The almighty dollar – a #GuptaLeaks game-changer?
To date, the apparent efforts of the Hawks, South Africa’s priority crime-combating unit, to investigate any of the voluminous allegations made against the Guptas have been minimal to non-existent.
But the Guptas’ repeated use of US dollars to move their kickbacks around the globe, along with previously hidden ties to US companies, may render the Hawks’ efforts (or lack thereof) irrelevant.
Under American anti-bribery and anti-money laundering laws, one link to the United States could expose all members of any broader conspiracy to the jurisdiction of American courts.
In addition to personal US criminal liability, ill-gotten gains are also at risk.
The US Department of Justice’s Kleptocracy Asset Recovery Initiative recently seized billions of dollars of assets – including bank accounts, real estate, art, jewelry, aircraft and yachts – located around the world.
When announcing the latest such seizure last Friday – stemming from contracts corruptly obtained by bribing Nigeria’s former oil minister – a senior official at the US Department of Justice remarked: “Corrupt foreign officials and business executives should make no mistake: if illicit funds are within the reach of the United States, we will seek to forfeit them and to return them to the victims from whom they were stolen.”
The Guptas’ dealings with software giant SAP potentially provides US authorities with a clear means of getting their foot in the door.
Although headquartered in Germany, SAP’s stock trades on the New York Stock Exchange, thus making the company subject to various US laws, including the Foreign Corrupt Practices Act (FCPA).
Last week, amaBhungane and Scorpio revealed that SAP paid R100-million to Gupta-linked CAD House.
By the end of the week, SAP had replaced its executive team in South Africa and had launched both internal and external investigations, the latter being led by US law firm Baker McKenzie.
To receive maximum credit for cooperating – thereby potentially reducing recommended fines by half – companies are expected to thoroughly investigate and self-report FCPA violations to US authorities.
To be eligible for any such credit, companies are further required to hand over “all relevant facts about individuals involved in corporate misconduct” to the US Department of Justice.
US Dollar and Gmail snares
Forthcoming instalments of the #GuptaLeaks will further detail the Guptas’ frequent transactions in US dollars – the Guptas’ currency of choice of when moving hundreds of millions of dollars to and from its Dubai bank accounts.
For instance, the #GuptaLeaks reveal that much of cash sloshing through the Dubai accounts are the proceeds of so-called “consulting” contracts such as the China South Rail-Transnet contract previously detailed by amaBhungane.
The #GuptaLeaks also reveal that communications related to the CSR kickbacks were carried out using US-based email providers.
Major US law firm, White & Case, explained how such US-dollar transactions and even emails can put someone within the very long reach of US laws, including anti-bribery laws.
“Many US laws — including the Foreign Corrupt Practices Act in certain circumstances and various antifraud statutes — may establish jurisdiction over a crime whenever it involves the use of any ‘means or instrumentality of interstate or foreign commerce’.
“The term is broadly defined by US authorities and may cover any communication or movement that crosses state or international borders, including wire transfers, emails, phone calls, mail and travel.
“Given the reach of US commerce, from free email servers to correspondent banks that clear US dollars for non-US based banks, such a broad definition can significantly increase the reach of US law.”
Beyond transferring many millions of dollars through US-based correspondent banks, the Guptas, their associates and many political figures linked to them frequently used US-based email providers, such as Gmail, Yahoo and Hotmail.
These US-based email accounts were used to communicate on a wide variety of topics including the Sun City wedding expenses, the near-daily US dollar movements to and from Dubai, as well as to make arrangements with parties in the United States who received funds from the Guptas’ accounts in Dubai.
US money laundering Laws
Regarding US anti-money laundering laws, White & Case notes: “US law makes it a criminal offense to engage in or attempt to engage in a financial transaction involving funds that are known to be the proceeds of certain unlawful activities, or to engage in a financial transaction that provides funds for the commission of a crime (such as terrorist financing or sending a bribe payment).
“This offense is called ‘money laundering,’ and non-US corporations and foreign nationals may be subject to prosecution under US federal anti-money laundering statutes if they are involved in the transfer or attempted transfer of illegally obtained funds or funds used to further criminal activity.”
The Guptas’ forwarding their ill-gotten gains to a US-incorporated company could potentially run afoul of such laws.
AmaBhungane and Scorpio revealed that over US$1-million paid by Swiss crane manufacturer Liebherr ultimately ended up in a US company, Brookfield Consulting, owned by apparent US-citizen relatives of the Guptas.
- Read #GuptaLeaks: More multinationals ensnared in Transnet kickback web
Roughly another US$9-million – apparently originating with China South Rail’s “consulting” contract – was also wired to Brookfield in the United States.
Individuals comfortably sitting in South Africa or Dubai might be unaware of the US legal risks created by the actions of merely one member of a broader conspiracy.
White & Case further explains that one link to the United States could expose all members of any broader conspiracy. “Conspiracy law may subject non-US companies or individuals who have not committed an act within the United States to US criminal jurisdiction.
“If the United States can establish jurisdiction over a single conspirator, it may have jurisdiction over all conspirators, whether companies or individuals, wherever they may be found.”
US officials have described the FCPA and the Kleptocracy Asset Recovery Initiative as “two sides of the same anti-corruption coin.”
Former US Attorney General Loretta Lynch explained: “Since it was established in 2010, the Kleptocracy Asset Recovery Initiative has been an effective tool in our ongoing efforts to curb high-level public corruption around the world. As we move forward, the Department of Justice will remain committed to using all the resources at its disposal to ensure that government funds go to their lawful purposes; that stolen assets are returned to state coffers; and that corrupt officials are held fully accountable for abusing their positions.”
Over the past few years alone, the US has seized many billions of dollars of ill-gotten cash and assets.
Two of the largest seizures – totaling US$2.5-billion to date – involve far-reaching, complex corruption in Uzbekistan and Malaysia.
In Uzbekistan, the daughter of the former president received over US$800-million from telecom companies. US authorities seized US$850-million sitting in accounts in Switzerland, Belgium, Ireland and Luxembourg.
The mere fact that these funds were moved in US dollars – and thus transmitted through the US – was sufficient to seek their forfeiture.
The US Department of Justice noted that the president’s daughter’s “associates laundered the corruption proceeds through accounts held in Latvia, the United Kingdom, Hong Kong, Ireland, Belgium, Luxembourg and Switzerland. The illicit funds were transmitted through financial institutions in the United States before they were deposited into accounts in these countries, thereby subjecting them to US jurisdiction.”
Last month, the US announced the latest in a series of seizures related to Malaysia’s 1MDB scandal – bringing the total grabbed by US authorities in that case alone to $1.7-billion.
The US Department of Justice’s characterization of the Malaysian scheme undoubtedly rings true for many South Africans:
“Today’s complaints reveal another chapter of this multi-year, multi-billion-dollar fraud scheme, bringing the total identified stolen proceeds to $4.5 billion. This money financed the lavish lifestyles of the alleged co-conspirators at the expense and detriment of the Malaysian people. We are unwavering in our commitment to ensure the United States is not a safe haven for corrupt individuals and kleptocrats to hide their ill-gotten wealth or money, and that recovered assets be returned to the victims from which they were taken.”
“These cases involve billions of dollars that should have been used to help the people of Malaysia, but instead was used by a small number of individuals to fuel their astonishing greed.”
“The misappropriation of 1MDB funds was accomplished with an extravagant web of lies and bogus transactions that were brought to light by the dedicated attorneys and law enforcement agents who continue to work on this matter. We simply will not allow the United States to be a place where corrupt individuals can expect to hide assets and lavishly spend money that should be used for the benefit of citizens of other nations.”
#GuptaLeaks: More racism exposed in email
Further indications of the Guptas’ racist attitudes towards black people have surfaced in a newly discovered email from the #GuptaLeaks.
“. . . they have tenant from 1 October, R15k per month but he is Nigerian. Still looking for someone else,” an employee of the Guptas’ Sahara Computers wrote in an email to Atul Gupta in September 2015.
Gupta apparently disapproved of the idea of leasing the property to a Nigerian.
“No to point one,” Gupta replied to the Sahara employee, in reference to the proposed leasing.
In the email, Sahara employee Rana Kumar updated Gupta on four properties the family appeared to have been leasing to tenants.
The email appears to suggest that the Guptas had a prospective tenant for a property in Century City in Cape Town in 2015, but because the would-be renter was Nigerian, the family would rather keep searching for another tenant.
The Guptas, who did not respond to News24’s queries, have denied past allegations of racism “with contempt”.
But other emails from the #GuptaLeaks suggest that the Guptas’ generally view black people as being inferior to them.
Earlier this month, News24 reported on a #GuptaLeaks email that suggests Rajesh “Tony” Gupta once called security guards stationed at the family’s Saxonwold residence “monkeys”.
The incident, tellingly, was described in a letter from a Sahara employee to security firm G4S Security in which Gupta’s actions were defended.
According to the letter, two guards stationed at the entrance to the Saxonwold compound did not hear Gupta calling them on one occasion, supposedly because they were “engrossed in some other activity.”
“The incident aggravated Mr Tony so much that he called them monkeys,” the Gupta employee wrote to G4S Security, apparently oblivious to the possible consequences of detailing Gupta’s alleged racist slur in writing.
‘ALL staff are white!’
The #GuptaLeaks have also revealed that the Guptas apparently routinely made use of racial profiling in an attempt to employ white employees instead of black South Africans.
Planning emails sent before major Gupta functions show that it was standard practice for “hostesses” to be hired from modelling agencies, with the agencies sending through photographs of potential women in advance to be selected or rejected.
The Guptas and their associates on numerous occasions expressed a preference for white candidates.
“Please see below the profiles of girls that have confirmed availability. I need to get more white ladies,” read an email from one such agency in August 2014.
That statement could be read innocently, were it not for the fact that there was some evidence from the leaked emails show that the Guptas had a distinct preference for hiring white people in certain areas.
Before the wedding of Vega Gupta at Sun City in 2013, the family made inquiries to hospitality agencies about hiring waiting staff and butlers. In response to a phone conversation with Tony Gupta, an agency called Heilbron Hospitality sent through a quote for hiring staff in February 2013.
Under “Terms & Conditions”, it stated: “Heilbron Hospitality confirms the provision of all Caucasian staff, with the majority of the waiters and a few of the butlers being female staff.”
Tony Gupta appeared not to have read the quote closely, because he replied to the email on the same day: “Please clarify total staff gender and race…”
A Heilbron employee wrote in response: “ALL staff are white! I included this point in the final quote.” It was not just the butlers and waiters at the wedding that the Guptas wanted to be white women, however.
An email from the manager of the Gatsby Spa at Sun City reveals that Sahara CEO Ashu Chawla met with the spa management in April 2013.
The email was sent later the same day. “Thank you for your time this morning, it was certainly interesting,” it begins.
“After discussing the matter with my fellow directors we have come to the conclusion that it would be in neither of our best interests to bring in part time white staff for your very important guests.” This suggests that the Guptas had specifically requested white staff for the event.
Racial profiling for job vacancies occurred elsewhere within the Gupta empire. An email sent by Tegeta director Ankur Sharma to Chawla in October 2012 stated that the mining company needed to recruit a “good office admin”, which Sharma specified should be a “senior old white lady with good experience”.
The Guptas have, of course, employed many black people. But another email, sent by a black Gupta employee in September 2014, claimed that the family treated its black workers especially poorly.
In the email, employee Tshepo Masilo berated the family for the meagre contributions they made to the families of employees who died in their service.
“The Gupta family is very wealthy, where you are able to spend more than R100-million for a wedding at Sun City, and yet you are unable to even give your poor employee who died without even earning a decent salary a good send-off,” Masilo wrote.
“It is very disappointing and hurting to see how you spent a lot of money donating to political parties and hosting events for very high profile figures and rulers of our country, and yet you do not take care of your struggling and lowly paid employees, especially blacks.”
Sun City wedding
Allegations that the Guptas had demanded white staff in certain roles for the wedding of Vega Gupta, the Gupta brothers’ niece, surfaced shortly after the event in 2013.
City Press reported that most of the bodyguards and butlers at the wedding were white and Afrikaans-speaking.
The newspaper also quoted a resort employee as claiming that black resort staff were made to clean themselves by a Gupta security officer before serving guests.
“The allegations of racism regarding the staff are definitely untrue,” a statement released by the Gupta family in response read. It said it rejected the claims “with the contempt [they] deserve”.
Integrity Commission summons to Ace Magashule sets stage for fiery anti-corruption special ANC NEC meeting
The ANC’S Integrity Commission has summoned the party’s secretary-general Ace Magashule to appear before it to answer questions about a television interview. In July, he told Newzroom Afrika that he would not step down despite numerous allegations about his activities as Free State premier.
Integrity Commission had initially hoped to meet with you to discuss and clarify the interview with you on Saturday 29 August 2020. We were however advised that there is a Special NEC scheduled for 28 to 30 August 2020. We, therefore, request your audience at any time… during the coming week (1-5 September),” says the letter.
The Integrity Commission’s chairperson George Mashamba, who signed the letter, believes that Magashule’s television remarks went against the grain of the Commission’s wide mandate to restore the party’s reputation and also against the anti-corruption campaign the ANC is currently mounting.
From Magashule’s side, he is said to view the letter as a further example of the Commission’s alleged “one-sided” findings. His team wants the Commission to also probe the genesis of President Cyril Ramaphosa’s R500-million funding for his campaign to become ANC president in 2017 and wants it to open an investigation into alleged vote-buying at that conference.
Either way, the summons to Magashule and the leaking of the letter has upped the ante for what is likely to be a fiery special NEC meeting.
And it’s not the only contentious matter on the agenda.
A delegation of KwaZulu-Natal members met with the former eThekwini mayor Zandile Gumede this week, who was sworn in earlier this month as a provincial MP, to get her to stand down.
If she does not (and most of her comrades believe she won’t), Gumede is likely to be made to walk the plank at a special meeting of the party’s powerful national executive committee (NEC) this weekend, according to several sources canvassed by Daily Maverick. Gumede has been charged with 16 others as part of a conspiracy to defraud the metro she governed to the tune of between R200-million and R400-million (the quantum is differently reported across court papers; the accused’s next appearance is in September).
Magashule and Gumede are allies and he is unlikely to support a temporary suspension of her (as provided for in the ANC constitution which is clear on what should happen if a member is criminally indicted).
Gumede’s elevation to a member of the provincial legislature from her demotion to councillor was the straw that broke the camel’s back and which pushed Ramaphosa to write an impassioned seven-page plea to ANC members on Monday August 25 to get serious about corruption.
The ANC has been dragged on social media in a viral hashtag called #VoetsekANC which has made party grandees warn that it could lose the next election if it is not seen to take a tough stand on corruption. “It’s the last chance saloon for the ANC. The opposition offices in Parliament are small,” said an official at the party’s Luthuli House headquarters.
“We are awaiting the NEC decision,” said ANC KZN spokesperson Nhlakanipho Ntombela, adding, “(we expect it) to conclude holistically on all members”. Gumede is not the only ANC member who holds office and who has been criminally charged. DM
#GuptaLeaks: How Eskom was captured
An explosive cache of emails from inside the Gupta empire has provided evidence of how the family captured the president, the government and key state-owned entities. This is the story about one of their most important conquests: Eskom.
In 2015, as Brian Molefe and his key lieutenant Anoj Singh moved across to Eskom, the Guptas turned their attention to the power utility’s R40-billion primary energy budget.
The feast was about to begin.
May 2014-September 2014: The Negotiations
To understand how the Guptas captured Eskom, one needs to go back to May 2014, when a company called Goldridge came looking for an Eskom coal contract.
At the time, the Guptas were well-known, having landed both literally and in the public discourse at Waterkloof airforce base in 2013. However, the Guptas’ fledgling mining companies, Goldridge and Tegeta, were still unknown entities.
Minutes from the meeting held at Megawatt Park on May 9 2014 show that there was some confusion about who actually owned their Brakfontein coal mine – Tegeta or another Gupta-owned mining company, Goldridge. It was Tegeta.
It was Ayanda Nteta, now Eskom’s acting head of fuel sourcing, who pointed out during that first meeting that “Eskom prefers dealing with companies that are 50%+1 black-owned” which Tegeta was not.
At the time, almost 50% of Tegeta was owned by Oakbay Investments, and indirectly Gupta brothers Atul and Ajay and their wives Chetali and Shivani.
Another 21.5% was owned by Bhatia International, a controversial Indian coal company that only a few months before had been charged by India’s Central Bureau of Investigations with allegedly supplying substandard quality coal to India’s version of Eskom, complete with forged lab results.
Only the remaining 30%, held by Aerohaven Trading and Oakbay chief executive Ronica Ragavan, was considered black-owned.
Throughout 2014, Eskom officials did not seem overly interested in the coal resources Tegeta had to offer, as minutes of various Eskom meetings reveal. Goldridge had offered the same resource to Eskom in 2012, which Eskom declined.
Still Eskom’s coal procurement officials agreed to play along and do another round of tests. The results were not promising: only a small seam of coal from Brakfontein mine known as “seam 4 lower” was considered suitable.
At a meeting in September 2014, Tegeta “asked if there is any way Eskom can accommodate them as they are only looking to supply [a] small amount of coal” from their stockpile.
Nteta responded that “the power stations that could potentially take coal from Brakfontein have all their needs met for this financial year”. Tegeta persisted, asking about “the possibility of moving some coal in the interim”. Eskom did not budge.
But the Guptas were not going to take no for an answer.
November 2014-January 2015: Enter the Gupta-controlled Board
AmaBhungane understands from sources familiar with the negotiations that Eskom’s coal procurement officials held out as long as they could, but by January 2015, they were receiving pressure “from above” to sign a contract with the Gupta-owned mine.
By this point, Eskom also had a new board. In December 2014, public enterprises minister Lynne Brown replaced eight members of Eskom’s board.
Six out of the eight new appointees – Ben Ngubane, Mark Pamensky, Nazia Carrim, Maria Cassim, Devapushupum Naidoo and Romeo Khumalo – were either family of or had business ties to the Guptas and their business partners, according to the Public Protector’s report.
On January 23 2015, Tegeta came with a new offer. Although Eskom tests found that Brakfontein’s blended product (seam 4 upper and lower) was unsuitable, Tegeta offered to supply the blended product at R15/GJ.
Eskom told Tegeta that the price was too high and to come back with a new offer.
Instead of lowering their price, Tegeta came back a week later with reasons why it needed a higher price.
Minutes from the meeting show that Tegeta’s chief executive Ravindra Nath told Eskom “they have increased their BBBEE ownership and a higher price would be needed to finance the BBBEE partners”.
This was not true – Tegeta only acquired new black shareholders six months later when Salim Essa and Duduzane Zuma were brought on board. Minutes show that Nath also tried to argue that “changes in environmental law as well as royalties justified the need for a higher price”.
Eventually, Eskom agreed to accept Tegeta’s offer to supply 65,000 tons per month of blended coal for five years at R13.50/GJ, roughly R277/ton.
It is unlikely that Eskom officials were aware that around the same time, questions about Brakfontein’s coal were being raised in court.
As part of a case brought by a former mining contractor against Goldridge, an expert geology report was submitted to court that concluded that “…Brakfontein coal deposit could never support a mine of economic importance”.
“Theoretically the poor quality [coal] can be mixed with another coal supply source to produce an acceptable Eskom quality coal feed, but [this] is a pipe dream,” geologist Gerhard Esterhuizen wrote in his report.
The pipe dream was about to be put to the test.
February 2015-March 2015: The Guptas demand more
The Guptas had finally been promised their first Eskom coal contract, but it is apparent they were not satisfied with their relatively modest contract of 65,000 tons/month.
Just four days after Eskom relented and agreed to take Brakfontein’s coal, Tegeta’s chief executive wrote back to Eskom’s general manager of fuel sourcing, Johann Bester, with a new request:
- Increase the amount of coal supplied from 65,000 tons a month to 100,000 tons a month, starting in October,
- Increase the contract from five years to 10 years, and
- Allow Tegeta a grace period of three years before it needed to become 50%+1 black-owned.
Minutes show that during negotiations, Eskom had requested first right of refusal to coal from the as-yet-unopened part of the coal mine known as Brakfontein Extension. Tegeta was now seeking to convert Eskom’s first-right-of-refusal into a cold, hard contract.
Bester sat on the request for a few days and then wrote back on February 12:
- Eskom would still only agree to take 65,000 tons a month; come October Tegeta could offer Eskom another 35,000 tons a month from Brakfontein Extension, but it would be up to Eskom to decide if it wanted or needed the coal.
- Eskom would still only agree to a contract of five years but there would be an option to extend for another five years when the contract ran out.
- On the BEE requirements, Eskom would agree to a grace period, as it had done with other suppliers, provided that Tegeta remained 50%+1 black-owned for rest of the contract.
Considering that Tegeta’s first coal contract was still not signed – a contract that was awarded without a competitive bidding process – this was an unusually generous concession from Eskom.Tegeta was not happy though.
Nath immediately forwarded Eskom’s letter to Tony Gupta and Salim Essa, saying:
I am not very happy with the wording “Eskom shall [have] an option to enter into an offtake agreement for the additional coal”. Further, ‘option to extend for further five years’. This shows that there is no commitment on the part of Eskom.
