Search for missing R1bn Gupta assets
Inquiry into shady business rescue deals, intercompany loans
● Retired judge Meyer Joffe will chair a closed inquiry into how an estimated R1bn of assets, cash, highvalue residential and commercial properties and mining equipment belonging to the Guptas’ Islandsite company allegedly vanished.
The disappearance is alleged to have occurred through questionable business rescue practices and irregular intercompany loans, property valuations and sales agreements.
Islandsite, which was placed in business rescue in 2018 after SA’s banks unbanked the Guptas, reportedly owed creditors R770m. These debts included : ● Bank of India (R31m); ● Sahara Computers (R467m); and ● The Guptas’ Westdawn (R200m). Law enforcement sources investigating the family allege the Guptas used Islandsite to channel funds from questionable government contracts to buy a Midrand office building, a Cessna jet, luxury German cars and plush homes in Johannesburg, Cape Town and Durban.
Islandsite owns nearly R100m worth of residential and commercial properties as well as an estimated R500m worth of mining equipment which, through Westdawn, was leased to the Guptas’ Optimum Coal Mine.
On Monday, Pretoria high court judge
Joseph Raulinga granted Islandsite’s new business rescue practitioner (BRP), Mahier Tayob, permission to hold an inquiry into the company’s affairs.
Declining to name those who would testify in-camera at the inquiry, to be held in Pretoria in September, Tayob said they would be subpoenaed this week. The Sunday Times understands they include bank executives, shareholders, lawyers, estate agents and executives of Gupta-linked companies.
Tony and Atul Gupta and their wives are the four Islandsite shareholders.
Tayob said the inquiry would determine whether there was criminal and civil liability in regard to the disappearance of nearly R1bn worth of assets.
“People will testify in secret because they could potentially incriminate themselves.”
A week before Raulinga granted the order, the Special Investigating Unit (SIU) approached Tayob and other Gupta BRPs, requesting share portfolio information about the companies they managed.
The Guptas are fighting a R3.8bn civil claim brought against them and their associates last month by the SIU and Eskom. The Sunday Times understands the SIU is looking at interdicting the sale of any shares as a way of recovering money from the Guptas.
SIU spokesperson Kaizer Kganyago said: “Whatever appropriate action that can be taken will be taken.”
The SIU’s request coincides with the Industrial Development Corporation (IDC) subpoenaing the Bank of Baroda’s chief executive in SA, Manoj Jha, on July 30 to testify and supply bank records relating to a R287.5m loan to Oakbay Resources and Energy, Oakbay Investment, Action Investment and Shiva Uranium.
The IDC wants share and loan agreements and international financial transfer records from 13 Gupta-linked businesses, including Islandsite.
IDC spokesperson Chimwemwe Mwanza confirmed the subpoena on Bank of Baroda and said subpoenas had also been served on other banks in SA.
He said the IDC, through its US-based attorneys, has also obtained a court order to issue subpoenas on 15 international banks with headquarters in the US to secure documents relating to banking transactions.
“These are relevant to the IDC’s South African legal proceedings against Oakbay Resources & Energy, Oakbay Investments, Action Investments and Shiva Uranium.
“The IDC is concerned [that] Oakbay breached its warranty, which was given as part of the funding agreements, that it would not be involved in any corrupt activities.
“This is the primary reason for the IDC opting to cancel the agreement with Oakbay Resources and [to] claim repayment of monies owed to it, together with interest. Of the R250m the IDC advanced, R218.5m has been repaid.
“The case before court is the IDC seeking to recover the outstanding R37.5m, together with interest amounting to R200m.”
Jha did not respond to questions.
The inquiry stems from a battle Tayob has had in securing information on Islandsite’s assets. A status report issued by Tayob in June on Islandsite’s business rescue was used in argument for the inquiry order.
The report, which the Sunday Times has seen, alleges, among other things, that:
● The company’s mining equipment at OCM was devalued from R150m to R104m;
● A R119m loan had been left unclaimed; ● R65m in rentals had been lost;
● A R7m commercial property in Rustenburg was undervalued and sold for R3m;
● Financial records, including property sale and lease agreements, are missing; and
● R25m was paid to a non-creditor.
Tayob said the inquiry was part of a multipronged approach to bring Islandsite out of business rescue.
“Within the month we will file papers in the Supreme Court of Appeal challenging the former business rescue practitioners’ appeal to be reinstated. In September in the Pretoria High Court we will launch an application to bring Islandsite out of business rescue.”
He said they were legally challenging certain property sales and had halted the sale of four commercial properties that had allegedly been undervalued.
He said he had reported estate agencies and their staff, including commercial property giant API, to the Estate Agency Affairs Board (EAAB).
“Once Islandsite comes out of business rescue it goes back to the shareholders, who are still the Guptas. Under the Companies Act they can trade. With the Guptas still unbanked in SA, I’m not sure what will happen with the company.”
API director Stephanus Weyers said they had responded to the EAAB and were awaiting its decision.
EAAB legal manager Deli Nkambule said the complaint was under investigation.
Islandsite’s former BRP, Louis Klopper, who dismissed the allegations in Tayob’s report, said he was waiting for a date to appear in the Supreme Court of Appeal.