‘Don’t allow Gupta enabler to get hands on Optimum’
● In one of her final acts as head of the Investigating Directorate, advocate Hermione Cronje has warned that Dubai-based British businessman Daniel McGowan was involved in state capture and should not be allowed to get his hands on one of its biggest prizes — the Guptas’ Optimum Coal Mine.
In an affidavit filed late last week, Cronje alleges that McGowan is a “potential suspect” in a huge money-laundering investigation involving the Guptas and has a history of helping the family in their state capture project from as far back as 2013.
McGowan, who has presented himself as the saviour of Optimum and the jobs of 1,500 workers, was supposed to have taken control of the company from business rescue practitioners this month.
However, he is now fighting a record-setting bid to preserve Optimum, said to be worth more than R4bn, by the National Prosecuting Authority, which believes the Guptas bought the company with the proceeds of crime — and with McGowan’s help.
After a fallout with the Guptas, McGowan in court papers presented himself as a victim of the family who was unaware of their alleged criminal activities. But Cronje disputes this, alleging that McGowan knew who he was dealing with when he went into business with the Guptas.
“At the time that the Gupta family and Salim Essa were in a position to perpetrate acts of state capture, McGowan was an enthusiastic participant in commercial ventures that state capture provided the Gupta family and [Gupta business partner] Salim Essa,” Cronje states.
Cronje alleges that one of the “first acts McGowan performed for the Guptas was the valuation of ‘dairy land’ in Vrede, in the Free State”.
“At a time when the improper Gupta fam
ily role in the Estina dairy project in Vrede was already a matter of national controversy in SA, McGowan was actively assisting the Gupta family to evaluate a proposal to buy more dairy land in Vrede.”
Cronje says that in 2015 McGowan helped the Guptas buy Duduzane Zuma [Jacob Zuma’s son] an apartment in Dubai, which the Sunday Times reported was in the iconic Burj Khalifa skyscraper. Essa e-mailed McGowan and his company lawyer, asking them to review the contract of sale and advise on it.
Cronje alleges that McGowan helped the Guptas buy Optimum in 2016 through a $100m loan (about R1.5bn at current exchange rates) from a Dubai-based Gupta company controlled by Ajay Gupta’s son, to Centaur Ventures in Bermuda, a joint venture between McGowan and Akash Garg Jahajgarhia, the man who married the Guptas’ niece at the infamous Sun City wedding. That money, alleged to be ill-gotten, landed up in the account of Centaur Mining SA, from which R842m was put up as security for a Tegeta loan to help buy the mine. Cronje alleges the transfer constituted money laundering.
“(McGowan) had no rational, lawful reason to channel his money this way, as opposed to paying Tegeta directly from [Dubai Gupta company] Griffin Line,” said Cronje.
Investigating Directorate spokesperson Sindisiwe Seboka said the R842m debt, ceded to McGowan’s new company Templar, means he is now the largest creditor of Optimum Coal Mine, positioning him to buy the mine “at a throwaway price”.
Cronje alleges that McGowan was central in laundering R313m through Griffin Line, to Trillian — a company the Guptas used to score huge contracts from Eskom and Transnet from which they allegedly received kickbacks. This money, she alleges, was then “laundered through Cutting Edge and Sahara Computers into various Gupta family companies in SA”. She states that McGowan suggested ways to Essa “to paper the money flows from Centaur to Trillian and offered to ‘use the same template as we use for Griffin if you agree’”.
Cronje states that last year, because the NPA was concerned about the future of the mine and job losses, it took the “unprecedented” step of meeting McGowan and his company to allow him to explain his involvement with the Guptas. “The NPA has never previously met with a potential suspect in a serious commercial crime investigation to inform him/her of the possibility of a preservation order over property in which s/he has an interest,” she states.
Upon reviewing McGowan’s representations, Cronje states, the NPA had no choice but to proceed with its bid to preserve the mine and prevent the “implementation of a business rescue plan that will ... also result in the transfer of assets acquired through state capture crimes to one of the original participants of state capture”.
In his affidavit filed last month, McGowan claims to have had no knowledge of the Guptas’ alleged criminal activities before going into business with them. After falling out with the family, who are now on Interpol’s red list, McGowan became embroiled in a court battle with them in Bermuda — which he says proves he was unaware of their state capture project.
“I did not have (and could not have reasonably had) prior knowledge that Griffin Line funds may have been the proceeds of criminal activities of the Gupta family (and especially Messrs Garg and [Ajay Gupta’s son Kamal] Singhala); I state they were misusing Centaur for their criminal activities that caused harm to the company, and they refused to respond to my requests for information and documents relevant to their activities involving Griffin Line and the Gupta family,” McGowan states.
“I had no reason to believe that the monies we were loaned or paid were proceeds of crime. (Indeed this is still not clear to date.) We were not party to money laundering, or state capture of any kind.”
But in her affidavit, Cronje states the payments from Gupta companies were “money laundering transactions by which the Gupta family laundered proceeds of crimes committed against South African organs of state and used these proceeds to prop up the finances of Gupta family entities within SA”.
In response to questions, McGowan’s lawyer Brett Tate said his client was introduced to business opportunities with the Guptas through a business partner who was an associate of Essa. This information was volunteered to the NPA, he said.
Regarding the Estina project, Tate said McGowan did not assist with any valuation of land and his voluntary disclosure has been “twisted ... into an allegation that Mr McGowan somehow assisted the Gupta family with the Estina dairy project”.
“Mr McGowan’s position is that the suggestion is baseless and only highlights the NPA’s desperation to make allegations which are unsupported by the facts,” said Tate.
Regarding the allegation that McGowan helped buy Duduzane Zuma a house, Tate said McGowan’s partner, Garg, asked for and received assistance from his company’s legal counsel.
“It is McGowan’s understanding that the property purchase was not concluded and it is not clear what negative inferences can be drawn from this ... McGowan further believes that the suggestion is baseless and only highlights the NPA’s desperation.”
Asked about McGowan being a “potential suspect” in money laundering relating to the $100m loan and R300m loan to Trillian, Tate said, “McGowan is unaware of any such allegation or suggestion”.
About whether McGowan knew what the Guptas were up to, Tate said his client “denies this allegation ... and further believes that if the Guptas were engaged in criminal activities as alleged by the NPA, it was for the NPA to investigate such and take the necessary action. Mr McGowan does not believe the NPA can attempt to place the blame for NPA shortcomings on him.”
Tate said that because of pending litigation with Trillian liquidators, he could not comment on claims that he suggested ways to “paper” money flows to the company.