It is worth taking a minute to consider this – Tegeta had already used their connections to pressure Eskom to take low quality coal. Now, by refusing to more than triple the contract from roughly R1-billion to R3.8-billion on the basis of a single letter, Eskom was deemed to be showing “no commitment”.
Commitment to what, exactly?
The reply that came from Gupta and Essa is not included in the #GuptaLeaks. But the following day, an emboldened Tegeta wrote back, this time to Nteta, who reported to Bester.
“Kindly recollect our discussions in which I mentioned that we want a 10 years’ contract to satisfy our funders as the loan period is going to be more than 7 years… for the sustainability of the mines we request you to kindly consider the following changes favourably.”
Nath included his proposed changes to the wording of the contract, which would include a 10-year contract and a guaranteed 100,000 tons a month, starting in October.
At this stage, there’s clear evidence that Eskom was aware that Tegeta’s Brakfontein coal mine did not represent the best value-for-money for Majuba power station.
A list of coal suppliers disclosed in the unredacted version of the Denton’s Report shows that in 2015, Majuba power station had seven suppliers – Tegeta delivered the lowest quality coal yet commanded the highest rand per gigajoule rate.
For example, while Tegeta scored R13.50 per GJ, another Delmas-based mine, Kuyasa Mining, was paid R10.41 per GJ. And while Kuyasa as well as four other Majuba suppliers reached Eskom’s target of being 50%+1 black-owned, Tegeta had still not concluded their promised BEE deal.
It is not clear from the #GuptaLeaks what happened over the next two weeks, but on March 9, Eskom relented – Nteta wrote back to Tegeta confirming that Eskom would take 113,000 tons of coal from Brakfontein, starting in October 2015.
The following day, Eskom and Tegeta signed the Brakfontein contract worth R3.8-billion over 10 years.
An unexplained footnote to this saga is that the day after the Brakfontein contract was signed, Eskom’s board suspended four senior executives, including chief executive Tshediso Matona and Matshela Koko, group executive for commercial and technology.
Of the four suspended, only Koko would eventually be reinstated.
March 2015: Problems emerge
Tegeta was due to start delivering coal on 1 April 2015, provided that its coal first passed a combustion test at Eskom’s Research, Testing and Development lab in Germiston – this was not as simple as it sounds since Tegeta’s blended coal had failed to pass two previous tests.
The results of the combustion test, conducted by Eskom’s special-purpose built lab, were delivered two days after the contract was signed. The report, which forms part of an ongoing investigation by Treasury, concluded that Brakfontein’s coal was “not suitable for all power stations”.
Of the 14 power stations in Eskom’s fleet, the coal was considered “not acceptable” for 10, while four were considered “marginal”. Majuba, where Brakfontein’s coal was contracted to go, was one of the power stations marked “not acceptable”.
In particular, the report warned that Tegeta’s plan to blend higher and lower quality coal was risky, saying: “…producing a consistent blend … is difficult to maintain. This can result [in] producing a blend with a hardgrove [index] which is worse than the one analysed, and also surpassing the … ash and CV rejection limit.”
In other words, the coal from Brakfontein mine was too marginal, the risk of the coal quality dipping below the rejection limit on a regular basis too high.
At this point, Eskom should have told Tegeta the deal was off. Instead, Eskom ignored its own technical experts and okayed Tegeta to start delivering coal to Majuba.
March 2015: Ben’s Board
By this point, the Guptas were also starting to throw their weight around with the Eskom board.
On March 19, Nazeem Howa, then-chief executive of Oakbay Investments, sent Salim Essa a statement that he had drafted for the Eskom board to send out announcing that it had decided to relieve chairman Zola Tsotsi of his duties.
In the email Howa refers to the statement as “a first draft”, saying to Essa: “Let me have your thoughts and I will work to polish further.”
Although Tsotsi would only step down two weeks later, it appears the Guptas were not only given advanced warning that the Eskom chairman would resign, but had taken the liberty of drafting a statement for the new chairman, Ben Ngubane.
On Thursday, Tsotsi said he was “not surprised” that the Guptas were privy to information about his removal:
“I suspected my removal was orchestrated by them. In fact, the Guptas told me a couple of weeks before, at the State of the Nation Address [February 12], that if I would not co-operate with them that they will see to it that I am removed as they were the ones who made sure that I was retained as chairman.”
Tsotsi said that at the time he was not aware that his replacement, Ngubane, and several members of the Eskom board had connections to the Guptas.
The #GuptaLeaks show that Ngubane and Essa were already well-acquainted, being business partners in Gade Oil and Gas, a company that tried to gain oil concessions in Central African Republic in 2013.
Two weeks later, the day after Tsotsi resigned, Howa sent Essa an “amended version of the statement for Ngubane, “for your approval”.
The statement that Ngubane released on behalf of the Eskom board later that day differs substantially from Howa’s final draft, but Howa’s fingerprints are clear in a few of his sentences that survived.
One of Howa’s phrases that did not make it into the final statement was that the board “will not tolerate incompetence, tardiness, any dereliction of duty from any member of the Eskom team, saying:
“We know that there is no alternative but to implement several radical solutions.”
Things were about to get a lot more radical at Eskom.
April 2015-June 2015: Enter Molefe and Singh
With Eskom chief executive Tshediso Matona on suspension, Minister Brown announced that she would be moving Transnet chief executive Brian Molefe across to Eskom. Coming with him would be Transnet chief financial officer Anoj Singh.
Invoices show that Singh had already made four trips to Dubai by this point, where he stayed in the luxury Oberoi Hotel, enjoyed spa treatments and was chauffeured around in a limo – all paid for by the Guptas’ Sahara Computers.
Although there’s no record of Molefe visiting the Guptas in Dubai, the Public Protector’s State of Capture report detailed 58 phone calls between Molefe and Ajay Gupta starting soon after Molefe joined Eskom.
The arrival of Molefe and Singh at Eskom ushered in a new era for the Guptas’ mining ambitions.
When Tegeta started delivering coal to Eskom’s Majuba power station in April 2015 production was slow – just 54,041 tons in the first month – but deliveries soon ramped up and by July, Tegeta was delivering and being paid for more than 100,000 tons; far more than the 65,000 tons Eskom agreed to take for the first six months of the contract.
Considering that Tegeta had scored a 10-year contract without participating in a competitive bidding process, this was a major triumph.
But Tegeta now wanted more.
In a new proposal sent to Eskom in June, Tegeta proposed that come October, its mine would deliver 200,000 tons of coal to Eskom, up from the already inflated 113,000 tons agreed to in the contract.
Eskom agreed, provided that Tegeta’s coal passed the required qualify tests. However, as production volumes increased at Brakfontein mine so too did the problems.
A technical report commissioned by Treasury and based on documents from Eskom shows that in August 2015, 34% of Tegeta’s stockpiles were rejected because the quality did not meet Eskom’s specifications.
Eskom insists it did not pay Tegeta for stockpiles that were rejected, but the records provided to Treasury show that Tegeta was still paid for well over 65,000 tons of coal it was contracted to deliver – R35.3m for 122,617 tons in July, R33.2m for 112,207 tons in August, R42m for 139,386 tons in September.
August 2015: Problems emerge
By the end of August 2015, Eskom could not ignore the problems with Tegeta’s coal.
On August 31, Koko – who had recently been reinstated to his position as group executive of technology and commercial – suspended Tegeta’s contract as well as two independent laboratories that were testing Tegeta’s coal.
The suspension of its contract came at an inopportune time for Tegeta. Just three days before Tegeta had written to Eskom with yet another offer, this time to supply an additional 150,000 tons of coal a month – Tegeta would source the coal from other mines and blend it, not as a middleman per se, but a “value-adding trader”.
For most junior coal suppliers, the suspension of a coal contract would be a major crisis. Tegeta seemed undeterred. On September 4, Tegeta increased their offer to supply coal as a value-adding trader to 200,000 tons.
At the same time, Nath wrote back to Koko explaining that despite accredited independent laboratories rejecting numerous samples of being too high in sulphur, Tegeta’s own in-house tests found the sulphur levels to be acceptable.
There is no indication in the #GuptaLeaks that Tegeta sent the result of the in-house tests to Eskom. Despite this, Nath’s letter seems to have sufficed. The following day, Koko lifted Tegeta’s suspension “whilst [Eskom] continues its investigation”.
Koko would later claim in an interview that their investigation found that one of the labs was at fault, saying: “…We had conclusive proof that this lab was fabricating results … that is why we suspended them,” Koko told Carte Blanche in June 2016.
However, an October 2015 report by Dr Chris van Alphen, Eskom’s chief adviser on coal quality, lays the blame squarely on Tegeta and its apparent inability to produce a consistent blend of coal.
According to a technical report prepared for Treasury’s investigation, when three labs analysed what were supposed to be identical samples of Brakfontein’s coal from August 2015, the results varied so dramatically that one technician remarked: “They do not look like the same coals never mind the same samples.”
For Tegeta it was business as usual, but the episode also resulted in four Eskom employees being suspended including Dr Mark van der Riet, Eskom’s most senior coal scientist who was tasked with investigating the discrepancies in Brakfontein’s coal qualities.
Almost two years later, Van der Riet remains on suspension. After Van der Riet and his union representative approached the Labour Court, Eskom finally agreed to hold an internal disciplinary hearing later this month.
“If Mark’s matter is such a serious matter why has it taken more than a year for Eskom to deal with it? Eskom seems to be using delaying tactics, hoping the employee will eventually resign,” Numsa’s Bonny Nyangwa said on Wednesday.
Eskom’s official line is that Van der Riet’s 22-month suspension is not linked to his role in investigating Brakfontein’s coal qualities.
Nyangwa disputes this, and confirmed that Eskom added new charges against Van der Riet earlier this month: breaching Eskom’s confidentiality policy by allegedly forwarding information about the Brakfontein investigation to his personal email address.
September 2015: Tegeta ups the game
Even after Tegeta’s contract was reinstated, Brakfontein’s coal continued to periodically fail lab tests, according to Treasury’s technical report.
In September 2015, for instance, 38% of Tegeta’s stockpiles were rejected, most for having excessively high sulphur levels, the cause of toxic sulphur dioxide air pollution.
There’s no evidence that Eskom was deeply concerned by this development. Instead, starting October, Tegeta increased deliveries to Majuba power station to more than 200,000 tons a month.
Keep in mind that this was during summer, when Eskom’s coal requirements have always been lower. Despite this, Tegeta was now delivering three times what was originally agreed to in the January 2015 negotiations with Eskom.
For the next several months, Tegeta reaped the rewards despite there being no evidence that any other mines were given an opportunity to bid to supply extra coal to Majuba.
At the same time Tegeta was also pushing Eskom to agree to their long-standing proposal to become a “value-adding trader”. Finally, at the end of September, Eskom official Thabani Mashego pushed back.
In a tone that the Guptas must have been unused to hearing, Mashego told Tegeta chief executive Ravindra Nath in an email:
“Eskom will be going out on open enquiry to fulfil their coal shortfall requirements going forward. Tegeta is therefore advised to respond to such enquiries, which will be advertised in the print media and the Eskom Tender Bulletin shortly.”
Nath wrote back the next day, essentially instructing Eskom to sign the contract.
“[W]e have to advise that on the basis of the letter and the subsequent meeting thereafter we have already tied up the coal offtake and it is not possible to come out of it. We therefore request you to arrange for the contract in this regard.”
It is not clear whether Eskom capitulated and signed this contract – this is one of the many questions that Eskom chose not to answer. Either way, Tegeta did not need this off-take agreement – it was about to become a major coal supplier to Eskom.
April 2015-December 2015: Next Target: Optimum
It is worth taking a step back for a minute to understand how the Glencore-owned Optimum coal mine became a target in Tegeta’s rapidly expanding coal empire.
Hidden in the #GuptaLeaks is a letter addressed to Glencore’s chief executive Clinton Ephron. Dated April 13, the letter was from Dam Capital, representing the little-known Endulwini Consortium, and contained an offer to buy Optimum Coal as well as Optimum’s Richards Bay export allocation for $200-milllion.
“We have commenced putting together a consortium of South African investors, led by Black people, with an established presence in the mining industry,” the letter reads, “[t]he identity of whom will be disclosed as we reach an agreement that the assets are available for sale.”
No more is heard from Endulwini or Dam Capital in the cache of leaked emails, and it is not clear if the Guptas were the anonymous investors referred to in the letter.
What we do know from the Public Protector’s report is that in July, Glencore received an almost identical offer to buy Optimum Coal from KPMG representing an anonymous client.
When Glencore questioned KPMG it discovered the bid had come from Oakbay.
Glencore refuses to comment on the Dam Capital offer, and we know from the Public Protector’s report that it rejected the similar overtures by KPMG.
Soon though, Glencore was facing new problems from Eskom as newly appointed Eskom chief executive Brian Molefe took a hardline approach, refusing to renegotiate the price Eskom paid for Optimum’s coal.
At R150/ton Optimum was sinking deeper and deeper into financial trouble. In August, Glencore placed the mine in business rescue in a bid to stave off liquidation, but Molefe remained unmoved.
Instead it is alleged that Molefe and Eskom chairman Ben Ngubane tried to persuade mines’ minister Ngoako Ramatlhodi to cancel Glencore’s other mining rights in a bid to force Glencore to capitulate.
On August 7, after Optimum’s mining licence was briefly suspended and then reinstated by the Department of Mineral Resources, a Gupta lieutenant, Ashu Chawla, received an email from someone only identified as “Business Man” using the email address “firstname.lastname@example.org”.
Attached to the email was a letter Optimum’s business rescue practitioners had sent to Eskom’s senior executives regarding Optimum’s mining right suspension.
The letter itself is not particularly explosive, but what is apparent is that someone with access to confidential information in Eskom was leaking it to the Guptas.
“Business Man” features in the #GuptaLeaks again in November when Matshela Koko forwarded two emails from his private Yahoo email address to “Business Man”, both containing confidential Eskom information.
In one, Koko asks “Business Man” to pass the Eskom documents on to “the Boss” – the email was then forwarded to “Western”, another anonymous email address that appears to be a proxy for one of the Gupta brothers.
In the second email Koko passed on a sensitive legal opinion exposing how weak Eskom’s position was in their ongoing battle with Optimum Coal. Again, “Business Man” and “Western” passed these on to Chawla.
A day later, Koko sent a particularly vitriolic letter to the business rescue practitioners, threatening to review all of Glencore’s other Eskom contracts – it is not clear how, but the #GuptaLeaks show that Tony Gupta was given an advanced copy of Koko’s letter.
A few days later, the business rescue practitioners signed a term sheet with the Guptas, formally entering negotiations to sell Optimum Coal.
We can also see from the #GuptaLeaks that on December 2, when mines minister Mosebenzi Zwane failed to board his official flight from Zurich to Dubai, he was allegedly on board the Guptas’ Bombardier jet, ZS-OAK, along with Tony Gupta and Salim Essa.
The former Public Protector’s report concluded that Zwane had played a central role during the negotiations in Zurich where Glencore agreed to sell Optimum to the Guptas.
What her report was unable to explain however was how the minister got from Zurich to Dubai – from the #GuptaLeaks we now have evidence that Zwane spent the next two days in India with the Guptas before flying back to Dubai and catching his official flight back to Johannesburg.
December 2015: The R1.68-billion prepayment
By early December, the Guptas were finally about to get their hands on Optimum Coal.
Thanks to Koko, insisting at the last minute that Glencore sell the entire Optimum Coal Holdings portfolio, Tegeta would not only be buying the loss-making Optimum Coal Mine, but also Koornfontein Mines and a 5.5m-ton/year export allocation at Richard’s Bay.
Tegeta now needed to find a way to pay for it. The problem was that Tegeta would not be paying the R2.15-billion purchase price to Glencore, but to a consortium of three banks which had loaned money to Glencore during a period of several years.
On December 8, Tegeta chief executive Ravindra Nath met with First National Bank, Investec and Rand Merchant Bank and put a proposal on the table: Tegeta would settle an undisclosed portion of the debt now and the rest would be paid to banks in 11 monthly instalments.
The banks politely but firmly declined and told Tegeta they wanted the full debt settled.
Around the same time, Tegeta also called a meeting with Koko. We know about this meeting because it is referred to in a letter sent to Koko on December 9 and disclosed in the #GuptaLeaks.
Based on the letter we can deduce that Eskom agreed in principle to give Tegeta a massive R1.68-billion upfront payment for future coal deliveries from Optimum Coal.
It appears from the #GuptaLeaks that Tegeta wanted to use their yet-to-be acquired mine to secure a sizeable chunk of money from Eskom – money that could then be used to pay the purchase price of Optimum.
Tegeta appears to have been so confident of receiving the payment that Koko was requested “to kindly send us a written confirmation regarding the payment for supply of coal amounting to R1,680,000,000 (Rand one billion six hundred and eighty million)”.
Nath finished off his letter by attaching the Guptas’ lawyers bank details to the bottom of the page.
It is not clear from the #GuptaLeaks if Tegeta received the R1.68-billion prepayment it requested. On the same day Koko received the prepayment request, Zuma fired Nhlanhla Nene as finance minister, triggering the political equivalent of a nuclear bomb ripping through the markets.
By Monday 14 December, sanity had prevailed and the Guptas’ hand-picked finance minister Des van Rooyen was shifted out of Treasury.
It is possible that the entrance of Pravin Gordhan as finance minister put any plans of a R1.68-billion prepayment on hold. But the Optimum deal was by no means off the table.
On December 16, Eskom CFO Anoj Singh flew to Dubai – the trip, paid for by the Guptas, cost AED20454 (R71,610). In January, Koko followed suit, staying at the Oberoi Hotel for two nights at the Guptas’ expense.
The #GuptaLeaks provide no detail on whether Singh or Koko met with the Guptas during this time or what they spoke about if they did. However, based on the largesse that was about to flow in the Guptas’ direction, we should be deeply concerned by meetings such as these.
January 2016: A red-carpet welcome
Although Tegeta would only formally take ownership of Optimum Coal in April, from January 1, Tegeta was running the mine for its own profit or loss.
Tegeta was now supplying Majuba power station from their Brakfontein mine, Hendrina power station from Optimum, and Komati power station from Koornfontein mine.
The great mystery of the Guptas’ bid to grab Optimum was how they planned to turn a mine that was haemorrhaging R100-million a month and turn it into a profitable venture.
The assumption was that Eskom’s reluctance to renegotiate the price of R150/ton that Optimum received would fall away as soon as the Guptas took over the mine.
But Eskom’s refusal to renegotiate the price had become such a cornerstone of Eskom’s fight with Glencore that there was no way to change the price now.
The dilemma was quickly solved because by January, Eskom had conveniently cleared the way for Optimum to start supplying coal to Arnot power station in Mpumalanga.
In 2015, Eskom had taken the decision not to renew Exxaro’s cost-plus contract to supply Arnot as the price Eskom paid for the coal had become unsustainably high, sometimes exceeding R1,000/ton.
That decision may have made financial sense. What made less sense was Eskom’s decision to terminate a second Arnot contract, this time with Mafube, a joint venture between Exxaro and Anglo American that mines coal just north of the N12 highway and supplies it via a long conveyor belt system to Arnot power station.
Eskom’s Denton’s report shows that in July 2015, Mafube provided the cheapest coal on Eskom’s books at a fixed price of R132/ton. The coal was not great quality, but since 2004 the mine had delivered 1.18m tons a year to Arnot power station.
According to Denton’s report the contract was due to run until the end of 2023. Exxaro’s spokesperson Mzila Mthenjane will only say that the contract came to an end.
However, Exxaro’s own annual report refers to “Eskom’s decision to terminate the Mafube supply agreement”, and according to a source familiar with the operations, the contract was cancelled without reason in December 2015.
By the end of January, a steady stream of 30-ton coal trucks was running from Optimum mine to Arnot power station roughly 60km away.
And while Optimum received R150/ton for coal delivered to Hendrina power station, Optimum scored R470/ton for coal delivered to Arnot power station, excluding transport costs. The cost of transporting the coal – another R60/ton or R1,800/truck – was paid by Eskom.
Eskom maintains that the coal delivered to Arnot justified a higher price on the basis that the coal had a lower abrasiveness index – this version is disputed by numerous sources familiar with the on-the-ground operations.
Later, when demand for coal at Arnot rose, and Optimum no longer had enough coal to supply both contracts, Eskom appears to have obligingly reduced the amount of coal Optimum was required to deliver to Hendrina power station, freeing up additional coal for the more lucrative Arnot contract.
January 2016-February 2016: Brakfontein goes on sale
Around the same time, Tegeta announced it would sell Brakfontein mine with its Eskom contract to Shiva Uranium, a subsidiary of the Guptas’ listed company Oakbay Resources and Energy – Tegeta would transfer Brakfontein and all its contracts to Shiva and in exchange Tegeta would receive shares in Shiva worth R2.1-billion.
On February 24, Oakbay’s shareholders approved the deal, and Brakfontein became part of the newly formed Shiva Coal. However, even though the mine changed hands, Eskom kept paying Tegeta for the coal.
