NPA targets Gupta mine as ‘proceeds of crime’

The National Prosecuting Authority (NPA) has set its sights on the Gupta-owned Optimum Coal Mine (OCM), which is in business rescue, in an ambitious plan to have it forfeited to the state as proceeds of crime. 

These plans are outlined in an application filed by national director of public prosecutions Shamila Batohi in the Johannesburg high court on Thursday.

The NPA is seeking a preservation order for just more than R2bn. This amount includes the mine; shares therein that are held by Tegeta, the company partly owned by former president Jacob Zuma’s son Duduzane Zuma, as well as more than R1.3bn in debt that is intended to be converted into a majority stake in the mine.

If the order is granted, this will be the most valuable Gupta asset in the SA government’s hands since the state capture scandal broke. Other Gupta assets frozen by the state include a private jet; a house in Saxonwold, Johannesburg; and one in Constantia, Cape Town. 

If the NPA is successful, the preservation of the mine will be a boost for the organisation, which has been under fire for not producing sufficiently speedy results in cases involving grand corruption and state capture. 

In an affidavit filed by Hermione Cronje, head of the NPA’s Investigative Directorate, the authority stakes its claim to R1.3bn arising from coal prepayments and loans belonging to UK-based Templar Capital. These were ceded to it by a Bermuda-based company, Centaur Venture Ltd (CVL), last June. 

CVL is part-owned by Gupta son-in-law Akash Garg, known to South Africans as the groom at the family’s infamous wedding at Sun City, which showed the extent to which they controlled the state. 

The R1.3bn makes Templar OCM’s largest creditor and the company is, with OCM’s business rescue practitioners, converting debt to equity in a plan that will see a “new OCM” rise from the ashes of the one under rescue.

“The purpose of the preservation order sought is to ensure that the property is preserved pending the outcome of an application for a forfeiture order in terms of section 48 of the POCA (Prevention of Organised Crime Act). In terms of section 40 of the POCA, such an application must be brought within 90 days of the publication of the preservation order in the Government Gazette,” Cronje said in the papers.

OCM was bought by Gupta-owned Tegeta in 2016 for R2.1bn. Subsequent investigations revealed that much of the money came from CVL, which was owned by Garg and Templar Capital owner Daniel McGowan. 

Cronje said NPA chief financial investigator Sibusiso Tshikovhi, uncovered that CVL’s activities were funded by a Gupta company, Griffin Line Trading, which is based in Dubai. This included some R2bn in coal prepayments that were made to OCM by CVL. 

Tshikovhi also showed that the payments were not legitimate coal payments, but rather “money-laundering transactions by which the Gupta family laundered proceeds of crimes committed against SA organs of state and used these proceeds to prop up the finances of Gupta family entities within SA”.

Breaking down where the R2bn used to purchase the mine from Glencore came from, Tshikovhi and auditors PwC found: 

• R660m from the Gupta’s mining company, Tegeta Exploration and Resources, that was traced back to Eskom’s controversial coal prepayment that was found to be unlawful;
• R68m payment from Eskom;
• R155m loan from Oakbay Holdings;
• R105m loan from Albatime, a company belonging to Gupta-linked businessman Kuben Moodley, with money looted from Transnet;
• R152m loan from Trillian Management Consulting, a company belonging to another Gupta fixer, Salim Essa, that was paid R600m by Eskom despite not having a contract;
• R842m loan from CVL;
• R2m from Oakbay; and
• R100m in residual funds in Tegeta’s Bank of Baroda account derived from multiple sources  

McGowan’s attorney, Brett Tate, of Andersen South Africa, said on Wednesday his client was not aware papers had been filed but was in communication with the NPA. “Once papers are filed we will see what they say and decide on a way forward,” he said.

Richard Mguzulu, the National Union of Mineworkers (NUM) branch secretary at the mine, lamented the NPA’s decision, saying it impeded what should have been a light at the end of the tunnel for them. “We don’t want to be seen as standing in the way of fighting crime and recovering money that was stolen, but I don’t understand why it took three years for them to take this decision. 

“OCM has been in business rescue for a long time, and just when we as the workers have struck a deal with the new owner that would have seen people start going back to work by the end of December, they come with an application that will shut down the mine, if granted.”

Mguzulu said he was part of about 540 workers owed more than R200m in back pay, severance packages and other deductions, and McGowan had agreed to not only re-employ those who wished to return but had also undertaken to pay workers what they were owed over time.

“The deal we signed with him was that 20% would be paid within six months of him being granted the mining rights and becoming operational. Now this throws a spanner in the works, and we have taken a decision to march to the NPA office in protest next week,” he said.