NPA hits back after Gupta win
First sight of new report reveals details of Estina ‘fraud and money laundering’
● The Guptas drew blood against the NPA on Friday, but prosecutors immediately hit back with new evidence about the disappearance of R169-million from the Estina dairy project in the Free State.
The NPA also seized R1.7-billion in Gupta mine rehabilitation funds under the latest preservation order, granted by the High Court in Pretoria.
Earlier, the High Court in Bloemfontein had dealt the Asset Forfeiture Unit a blow by overturning preservation orders it had secured over R180-million linked to Estina. Gupta lawyers immediately wrote to national director of public prosecutions Shaun Abrahams, demanding that the “sham” Estina case be dropped.
However, prosecutors believe a damning interim report by Estina curator Eugene Nel — not admitted as evidence on Friday — makes their case against the Guptas watertight.
The report, seen by the Sunday Times, shows Gupta involvement in alleged fraud and money laundering totalling R169-million, paid from Estina to Dubai-based and Gupta-owned Gateway Limited.
Nel says sole Estina director Kamal Vasram opened three loan accounts with the Bank of Baroda, and “funds that flow from the Estina Baroda account are taken to settle Kamal Vasram’s loan accounts”.
‘Coincidence? I think not’
“What is meaningful is that the funds that Kamal Vasram borrows from Baroda are utilised to pay Oakbay Investments, Kamal Vasram and Aerohaven.” Oakbay received R11.175-million this way, Aerohaven R8.9million and Vasram R9-million.
The first loan account was opened on April 18 2013, the day that Free State agriculture department funding started flowing to Estina. “The very next day, payment of R5million is made to Oakbay. Is the above payment a coincidence? I think not.”
In Bloemfontein, Judge Fouche Jordaan said on Friday that while Bank of Baroda transactions involving Estina and Guptalinked accounts may be “suspicious”, there was inadequate proof they were connected. He also pointed out that the bank had produced Estina statements that did not show any payments to Atul Gupta or Gupta companies.
It appeared AFU investigators arguing that the Guptas received millions intended for the empowerment of poor black farmers relied on transactions conducted through the Bank of Baroda’s Nedbank pool account — which served 800 clients — to make a case that Atul and various Gupta-owned companies had received Estina funds.
Atul has not been criminally charged for what the AFU contends was the Estina “scam”, but his nephew Varun Gupta‚ close associate Ashu Chawla‚ former Oakbay CEO Nazeem Howa and his successor Ronica Ragovan are all out on R100 000 bail for the case.
Gupta law firm BDK Attorneys wrote to Abrahams after Jordaan’s ruling, saying the state’s case is “based on the same fundamental misunderstanding of the bank account of Estina (Pty) Ltd and the pool account of the Bank of Baroda”.
The Hawks and the NPA had acted with “male fides [bad faith] in instituting this prosecution, with a wilful disregard for the constitutional rights of our clients and any basic notion of fairness and with reckless incompetence”.
It added: “Our clients ought not to have been arrested, detained, compelled to apply for bail, released on bail and subjected to stringent bail conditions in circumstances where the investigation in this matter was far from complete as is evidenced by the long postponement [of the Estina criminal trial] to 17 August 2018.
“You are called upon forthwith to withdraw the charges against our clients.”
In its final salvo, BDK warned that “those officials responsible for the unlawful arrest, detention and malicious prosecution of our clients will not be excluded or protected from personal liability for the wrongful acts perpetrated against our clients”.
On Thursday, the AFU secured its third preservation order, granted by the High Court in Pretoria, this time in relation to nearly R1.75-billion in rehabilitation funds for the Gupta-owned Optimum and Koornfontein mines.
The funds are already frozen under an interim court order obtained by the Organisation Undoing Tax Abuse in September.
“We are seeking to complement the work done by Outa,” said AFU acting head Knorx Molelle, adding that the chief concern lay with the announcement by the Bank of Baroda, which holds the funds, that it was exiting South Africa at the end of this month.
‘Fraud and/or theft’
“The process initiated by Outa would only be finalised late in March, and the AFU’s process is an expedited way to ensure that these funds are ring-fenced.”
In his affidavit in support of the application, Molelle relies heavily on financial analysis of Baroda accounts by former public protector Thuli Madonsela, and on evidence presented by Outa.
Between June 22 and September 16 2016, only months after the sale of Optimum to the Gupta’s Tegeta Resources and Energy, 54 transactions were conducted through accounts holding the rehabilitation funds.
The funds were transferred to various accounts controlled by the Gupta family and their companies, all held with Baroda.
By September 16, the rehabilitation funds contained only R293-million of the R1.6-billion they totalled on June 22.
Molelle argues that the accessing of these funds contravened the Mineral and Petroleum Resources Development Act, the National Environmental Management Act and the Income Tax Act.
These acts make clear the specific conditions under which mining rehabilitation funds may be accessed — at all times with the express permission of the Department of Mineral Resources.
“The said funds were never ring-fenced for purposes of investment and capital growth as contemplated by [the National Environmental Management Act]. Instead they were used to fund cash flow of Tegeta’s operations,” says Molelle.
“Consequently, Tegeta and/or the trustees of the Optimum and Koornfontein rehabilitation trust funds have committed fraud and/or theft.”