AmaBhungane discovered this after submitting a PAIA request to Eskom for a list of Eskom’s coal suppliers and their percentage of black ownership – the list we received in March this year did not include Oakbay or Shiva.
In terms of the Public Finance Management Act, Eskom has to pay the rightful owner of the coal it receives. However, Eskom’s own records show that Tegeta continued to receive payments for Brakfontein’s coal for months after the mine was sold.
Sources say that as of last month Tegeta was still receiving the payments for Brakfontein’s coal.
When we queried this with Eskom in a meeting in April, Ayanda Nteta, the outspoken executive from the 2014 meetings, told us: “In terms of Brakfontein, my understanding is that Shiva Uranium has bought in shares in terms of Brakfontein so there was a flow through… The contract we have is with Tegeta, that’s why … Shiva wouldn’t be listed.”
In fact, Shiva did not buy the shares in Brakfontein or Tegeta. Instead the circular is explicit that Shiva bought the mine with its contract. Shiva is now the rightful owner of the coal, but instead Eskom is continuing to pay Tegeta.
“We will look into that. Our legal people understand in terms of the flow through and who bought the shares,” Nteta said.
Eskom has failed to respond to any follow-up questions on the issue. Questions were also sent to Oakbay Resources & Energy two weeks ago – chairman George van der Merwe responded last week confirming that Shiva had bought the Brakfontein mine with its contract but offered no explanation for why Tegeta was still being paid.
February 2016: Briefly empowered, always empowered
It is hard to imagine why a JSE-listed company like Oakbay would allow Eskom to pay another company for its coal. The answer may lie in Eskom’s requirement that its coal suppliers be 50%+1 black-owned.
“We have a shareholder compact which targets us to spend at least 40% of our total procurement on black suppliers. Coal being the biggest commodity, the more we can do it on coal the easier it gets,” Edwin Mabelane, Eskom’s head of procurement, told amaBhungane.
When the original Brakfontein contract was signed in 2015, it contained a suspensive condition – Tegeta needed to reach Eskom’s black empowerment target of 50%+1 by 2018 and remain empowered for the rest of the contract.
“In terms of [Tegeta’s] contract, they were given a certain period; we said to them, ‘You have a [10-year] contract, you need to move to black-owned within a certain amount of time,’” Nteta confirmed.
In November 2015, just before Tegeta bought Optimum Coal, Tegeta reached that target when Duduzane Zuma and Salim Essa became shareholders through Elgasolve and Mabengela Investments respectively.
As a result, Tegeta’s black-owned shareholders own 775 shares versus the 774 shares held by Oakbay and several off-shore companies – through a byzantine share structure the majority of control still rests with members of the Gupta family and two Gupta-controlled companies registered in Dubai.
However, this raises an interesting question: if Shiva takes possession of the contract as it is legally entitled to do, would Shiva be required to become 50%+1 black-owned by next year?
And if Shiva failed to become majority black-owned, would Eskom be entitled to cancel the contract even though it is still scheduled to run until 2025?
In other words, for the Brakfontein contract, does once empowered (albeit briefly) mean always empowered?
Currently, Shiva is 41% black-owned thanks to Tegeta and another Duduzane Zuma-owned company, Islandsite Investments 255. However, due to the complicated share structure, more than 50% of the Shiva is owned by members of the Gupta family.
April 2016: Eskom asks Treasury for even more
It has been well-established that throughout 2016, Tegeta raked in almost R1-billion from their “emergency” contract supplying coal to Arnot power station.
Unfortunately, the #GuptaLeaks provide no further detail on the Guptas’ dealings with Eskom beyond the early negotiations in 2016.
In April 2016, Eskom delivered on part of the prepayment Koko promised when, in a late-night special tender committee meeting, Eskom agreed to prepay Tegeta R587-million for coal. Eskom’s decision came just hours after the consortium of banks refused to provide Tegeta with a R600-million bridging loan.
In August, Treasury refused Eskom’s request to extend Tegeta’s contract to supply Arnot power station by another R855-million over six months.
However, Treasury gave conditional approval to Eskom to sign a R7-billion expansion to the Koornfontein contract to supply Komati power station for the next seven years, provided that there were no other potential suppliers. Eskom appears to have ignored this condition and handed the contract to Tegeta two weeks later.
By this point, Brakfontein’s deliveries to Majuba power station were back down to the contractual 113,000 tons of coal a month.
A few days later, Eskom returned to Treasury with a new request – Brakfontein had more coal to offer and Eskom wanted to extend the contract by another R2.9-billion.
During the interview in April this year, Eskom explained that the request for a R2.9-billion expansion of the Brakfontein contract was as a result of Eskom’s earlier agreement from June 2015 to increase deliveries to Majuba power station to 200,000 tons of coal a month.
“What Eskom decided to do was [to be] more proactive – because actually it was agreed on prior and we should have just continued – we opted to inform National Treasury to say, ‘By the way we were supposed to get [a certain number of tons] and this [additional amount] was supposed to kick in in October. We would like to now exercise this requirement,’” Nteta said.
What Eskom was asking for was to increase the already inflated contract from R3.8-billion to R6.7-billion. Treasury baulked and told Eskom it could not support Eskom’s decision to take further coal from Brakfontein until the year-long Treasury investigation was completed.
2017: Eskom on the ropes
We’re now in mid-2017 and the empire that the Guptas built at Eskom is crumbling.
Brian Molefe has been removed as chief executive, Matshela Koko is under investigation and unlikely to return to his position as acting chief executive.
Meanwhile both Parliament and Treasury are demanding answers to know why Eskom rolled out red-carpet treatment for the Guptas.
By our calculation the Guptas have received contracts worth R11.7-billion from Eskom for coal alone.
None of these contracts was awarded as the outcome of a competitive bidding process, and the R11.7-billion does not include the contracts that Tegeta inherited when it bought Optimum Coal, nor does it include invoices totalling R419-million for management consulting and advisory services delivered to Eskom by Trillian Capital Partners, a company majority owned by Salim Essa.
Last week, we wrote to Eskom asking how it planned to deal with allegations contained in the #GuptaLeaks considering that Eskom’s former chief executive (Molefe), Eskom’s former acting chief executive (Koko), Eskom’s chief financial officer (Singh), Eskom’s chairman (Ngubane) and half of Eskom’s board were named and potentially implicated by the emails.
Eskom chose not to respond to the three pages of questions we sent; instead spokesperson Khulu Phasiwe said Eskom supports minister Lynne Brown’s decision to institute an investigation via the Special Investigating Unit into all the allegations against Eskom and will fully co-operate with the investigation.
“As you may be aware, the Minister of Public Enterprises Lynne Brown said … that she is in the process of instituting an inquiry into these allegations with the aim of getting to the bottom of these matters once and for all.
Eskom supports the establishment of this enquiry, and will co-operate with the investigators once that process gets underway.
In addition, the National Treasury has also been investigating these contracts since July 2015, and as the Treasury has informed Scopa … it is happy with the level of co-operation it is getting from Eskom in getting to the bottom of these allegations.”
The Gupta family’s lawyer did not respond to similarly detailed questions, but told amaBhungane that the Guptas could not comment on the #GuptaLeaks until they had a copy of the leaks in their possession.
Zuma’s state legal adviser, Bonisiwe Makhene-Gadini, takes secrets to her grave
With her death at the age of 53 on 26 August, advocate Bonisiwe Makhene-Gadini, Jacob Zuma’s former state legal adviser, takes to her grave many secrets surrounding former president Jacob Zuma’s tumultuous term of office.
Apart from her career with the Department of Justice and Constitutional Development, which began in 1994, advocate Bonisiwe Makhene-Gadini found herself in the headlines more due to the activities of her husband, the State Security Agency (SSA) rogue spy Yekani Gadini.
Both Makhene-Gadini and Yekani Gadini had access to former president Jacob Zuma’s inner circle.
Yekani Gadini was connected to a rogue outfit in the SSA, the Special Operations Unit (SOU), which had close connections with Zuma and was found by the High Level Review Panel on the SSA to have been a parallel and illegal intelligence structure. The SOU was headed by Zuma’s “personal” spy Thulani Dlomo.
Yekani Gadini was also implicated in the SOU’s attempt to set up the bogus Workers Association Union (WAU) in 2014, allegedly at the behest of Zuma, and to counteract the Association of Mineworkers and Construction Union’s popularity in the North West Platinum Belt at Marikana.
The spy’s role was exposed when Thebe Maswabi, founding member of the WAU, launched a R120-million civil claim against Zuma and then State Security Minister David Mahlobo, when funding to his union dried up. The cellphone number used to register WAU at the Department of Labour had belonged to Gadini.
Unlike President Thabo Mbeki’s legal adviser, Mojanku Gumbi, who was drawn from the ranks of Azapo, Makhene-Gadini’s political heartland was the ANC.
Her appointment in 2009 as Zuma’s legal adviser was seen at the time as an attempt by the governing party to drive the transformation of the judiciary according to a resolution adopted at the ANC’s national congress at Polokwane in 2008.
Shortly after he was elected president in 2009, Zuma collected around him an informal team of advisers who would become known as the “engine room”.
Much to the displeasure of tripartite alliance members the SACP and Cosatu, Zuma relied on these individuals instead of the ANC’s alliance partners to restructure the government and determine policy direction after the Mbeki years.
“By the time our team was established, President Zuma had established this team in secret without informing alliance leadership and they had already done some work,” SACP deputy general secretary Solly Mapaila told the Sunday Times in 2019.
Mapaila at the time said that testimony would be given to the Zondo Commission of Inquiry that it was here, in the “engine room” that policymaking “shifted from the ANC to an unknown secret system”, marking the beginning of what was to become the political project of capturing the state.
The alliance’s “transitional team” had included the ANC top six officials as well as the SACP and Cosatu general secretaries, Blade Nzimande and Zwelinzima Vavi, together with Ayanda Dlodlo, Neil Coleman and Clifford Motsepe. The secretariat was headed by the late Collins Chabane.
Bonisiwe Makhene-Gadini was invited to be part of Zuma’s original engine room along with Thuli Madonsela, Nathi Nhleko, Riah Phiyega, Glen Mashinini, Vincent Magwenya and Mandla Sithole NoZulu. Also linked to the “engine room” was filmmaker Duma Ndlovu.
While Madonsela soon distanced herself from the group, almost everyone else went on to be appointed to key positions in the Zuma administration, including Makhene-Gadini as his legal adviser.
Prior to this, Makhene-Gadini was the DOJ’s director of policy research. In that position she played a central role in drafting at least five judicial reform bills which were introduced in 2004, prompting criticism and an outcry from the judiciary and the legal profession.
The Superior Courts Bill and the Fourteenth Amendment Bill were later reintroduced to Parliament, unaltered, where they faced further opposition before being scrapped by the then president Thabo Mbeki.
Writing in 2007, Amy Gordon and David Bruce, in a paper for the Centre for the Study of Violence and Reconciliation, noted that:
“The saga of the justice bills, ostensibly intended to improve court management and efficiency, rationalise court structures and promote transformation of the judiciary, has been one of the biggest tests for judicial independence in the post-apartheid period.”
While Makhene-Gadini was Zuma’s official state legal adviser, the president also appointed Michael Hulley as his legal adviser in November 2011 “on a part-time basis”. Hulley raked in around R25-million in legal costs over the years as Zuma fought off various legal challenges.
Makhene-Gadini began her career in 1994 as a legal admin officer at the Department of Justice and Constitutional Development before being appointed as a special adviser to the then justice minister, Dullah Omar, between 1997 and 1999.
Between 1999 and 2003 she was a special adviser to Minister Penuell Maduna and assigned as company secretary for the justice ministry board of directors.
She was seconded as legal adviser to Zuma between 2009 and 2018. After this, she was appointed deputy state law adviser before taking up her position in January 2020 as acting head of the Justice College, where she was employed at the time of her death.
Other high-profile matters which have involved Makhene-Gadini include an attempt by Zuma to force National Director of Public Prosecutions Mxolisi Nxasana out of office by offering a “settlement proposal”.
Nxasana met with Zuma, his attorney Hulley and Makhene-Gadhini a day before Nxasana’s appointment as NDPP in 2013. When he proved too independent-minded a plan was put in motion to remove him.
Nxasana has given explosive testimony to the Zondo Commission that he did not approach Zuma to ask to be removed from the position, as the former president has stated.
It was Makhene-Gadini, the commission heard, who had presented Nxasana’s lawyer, Busani Mabunda, with a “settlement proposal” for the NDPP to be released before his term of office had expired. Zuma had also set up an inquiry, chaired by advocate Nazeer Cassim, into Nxasana’s fitness to hold office.
Nxasana was replaced in 2015 by Zuma with the now-disgraced Nomgcobo Jiba.
In 2014 Makhene-Gadini and the then police commissioner, Riah Phiyega, a friend, rushed to the Wierdabrug police station to release Yekani Gadini, who had been kidnapped by his colleagues in the SSA and stuffed in the boot of a VW Polo.
The abduction occurred, wrote Pieter-Louis Myburgh, after Gadini had met with senior SARS officials, and his kidnappers had believed the spy was in possession of documents incriminating SSA agents and tobacco bosses.
Makhene-Gadini, sources told Myburgh, had contacted police personally when she learnt of her husband’s abduction.
Makhene-Gadini’s memorial service takes place on 1 September. She takes to the grave the secrets of a president who has been placed at the centre of the capture of the South African state. DM
Hit Men and Power: South Africa’s Leaders Are Killing One Another
UMZIMKHULU, South Africa — Their fear faded as they raced back home, the bottle of Johnnie Walker getting lighter with each turn of the road.
Soon, Sindiso Magaqa was clapping and bouncing behind the wheel of his beloved V8 Mercedes-Benz, pulling into familiar territory just before dark.
Minutes later, men closed in with assault rifles. Mr. Magaqa reached for the gun under his seat — too late.
One of his passengers saw flashes of light, dozens of them, from the spray of bullets pockmarking the doors.
The ambush was exactly what Mr. Magaqa had feared. A few months before, a friend had been killed by gunmen in his front yard.
Then, as another friend tried to open his front gate at night, a hit man crept out of the dark, shooting him dead.
Next came Mr. Magaqa, 34. Struck half a dozen times, he hung on for weeks in a hospital before dying last year.
All of the assassination targets had one thing in common: They were members of the African National Congress who had spoken out against corruption in the party that defined their lives.
“If you understand the Cosa Nostra, you don’t only kill the person, but you also send a strong message,” said Thabiso Zulu, another A.N.C. whistle-blower who, fearing for his life, is now in hiding.
“We broke the rule of omertà,” he added, saying that the party of Nelson Mandela had become like the Mafia.
Political assassinations are rising sharply in South Africa, threatening the stability of hard-hit parts of the country and imperiling Mr. Mandela’s dream of a unified, democratic nation.
But unlike much of the political violence that upended the country in the 1990s, the recent killings are not being driven by vicious battles between rival political parties.
Quite the opposite: In most cases, A.N.C. officials are killing one another, hiring professional hit men to eliminate fellow party members in an all-or-nothing fight over money, turf and power, A.N.C. officials say.
The party once inspired generations of South Africans and captured the imagination of millions around the world — from impoverished corners of Africa to wealthy American campuses.
But corruption and divisions have flourished within the A.N.C. in recent years, stripping much of the party of its ideals.
After nearly 25 years in power, party members have increasingly turned to fighting, not over competing visions for the nation, but over influential positions and the spoils that go with them.
The death toll is climbing quickly. About 90 politicians have been killed since the start of 2016, more than twice the annual rate in the 16 years before that, according to researchers at the University of Cape Town and the Global Initiative Against Transnational Crime.
The murders have swelled into such a national crisis that the police began releasing data on political killings for the first time this year, while the new president, Cyril Ramaphosa, has lamented that the assassinations are tarnishing Mr. Mandela’s dream.
But Mr. Ramaphosa is struggling to unite his fractious party before elections next year and has done little to stem the violence.
His administration has even resisted official demands to provide police protection for two A.N.C. whistle-blowers in the case surrounding Mr. Magaqa’s murder, baffling some anti-corruption officials.
The funeral for Sindiso Magaqa, the most prominent African National Congress politician assassinated so far, in Umzimkhulu last September.Credit...Thuli Dlamini/Sunday Times, via Getty Images
The recent assassinations cover a wide range of personal and political feuds. Some victims were A.N.C. officials who became targets after exposing or denouncing corruption within the party. Others fell in internal battles for lucrative posts. In rural areas — where the party has a near-total grip on the economy, jobs and government contracts — the conflict is particularly intense, with officials constantly looking over their shoulders.
Mr. Magaqa’s province, KwaZulu-Natal, is the deadliest of all. Here, 80 A.N.C. officials were killed between 2011 and 2017, the party says. Even relatively low-level ward councilors have bodyguards, and many politicians carry guns themselves.
“It was better before we attained democracy, because we knew the enemy — that the enemy was the regime, the unjust regime,” said Mluleki Ndobe, the mayor of the district where Mr. Magaqa and five other A.N.C. politicians have been assassinated in the past year.
“Now, you don’t know who is the enemy,” he said.
More than any other, the death of Mr. Magaqa, the most prominent politician assassinated so far, has focused attention on the deadly scramble within the party that helped bring democracy to South Africa.
A rising star in the A.N.C. who had become a national figure, Mr. Magaqa returned to local politics in his hometown, Umzimkhulu. After accusing party officials of pocketing millions in the failed refurbishment of a historic building, Mr. Magaqa and two of his allies were killed in rapid succession.
Many others have suffered similar fates. This month in Pretoria, the capital, an A.N.C. councilor who had called for an inquiry into government housing was gunned down while driving her car with her three children. A few months earlier, a party official in a neighboring ward was shot dead near his home after exposing the shoddy quality of public housing.
In Mpumalanga, the province of Deputy President David Mabuza, an A.N.C. city council speaker was gunned down in front of his son outside his home after exposing corruption in the construction of a soccer stadium.
Here in KwaZulu-Natal, an A.N.C. councilor critical of corruption was shot to death last year while escorting a friend to her car. In March, an A.N.C. municipal manager known to be tough on corruption was gunned down behind a police station by two hit men. And this month, in a rare arrest, an A.N.C. councilor and the son of an A.N.C. deputy mayor were charged in the killing of an A.N.C. official who had led protests against corruption.
But few other political figures have been arrested in such killings, adding to a widening sense of lawlessness.
President Cyril Ramaphosa of South Africa, center, waving to supporters at an A.N.C. event near Durban this month.Credit...Rajesh Jantilal/Agence France-Presse — Getty Images
“The politicians have become like a political mafia,” said Mary de Haas, an expert on political killings who taught at the University of KwaZulu-Natal. “It is the very antithesis of democracy, because people fear to speak out.” For good reason. After Mr. Magaqa’s death, Mr. Zulu, the whistle-blower now in hiding, loudly condemned corruption in Umzimkhulu. The impoverished municipal government spent a large chunk of its budget to refurbish a historic building called the Memorial Hall. But after five years and more than $2 million in public money, the project was a sinkhole of dubious spending, with little to show for it. For breaking the code of silence, Mr. Zulu and another party official are now in grave danger, according to a 47-page report released in August by the Office of the Public Protector, a government authority that investigates corruption. The two whistle-blowers, the report said, fear that “they may be assassinated at any time.” The Public Protector’s office urged the national police to provide security for the whistle-blowers and reprimanded Mr. Ramaphosa’s police minister for being “grossly negligent” in failing to do so. But the police minister rejected the report and moved to challenge it in court. The Public Protector had a message for Mr. Ramaphosa as well: The president should “take urgent and appropriate steps” to protect the whistle-blowers. But Mr. Ramaphosa has not responded. Khusela Diko, his spokeswoman, said the president is consulting his police minister. The government’s inaction reflects the A.N.C.’s inability — or unwillingness — to stop the internal warfare because it could expose the extent of corruption and criminality in its ranks, current and former party officials say. “These allegiances go all the way to the top of the party,” said Makhosi Khoza, a prominent former A.N.C. politician who works at OUTA, an organization fighting graft. “That’s why the A.N.C. is not interested in this, no matter how many murders there are.” For decades before the end of apartheid, different factions under the A.N.C.’s umbrella — communists, free marketeers, trade unionists, agents in exile — competed with one another, sometimes violently, as they fought white rule. But the recent increase in killings inside the A.N.C. is a potent reminder of how far the party has strayed from creating, in the ashes of apartheid, a political order based on the rule of law. The Public Protector’s investigation into the Memorial Hall has frozen the renovation. Umzimkhulu’s mayor, Mphuthumi Mpabanga, called the project a “dream” that would change “the lives of the people.” But it has little resonance for many in Umzimkhulu, a vast municipality with pockets of extreme poverty. Margaret Phungula, 60, carries buckets to a muddy stream six times a day for water, adding spoonfuls of chlorine. Shown a photo of the Memorial Hall, she stared blankly. “They’re not thinking of us,” she said of the town’s leaders. “We’re still suffering.”
