A breakthrough in the fight against state capture

The National Prosecuting Authority (NPA) made a significant breakthrough this week in its ongoing efforts to crack down on high-level corruption. The preservation orders granted for Optimum Coal Mine shows that the wheels of justice in relation to complex crimes are turning, albeit slowly.

The case demonstrates the multifaceted nature of the NPA’s response to complex corruption matters, which includes civil processes to preserve assets, and ultimately bringing back the money stolen and looted during the state-capture years.

The Gauteng high court granted preservation orders to the Asset Forfeiture Unit of the NPA against those who, in 2016, were involved in “financing” the purchase of Optimum Coal Mine for R2.1bn by the Gupta-owned Tegeta Resources.

The preservation orders — issued in terms of section 38 (2) of the Prevention of Organised Crime Act — effectively prevent any further steps to remove or dispose of the mine’s assets, as they are now regarded as having been bought with the proceeds of criminal activity.

A curator has been appointed by the court to provide a proper valuation of the mine. The curator will also find a purchaser at fair value — which is good news for all the people who have been concerned about the fate of the mine, and the community in which it is situated.

The scale and scope of the “heist” at Optimum is unprecedented, as demonstrated by the size of the preservation orders — at least R3.4bn. This is the largest preservation order in the history of the NPA.

The NPA developed a co-ordinated case strategy, implemented by a team of expert prosecutors who successfully brought two applications. The first pertains to all the Guptaowned Tegeta shares in Optimum Coal Mine and Optimum Coal Terminal, and the entire Optimum business. The second pertains to a claim of R1.3bn from Templar Capital Ltd in relation to Optimum Coal Mine.

In respect of the second application, Templar’s owner, Daniel McGowan, had stated under oath that the funds advanced to his company derived from “money stolen from the South African government”. The funds in question were advanced by Griffin Line — a company nominally controlled by Ajay Gupta’s son, Kamal Singhala — and, in McGowan’s words, “laundered via Mr Singhala on behalf of his father and wider family members”. These funds were, in effect, part of the elaborate “washing machine” used by the Gupta family and their associates to launder billions of rands stolen from the people of SA to fund the purchase of Optimum Coal Mine.

The high court rulings stop any further attempts to implement a so-called business rescue plan at Optimum Coal Mine, which the NPA has long argued would effectively have legitimised the proceeds of crime.

Moreover, the Optimum Coal ruling is significant for a number of reasons.

The civil court orders clear the way for criminal proceedings against those involved in the various money-siphoning and money-laundering aspects of the Optimum deal.

It confirms the central role played by the Gupta family in structuring the various “loans” and transactions, through various business entities. The names of Gupta-owned companies and associates litter our court documents, naming them as recipients of millions of rands stolen from the public purse, and misappropriated through front companies as “loans” and “advances”.

These companies include Sahara Computers, Islandsite Investments and then-JSE listed Gupta flagship, Oakbay Investments.

It confirms the broad theft of public funds to build the Gupta empire — including the corruption and deception which took place at Eskom, where rules were broken to steal public funds by rushing through contracts that would enable Tegeta to part-fund its purchase of Optimum Coal.

It also confirms the misappropriation of pension money from the Transnet Defined Benefit Scheme, facilitated by Gupta enablers such as Trillian and Regiments.

Finally, it demonstrates the effectiveness of the NPA’s Asset Forfeiture Unit, working with investigators in the Investigating Directorate from the Directorate for Priority Crime Investigations (DPCI), in applying the provisions of the Prevention of Organised Crime Act to deal with the proceeds of crime and corruption, whether through criminal or civil actions.

The rulings demonstrate the co-ordinated approach of the NPA and the DPCI, and send a strong signal about the NPA’s growing capacity to deal with state capture and ensure accountability from those involved, and to seize, recover and return the stolen money.

It is a first and meaningful step in asserting the NPA’s capacity to use all avenues at its disposal to ensure justice is delivered for the most complex crimes in our country.

The next step is to obtain a forfeiture order which will allow the curator to sell the property to a legitimate buyer at the correct market value.

The matter has now been handed to the NPA’s Investigating Directorate for further criminal investigation and prosecution. Colleagues are hard at work preparing case files against all implicated role players, and will be building on the court orders this week to ensure that the case is effectively and fairly prosecuted.

A prosecution to hold accountable those responsible in this seminal case will go a long way towards restoring confidence in the criminal justice system in SA, and will be a powerful demonstration to state-capture looters that crime in SA does not pay.

The rulings ... send a strong signal about the NPA’s growing capacity to ensure accountability