facility of Sahara Computers, of which Atul Gupta was the authorised system manager.
The state does not allege that he personally made the transactions listed in the indictment — it ascribes these to Ragavan and other associates who had access rights to approve payments — but says they could not have happened “without his express or implied approval”.
But the defence does not accept this and asks what precisely he did to perform the transactions. Elsewhere it asks that if the state alleges that Islandsite and Ragavan acted on the orders of any of the Guptas, who served as the directors of the company at the time, it has to say where and when these were given.
Their legal team is seeking the same particulars with regard to every allegation against their clients.
The approach is to argue that short of this, the state does not have a case, and it is expected that senior defence counsel Mike Hellens SC will, at the next pre-trial hearing on 8 September, call for the charges to be dropped. At a hearing in June, Hellens suggested as much after describing the state’s initial response as woefully inadequate.
He was reminded by advocate Nazeer Cassim SC, the lead prosecutor for the state, that his first remedy was to seek further and better particulars, and did so in papers filed on 22 July.
Here, in paragraph 12, the defence insisted that the state had failed to answer the question, which runs like a refrain through their papers, as to what exactly the Guptas did to execute the conspiracy to commit fraud and money-laundering.
In a 149-page response filed last week, the state dismissed this as disingenuous and said it had made out a case that each of the four family members, like the eight accused currently before court, represented a crucial link in a chain conspiracy.
“Accused 7 and 8 do not have to agree or like the answer provided by the state. The answer given was sufficient to set out the allegations of acts committed by Atul Gupta, Rajesh Gupta, Chetali Gupta and Arti Gupta in the alleged collusion and conspiracy.”
The state alleges that through their actions, they associated themselves with the contents of the unsolicited letter from Worlds Window, which initiated the fraud with the cooperation of pliant Free State officials and with the common purpose of furthering the family’s financial interests.
The defence counsel has argued that the state’s failure to detail the actions of Islandsite, Ragavan and the Guptas, as well as the place and time where these were carried out, meant it had no case.
In reply, the state conceded that it cannot provide the answers but argued that it need not do so to make out a case of common purpose.
The same goes for the exact terms of the collusion, and to some extent for the place where it happened, with the state listing offices in Bloemfontein and Sandton and other locations unknown.
But the state says the agreement to commit fraud need not be explicit because the actions of the accused spoke to their intent and a court can infer that they had conspired.
“All the accused were interested in the overall scheme and are liable for each other’s acts in furtherance of the common purpose to commit the fraud. They actively associated with each other’s acts.”
Regarding the demand for “full details” of what each of the Guptas did to associate themselves, through Islandsite, with the letter to provincial officials, the state reiterated that it had fully answered the question, albeit seemingly not to the liking of the accused.
“The state’s answer to this question, no matter how many times it is asked, will remain the same. Anything more required is a matter for evidence. The state will lead further evidence … The evidence and the doctrine of common purpose will be argued by the parties during the trial.”
The criminal law doctrine holds that once wrongdoing has been established on the part of one person in a group that pursued the same outcome, fault attaches to each party. The prosecution does not have to prove that each person took part directly. But the intention of each of the co-conspirators to enable the crime has to be established independently.
The trial is set down for 23 January. For now, Atul and Rajesh Gupta remain in custody in Dubai, where they were arrested on 2 June and are expected to face an extradition hearing in coming weeks.
According to sources, Emirati law enforcement agencies are considering the request. The NPA has declined to say whether it is still seeking the surrender of their spouses but confirmed that the extradition request for the Gupta brothers alludes to future charges relating to the Estina scandal.
‘All the accused were interested in the overall scheme and are liable for each other’s acts’