From Idealism to Violence
In the arc of the A.N.C., Mr. Magaqa and his friends belong to the generation that includes Mr. Mandela’s grandchildren. Too young to have been politically active during white rule, they came of age in a new country — one forged by the party. Their political lives, mirroring the A.N.C.’s post-apartheid trajectory, began with youthful idealism, followed by lost innocence and, ultimately, fratricidal violence. Mr. Zulu, 36, the whistle-blower, always wanted to be an A.N.C. man. His grandmother took part in the A.N.C.-led potato boycott against apartheid in the 1950s, and he felt part of that legacy. In his late teens, he fell in with a group of politically minded young men like himself. One of them stood out immediately: Mr. Magaqa, a skinny, stubborn teenager with a bright smile. The youngest in the group, he quickly became its leader. Mr. Magaqa made a name for himself by leading a strike during high school. When students contributed money for a trip to Cape Town, the principal told them it had been put to other uses. Mr. Magaqa shut down the school for weeks. The early 2000s were a hopeful time for the young men. Their elders in the A.N.C. had gained political freedom for black South Africans, so the young men turned their attention to breaking into an economy still dominated by the white minority. Les Stuta — the second A.N.C. whistle-blower whose life is in danger, according to the Public Protector — was in the group as well. He recounted how they pledged to earn money to help their mothers, who worked as live-in maids for white families far away. “Guys,” Mr. Stuta recalled saying often, “they must come back home.” The young men traveled together across the vast stretches of the rural district to open youth league branches of the A.N.C., borrowing cars or hitchhiking. Finally, in 2004, Mr. Stuta got a car — a beat-up white Ford Escort with a sputtering 1.3-liter engine. The young men stocked it with oil and water to deal with frequent breakdowns along the dirt and gravel roads to remote villages. When Mr. Stuta could not afford to replace the starter for six months, party meetings ended with the young men pushing the car back to life. “That Ford Escort,” Mr. Stuta said, “was everything to us.”
Pattern of Kickbacks and Corruption
By 2006, Mr. Magaqa and his circle got well-paid government jobs in Umzimkhulu. He got a car of his own, with a vanity plate: “Gogwana,” the grandmother who had raised him while his mother worked in Johannesburg. When the A.N.C.’s youth league was established in Umzimkhulu, Mr. Magaqa became the chairman, beginning his rapid rise within the league — traditionally a springboard to leadership in the A.N.C. itself. But something nagged Mr. Zulu. Within a few years, the overriding pursuit of positions and money consumed his peers. Suddenly, some were taking kickbacks, drinking rare whiskeys and prodding Mr. Zulu to drop his high-mindedness. Flipping Jesus’s teaching, they often asked him: Who can live on principle alone? Soon, Mr. Zulu lost his government job and devoted himself to fighting corruption. But life was very different for his friend. At 27, Mr. Magaqa left the province for the national stage in Johannesburg. He became the A.N.C. youth league’s national secretary general, the No. 3 position, in 2011. As soon as he was appointed, he went to a car dealership in a wealthy Johannesburg suburb where he bought an icon of South Africa’s moneyed class: a Mercedes-Benz sport utility vehicle, the ML 500 4Matic. Mr. Magaqa raved about it to his friends back home — its V8 engine, the thunderous noise from the twin exhaust pipes. “He felt like he’s got money,” recalled Phumlani Phumlomo, a childhood friend. How much money Mr. Magaqa made in Johannesburg — and how — were questions Mr. Zulu preferred not to ask. “I don’t know how he acquired his money,” Mr. Zulu said. “Remember, he had access to everyone and anyone who’s big in the country.” It only lasted a few months. Mr. Magaqa fell in one of the countless shake-ups within the A.N.C. and lost his position. He drove his Mercedes straight back to Umzimkhulu and put most of his money into a minor league soccer team, the Blue Birds. He recruited the best players, lodging them in a big house with cable and PlayStations. When his team won on the road — and it won a lot — he put up the players and coach in a hotel. “But then his cash ran out,” said the coach, Mduduzi Ngubane. With his money gone, Mr. Magaqa went back to what he knew best: politics.
A Hit List: ‘After Me, It’s You’
In his political second act, Mr. Magaqa dove headlong into the issue that defined the A.N.C.: corruption. Jacob Zuma, the party’s scandal-plagued leader, was president of the nation, and more than ever, local A.N.C. politicians began killing one another over positions, contracts and jobs. In 2016, when Mr. Magaqa returned to politics, 31 politicians were assassinated, double the number from the year before, according to the tally by researchers. Of that total, 24 were killed in his province. With the backing of regional A.N.C. power brokers, Mr. Magaqa became a councilor in Umzimkhulu and a member of its decision-making body, effectively becoming the leader of an insurgent A.N.C. faction. The sudden return of a political star, someone who could still call on powerful figures in Johannesburg, was seen as an immediate threat to his party rivals in Umzimkhulu. “He was too ambitious,” said the municipal manager, Zweliphansi Skhosana. “That was the problem that he had.” Mr. Skhosana, a former high school teacher, knew Mr. Magaqa all too well. He had taught the young man from 10th grade through 12th grade. The two stood on opposing sides during the strike over money for the Cape Town trip. Now they were facing off again. Regarded as the real power behind Umzimkhulu’s dominant A.N.C. faction, Mr. Skhosana still lived next to the old high school, in the area’s largest house, surrounded by a concrete wall and electrified barbed wire. Right after joining the council, Mr. Magaqa zeroed in on the troubled renovation of the Memorial Hall. Little had been done to it, and the construction of a new annex was proving to be a disaster. A few councilors had already raised concerns, calling it a classic public works boondoggle designed to siphon money into the pockets of politicians and their allies. Jabulile Msiya, a councilor whose ward included the hall, said she had been excluded from meetings on the project after asking too many questions. Experts unconnected to Umzimkhulu’s politics, like Robert Brusse, an architect specializing in heritage buildings, agreed something was wrong. A few weeks after being hired as a consultant for the project in 2016, Mr. Brusse went to see the Memorial Hall for himself. “As I walked onto the site, I said, ‘There’s a rat here. This stinks,”’ he recalled. The new building behind the Memorial Hall was “professionally incompetent” and a “complete waste of money for what is being produced,” he said. Mr. Magaqa and his council allies demanded an independent audit — a motion quashed by the A.N.C.’s dominant faction in the municipality. Mr. Skhosana, the municipal manager, dismissed any possibility of corruption. Mr. Magaqa, he said, was simply trying to stir up trouble to gain control over the local government. He waved away accusations by councilors that the contractor had been chosen because of personal connections to a local official. The contractor simply had a “cash flow” problem, he said. But the contractor, Loyiso Magqaza, contradicted him in a telephone interview, denying any cash flow issues. “They can never” blame me for the project’s failure, he said. Mr. Magaqa, stuck in a deadlock with his former teacher, turned to someone his allies said he trusted fully: his old friend, Mr. Zulu. Mr. Zulu had become a known corruption fighter in the province, gathering evidence and sharing it with officials he trusted. So Mr. Magaqa gave him what he described as official documents about the Memorial Hall. The documents, which were reviewed by The New York Times, showed that after the contractor won the renovation contract in 2013, worth $1.2 million, the municipality paid the company and its subcontractor nearly two-thirds of the money, even though the project was far behind schedule. Two years later, after the company and its subcontractor failed to finish, the municipality hired a different contractor for another $1 million. In all, the documents do not unequivocally prove corruption on their own, but they show the municipality spent nearly all of the money it had budgeted for the hall — and ended up with little to show for it. Mr. Zulu said he had grabbed the files and promised to pursue the case with his contacts in the police. But over the following months, Mr. Magaqa brandished the documents in the council and challenged leaders of the dominant A.N.C. faction, leading Mr. Zulu to wonder whether his old friend was also trying to use the issue to his personal political advantage. The council speaker appeared to be moving over to Mr. Magaqa’s side, according to the speaker’s nephew, Mduduzi Thobela, an old friend who backed Mr. Magaqa during the high school strike. The speaker and Mr. Magaqa had been friendly, and were even related through marriage. Then the killings started. First came the warning: Three bullets pierced the storefront office where the council speaker worked. A few weeks later, the speaker, Khaya Thobela, was sprinkling holy water in a religious rite in his front yard — and was gunned down where he stood. A month later, the councilor expected to replace him, Mduduzi Shibase, was assassinated after opening the gate to his home. He had strongly supported Mr. Magaqa’s call for a forensic audit of the Memorial Hall. Ms. Msiya, the councilor who had asked pointed questions about the project, got a worried call from Mr. Magaqa. “‘Where are you? Don’t go out. I’m coming,’” she recalled him saying. He showed her a “hit list” he got from a friend in a government intelligence agency, she said. “‘It’s going to be me,’” Mr. Magaqa told her. “‘After me, it’s you.’”
‘We’re Not Safe’
On July 13, 2017, a red BMW cased the neighborhood where Mr. Magaqa lived. His neighbors did not recognize the car. It had a license plate from Gauteng, the province where Johannesburg is. Mr. Magaqa, accompanied by Ms. Msiya and other allies, had spent the day in a far corner of Umzimkhulu. But he was in a rush to head back home. The twin killings had shaken him, it was late afternoon, in the dead of South Africa’s winter, and the sun would be setting in no time. “‘Let’s go, we’re not safe,”’ he said, recalled Nontsikelelo Mafa, a councilor and close ally. As always, Mr. Magaqa drove his Mercedes himself and hid his gun under the driver’s seat. His bodyguard and another A.N.C. politician in the car also carried guns. Talk of the killings soon gave way to more pleasant topics during the 45-mile drive. The car stereo played house music, blasting the Distruction Boyz’s “Omunye,” an instant hit about a party. The group was planning a party that evening, too, for Ms. Mafa’s 27th birthday. By the time they got back, the music had Mr. Magaqa jumping in his seat. They pulled over at a hangout by the main road, where the red BMW had been waiting. Mr. Magaqa spotted the hit men first. “Don’t move,” he told the passengers in the back seat. Ms. Mafa saw two men with assault rifles approaching and Mr. Magaqa reaching for his gun. Then, the flashes of light.
Sleeping in a Different Place Every Night
Mr. Zulu’s cellphone rang minutes after the shooting. He reached out to senior police officials he trusted. “The first one hour is decisive,” he said. But the hit men weren’t caught, even though they drove a conspicuous car and had left witnesses: two women in the back seat survived with wounds to their legs. Mr. Magaqa died about eight weeks later — from his injuries, the authorities said. His family insisted he had been recovering and was poisoned. Of the nearly 40 politicians assassinated in South Africa last year, he was the most recognizable. The public broadcaster aired his funeral, five and a half hours long, live from a sports field. Hundreds came, including top A.N.C. politicians and a minister who flew in by helicopter. The speeches were anodyne, or became rallying cries for the party. But Mr. Zulu had none of it. At a service beforehand, he said Mr. Magaqa had been killed for revealing corruption inside the party. Today, fearing for his own life, Mr. Zulu sleeps in a different place every night. Two bodyguards, hired by his extended family, shadow him at all times. The three big men squeeze into his compact Volkswagen, which sinks a few inches every time they get in, as Mr. Zulu wages his one-man crusade against corruption. “The A.N.C. is like an ocean that will cleanse itself,” he said, repeating it so often that he seemed to be trying to convince himself. He, too, says he is fighting for what President Ramaphosa calls a “new dawn” for the nation. So why, he asked, has Mr. Ramaphosa remained silent on the Public Protector’s recommendations to provide him with security? “I’ve been living like a hunted animal,” Mr. Zulu said. In an empty, roofless room, wrapped in heavy blankets against the cold, Mr. Magaqa’s mother spoke about the promises A.N.C. officials made after her son died. His Mercedes sat in a corner of the backyard, riddled with bullets. She was still waiting for the A.N.C. to solve the killing, to take care of her son’s four children, or even to fix his broken cars. “Especially the Mercedes,” she said. “It’s destroyed our family, especially me. Each and every day, I see it, and everything comes back.”
Mabuza’s move and Mboweni’s moan reveals depth of division in party and state
Two seemingly unrelated events over the past 24 hours might give us some indication of where the political and economic year is headed. And early signs are that it won't be pretty.
First, on Thursday, Deputy President David Mabuza fired a broadside at Public Enterprises Minister Pravin Gordhan and Eskom chairperson Jabu Mabuza, saying they had "misled" the president about load shedding. And then, in the early hours of Friday morning, eccentric Finance Minister Tito Mboweni took to social media and went off about the country's imminent ratings downgrade, declaring: "You were warned and chose to ignore wise warnings!!" (With two exclamation marks).
WHY SHOULD WE TAKE NOTE OF IT?
Mabuza and Mboweni may serve in the same Cabinet, but they aren't on the same team. And Mabuza's attack on Gordhan and Mboweni's frustration reveal the depth and extent to which President Cyril Ramaphosa's attempts to rescue the state and country are being stymied.
HOW IMPORTANT IS MABUZA?
He's had a quiet time of it as Ramaphosa's Number Two. Recall that he made his big power play at the ANC's elective conference in 2017, throwing in his lot with Ramaphosa, rather than Nkosazana Dlamini-Zuma, thereby securing the pole position to succeed Ramaphosa when his term of office ends. Since being appointed deputy president, he has been out of the news, quietly trying to clean up his image as strongman politician from a provincial backwater, and someone who has been implicated in various alleged crimes. There have been few public appearances and his parliamentary statements have by and large gone unnoticed. There haven't been many public indicators of what Mabuza's plans are. And it's also unclear what exactly his beliefs are or what his ideology entails. What is clear though is that, before he became deputy president, he was a gun for hire, and that he didn't commit to Ramaphosa until the last minute. He has also publicly attacked the reformist minded Mboweni, once declaring that he doesn't take him (Mboweni) "seriously". His statement that Gordhan and Jabu Mabuza misled the president is significant. Gordhan is Ramaphosa's man, of that there is no doubt. He has been backed to the hilt by the president and is regarded as the man who will do the dirty work. When he makes a move, or a big announcement, it is done with the blessing of the president. They are in lock step. Similarly, Jabu Mabuza's appointment as Eskom chairperson was done at the insistence of Ramaphosa, mere days after he was elected ANC leader.Misleading the president is a serious accusation. And by saying what he has, Mabuza has located himself in opposition to Gordhan and, in effect, to Ramaphosa.
12 000 'dead people' doing business with SA government, says Treasury
South Africa’s National Treasury has discovered about 12,000 dead people in its register of companies that do business with the state. This is among the outcomes of a clean-up of the information system that the Treasury’s procurement office undertook as the government battles to rein in spending, said Schalk Human, the unit’s acting head. It has also identified about 14,000 state employees who are listed as directors of companies that have been awarded state contracts in violation of regulations. “We will report on them even if we drag those 14,000 to court by their hair and lock them up,” Human said in an interview this month in Pretoria, the capital.
Exposed SA pres Cyril Ramaphosa dishonest on farm murders Pieter Groenewald
Ramaphosa blatantly dishonest with the world regarding farm murders.
Media release by:
Dr. Pieter Groenewald
FF Plus leader
27 September 2018
President Cyril Ramaphosa’s denial of farm murders and land grabbing in South Africa at the Bloomberg Global Business Forum in New York is dishonest and comes down to a blatant lie. It is a poor attempt to pull the wool over the international community’s eyes.
The President is either totally ignorant or he is busy trying to create a false impression with the United Nations (UN) and the rest of the world, particularly with regard to farm murders. The fact the police has recently released statistics on farm murders and attacks as well as earlier police reports on farm attacks go to show that farm attacks and murders are a reality and, therefore, it is incomprehensible that the President of our country is in denial about it and thus lets our farmers down.
On the one hand, he says that farmers are important, but then on the other, he sells them out abroad. A police report compiled as far back as 2003, found that the reasons for farm murders are political in nature; that it is related to the land issue, that racism plays a role and that general crime is another contributing factor. If the President truly wanted to be honest with the world, he should have asked for international help to see how the world can contribute to effectively combat crime in South Africa, and in particular farm murders, which is partly the result of the inadequate rural safety system and strategy in South Africa.
It is a well-known fact that land grabs have taken place at various places in South Africa and that the land grabbers were only successfully removed by means of a court order in a few of the incidents. There number of illegal land occupations (land grabs) far exceed the number of cases where illegal land occupants are removed by means of a court order. That is the reality in South Africa. Dr Pieter Groenewald, leader of the FF Plus, will raise the matter in Parliament and will insist that the President must explain these false statements.
Eskom wants R1.8 billion for performance bonuses
Eskom wants to pay R1.8 billion in performance bonuses, despite the company’s dismal financial situation and its inability to keep the lights on. In recent years Eskom has become the poster child of state capture and failed state-owned enterprises, and is now the biggest risk to the South African economy. The power utility’s debt is sitting at a staggering R450 billion, it is massively overstaffed, it lacks critical skills, it has ageing power stations, and its maintenance is a mess.
Problems at Eskom were in full display in recent weeks when load-shedding hit a record stage 6 in December and made an unwelcome return again on Saturday night. Despite these problems, Eskom wants to reward its workforce for a job well done with R1.8 billion in performance bonuses between 2019 and 2022. Rapport reported that the National Energy Regulator of South Africa (Nersa) said Eskom did not reveal this plan in its tariff applications. According to Nersa, these bonuses are within management’s control and should not be allowed while Eskom is financially unstable.
How much money Eskom is losing
Over the last financial year, Eskom posted a net loss of R20.7 billion. While the government is promising to turn Eskom around, most South Africans are skeptical as they have heard this statement many times before. The company continues to be dogged by poor governance, corruption, maladministration, and cadre deployment, with no end in sight.
Chilling assessment: BEE has de-industrialized SA, pushed it backwards in time
Zimbabwe had land expropriation as the spark that caused its economy to implode. South Africa has a slower, but equally insidious, government policy that is pushing it backwards in time: Black Economic Empowerment (BEE). This warped system has enabled corrupt individuals to benefit personally from contracts as the country’s key services have steadily eroded. While BEE provided the mechanisms for state capture, the SA-specific term for wide-scale graft, it has also facilitated the spread of parasites that have, and continue to, suck the life-blood out of the country.
This is the assessment of environmental expert Professor Anthony Turton, who warned some years back that Eskom was in critical condition – but no-one was listening. Now raw sewage flows in many streets and the electricity is turned off for hours on end, in what looks like a return of sorts to the dark ages, he points out. Turton’s article, republished here with kind permission of the Daily Friend, makes for depressing reading early in the year. But, perhaps this time our leaders are listening and have the appetite to make major changes? – Jackie Cameron
ANC slams 'inhumane' US airstrikes in Iraq, labels it 'international terrorism'
The African National Congress has slammed what it calls "inhumane" airstrikes by the United States in Iraq, which saw General Qassem Soleimani, Commander of Iranian Quds Force killed. The governing party called on the United Nations to take action against "this act of international terrorism" and for restraint between countries. In a statement on Saturday, ANC secretary-general Ace Magashule described the airstrikes as an attack on the people of Iran.
"The ANC and all progressive formations of the world cannot afford to remain silent while the actions of the US appear to be undermining peace and security with impunity - a clear and deliberate erosion of Iran's national "We urge the nations of the world, through the United Nations, to act firmly and expeditiously against this act of international terrorism. We urge all parties to this conflict to give peace a chance. We appeal for maximum restraint. Magashule said.
‘They Eat Money’: How Mandela’s Political Heirs Grow Rich Off Corruption
VREDE, South Africa — With loudspeakers blaring, city officials drove across the black township’s dirt roads in a pickup truck, summoning residents to the town hall.
The main guest was a local figure who had soared up the ranks of the governing African National Congress and come back with an enticing offer.
Over the next few hours, the visiting political boss, Mosebenzi Joseph Zwane, sold them on his latest deal: a government-backed dairy farm that they, as landless black farmers, would control.
They would get an ownership stake in the business, just by signing up. They would go to India for training, all expenses paid. To hear him tell it, the dairy would bring jobs to the impoverished, help build a clinic and fix the roads.
“He said he wanted to change our lives,” said Ephraim Dhlamini, who, despite suspicions that the offer was too good to be true, signed up to become a “beneficiary” of the project.
“This thing is coming from the government, free of charge. You can’t say you don’t like this thing. You must take it.”
But, sure enough, his instincts were right.
The dairy farm turned out to be a classic South African fraud, prosecutors say: Millions of dollars from state coffers, meant to uplift the poor, vanished in a web of bank accounts controlled by politically connected companies and individuals.
The money from an array of state contracts like this one helped pay for a lavish wedding that a top executive at KPMG, the international accounting firm, described as “an event of the millennium,” according to leaked emails. And Mr. Zwane, continuing his meteoric rise, soon leaped to the national stage to become South Africa’s minister of mineral resources.
Almost nothing trickled down to the township or the scores of would-be beneficiaries after that first meeting in 2012. The only local residents to get a free trip to India were members of a church choir headed by Mr. Zwane.
In the generation since apartheid ended in 1994, tens of billions of dollars in public funds — intended to develop the economy and improve the lives of black South Africans — have been siphoned off by leaders of the A.N.C., the very organization that had promised them a new, equal and just nation.
Corruption has enriched A.N.C. leaders and their business allies — black and white South Africans, as well as foreigners. But the supposed beneficiaries of many government projects, in whose names the money was spent, have been left with little but seething anger and deepening disillusionment with the state of post-apartheid South Africa.
