Cana­dian bank in ur­gent SA court bid to ground Gupta jet

Weekend Post (South Africa) - - FRONT PAGE - Stephan Hof­s­tat­ter and Genevieve Quin­tal

THE Cana­dian bank that lent the Gup­tas 41-mil­lion Cana­dian dol­lars (R377-mil­lion) to buy their Bom­bardier jet ur­gently want to get their hands on the plane‚ say­ing they fear it could be seized by the as­set for­fei­ture unit.

Ad­vo­cate Al­fred Cock­rell‚ ap­pear­ing for Ex­port De­vel­op­ment Canada (EDC)‚ said the Hawks raids on Gupta homes‚ AFU preser­va­tion or­ders for their prop­er­ties and bank ac­counts, and the fam­ily’s de­ci­sion to switch off the track­ing de­vice on their jet had prompted the bank to go to court ur­gently to ground the air­craft.

The EDC wants the Bom­bardier Global 6 000 with the tail num­ber ZS-OAK grounded be­cause the fam­ily de­faulted on re­pay­ments and to stop it from be­ing used to com­mit crimes or flee from jus­tice.

The bank’s ap­pli­ca­tion to ground the jet was be­ing heard in the South Gauteng High Court yes­ter­day. The ap­pli­ca­tion was brought pend­ing the out­come of le­gal pro­ceed­ings in the United King­dom to de­ter­mine whether the bank law­fully ter­mi­nated its loan agree­ment with the Gup­tas.

If the Gup­tas refuse to sur­ren­der the jet, the EDC has asked South Africa’s Civil Avi­a­tion Au­thor­ity (CAA) to dereg­is­ter the air­craft‚ which ef­fec­tively means it would not be able to fly any­where in the world. The CAA is not op­pos­ing the ap­pli­ca­tion.

The EDC is­sued the Gup­tas with a ter­mi­na­tion no­tice on De­cem­ber 13 after they

stopped mak­ing re­pay­ments and breached sev­eral loan covenants.

These in­cluded the fail­ure by Gupta com­pany Oak­bay In­vest­ments‚ the cor­po­rate guar­an­tor of the loan‚ to fur­nish the EDC with its an­nual fi­nan­cial state­ments.

Atul and his wife, Chetali Gupta, also per­son­ally stand surety for the loan. When the loan agree­ment was signed in 2015, Atul Gupta was listed as chair­man of Oak­bay but he re­signed in Oc­to­ber 2017.

The EDC re­gards this‚ as well as Oak­bay’s plans to dis­pose of its com­pa­nies In­fin­ity Me­dia and Tegeta‚ as fur­ther breaches of the agree­ment.

Other breaches cited by Cock­rell in­clude the delist­ing from the JSE by Oak­bay In­vest­ment’s sub­sidiary Oak­bay Re­sources after the com­pany lost its spon­sor and most of its bank ac­counts were closed.

“That is a ma­te­rial ad­verse change‚ on any read­ing‚” Cock­rell said.

In an af­fi­davit filed in the court pro­ceed­ings, Gupta ex­ec­u­tive Ron­ica Ra­ga­van said the Gup­tas were en­ti­tled to fly their jet around the world be­cause the bank had un­law­fully ter­mi­nated the agree­ment.

The Gup­tas wanted to make loan re­pay­ments to the EDC but the bank had can­celled its lease with Stoner­iver‚ a com­pany in Ire­land that holds the loan.

The Gup­tas had of­fered to ex­er­cise their right to end the lease and buy the air­craft but had not re­ceived a re­sponse from the EDC.

Ra­ga­van said their of­fer would be ac­cep- ted if the EDC was “truly in­ter­ested in their com­mer­cial in­ter­ests‚ rather than some un­spec­i­fied po­lit­i­cal agenda which they now seem to har­bour against the Gup­tas”.

Ra­ga­van said that as a re­sult the Gup­tas were “en­ti­tled to con­tinue the en­joy­ment of the full spec­trum of rights granted un­der the lease agree­ment”. She said the EDC’s case for ur­gency was “self-cre­ated” be­cause it was based largely on the rep­u­ta­tional dam­age the bank suf­fered from its busi­ness re­la­tion­ship with the fam­ily.

Ra­ga­van pointed out that these scan­dals had been widely pub­li­cised since 2013‚ in­clud­ing in Canada. Yet the EDC had taken no steps to dis­tance it­self from the Gup­tas.

In­stead, the bank con­tin­ued to en­joy “a com­mer­cially ben­e­fi­cial re­la­tion­ship” with the fam­ily un­til its ter­mi­na­tion no­tice was sent in De­cem­ber last year and its ur­gent ap­pli­ca­tion lodged in Fe­bru­ary this year.

The case was there­fore lit­tle more than “a pub­lic re­la­tions and face-sav­ing ex­er­cise”‚ she said.

But Cock­rell sketched a pic­ture of dra­mat­i­cally es­ca­lat­ing events from De­cem­ber 13‚ when the bank is­sued its first ter­mi­na­tion no­tice‚ and Fe­bru­ary 15‚ when it lodged its ur­gent ap­pli­ca­tion.

In the in­terim the He­len Suz­man Foun­da­tion went to court seek­ing the re­turn of R7-bil­lion the Gupta com­pa­nies were paid in al­legedly cor­rupt con­tracts with Eskom‚ and the AFU ob­tained preser­va­tion or­ders for Gupta funds al­legedly looted from the Estina dairy project in the Free State.

Both cases led the EDC to con­clude there were ad­di­tional grounds for can­celling the loan agree­ment. Then on Fe­bru­ary 4 “the track­ing de­vice on the jet was switched off”‚ Cock­rell said.

“My client dis­cov­ers for the first time they have no way of know­ing where the air­craft is‚” he said‚ adding that “Dubai seems to be a pop­u­lar land­ing ground for the air­craft”‚ as well as In­dia.

Later last month, the Re­serve Bank con­firmed that the Bank of Bar­oda‚ the last bank that served the Gup­tas‚ would be leav­ing South Africa. Then‚ on Fe­bru­ary 14‚ the Hawks raided the Gupta com­pound in Sax­on­wold.

The case con­tin­ues.

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