While poverty has declined since the end of apartheid, inequality has risen in a society that was already one of the world’s most unequal, according to a recent report by the World Bank and the South African government.
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South Africa has a large, advanced economy, an aggressively free press and a wealth of independent organizations and scholars who keep a close watch on government malfeasance.
But even with its vibrant democracy, in which the details of corruption schemes are routinely aired and condemned by the news media and opposition politicians, graft has engulfed the country.
The nation was governed for nine years by the scandal-plagued President Jacob Zuma, whose close ties with the Gupta family — three Indian brothers at the helm of a sprawling business empire built on government contracts, including the dairy farm — outraged voters.
Their cozy relationship contributed to the A.N.C.’s recent electoral losses and helped lead to Mr. Zuma’s ouster two months ago.
Promising a “new dawn,” Mr. Zuma’s replacement, Cyril Ramaphosa, has said that he would make fighting corruption a priority as the nation’s new president. But he is also a veteran A.N.C. insider, and the early signs have not been encouraging.
Having become party leader by a razor-thin margin, Mr. Ramaphosa has tried to keep together a fractured A.N.C. by moving cautiously.
He formed his first cabinet by appointing some well-respected officials, but also included allies — his own and Mr. Zuma’s — who have been accused of corruption by the Public Protector’s office and good governance groups.
Beyond that, politicians who long oversaw provinces rife with public corruption, including the one where the dairy farm is, now sit at the top of the A.N.C.’s hierarchy.
National prosecutors, often criticized for being servile to the sitting president, say they are trying to recover more than $4 billion lost to corruption related to the Gupta family’s undue influence on Mr. Zuma’s administration.
And that is just a small measure of the corruption that has whittled away at virtually every institution in the country, including schools, public housing, the police, the power utility,
South African Airways and state enterprises overseeing everything from rail service to the defense industry.
Almost no one comes out of this looking good.
At just under $21 million, the money lost in the Vrede dairy farm may seem small. But it is a big test of whether South Africa’s new government has the power and the will to confront public corruption at its source.
The police have apprehended some low- and midlevel officials involved in the dairy farm, the first arrests related to a high-profile case of public corruption during the Zuma presidency.
But notably, they have yet to pursue any A.N.C. officials. Mr. Zwane has not faced any charges.
What’s more, the provincial premier who approved the project, Ace Magashule, was recently elected secretary general of the A.N.C., elevating him to the top ranks of the party’s leadership.
The endless scandals have also raised serious questions about the complicity of major Western companies, with multiple investigations scrutinizing the role they may have played in enabling corruption and weakening the country’s institutions.
South African regulators have urged the police to begin a criminal inquiry into McKinsey, the American consulting giant, over its relationship with a Gupta-linked company in a contract involving a state-owned utility.
A South African court has frozen the $83 million McKinsey was paid for the contract, and the firm says it will return the fee.
Regulators say they have also pressed the police to investigate KPMG, the Big Four auditing firm based in the Netherlands, for its work for the national revenue service in 2015. KPMG has acknowledged that elements of the work “should no longer be relied upon” and offered to pay back its consulting fees.
SAP, the German software behemoth, is being investigated by the United States Department of Justice and the Securities and Exchange Commission after it disclosed payments to intermediaries on state contracts that may have contravened the Foreign Corrupt Practices Act.
International banks have been ensnared in the scandals, too. HSBC and Standard Chartered have been accused by a British lawmaker of laundering the Guptas’ ill-gotten gains.
HSBC says it has closed a number of accounts that belonged to front companies operated by the Gupta family.
Many trace the deep corruption in the nation to a fundamental flaw in South Africa’s transition from white rule to democracy a generation ago.
In the grand bargain struck between the apartheid government and the A.N.C., headed by Nelson Mandela, a transfer of power was carried out peacefully, disproving predictions of civil war and earning Mr. Mandela accolades as a visionary peacemaker.
But the deal was reached on what many South Africans today consider Pyrrhic terms: The black majority was allowed to control politics, but much of the country’s economic resources, including land, has remained in the hands of white South Africans and a small group of other elites.
In the early years of A.N.C. rule, Mr. Mandela and other top leaders, who had helped defeat apartheid but had no personal savings, received houses, vehicles and money from white business leaders — essentially bribes, critics say.
A smattering of influential figures, like the current president, Mr. Ramaphosa, amassed extraordinary wealth. They were allowed to buy shares of white-owned companies on extremely generous terms and invited to sit on corporate boards.
They acted as conduits between the governing party and the white-dominated business world.
Some of the A.N.C. leaders who were left out of that bonanza quickly found a new road to wealth: lucrative government contracts.
The public tap became a legitimate source of wealth for the well connected, but also a wellspring of corruption and political patronage, much as it had been for the white minority during apartheid.
Over the years, Mr. Zuma and his allies, while never admitting corruption, often played down its corrosive effect on society and emphasized the need to redistribute wealth to black South Africans.
It is an argument that Mr. Zuma is expected to make in defending himself against recently reinstated charges of corruption in an arms deal from the late 1990s.
While Mr. Mandela is still revered in the West, his legacy is regarded more critically in South Africa, especially by some young black people. To them, he sold out the country’s black masses to the white business elite.
Even some of Mr. Mandela’s longtime supporters struggle to defend the deal that he struck to bring democracy to South Africa. Ultimately, it left most black people in poverty while benefiting a small elite, including the chief negotiator during the talks, Mr. Ramaphosa.
After 27 years as a political prisoner, Mr. Mandela did not understand South Africa’s political economy and agreed to a settlement that failed to secure black South Africans’ economic independence, said Mamphela Ramphele, an anti-apartheid activist who became close to Mr. Mandela.
She later went on to serve as a managing director of the World Bank.
“He didn’t know any better,” Ms. Ramphele said.
The dairy farm case is emblematic of the many ills afflicting South Africa a quarter-century after the end of apartheid. It shows how corruption, in a government controlled at all levels by a single party, has entrenched old racial inequalities.
About 125 miles southeast of Johannesburg, in the province of Free State, Vrede is a small farming town with discount chain stores, two supermarkets and a gas station.
A cemetery and a police station — buffers during the apartheid era — still separate Vrede from the neighboring black township of Thembalihle.
As in so many other townships, the level of local corruption can be quickly gauged by the quality of government housing for the poor.
In one of the most common sources of corruption, money and building materials are diverted from a housing project, often leaving behind shoddy dwellings for poor residents who have waited years or decades to move out of shacks.
In a new outpost of the township, single-family government houses were so poorly built that many have collapsed, while new houses are being erected on shaky foundations and frames, with deep cracks spreading across extremely thin walls.
In many ways, the area is a microcosm of the enduring economic imbalance in South Africa.
Nationally, black people make up 80 percent of the population, but most remain shut out of economic opportunities. White people, accounting for 8 percent, retain an oversize influence on the economy.
Nearly all of the commercial farmers around Vrede are white, as is the main government contractor. In the adjoining township, black people operate small taverns and basic carwashes.
But in the town of Vrede itself, white people still own all of the faded buildings on the main street, where they — along with immigrants from other African nations and countries like Pakistan and Bangladesh — operate shops. Black people, who were not allowed to live in the town under apartheid, now own or rent only about 10 percent of its residences.
“This system that was built for us, blacks, it’s very difficult for us to create our own businesses,” said Veli Thulani Tshabalala, 29, who runs a computer and cellphone repair shop with his cousin.
They are the only black South Africans to operate a store in Vrede.
Pieter Bergh, 83, a white South African who served on Vrede’s City Council in the years immediately before and after the end of apartheid, agreed that little has changed for black South Africans since 1994 and that the economic inequality has remained static.
“They only received the power to vote — that was all,” Mr. Bergh said, adding that he “definitely” considered that a historical mistake.
In the late 1990s, officials were purged from city government and replaced by A.N.C. appointees with little experience. The purge, which occurred at all levels of government across the nation, contributed to the corruption that emerged toward the end of Mr. Mandela’s term.
Here in Free State, one of the first post-apartheid cases of corruption in government revolved around Mr. Magashule, the A.N.C.’s current secretary general.
Mr. Magashule, now 59, has served as the party’s leader in Free State since the very end of apartheid in 1994. He grew up in Parys, a small town in the province.
During apartheid, he was an underground A.N.C. operative whose boldness caught the attention of Winnie Mandela, Nelson’s wife and an anti-apartheid activist.
After white rule ended, he oversaw economic development in the cabinet of the first post-apartheid provincial premier, Mosiuoa Lekota.
In an interview, Mr. Lekota said he had caught Mr. Magashule stealing government funds — a charge that Mr. Magashule, whose spokespeople did not respond to interview requests for this article, has long denied.
Mr. Lekota said he had fired Mr. Magashule, but was overruled by his patron, the A.N.C.’s deputy secretary general at the time: Mr. Zuma.
In the early days after the end of apartheid, Mr. Zuma openly complained about the A.N.C. leaders who were getting rich. Most — like Mr. Ramaphosa and Tokyo Sexwale, another anti-apartheid activist — were favorites of Mr. Mandela.
“Zuma did go to some of the other guys and said to them, ‘This is what Mandela is doing.
We must wake up and we must go for the money ourselves,’ ” said Mr. Lekota, who left the A.N.C. to found his own party, the Congress of the People, in 2008.
Mr. Magashule went on to flourish inside Free State. He became premier of the province in 2009 just as Mr. Zuma became president.
Like other powerful premiers, he was able to turn his province into a fief, said Mr. Lekota and several provincial officials from the A.N.C., as well as its historical ally, the South African Communist Party.
Taxes are mostly collected by the national government, and the money is redistributed to the provinces, where it is spent with little oversight. Free State — a rural economy where black people remain dependent on the A.N.C. for jobs and government contracts — has remained a stronghold for the party even as it has lost support among middle-class black voters in urban areas.
Mr. Magashule’s ambitions, however, were never confined to the province. Like Mr. Zuma, he forged a relationship with the Gupta brothers, who had befriended some high-ranking A.N.C. figures after arriving in South Africa from their native India in the early 1990s.
Mr. Magashule’s son, Tshepiso, worked for the Guptas, and, according to emails leaked from a Gupta-company server, served as a conduit to his father’s office.
Under Mr. Magashule’s governance, many of the province’s public services departments teetered on the brink of insolvency, according to A.N.C. officials and opposition parties.
In a harsh report in 2017, the national auditor said that Free State’s government showed “a lack of accountability and commitment towards clean administration,” adding that the situation had worsened in recent years.
“If you find that the one who is supposed to be the custodian of the purse like the premier — he is the one who is involved in corrupt practices — it becomes easy then for others also to get involved,” said Thabo Manyoni, an A.N.C. official in Free State who was once a close friend and deputy of Mr. Magashule.
“You end up in a situation where nobody is able to stop anyone else because we all are doing it,” Mr. Manyoni said.
Suspicions From the Start
To many, the dairy farm project appeared to be a swindle from the beginning.
For starters, there were ample suspicions about the pitchman, Mr. Zwane.
“I know this guy,” said Mr. Dhlamini, the would-be beneficiary who was also the chairman of Vrede’s arm of the African Farmers Association, a national organization for black farmers. “I don’t trust him.”
As he climbed the political ranks, Mr. Zwane often came back to Thembalihle, the black township next to Vrede.
Sometimes, he doled out fistfuls of cash from the trunk of his latest luxury car, said A.N.C. and opposition politicians, as well as many residents.
Throughout the township and town, many people shared the same wariness of Mr. Zwane. His meteoric rise had been too fast and seemed tied to the corruption taking hold in the A.N.C. and in Free State.
Mr. Zwane, who declined through a spokesman to comment for this article, grew up on a nearby farm and moved to Thembalihle in his teens.
People remember him as an undistinguished student who, after high school, taught the children of black farm laborers in a nearby village where he met his future wife.
The couple lived next to the school building, in a low, two-room concrete structure that is still used as a schoolteacher’s residence.
There, villagers remember Mr. Zwane as an engaged teacher, at least until he became a district councilor and his interests turned to politics.
Soon, Mr. Zwane rose swiftly in the party, as well as in local and district governments, thanks in great part to his close relationship with the province’s head of the A.N.C., Mr. Magashule, according to politicians in Free State.
He joined Mr. Magashule’s cabinet in 2009 and a few years later took over the agriculture portfolio.
When Mr. Zwane became the provincial minister of agriculture, many black farmers in Vrede rejoiced. Like others in the country, they had neither capital nor land.
With a local son heading the province’s department of agriculture, they thought their “lives were going to change,” recalled Meshack Ncongwane, the deputy chairman of Vrede’s African Farmers Association.
A dozen black farmers from Vrede chartered a bus, each paying about $20, to attend Mr. Zwane’s swearing-in ceremony in the provincial capital, Bloemfontein, about four hours away. Even the association’s chairman, the skeptical Mr. Dhlamini, went along.
“We were happy,” Mr. Ncongwane said, adding, in hindsight, “although we were happy for a crook.”
In 2012, Mr. Zwane and agricultural department officials arrived in Vrede to promote the dairy farm project. Flanked by the council speaker, Roseline Zwane, known as Topsy — who happened to be his wife — and by his longtime ally, Mayor Tlokotsi John Motaung, Mr. Zwane told the crowd about a dairy farm that would empower black farmers and create 150 jobs.
Shortly afterward, his department signed the first of its two dairy farm agreements with a company called Estina.
This was a peculiar choice. Estina was to buy cows for local farmers and process milk at the farm. But the company was headed by a businessman from India who had a background in information technology — not in farming. Yet, importantly, he had long worked for the Guptas.
Despite the project’s sketchy details, Mr. Zwane signed off on it and asked the provincial treasury to start paying Estina, according to an investigation by the National Treasury.
Initially, he was overruled by lawyers in Mr. Magashule’s office, who deemed the contract invalid because procurement rules, like a competitive bid, had not been followed.
But that was only a hiccup. The province signed another contract with Estina the following month — this time with the lawyers’ blessing.
That agreement stated that Estina would invest just under $20 million in the project and the province would contribute about $30 million over three years. Local farmers, the so-called beneficiaries, would retain 51 percent of the shares.
There was “something fishy” from the start, said Doctor Radebe, who was a councilor for the opposition Democratic Alliance in Vrede. Mr. Zwane and the agricultural officials presented no business plan or budget for the project, but they and the mayor insisted on pressing ahead, Mr. Radebe said.
The local municipality quickly decided to hand over 3,400 hectares, or about 8,400 acres, of land for the dairy farm.
In fact, the municipality was so determined to get the project underway that it compensated four white commercial farmers, who had been leasing the land for about $80,000 a year, in order to prematurely break their leases.
Later that year, just before Mr. Zwane and his local choir left for India, on a trip sponsored by a Gupta company, the province leased the farm to Estina — rent-free, for 99 years.
In an interview, Mayor Motaung said, “We had no doubt that the plan will work.”
But the mayor acknowledged that Mr. Zwane presented no detailed plan or document about the proposed dairy farm. Even basic details — like the criteria for selecting the beneficiaries — were missing, the mayor said, acknowledging that his role in the project was now under scrutiny.
The payments to Estina began months later. Court documents show that the province deposited just under $21 million in two Estina bank accounts over three years.
Days after every payment, the company transferred the entire sum to other accounts.
From there, prosecutors say, the money was withdrawn by individuals and other Gupta-linked companies that had little to do with the farm.
In fact, prosecutors say that only about 1 percent of the money invested by the province actually went into dairy farming.
Beyond that, the National Treasury found no evidence that Estina ever invested its own money in the project, despite its obligation to do so.
Emails leaked from a Gupta company server indicate that some of the money was sent to the United Arab Emirates and put into accounts registered to the Guptas.
The money then made its way back to South Africa through a maze of bank transfers, according to spreadsheets, logs and an invoice in the email trove.
The emails, amounting to thousands of exchanges, were leaked last year to South African news organizations and an anti-corruption group.
It is not known who leaked them, though they soon fanned national outrage at the Gupta family and at Mr. Zuma.
The Guptas denied the authenticity of the emails, but some A.N.C. officials included in the correspondence confirmed that they were real.
In one of the emails, Gupta companies paid one another for expenses at a relative’s lavish four-day wedding in 2013, including fireworks, dancers, chocolates and scarves.
In another exchange, KPMG, then an auditor of the Gupta companies, ignored a junior employee’s protest and allowed the Gupta family to write off some of the expenses at the wedding as business costs.
“I have never been to an event like that,” Moses Kgosana, a KPMG executive who attended the wedding, gushed to a Gupta brother in one of the emails, calling it “an event of the millennium.”
The accounting firm has since acknowledged that its actions “fell well short of the quality expected.”
Many of the problems surrounding the dairy farm could have been ignored had the province not tried to tap into a national fund for struggling farmers.
The national government initially agreed to give about $4 million to the project on the condition that the province submit, among other things, a list of 100 poor farmers who would benefit from the farm.
When the government found no evidence that local farmers were involved, it sent National Treasury auditors to investigate in 2013. Though Mr. Zwane, sometimes accompanied by his wife, had held meetings to look for beneficiaries, no official list had been drawn.
After the auditors started asking questions, a list of beneficiaries — between 80 and 100, depending on the version — was hastily assembled.
Some were genuine farmers. “Others, they are not even farmers,” Mr. Radebe said, adding that many were A.N.C. supporters. “They don’t even have a cat.”
Estina did try its hand at dairy farming in Vrede. When the National Treasury’s investigators visited in 2013, they found about 350 cows and some buildings under construction.
But the seemingly inflated costs — including $215,000 for a manually sliding gate and a guardhouse — drew scrutiny from the opposition party.
And while the beneficiaries were supposedly the farm’s owners, they were never informed of the project’s developments. They were not even allowed to visit the premises.
Those who were serious about farming started to complain. At a meeting with officials in the provincial government, Mr. Dhlamini and Mr. Ncongwane, of the African Farmers Association, said that when they raised questions about the project, they were dismissed as noisy “frogs.”
That especially stung Mr. Dhlamini, who once was the only black South African business owner in Vrede. He ran a small record store called “Siyathuthuka,” or “We’re moving forward,” in the Zulu language, but was forced to shutter his store because of rising rents. He was now focused full time on farming and owned 35 cows.
In early 2014, the National Treasury sent a scathing report to Mr. Magashule, the premier of Free State, and told the province to stop paying Estina.
But it took Free State another six months to take the farm back. The province even continued to pay Estina another $11 million after officially terminating the contract, court documents show.
In the end, a project meant to empower black farmers like Mr. Dhlamini further enriched the Guptas and one of the wealthiest white men in Vrede, Willie Basson.
With a fleet of vehicles, construction equipment and billboards advertising his business all over town, Mr. Basson is the main government contractor in Vrede and helped build the dairy farm.
But he said that Estina mismanaged the business so badly that he ended up having to dig graves for as many as 100 cows, even though he had delivered feed for them.
“They just do projects like this to get money,” he said in an interview in his office. “That’s how they operate, but, luckily, they paid me every cent,” Mr. Basson said.
“Hey! It’s rotten in this place here,” he exclaimed, pounding on the table in front of him. “And we work with all of them, so we know.”
It was a measure of how corrupt South Africa had become a generation after the end of apartheid that nothing was done about the Vrede dairy farm case for years.
The national police and prosecutors looked away even after the National Treasury raised alarms about the project.
In Free State, some who spoke out against public corruption were suddenly killed in circumstances that, even in a country with widespread violent crime, aroused suspicions.
Moses Tshake, a provincial government auditor who inquired about projects in the agriculture department, was killed in a carjacking in 2013. In Warden, a town where Mr. Zwane has a large home, Vusi Mlaba, a politician who had campaigned against corruption in public housing, was fatally shot a dozen times just outside his home in 2016. Police investigations resulted in no arrests in either case.
As for Mr. Zwane, the dairy farm hardly hurt his career.
During Mr. Zuma’s presidency, the Gupta brothers increasingly acquired economic and political influence by forging close ties with the president, his son and political allies like Mr. Magashule, the provincial premier who endorsed the dairy farm project. A lawyer for Atul Gupta, from whom prosecutors tried to recover public money spent on the dairy farm, did not respond to a request for an interview with his client.
The Guptas’ influence, and possibly direct role, in the appointment of ministers and other important government officials has been investigated by the Public Protector and is expected to be a focus of a recently begun government inquiry into public corruption.
In August 2015, according to the leaked emails, Tony Gupta, the youngest of the three brothers, forwarded Mr. Zwane’s résumé to Duduzane Zuma, one of the president’s sons, who was a director of many companies operated by the Guptas.
Two months later, Mr. Zwane, whose highest qualification is a teacher’s diploma, became South Africa’s new minister of mineral resources, one of the most important — and potentially lucrative — portfolios.
Shortly after his appointment, Mr. Zwane went to Zurich with Tony Gupta and met with an executive from Glencore, the giant international commodities and mining firm.
At the time, the Guptas were trying to buy a Glencore coal mine. In a 2016 report on corruption, the Public Protector called Mr. Zwane’s lobbying in Switzerland “potentially unlawful.”
The ‘Premier League’
Last December, A.N.C. delegates from all over the country chose Mr. Magashule, Free State’s longtime premier, as the party’s secretary general — one of the top four positions in the party.
Mr. Magashule had been one of Mr. Zuma’s fiercest backers, along with two other provincial premiers who became known in the South African news media as the “premier league.” They had endorsed Mr. Zuma’s chosen candidate as the A.N.C.’s next president.
But, at the last minute, one of the premiers, David Mabuza, switched sides, handing a narrow victory to Mr. Ramaphosa.
Afterward, Mr. Ramaphosa made Mr. Mabuza — whose province, Mpumalanga, became known for political killings and endemic corruption during Mr. Mabuza’s decade as premier — the nation’s deputy president.
With a new president in charge, the national police and prosecutors have started moving against some individuals involved in the dairy farm case.
Eight people were charged with fraud, and others had their assets linked to the farm frozen. But a judge released most of the frozen assets in March. The next court hearing in the criminal case is scheduled for August.
Mr. Zwane, who was not appointed to Mr. Ramaphosa’s new cabinet, has kept out of the public eye in recent weeks.
Neither he nor Mr. Magashule has shown any willingness to answer questions about the dairy farm from the news media or Parliament — reinforcing the public perception that A.N.C. officials are above the law.
“What has gone wrong has gone wrong under their watch,” said Mathole Motshekga, a senior A.N.C. official who is a member of the party’s decision-making body, the national executive committee, and is also chairman of Parliament’s justice committee.
“We expect, and the public expects, that they should take responsibility for what has happened. We are waiting to hear what they have to say, because we don’t expect people in such positions to be absentee landlords.”
But many have given up on the A.N.C. Though the money lost in the dairy farm paled in comparison to the scale of corruption inside South Africa’s state-owned enterprises, it resonated deeply across the nation.
Government money meant to help poor farmers simply vanished, the way it does across South Africa, and so far none of the A.N.C. officials in charge at the local or provincial levels have been held to account.
As Mr. Ramaphosa pledges to clean up the South Africa he has inherited from Mr. Zuma, this case will test his capacity to do just that. A spokeswoman for Mr. Ramaphosa said he was unavailable for interviews.
One of the would-be beneficiaries, Adam Khatide, 55, retired early from his teaching job believing that the Vrede dairy farm would take off. In the fallout, he lost faith in the power of his vote.
“It’s voting for nothing,” he said. “Just taking people, putting them in office, and then they eat money.”
When democracy arrived for black people in 1994, Mr. Khatide drove elderly neighbors to voting stations, where they elected Mr. Mandela as the first president of the new South Africa.
“We managed to bring democracy, which is not working for us now. It’s working for individuals,” Mr. Khatide said, laughing. “I cannot cry. When I’m crying, it’s just the same. It’s better I must laugh.”
#GuptaLeaks: The Dubai Laundromat – How millions from dairy paid for Sun City wedding
By all accounts, the 2013 Sun City nuptials of the Guptas’ niece, Vega, was a dazzling display of the family’s wealth. Except it was not.
The #GuptaLeaks reveal that that the Free State provincial government largely picked up the tab for the “event of the millennium”, as it was described by a guest, KPMG Africa then-chief executive Moses Kgosana.
“My wife and I were privileged to attend and enjoyed every moment and every occasion,” Kgosana gushed in a thank-you note to Atul Gupta. “I have never been to an event like that and probably will not because it was an event of the millennium.”
Surely, though, the long list of political and business figures attending the multi-day spectacular were not privy to the veiled source of funds.
Except KPMG’s Kgosana should have been.
KPMG were the auditors of the Guptas’ Linkway Trading (Pty) Ltd. This company, we shall see, played a crucial role in the diversion of cash earmarked for the Free State’s Vrede dairy project to reimburse most of the wedding expenses – R30 million to be exact.
By allowing Linkway to account for the wedding as a “business expense”, KPMG further ensured that the Guptas paid zero taxes on their Free State government windfall.
KPMG said this week it was normal for it to attend “client related events”.
“In this case the wedding attendance was approved by our risk management and the accommodation costs were borne by KPMG…We stand by our work done and audit opinions issued.”
The Gupta family did not respond to our enquiries.
Gupta Radical Economic Transformation, courtesy Mosebenzi Zwane
AmaBhungane first revealed in 2013 how the Free State provincial government had gifted an unknown company, Estina, a free 99-year lease to a 4 400-hectare farm outside Vrede. Estina’s sole director was an IT salesman with no farming experience.
The government also promised Estina R114-million a year for three years to set up a farming operation and dairy, whose supposed purpose was to empower locals and boost provincial agriculture.
Mosebenzi Zwane, now South Africa’s mineral resources minister and then Free State MEC for agriculture, drove the provincial government to adopt the dairy project. Vrede is Zwane’s home town. The project was not put out to public tender.
Zwane, among the Guptas’ most ardent defenders, recently claimed the #GuptaLeaks were an attack on committed government employees.
Zwane did not respond to our enquiries made earlier this week.
In 2013, amaBhungane established that Estina had an address that was also used by Gupta companies and that Kamal Vasram, its sole director, had ties to the Guptas. Despite these signs of Gupta involvement, the family denied any connection save for a R138 000 consulting contract performed by Linkway Trading – coincidentally or not the same company that features in this story.
Vasram repeated the Gupta line that the controversial family was not involved, telling amaBhungane at the time: “I wish to categorically state that they are not involved in any manner in this project.”
The #GuptaLeaks have unravelled these denials. Dozens of e-mails and other records show the family not only had significant control over the scheme, but diverted much of the provincial government’s funding to it for their own purposes.
The Guptas’ Dubai laundromat milks the Free State
When Zwane’s successor as agriculture MEC, Mamiki Qabathe, answered questions about the project in the provincial legislature in November 2013, she said that by then a total of R114-million of the government’s money – tranches of R30-million and R84-million – had been transferred to Estina.
Financial records in the #GuptaLeaks show that over a six-week period between August and September 2013, Estina had transferred US$8 348 700 (R84-million at the time) to the Dubai bank account of a Gupta-controlled United Arab Emirates (UAE) shell company, Gateway Limited.
That is, the entire R84-million second tranche transferred by the Free State government to Estina landed in a Gupta-controlled US dollar account at Standard Chartered Bank in Dubai.
In a clear sign that Dubai was little more than a laundry stop, a forensic examination shows that at least three quarters of that money was shortly bounced back to two Gupta companies in South Africa – including to pay for the wedding. It went like this:
The wedding celebrations were held at Sun City over four days at the end of April and beginning of May 2013.
Three months later, on July 31, the Guptas’ Linkway Trading, based in South Africa, presented Accurate Investments Ltd, a second Gupta-controlled shell company in the UAE, with a four-page, itemised invoicefor expenses for the “V & A Function … at Sun City” (the bride and groom were Vega and Aakash).
The items for which Linkway invoiced Accurate for ranged from R13 086 for chocolate truffles to R2.3-million for scarves, R247 848 for fireworks and R13.9-million for “event services”.
Including VAT, Linkway’s bill totalled a perfectly round R30 000 000. It was further noted that “this invoice is the equivalent of USD3 333 400”.
As of the date of Linkway’s invoice, Accurate had a mere US$15 811 in its account at Standard Chartered – a tiny fraction of the amount invoiced. But thanks to the Free State government and Estina, Accurate’s bank balance would soon improve drastically.
This is where the laundromat started spinning. If the details are confusing, it is because they were meant to, but it went like this:
- On August 11, 2013 Estina transferred US$1 999 975 of the Free State government’s cash to the Standard Chartered account of the Guptas’ Gateway Limited in Dubai.
- On the same day Gateway transferred US$1 600 000 of the Estina money to the Standard Chartered account of yet another Gupta UAE shell, Global Corporation LLC.
- The next day, 12 August, Global transferred US$1 590 000 – that is the full amount it received less $10 000 – in two tranches to another Standard Chartered account: that of Accurate, the company that Linkway had invoiced for the Sun City wedding.
- That same day, Gateway itself transferred the balance of the funds it had received from Estina plus another $25 to round it off – US$400 000 – to Accurate’s Standard Chartered account.
- The end result of this financial Three-card Monte was that the Guptas’ Accurate now held US$1,990,000 of the US$1 999 975 of the Free State government’s cash, which had been transferred by Estina to Gateway the day before.
Accurate then immediately transferred US$1 986 000 to Linkway’s account at the State Bank of India in Johannesburg. The wire transfer confirmation notes an invoice number identical to the one contained in Linkway’s wedding expense invoice presented to Accurate.
This 12 August payment of the Free State’s cash via Dubai, however, fell short of Linkway’s invoiced amount of US$3 333 400 by US$1 347 400.
Wash, rinse, repeat
And so, the Dubai laundry machines started spinning again:
- On September 5, 2013, the next tranche of Free State funds arrived from Estina in Gateway’s Dubai account: US$2 999 975.
- Four days later, on September 9, Gateway transferred US$1 400 000 of this cash to Accurate, which then immediately paid Linkway exactly US$1 347 400 – the balance of the wedding expense invoice.
The wedding bill, however, was not the end of the Guptas’ Free State gravy train.
Weeks later, on September 23, a further US$3.1-million of the Free State’s cash was washed and delivered to the Guptas in South Africa via Dubai.
This time, the cash flowed from Estina to Gateway to yet another Gupta UAE front, Fidelity Enterprises Limited, which then transferred US$3.1-million to Oakbay Investments, the Gupta family holding company in South Africa.
With so much of the Free State’s money ending up with the Guptas, it appears that very little ended up with actual suppliers to the project.
As we previously reported US$3 448 800 (about R34-million then) of the R84-million that was sucked from Estina to Dubai in August and September 2013 was justified by a Gateway invoice for a milk pasteurisation plant to be supplied by Star Engineers, an engineering firm in the Guptas’ hometown of Saharanpur, India.
#GuptaLeaks financial records, however, show only a tiny fraction of that — US$165 610 –transferred to Star Engineers during the course of 2013. Whether that was the full amount paid to Star remains unclear.
Back-to-back transfers like those seen in the Guptas’ Dubai accounts were obvious red flags. Indeed, Standard Chartered confirmed this week that it closed the accounts in early 2014, shortly after these transfers.
A spokesperson for the bank said: “Standard Chartered takes its responsibility to combat financial crime very seriously and is fully committed to doing business in accordance with local and international regulatory and legal requirements.”
By the time Estina was kicked off the project in 2014 following a national treasury probe and amaBhungane’s exposure of dead cows being dumped in a ditch, the provincial government had paid Estina about R210-million in taxpayers’ money.
Of that, it is now clear, the Guptas, and not the people of the Free State, were the major beneficiaries.
Zwane’s continuing committed public service
Amidst the #GuptaLeaks revelations, Mineral Resources Minister Mosebenzi Zwane recently unveiled controversial changes to the mining charter. The proposed revisions seem to fit one particular family of Indian immigrants like a glove.
Naturalised black people would now also be deemed to have been previously disadvantaged by apartheid, thereby radically transforming the Guptas into prospective BEE partners.
The Guptas started arriving in South Africa mere months before the 1994 elections.
While Zwane appears to have repeatedly bent over backwards for the Guptas – even going as far as suggesting the #Guptaleaks were driven by anti-black racism targeting him – the leaked documents suggest that perhaps Zwane’s apparent blind loyalty to the Guptas is not entirely reciprocated.
Considering the colossal quantum of cash diverted from Zwane’s Vrede dairy project to the Gupta’s pockets, one would assume that Zwane was the Guptas’ guest of honour at the Sun City extravaganza.
Rather, he appears to have been an afterthought.
Possibly no other document in the #GuptaLeaks trove was circulated as widely and revised so often as the wedding’s guest list.
Yet, on the near-final guest list, Zwane’s name – a seemingly late addition near the very bottom (at row 242 out of 254) appearing under the subheading “Extra Guests” – was misspelled as “Mosebebi”, an error which endured throughout the drafts.
Even the Guptas’ now-mortal enemy, Peter Bruce, the former editor of Business Day, snagged a higher spot (235) than Zwane on the guest list.
While the fate of the mining charter revisions recently tabled by Zwane is uncertain, one thing is clear: with the next generation of Guptas now in their teens and twenties, weddings (and wedding expenses) will continue apace.
For all his steadfast efforts to radically economically transform the Guptas, perhaps “Mosebebi” should at the very least demand pride of place at the next one.
#GuptaLeaks: The ‘Gift’ that keeps on giving
The Guptas dished out personal and political largesse to the sons of Free State Premier Ace Magashule. In turn, one son opened doors to Magashule’s office, where staff appeared to do the Guptas’ bidding.
Magashule’s staff officially invited a senior Indian politician to South Africa on a Gupta associate’s request. His son Tshepiso “Gift” Magashule then forwarded the official correspondence to Tony Gupta.
The revelations are contained in the #GuptaLeaks, a trove of data leaked from the heart of the Guptas’ business network.
The leaks offer details on what appears to be the Guptas’ modus operandi for locking-in political loyalties.
In much the same way that Duduzane Zuma was apparently groomed, the #GuptaLeaks suggest that Magashule’s sons were similarly primed to become Gupta intermediaries.
At an Indian hotel in 2012, an employee briefing his colleagues by e-mail on the imminent arrival of Rajesh “Tony” Gupta and a Free State entourage described the Gupta brothers as being “known for their billionaire lifestyles and open-door access to the highest levels of government, including the president Jacob Zuma”.
Accompanying the group to India was future mining minister Mosebenzi Zwane. At the time he was Free State MEC for agriculture.
Read the emails
Notes and e-mails indicate that Magashule’s son Tshepiso started working for the Guptas as a consultant in November 2010, the year after Duduzane was brought into the Gupta fold.
Tshepiso appears not to have made it to the same level as the young Zuma. The #GuptaLeaks show how Duduzane, a director in several Gupta companies, was raking in R300,000 a month by March 2015, while Tshepiso, a director in only one Gupta company, was getting R90,000 a month.
In earlier days the two were treated more evenly. The #GuptaLeaks provide details of an extravagant Gupta family holiday in December 2011.
Tshepiso and Duduzane joined the Gupta brothers Ajay, Rajesh, Atul and their families on a three-week holiday to New York City and Venice, Italy.
A lengthy e-mail exchange between an Indian-based company, JV Travels and Ashu Chawla, a senior Gupta employee, detailed the group’s itinerary as well as a list of who was to fly first class and who would go business class. The young Zuma and Magashule both got business class.
Chawla signed off on the flight schedules and airfares: the 11 first class seats cost roughly R700,000 and the eight business class seats around R407,000.
The group flew to New York from Delhi in India on December 3, 2011. They spent about a week in the Big Apple before heading east again to Venice in Italy for a few days before returning to Delhi on December 20.
The #GuptaLeaks shows Tshepiso has called in favours for the ruling party.
In May 6, 2014, a day before the national elections, Tony Gupta received an e-mail via Tshepiso with an attachment titled “Air time list”.
The e-mail trail shows Tshepiso received the e-mail from a member of the Free State legislature. The subject was: “As discussed.”
The legislator wrote: “Good morning, Attached please receive a list of FS ANC party agents in need of airtime, they all use MTN. It will be appreciated if air time amounting to R120 per person could be loaded today, 06 May 2014. Hoping for your positive response.”
The attachment contained the names and cellphone numbers of 362 people – apparently all Free State ANC members.
However, for every quid there appears to be a quo. And when the Guptas needed access to the power of the premier’s office, they used Tshepiso. In November 2014, Gupta associate Ashok Narayan requested that Tshepiso print a document entitled “a drafted invitation”.
Narayan was a key figure in what amaBhungane previously reported appeared to be a money laundering scheme connected to the Guptas. He did not respond to requests for comment at the time.
Now Narayan told Tshepiso that he needed the document printed “on the official letterhead of the Office of the Premier”.
The attached invitation was to Devendra Fadnavis, chief minister of Maharashtra, Mumbai. “Ask them to fax and e-mail to the numbers provided in the letter once the Premier has signed. Please mail me a copy as well,” Narayan wrote.
Apparently heeding Narayan’s request, Tshepiso once again sent it to his father’s chief of staff, who responded: “Hi T, Please see the attached. I have the Chief Ministers e-mail address and can send it on directly should you wish me to. It may look better coming from an official premier e-mail address. Let me know.”
On the same day Tshepiso forwarded the response to Tony Gupta.
It was previously reported that Magashule did something similar just before the three-day Sun City wedding of a Gupta daughter on April 30, 2013, in an apparent attempt to tick the box of the plane full of wedding guests being an official flight.
The #GuptaLeaks confirm the invite from Magashule, on official letterhead, to Bhupinder Singh Hooda, the Chief Minister of Haryana state. They also confirm that the invite was linked to the Guptas, as it was forwarded to senior Gupta employee Ashok Narayan.
The invitation said: “I would like to cordially invite you to visit us in the Free State Province … to explore potential areas of mutual co-operation between our countries with specific emphasis on bi-lateral trade opportunities between the Province of the Free State and the State of Haryana.”
Other e-mails suggest Tshepiso received support from the Guptas, including a loan of R80,000.
His brother Thato Magashule apparently also received benefits. The e-mails show that the two brothers travelled to Dubai in December 2015, where they stayed at the luxurious Oberoi Hotel for eight days.
The hotel sent an AED10,240 (roughly R40,000 at the time) bill for the Magashule brothers’ stay directly to the Guptas’ Sahara Computers.
Despite such benefits, the Magashule brothers seem to have been treated as mid-level assets by the Guptas. At the time, Chawla instructed: “All these guest [sic] entire bills we have to pay so please arrange payments for all except Gift Magashule and Thato Magashule. For them just bed and breakfast.”
- Read Chawla’s instruction here.
Oberoi staff received similar instructions in October 2012 before Tony Gupta, Narayan and Zwane arrived in India for a part-choir, part-networking, week-long tour.
The group was booked into Oberoi Hotels throughout their stay. Shortly before their arrival, a hotel manager sent an e-mail to brief staff on the guests.
- Oberoi hotel invoice.
The manager said: “Dear all, this is in regards to the upcoming Sahara group at your respective hotels…
“Please note this is a VVIP group and Mr. Rajesh Gupta regularly stays at the Presidential Suite of the Taj in New Delhi.” And: “All mini bars to be locked for the entire group excepting Mr Rajesh Gupta and Ms Videsha Proothveerajh.”
At the time, Zwane was an MEC in the Free State. Zuma controversially appointed him as mining minister in 2015. Even before the October 2012 trip to India, Zwane was linked to the Guptas via a controversial dairy project in Vrede, Zwane’s home town.
In 2013, amaBhungane first learnt that Zwane was on this trip, that the New Age sponsored caps and T-shirts, and that members from the Umsingizane gospel choir and officials from the Free State’s agriculture department were part of the group.
Chawla took care of bills, which were scanned directly to him by the Oberoi hotel group.
Responses … and not
Zwane did not respond to queries from amaBhungane.
Magashule’s spokesperson issued a statement saying he “has noted the so-called – communications…
“The Free State provincial government has noted that the relevant authorities, including the Directorate of Priority Crime Investigations (Hawks), have embarked on investigations which are intended to test the validity and authenticity of such e-mails.
“Until such investigations are concluded, the premier and the Free State provincial government shall not respond to enquiries relating to the sources, content or allegations emanating from these ‘leaked’ e-mails.”
Gupta lawyer Gert van der Merwe also responded in general terms, saying in a phone call that it would be “inappropriate” to comment on claims about his clients. “I will be more than just a cowboy to respond because I have no documents or context or instructions. It is inappropriate.”
Van der Merwe said: “One finds oneself in an unfortunate position, to answer on the record on the documents when people can’t say where they got the documents. It is unreasonable even in this day and age to answer to documents held in secrecy.”
He added that he had advised his clients to obtain the leaked emails and that they had on Saturday “mounted an effort to get hold of them.”
#GuptaLeaks: How MultiChoice paid the Guptas millions
Johannesburg – MultiChoice, the pay-TV company that owns DStv and M-Net, made a questionable payment of R25m to the Guptas’ controversial ANN7 channel, the #GuptaLeaks show.
In addition, MultiChoice increased its annual payment to ANN7 from R50m to R141m.
The payments came after the family seemingly assisted former communications minister Faith Muthambi in getting President Jacob Zuma to transfer certain broadcasting powers to her, something MultiChoice was lobbying the minister for.
Following the transfer of powers, Muthambi controversially pushed through a decision in favour of unencrypted set-top boxes, which benefitted MultiChoice.
Muthambi’s decision flouted her own party’s policy on the issue. The ANC supported encryption – required for pay-TV – to promote competition in the sector.
After a lengthy court battle, the Constitutional Court earlier this year ruled that it was within Muthambi’s right to make policy decisions affecting the broadcasting sector.
MultiChoice however deny that there is any relationship between the policy outcome in its favour and payments made to ANN7. In a statement, the company said: “MultiChoice rejects your insinuations in the strongest possible terms.”
The #GuptaLeaks reveal that:
– MultiChoice executive Clarissa Mack (who had since resigned) sent policy documents directly to Muthambi, who shared them with Gupta lieutenant Ashu Chawla, setting out proposals for Zuma to transfer broadcasting powers back to Muthambi after he split the communications portfolio into two departments in 2014;
– In September 2015, six months after Muthambi confirmed there would be no encryption, MultiChoice increased its annual payment to the Guptas’ controversial ANN7 channel from R50m to R141m – at a time when the channel had failed to win a significant slice of DStv’s news audience, and whilst the channel received widespread criticism over the quality of its content;
– MultiChoice CEO Imtiaz Patel was once a director of a company with the youngest Gupta brother, Tony, and Zuma’s son Duduzane. Patel says his appointment was done without his permission, and CIPC records show that he resigned from the company on the same day he was appointed.
New ANN7 owner Mzwanele Manyi, who took over the station this year in a vendor-financed deal, said: “The so-called Gupta emails have NOT been authenticated. What if all this is part of a larger plot designed to undermine alternative voices as in ANN7?”
The Guptas did not respond to questions but have previously dismissed the #GuptaLeaks as “not authentic”.
Pay for Play
MultiChoice has been in the news this week for paying the Guptas R50m per annum for ANN7.
The pay-TV giant denied signing a “third channel amendment agreement” which would have taken ANN7’s annual income from MultiChoice to R150m, but neglected to disclose the existence of a “fourth channel amendment agreement”.
This document was unearthed in-between the more than 200 000 emails that have become known as the #GuptaLeaks.
The agreement was signed by MultiChoice’s Glen Marques and Nazeem Howa for Infinity Media Networks, ANN7’s holding company, on September 9, 2015.
The agreement not only ensured that MultiChoice would fork out R141m a year for ANN7 from April 1, 2016, but also guaranteed the Gupta-controlled company a “once off amount” of R25m.
This had to be paid to Infinity within seven days of the contract being signed, according to the agreement.
Two broadcasting insiders who had previously been involved in MultiChoice’s negotiations with news channels say such a “once off amount” is unheard of in the industry.
“The once-off fee you refer to is a pro rata payment in terms of an amendment agreement. The amendment agreement was entered into in order to assist with improving production quality,” MultiChoice said about the payment.
MultiChoice also maintains that its fee for ANN7 represented a “fair value” at the time of signing the fourth contract amendment, given the cost of running a 24-hour news channel.
“After several rounds of negotiations over a period of three years, during which we developed an understanding of the channel’s operating costs and the need for improvements in production quality over time, the final fee was set,” says MultiChoice.
MultiChoice admits that it made policy proposals to Muthambi, but the company says the majority of its suggestions were not taken up in later amendments to government legislation.
The company also denies that it was aware that Muthambi was forwarding MultiChoice’s suggestions to the Guptas.
“MultiChoice has absolutely no knowledge of the minister sending our proposals to any other person, and can in no way be held responsible for that,” says the company.
The issue at hand involves a long-running battle over whether government should favour either encrypted or unencrypted set-top boxes for the country’s digital migration process.
Critics of a policy supporting unencrypted set-top boxes argue that would-be rivals of MultiChoice can only compete with the latter’s DStv service if government enforces the roll-out of encrypted devices.
In December 2013, then-communications minister Yunus Carrim published proposed amendments to government’s digital migration policy that opened the door for encrypted set-top boxes.
But Carrim would not have the last say on the matter.
MultiChoice fingerprints in the #GuptaLeaks
After having created the separate departments of communications and telecommunications in May 2014, Zuma issued a presidential proclamation that transferred certain regulatory powers from Muthambi to Siyabonga Cwele, the then-telecommunications minister.
On July 18, 2014, only three days after the proclamation was published in the government gazette, Muthambi sent an email to known Gupta associate Ashu Chawla. She attached the government gazette containing the proclamation.
Minutes later, Muthambi again emailed Chawla, this time attaching a Microsoft Word document titled “Effect of presidential proclamation”. The document was forwarded by Chawla to Tony Gupta on the same day.
The document’s metadata reveals that its creator was Clarissa Mack, MultiChoice’s then-group executive for regulatory and policy affairs. Mack created the document on July 17, the day before Muthambi forwarded it to Chawla. Mack was also the last person to have modified the file.
Mack wrote that when Zuma created the two departments, there was an “assumption … that broadcasting including digital migration would report to the Minister of Communications”.
“The proclamation published on 15 July 2014 did not give effect to this division,” complained Mack. She also made detailed suggestions with regards to how the relevant decision-making powers should be split between Muthambi’s and Cwele’s departments.
Mack’s letter made it clear that MultiChoice wanted key powers guaranteed by parts of the Electronic Communications Act to be transferred back to Muthambi.
“Broadcasting is regulated by the Electronic Communications Act, 2005 (Act No 36 of 2005). The ability to make broadcasting policy and issue broadcasting policy directions are set out in section 3 of this Act. These powers have been transferred from the Minister of Communications to the Minister of Telecommunications and Postal Services,” Mack stated.
“It is therefore the Minister of Telecommunications and Postal Service [Cwele] who will make policy and issue policy directives to Icasa for broadcasting, including public service broadcasting,” Mack added.
Muthambi lobbies the Guptas
Over the course of the next few months, Muthambi would send Chawla four other documents relating to broadcasting policy. Chawla forwarded most of these to Tony Gupta and Duduzane Zuma, the president’s son.
On July 25, Muthambi sent Chawla a Word document called “proclamtion [sic] new 18 July 2014”.
MultiChoice has admitted that this document was also penned by Mack.
Chawla forwarded the document to Tony Gupta and Duduzane Zuma on the same day. The document stipulated in detail which aspects of the Electronic Communications Act Muthambi wanted to be moved from Cwele back to her.
“These sections must be transferred to the Minister of Communications,” Muthambi wrote to Chawla.
The document specifically focused on the parts of the Act dealing with the Independent Communications Authority of South Africa (Icasa), one of the key government bodies involved in the digital television migration process.
Muthambi also sent Chawla a Word document called “Responsibility for Infraco and Sentech” on July 25, adding in her email that “Sentech’s signal distribution must rest with the Ministry of Communications”. Apart from Icasa, Sentech is a key role-player in the digital migration process, whilst Broadband Infraco is a state-owned telecommunications company.
This document was also created by Mack, according to MultiChoice.
Perhaps the most shocking aspect of Muthambi’s communications with Chawla came in the form of a document called “final proclamation 01 August”, sent by the minister to the Gupta associate on the date mentioned in the document’s title.
“See attached Proclamation that President must sign,” Muthambi wrote Chawla, who subsequently forwarded it to Tony Gupta.
The proposed proclamation stipulated that control over section 3 of the Electronic Communications Act needed to be transferred back to Muthambi, exactly as Mack had originally pleaded in her letter.
It also included the proposed changes to the Icasa Act that Muthambi had earlier sent to Chawla.
Asked whether Mack had also created this document, MultiChoice said: “As mentioned previously, MultiChoice, like other companies in the sector, regularly engages the industry regulator and government on matters that affect the broadcasting sector. This includes making proposals that may take a specific regulatory or legislative form. Yes, this document was sent to Ms Muthambi. The proposals were inserted in a legislative template we took from previous Proclamations in the Government Gazette. Again, many of our proposals were rejected.”
Muthambi uses her powers
On November 25, Zuma signed proclamation 79 of 2014. With the stroke of a pen, Zuma gave legislative effect to the transfer of some of the powers advocated for in Mack’s documents.
Muthambi wasted little time to make use of her newly-won policy powers. In March 2015, she stunned the broadcasting industry by issuing an amendment to government’s digital migration policy that went directly against her own party’s stance on the matter.
The new set-top boxes would “not have capabilities to encrypt broadcast signals,” declared a clause Muthambi inserted in the amendment.
Only two months before, at the ANC’s January lekgotla, the ruling party stated that it supported Carrim’s December 2013 policy, which had paved the way for encrypted set-top boxes.
In her response to News24, Muthambi admitted that she had received “submissions” from MultiChoice “sent … through Ms Mack”. But Muthambi says that she had “opened the door” for such submissions after the July 2014 proclamation caused “confusion and uncertainty” over which of the two departments would be responsible for broadcasting policy.
“The minister denies having been influenced by any person in the finalisation of the digital migration policy after consideration of all submissions by all interested parties…” Muthambi’s spokesperson said in a statement.
MultiChoice also said that it was one of “several stakeholders” who made submissions to the minister. Neither MultiChoice nor the minister indicated which other parties, apart from MultiChoice, made submissions to her office.
Muthambi also failed to address News24’s detailed queries about the emails she had sent to Chawla.
ANN7’s MultiChoice bonanza
On December 4, 2014, about a week after Zuma transferred the relevant broadcasting policy powers to Muthambi, Howa sent Tony Gupta a draft “third channel amendment agreement” for the deal between MultiChoice and Infinity.
This is the unsigned document that recently surfaced in the media.
The signed “fourth channel amendment agreement”, however, reveals that MultiChoice first agreed to increase the ANN7 fee to R100m per annum, before ultimately settling on an amount of R141m.
But it is the “once off” payment of R25m that has industry insiders most concerned.
“It is unheard of. I haven’t seen any once-off payments [in] any of the agreements with MultiChoice that I’d been privy to,” said one of the industry insiders.
The two sources, along with a third industry expert with direct knowledge of MultiChoice’s agreements with news channels, all agree that even R50m per year would constitute a bad investment for MultiChoice.
“What they pay ANN7 compared to what they get from it [the agreement] makes no commercial sense. It is such a bad channel and its viewership is so low that ANN7 actually needs to pay DStv to be on their platform,” said one of the sources.
Data obtained from the Broadcasting Research Council (BRC) shows that ANN7 secured only 8.93% of DStv’s news audience in 2014, and 10.98% in 2015. Its average daily viewership figures for 2014 and 2015 were 6 215 and 8 157 respectively.
SABC News held news audience shares of 19.90% (2014) and 22.46% (2015) and it drew 12 379 and 15 412 average daily viewers in those two years.
eNCA’s average daily viewership was 29 481 (2014) and 32 265 (2015) and it had a news audience share of 54.28% in 2014 and 52.71% in 2015.
Despite ANN7’s relatively low audience figures, MultiChoice maintains that it believed the fee increases were justified.
“We believe the fee represented fair value at the time, particularly considering that ANN7 was a start-up channel requiring significant initial investment to get off the ground – as opposed to others, who could leverage existing infrastructure and content,” said MultiChoice.
“We deny that there is any relationship between our submission on the proclamation, the channel supply agreement for ANN7, and any fees or increase in fees paid for that channel.”
Asked about his relationship with the Guptas, Patel said he couldn’t remember when he first met the Guptas.
“I did interact with them, in particular between approximately 2007-2010, and our relationship tapered off after that. I can’t recall attending any Gupta social functions after about 2010, except for the wedding in 2013,” said Patel.
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VIEW ALL THE RELATED DOCUMENTS:
#GuptaLeaks: Meet the money launderers
The Guptas used an international network of scrap metal dealers to launder hundreds of millions in kickbacks between China, India, UAE and SA. We introduce them.
amaBhungane and Scorpio
It must have been good news for Piyoosh Goyal when the State Bank of India approved his Rs750m (R120m then) loan.
So good that he then sent his agent to a senior banker’s Mumbai home on a Sunday with two expensive watches and a fistful of cash. At least, this is what the Mumbai branch of the Central Bureau of Investigation (CBI) later claimed.
Their anti-corruption investigators had lain in wait, that November 2013, and they arrested Goyal’s alleged agent when he emerged from the banker’s home.
Then they raided the home where they said they found the two watches and the cash. Simultaneously, they raided Goyal’s premises, where they claimed to have found “incriminating documents”.
The investigators laid charges of bribery and collusion against Goyal, his alleged agent and the banker.
Find all you need to know about #GuptaLeaks here
According to Indian journalists, the investigators’ evidence included more than 70 hours of recorded conversations. They also interrogated Goyal’s agent for half a day.
Goyal’s Delhi-based scrap metal company, Worlds Window Impex India, issued a statement the next day denying the allegations.
The bank got two senior staffers to investigate. Within days, they cleared their colleague of wrongdoing.
But the CBI continued to investigate and, in January 2015, it filed a charge sheet with a Mumbai judge, a spokesperson told us.
“The matter is sub judice,” he said, meaning CBI would not comment as the case was still before court.
Goyal’s questionable Indian bank loan was just the tip of an iceberg.
In this article, we reveal that by the time CBI charged Goyal, he and Worlds Window had for four years helped the South African Guptas to move the equivalent of hundreds of millions of rand between China, India, SA and the UAE, using hundreds of suspicious transactions.
Goyal founded Worlds Window in Delhi in the 1990s. He was in his early 20s. Business people described him as a “first generation entrepreneur” and a “young and dynamic businessman”.
He started by importing and trading scrap metal. Then he expanded the group into logistics, manufacturing and – after he met the Guptas in 2010 – coal mining in SA.
In 2008, Britain’s biggest metal recycler, European Metal Recycling (EMR), bought a 49% Worlds Window stake from Goyal and other shareholders. EMR holds the stake to this day, and has regularly injected cash into the business (see story below: #GuptaLeaks: Liverpool company owns 49% of Indian firm implicated in kickback scheme).
EMR told us: “EMR is disturbed to hear press reports of the alleged involvement of Worlds Windows in money laundering, which we became aware of late last year through #GuptaLeaks. We are currently carefully looking at this investment as a consequence.”
Worlds Window has claimed to be one of India’s largest scrap importers; however its financials suggest it was a relatively modest operation.
In the financial year ending in March 2011, the group’s holding company, Worlds Window Impex India, bought scrap worth R1.7bn. This was about 5% of the total Indian imports at the time. It said it sold a little more than this and, after operating costs, was left with R57m.
We note these numbers because, as we shall see, they were small compared to the tide of money then washing between Goyal-linked companies and the Guptas.
Before the CBI bust, Goyal had kept a modest profile. He appeared on podiums and in a few puffy news pieces as the esteemed company executive. Otherwise, he occasionally graced the pages of International Society for Krishna Consciousness newsletters.
The society described him as a donor, “senior devotee” and the “midday meal director” for Sri Sri Radha Parthasarathi Temple’s feeding programme, in south Delhi.
Piyoosh Goyal, right.
He told us that because he had resigned, he could not answer our questions on Worlds Window’s behalf.
Yet, analysts at an Indian credit agency still describe Goyal as Worlds Window’s promoter. His father stayed on after 2013 as “group mentor” and a “key person”, according to its website. And at least 41 Worlds Window companies remain registered to the address Goyal declared on his 2012 tax return.
Goyal gave us limited written comment for this article, and Worlds Window ignored us despite repeated attempts to elicit a response.
However, one man came forward to offer a spirited and detailed defence for them. He did not want to be named, so we shall call him Mr Patel.
Meeting the Zuptas
Mr Patel is a senior figure in Worlds Window.
He said Goyal first met the South African Guptas through a common friend in India in 2010. The Guptas then introduced Goyal to their business partner Duduzane Zuma, the president’s son.
They encouraged Goyal to invest in SA, telling him: “We have lots of mines, and you will not face any problem. We know everybody.”
Worlds Window quickly joined the “Zupta” party, it appeared.
An August 2010 accounting record from the #GuptaLeaks described that someone from Worlds Window spent more than Rs700 000 (about R100 000 then) on “SA… President’s Clothes (Cash)… India”. The Guptas later paid them back. Jacob Zuma had officially visited India two months earlier.
We asked Mr Patel if they had bought clothes for Zuma. He said: “I can remember cloth has been purchased for Zuma and his wife. There is chances payment made by us [sic]. Don’t remember exactly. It was more than eight or 10 sets for each.”
He added: “As I remember, president used Indian cloth in India, so assuming paid by Gupta as we never met president in India [sic].”
Jacob and Duduzane Zuma and the Guptas failed to reply to our questions. South African brother Atul Gupta previously told the BBC the #GuptaLeaks were fake.
That same month in 2010, Goyal and the Guptas did one of their first big deals.
It was dressed up as Worlds Window investing in two South African coal mines, but it appeared to be a sham, as we previously reported.
In the deal, a subsidiary of Worlds Window Impex India, the group’s flagship, transferred $4.43m (R31.5m then) to the Guptas’ Oakbay Investments in SA.
That was a lot of money for Worlds Window Impex; in fact, it was more than half of its operating profit for that year, so you would expect its subsidiary would have placed a reasonably sure bet.
Worlds Window had paid for minority shares in two dormant companies that owned two questionable coal prospecting rights in SA – worse, share registers show the Guptas did not transfer the shares to Worlds Window.
Even worse, it appeared that there was no coal and the project was abandoned two years later.
Oakbay got money for nothing.
A purported coal deal in 2010, in which Worlds Window gave the Guptas money for nothing and never got it back.
Our recent report compared this to two nearly identical Gupta deals in which they appeared to launder stolen Transnet and Free State provincial government money back home. It appeared to be a modus operandi.
But Mr Patel denied Worlds Window was party to a sham. He said the R31.5m was “for profitable mining”. He said: “They issued the share to us, but they might have done a fraud [sic].” He sent us a copy of Worlds Window’s purported share certificates.
Worlds Window sent its South African lawyers to investigate the fate of their money – but it only did this a full six years later, after the Gupta scandal blew up in SA. Mr Patel said the group was now considering taking legal action to recover the money.
By early 2011, Worlds Window had registered two subsidiary companies here, and Goyal was a regular visitor.
The #GuptaLeaks show how Gupta employees made sure his travels were comfortable. They arranged his luxury airport pickups and Saxonwold meetings with South African Gupta brother Tony.
They hosted Goyal and his wife at their luxury Clifftop Lodge in Welgevonden Game Reserve in Limpopo. A helicopter was to transport the Goyals there, and the Guptas booked them into the lodge’s honeymoon suite, according to the leaks.
In 2011, Gupta staff chartered flights to carry the Gupta and Goyal families from Delhi to watch the Cricket World Cup final in Mumbai. They were joined by the family of a powerful Indian politician who was at the time a cabinet minister.
India beat Sri Lanka by six wickets.
Later that year, Goyal and the Guptas handled some travel arrangements for the politician’s adult son and the son’s wife when the couple visited Cape Town for Christmas and New Year. The Guptas paid for their stay at the luxurious Queen Victoria Hotel at the V&A Waterfront, the #GuptaLeaks show.
More recently, Worlds Window transferred ownership of one of its shell companies to the politician – who refused to explain the deal to us (see story below: #amaBhungane: Indian politician’s deal with Gupta partner).
In 2014, when Tony Gupta needed a helicopter for a 250km trip in the western Indian state of Gujarat, he called upon Goyal. Goyal wielded his apparently significant influence there: A senior Gupta staffer emailed him the travel details and Goyal forwarded this to billionaire industrialist Gautam Adani.
Adani and his global industrial group of the same name form a political and financial powerhouse in India. He is reported to be close to Indian Prime Minister Narendra Modi.
Goyal wrote to Adani to vouch for the Gupta staffer: “He is Ajay’s [one of the Guptas] brother can you help pls. Thx nd rgds.”
Adani quickly wrote back: “I don’t have helicopter, but if he require the plane let me know and will provide him… Gautam.”
Not two years later, the Guptas and Adani cobbled together a would-be weapons deal that, as we previously reported, was set up to enrich them at the expense of South African state arms manufacturer Denel.
Down to business
Worlds Window’s apparently pseudo mining investments and Goyal’s South African visits seem to have set the framework for a more lucrative business – money laundry.
Some time back, amaBhungane received an anonymous tipoff implicating Worlds Window and the Guptas in ports corruption in South Africa in 2011.
It said: “ZPMC has been inflating prices of their cranes at the ports, particularly the seven cranes purchased for port of Durban, by more than 15% to accommodate bribes that included many senior Transnet officials.”
ZPMC is the name commonly used by Chinese state-owned crane manufacturer Shanghai Zhenhua Heavy Industries.
Our anonymous tipster described the alleged role of “a representative of the Guptas” who arranged kickbacks through a Worlds Window account in the UAE.
This was Naveen Agrawal, a long-time director of the Worlds Window group. He did not respond to our questions.
We found one chain of correspondence in which a group of people discussed ZPMC’s crane bid. They named a “Naveen” who appeared to advise ZPMC on how to engage with Transnet on another crane tender.
We also found an “agent agreement” – often of a cover for bribes and kickbacks – between ZPMC and a UAE-registered company called JJ Trading. The contract and related documents explain how the cranes were only worth $81m (R570m then), but ZPMC inflated the price to $92m (R650m then) to make room for “commissions and fees” for JJ.
The person who signed on behalf of JJ was not identified.
At about the same time, a senior Gupta staffer emailed Goyal a confidential Transnet document, outlining a separate, upcoming crane tender.
The document metadata indicates it was drafted by an employee in Transnet’s Office of the Chairperson and Group CEO. Then Transnet chief executive Brian Molefe told us he did not know how the Guptas got it. For years, Molefe has been questioned for his proximity to the Guptas.
ZPMC denied it was party to corruption; Transnet said it was investigating, and Goyal did not explain the latter email exchange when we asked.
So, who was JJ Trading, the company that had signed the “agent” agreement with ZPMC? Was it controlled by Worlds Window as the tipoff suggested?
A desert mystery
Ram Ratan Jagati probably did not intend to become the public face of an international money laundromat.
His social media profiles identify him as “manager at JJ Trading”, but no-one answered his or JJ’s phones or emails. We were left to piece together his profile using snippets of information online and in the #GuptaLeaks.
JJ’s website advertises its experience as a trader of scrap metal, rice, beans and other commodities.
Jagati’s social media profiles show him to be balding, moustached, bespectacled and neatly dressed. He appears to live in Sharjah, in the UAE, but states that he comes from Ahmedabad in India.
Ram Ratan Jagati, JJ Trading “manager”.
JJ is registered in the UAE’s Hamriyah Free Zone, a financial haven that keeps company owners’ identities a strict secret.
Jagati lists at least 41 Worlds Window staffers and directors as his Facebook friends – but emails in the #GuptaLeaks show he was more than just a “friend” to the group, particularly when moving money for the Guptas.
In one email to Jagati, a Worlds Window director said: “Dear Ram Ratan. Please provide [$1m] to Arctos.” The director copied in a Worlds Window administrative employee.
Arctos Trading is one of the two Worlds Window subsidiaries established in SA. It managed a Gupta mine in Mpumalanga.
Jagati replied with proof of a $1m wire transfer from the UAE-registered IMR General Trading to Arctos. He copied two Worlds Window staffers.
Goyal at least part owned IMR, the #GuptaLeaks show. One online UAE business list recorded “firstname.lastname@example.org” as IMR’s contact – a misspelling of Jagati’s actual email address. Another listed “email@example.com”.
Jagati’s proof of payment from IMR to Arctos claimed the money was for the “purchase of metal scrap”, but a Worlds Window staffer then forwarded this to a Gupta manager “for your reference”. A trailing email notes that it was “payment for [Bank of Baroda] instalment” – contradicting Jagati.
In other words, money had moved but the commercial explanation was a fiction. And the sequence of events reveals Jagati to have been a Worlds Window and Goyal factotum.
Another apparently fictional deal, handled by JJ Trading’s manager Jagati for Goyal and Worlds Window, evidencing Jagati’s place in their international network.
More emails underscored this.
Shortly after Transnet gave ZPMC the crane contract, a #GuptaLeaks accounting document appears to record JJ’s receipt of $969 086 (R8m then). It is described as “Shanghai Zhenhua Heavy Industries”, ZPMC’s full name.
Shortly after this, a Gupta accountant emailed his colleagues instructions on how to distribute a larger sum – $3.3m, apparently including the ZPMC payment – to three Gupta-owned companies in India.
One of the Gupta staffers then sent the email to Jagati and a senior Worlds Window accountant, and JJ promptly wired the funds from its account at HSBC to the three Gupta companies.
JJ and, again, Jagati appeared to answer to Worlds Window.
Worlds Window and the Guptas used JJ Trading and Jagati to move kickbacks.
It wasn’t me
No, answered Goyal. “I am not the director, promoter or even employee of JJ. We [Worlds Window] never received any money either from JJ or Gupta [or] ZPMC.
“I have neither met any officer/executive of ZPMC or Transnet, [and] we were never involved in any Transnet related business so I will be highly obliged if you don’t link my name.”
He added: “For your satisfaction, we may provide you even certificate from chartered accountant that whatever business Worlds Window did with Gupta, it was 100% as per law. Even we declare all investment in our account books or whenever required informed government authorities also [sic].”
For several weeks, he did not come up with the promised accountant’s certificate. Then, in response to final questions last week, he again promised to produce one, supposedly to clear Worlds Window.
He told us: “You are misusing your writing power. With all respect, I have doubt on your intention.”
He later appeared to accuse us of drafting fiction: “Let me appreciate you are good story maker.”
Transnet spending spree
The next year, 2012, the Chinese state-owned locomotive manufacturer China South Rail (CSR) was bidding to sell Transnet 95 new locomotives.
Goyal and the Guptas got involved, #GuptaLeaks emails show.
In January, a CSR deputy director emailed Transnet CEO Molefe and CSR’s vice president. He attached a letter requesting to visit Transnet sites in South Africa.
The CSR deputy director forwarded the email to a Worlds Window group director, Rupesh Bansal.
Bansal forwarded the email to a Worlds Window staffer, commenting in broken English: “Please provide this letter copy along with update on previous email as required by Piyoosh Ji.” Recall that this is Goyal’s first name. “Please suggest him that this is the letter is sent and the points mentioned in letter are practical and to be pursued by CSR.”
The Worlds Window staffer passed the email to Goyal’s assistant, who passed it on to a senior Gupta manager and to Ajay Gupta’s son.
Meanwhile, Molefe responded – politely and appropriately – to CSR. Someone also sent this email to Worlds Window and Goyal’s assistant. She passed it on to the Guptas.
Evidently, Goyal and the Guptas’ mutual interests extended well beyond mining.
Goyal failed to explain when we asked him too.
CRRC Corporation Limited, which absorbed CSR in 2015, has not answered our questions.
We could not reach Bansal for comment.
In October 2012, Transnet awarded CSR the R2.7bn 95-locomotive contract.
And, as we previously reported, CSR then started kicking 20% of the contract back to JJ and a related company called Century General Trading.
Century General is also registered in a UAE financial secrecy haven. Like JJ, its website claims that it trades scrap metal, grains and beans. And Ramratan Jagati – the JJ “general manager” who takes orders from Worlds Window and spends Goyal’s company’s money – registered its website.
A joint Worlds Window-Gupta accounting document, discussed later, shows CSR made one of its first payments – $6m (R50m then) – to Century General in December 2012. In the following weeks, JJ and Century General wired at least $2m (R17m then) from their accounts at HSBC in Dubai to the Guptas’ front companies.
Next, Transnet ordered another 100 locomotives from CSR. These ones cost Transnet R4.4bn, and CSR started paying 21% of this to Jagati’s JJ and Century General.
And in 2014, Transnet ordered another 359 locomotives for R18.1bn. CSR started funnelling a further 21% to JJ and Century General.
All in, these non-descript little UAE metal, rice and bean dealers stood to earn a whopping R5.3bn in CSR payments. By comparison, this was more than three times the R1.7bn annual turnover for Worlds Window Impex, at the time.
JJ and Century General were to keep a 15% fee (R795m) on the Chinese kickbacks, the leaks show, way outperforming Worlds Window’s 3% operating margins (R57m) on its scrap metal.
The laundromat appeared to dwarf the Worlds Window front office.
But Mr Patel, the Worlds Window insider, tried to convince us there was nothing out of the ordinary here.
He said of JJ: “They are professional consultant. They are associated with CSR for the last 10 years.
“JJ is not involved with Transnet deal. JJ has nothing to do with Gupta or anybody, and I don’t think you will find any deal between JJ and Gupta.
“CSR used to take help of JJ. They used to take help in Europe, Africa, India, Pak…, everywhere JJ’s consulting for them.”
We thought JJ just traded metal, rice and beans.
Nevertheless, things went awry in South Africa, Mr Patel said: “In South Africa, CSR cancelled their agreement with JJ. They say we cannot go ahead with you in South Africa. In this case JJ did lot of hard work. They have lot of expenditure for CSR, before tender.”
What sort of work?
“They hired eight or 10 guys in South Africa also, and they selected, they interviewed four or five black partners for them.”
How would a UAE scrap metal trader or its non-descript manager Jagati qualify for that job?
“Because CSR used to tell them: ‘Can we hire this consultant?’ Because being a government company, CSR cannot pay any money before tender.
“So, before tender they were required to hire so many people to do the research and consultancy and internal information. So, they hire JJ to finance all this information.
“So they hire people for intelligence. So, how much Bombardier will quote? How much GE [General Electric] will quote? So, even for this type of information, they hire people.”
Bombardier and GE were competing bidders on the Transnet locomotive contracts.
“They [JJ] have some intelligence system, as per my knowledge. Definitely they use someone to spy on somebody. Definitely. As per my knowledge. So many services.”
It was unfortunate that Mr Patel did not want to be named or explain more clearly the source of his apparent knowledge about JJ, so we asked him if he could get us documents detailing the alleged dispute between JJ and CSR.
He chuckled nervously: “Awww, ha ha ha. Why you want to? I will prefer if you write all Gupta instead of JJ. I would rather not.”
How can we reach JJ?
“Let me check, because I don’t want there to be any harm to JJ. Because I know because of internal story, JJ is in loss because of this deal, because they have been cheated by [CSR].”
Intrigued, we dug deep into the #GuptaLeaks to try to understand Worlds Window and the Guptas’ dealings.
We found huge sums of money flowing between the two groups.
Some of it was for legitimate business, as Goyal claimed. For example, Worlds Window subsidiary Arctos formed coal mining partnerships with two Gupta companies and managed their coal mine in Mpumalanga.
But other money flows were suspicious.
For example, we found a spreadsheet in the #GuptaLeaks, titled “Worlds Window”. It was attached to an email from one Gupta executive to her senior colleague. In the email, the executive typed: “Is this what u looking for?” No further context was given.
The spreadsheet is a ledger, recording 251 transactions from January 2010 until February 2013.
It looks a lot like traditional “hawala” bookkeeping.
Hawala is the name for an ancient form of money transfer developed in south Asia. It is still used today, often legitimately, as an alternative to formal banking systems. But because the money is not remitted through formal channels, it is a popular way to launder money.
The Chinese developed a similar system, known as “flying money”.
As a simple example, a man in the UAE wants to pay a woman in South Africa. He gives his money to an Emirati hawala broker, or “hawaladar”.
The Emirati broker will then send a message to a South African broker who will give the money to the woman there, minus a fee.
Both brokers will have many clients remitting money in both directions. Each broker will keep a running balance of how much he owes the other broker. Over time, the brokers will settle the difference.
The Gupta-Worlds Window “hawala” ledger describes a group of Worlds Windows-linked entities in one column. Other columns describe the transactions. Sometimes the explanations are cryptic, and sometimes they are clear. Overall, it appears as if the Worlds Window-linked “brokers” were transacting with Gupta-linked entities to remit money to and from South Africa, India and the UAE.
In some entries, it is easy to see how Gupta companies paid Worlds Windows companies in one country, and on the same day, the Worlds Window companies paid the Guptas the same amount in another country, and vice versa.
Thus, money was effectively “beamed” across borders.
Just like a traditional hawala ledger, this one keeps a dollar balance of how much the Guptas owed Worlds Window.
In total, $74m (R660m then) flowed into the account, and $74m flowed out, settling up the balance over time.
While the ultimate source and destination of the transactions is not always clear, some ZPMC and CSR payments can be traced from the Chinese companies, through JJ and Century General, for remittance to the Guptas in India, the UAE and South Africa.
The Worlds Window-Gupta “hawala” transactions, including remittances derived from Transnet contractors.
A R76m roundabout
A number of transactions over six days in November and December 2011 were noteworthy. The transfers were recorded in the “hawala” ledger and are largely corroborated by other records in the #GuptaLeaks.
On November 30 and December 1, Gupta mining company Westdawn Investments transferred R44m to Worlds Window’s South African subsidiary Arctos. This was broken into four smaller amounts.
Immediately, Arctos transferred R44m to the Guptas’ Tegeta, broken into four differently apportioned amounts.
Tegeta kept R14.1m and immediately transferred R29.9m to the Guptas’ Oakbay Investments, which quickly parked R20m in an account at the Bank of Baroda in Sandton.
Over six days, the Guptas suspiciously roundtripped R76m through their group companies, routing all of it through a Worlds Window subsidiary.
Four days later, Oakbay and a Gupta company described as “Islandsite” transferred R32m to Worlds Window’s Arctos. This was broken into five smaller amounts. Immediately, Arctos passed this on to Idwala Coal, a Gupta company, broken into three amounts.
Idwala immediately passed the R32m on to Oakbay, again broken into three amounts.
All in, the Guptas had routed R76m in a circle, through a number of their own companies, funnelling all of it through Arctos and back to their Tegeta and Oakbay.
The money flows appear to be artificial. We do not know their purpose, but in the process, the Guptas and Arctos employed three techniques common to illicit finance.
“Smurfing”: A money launderer breaks up and moves the money in small amounts to avoid detection.
“Layering”: Money is moved between numerous different accounts to obscure its source and destination.
“Roundtripping”: A series of transactions is made between companies serving to boost their revenues without real commercial benefit.
Gupta and Worlds Window companies often appeared to lend each other money, but the circumstances were suspicious, raising the concern that the loans could have been a fake cover for money movement.
If so, we again do not know the true motivation behind the flows.
In one example in 2013, Oakbay appeared to pay Arctos R86m. But the Guptas’ staff had a problem six months later: Their auditors needed documents to legitimately explain the payment, but there were none.
So, a Gupta executive emailed a Worlds Window manager a loan contract with non-descript terms. She said: “Please sign agreement as we did last year also.”
In at least two other cases, Worlds Window’s South African subsidiaries appeared to lend Gupta companies R16m and about $32.6m (R250m then).
In fact, the Worlds Window’s subsidiaries again appeared to act as unnecessary middlemen.
They channelled loans, originally from Bank of Baroda to the Worlds Window subsidiaries, straight on to the Gupta companies. The Gupta companies in turn repaid 9% interest to the Worlds Window companies, which passed this back to the bank.
In a 2014 email, a senior Gupta manager explained to Tony Gupta that, at times, Piyoosh Goyal had paid them “through [Baroda] loan”.
If so, it is possible Goyal or Worlds Window placed a fixed deposit with Baroda abroad. Baroda in South Africa then lent the money to the Worlds Window subsidiaries, which passed it on to the Guptas.
Indeed, Baroda described the $32.6m as a “loan against fixed deposit”.
If Worlds Window in South Africa failed to repay Baroda the underlying loan amount, the bank could simply claim the fixed deposit. Thus, money would have been moved from abroad to the Guptas under the guise of a loan, and Baroda would have earned itself a 9% fee.
We have found no evidence that the underlying loans were repaid to Baroda.
Loans from banks against fixed deposits are used for various legitimate reasons, but they tend to be between related companies, not unrelated parties in different countries.
The technique can also be abused to quietly move money across borders without detection, stymieing money laundering investigators who call this a “loan back”.
Worlds Window appeared to use a “loan back” scheme to get money to the Guptas.
The Guptas used Baroda loan backs to move money in other suspicious circumstances, the #GuptaLeaks show.
For instance, the Guptas at times placed hundreds of millions of rand sourced from JJ and the Transnet kickbacks into fixed-term deposits at Baroda in both Dubai and South Africa. Using these deposits as collateral, Baroda would typically lend 95% of the value of the fixed deposit to another Gupta company.
Without the #GuptaLeaks revealing the connections between the fixed deposit made by Gupta Company A to the loan made by Baroda to another Gupta Company B, it would be difficult for an investigator to follow the money trail from Company A to Company B as there would be no direct transfer.
Baroda’s intermediating the effective transfer between the two appears often to have served to obscure such money flows. Baroda did not respond to our questions.
In the end, things did not work out for the Worlds Window launderers.
“Gupta’s have not just cheated South Africans but also cheated Indians,” Goyal told us.
“We went into partnership with the Gupta brothers for mining, and we were cheated by them in the business.”
Regarding one of their coal deals, he said: “After [them] receiving our payment, they have not allowed us to get any proceeds from the mine. We were not allowed to go on the property, and also they threatened us for not to even enter South Africa as they control things in the country [sic].”
He said the Guptas were now “illegally” selling Worlds Window’s coal.
“I have not even visited South Africa since last four years and we are now pursuing legal cases against Guptas.”
Worlds Window laid a criminal charge with the Hawks against a senior Gupta manager who allegedly stole R7.2m from one of its South African accounts in 2015. A Hawks officer confirmed he was investigating the charge.
Goyal told us: “You know very well I am in fighting with Gupta since approximately March/April 2013. But in your story, you are mentioning [payments in] 2014/2015. May I know the reason of that? I assume definitely 2013 is not fitting in your story so you prefer 2015.”
Indeed, records of Goyal’s trips to South Africa cease in the #GuptaLeaks from April 2013. But the leaks also suggest that, until late 2014, the money continued to flow between Oakbay and Arctos and JJ continued to pay into the Guptas’ UAE accounts.
But, nearly three years after the first Transnet kickbacks flowed to JJ’s accounts, HSBC shut down JJ and Century General’s accounts, according to a recent Wall Street Journal article.
HSBC told us: “To the best of our knowledge, HSBC previously exited, is in the process of exiting, or never had a banking relationship with JJ Trading [or] Century General Trading.”
But HSBC’s action seemed to be a minor inconvenience for the Guptas, who rerouted the kickback flow from JJ and Century General in Dubai to the HSBC accounts of a Gupta-related company, Tequesta, in Hong Kong.
By then, CSR had paid JJ and Century R1.6bn of the intended R5.3bn – and the #GuptaLeaks show substantial evidence of this flowing into the Guptas’ offshore accounts.
In a 2015 email, Worlds Window director Rupesh Bansal – the same one who received earlier CSR-Transnet correspondence and passed it on to Goyal – emailed CSR’s vice president. Bansal attached a spreadsheet that consolidated CSR’s payments to JJ and Century General.
The CSR man forwarded this spreadsheet to a Gupta email address.
Last week, Goyal said: “I repeat, Worlds Window neither control JJ nor Century General and never taken even a single penny from anybody on account of supply to Transnet.
“Apart from mining,” he added, “we had no areas of mutual interest with [the Guptas]”.
#GuptaLeaks: Liverpool company owns 49% of Indian firm implicated in kickback scheme
The Guptas used what looks like an international money laundering network to move their wealth. The network reaches back to the UK.
amaBhungane and Scorpio
Britain’s biggest metal recycling firm holds a 49% stake in Indian firm Worlds Window, which moved hundreds of millions in kickbacks around the world for the Guptas.
The money flows are exposed in a new amaBhungane and Scorpio investigation (scroll up), based in large part on the #GuptaLeaks.
The British firm, European Metal Recycling (EMR), is a Liverpool-based business. It says its “heritage” reaches back to the 1940s. It turns over more than £2bn a year, and is largely owned and run by one family, the Sheppards.
EMR bought 49% of Worlds Window Impex India (the parent company) in 2008. EMR’s audited financials state that it “exercises significant influence over the operating and financial policies of” Worlds Window.
EMR has regularly injected capital into Worlds Window, EMR’s financials and other records show.
There is no evidence that EMR knowingly contributed to Worlds Window’s suspicious financial activity.
Between 2010 and 2015, Worlds Window directors and staff involved themselves in private bids for multibillion-rand crane and locomotive tenders at state-owned logistics company Transnet.
Offshore shell companies
The Worlds Window directors and staff then worked with offshore shell companies, which received “agent fees” – structured like kickbacks – and helped to disperse the money around the world, including to businesses associated with the Gupta family in South Africa and abroad.
Together, the Guptas and Worlds Window also moved more millions in many suspicious transactions, according to our investigation. These transactions bore multiple hallmarks of money laundering, although the source of the money was not always known.
The Guptas are friends with president Jacob Zuma and kept Zuma’s son on their payroll. They have been accused of grand corruption here.
This week, the Asset Forfeiture Unit moved to seize R1.6bn in assets linked to the Guptas and firms they did business with. It said it hoped to seize at least R50bn in 17 related cases under investigation.
EMR responded to our initial questions. It said that before 2008, it had “a pretty long established trading relationship with Worlds Window who effectively acted as a sales agent into India”.
It said: “EMR is disturbed to hear press reports of the alleged involvement of Worlds Windows in money laundering, which we became aware of late last year through #GuptaLeaks. We are currently carefully looking at this investment as a consequence.”
We had asked EMR if it also had a business relationship with a number of offshore companies central to the laundering of Transnet kickbacks. These included JJ Trading, Century General Trading and IMR General Trading, all registered in UAE financial havens.
EMR’s response was confusing. It said: “EMR has no involvement with any of the companies mentioned, however a few companies have been counterparties in the legitimate trade of scrap metal.”
We asked it to explain, name its trading partners and provide evidence of legitimate business. It did not.
EMR spokesperson Olivia Healey sent us a general response, referring to a statement in EMR’s audited financials in which it classifies Worlds Window companies as “associate undertakings” because EMR “exercises significant influence over the operating and financial policies of the company”.
She said this statement “misrepresents the reality of this situation”.
She continued: “When consolidating our accounts, we work on standard assumptions as follows: ‘An associate is an entity in which the group has significant influence, but not control, over the operating and financial policies of the entity. Significant influence is presumed to exist when the investor holds between 20% and 50% of the equity voting rights.’ The important word in here is presumed. So, for the purpose of accounting, Worlds Windows is presumed to fall into this category as we have a significant minority interest.
“The reality of the situation is that [EMR] had no board representation and exercised no management control over the business. This financial investment was effectively managed by a post audit financial review which had not raised any red flags to date.
“So unfortunately we are simply unable to assist you any further with your enquiries.”
Among our questions, we had asked EMR whether it knew about or had influence over Worlds Window’s business relationship with the Guptas, the apparent laundering of kickbacks via JJ and Century General and whether it condoned other suspicious money flows, outlined in our investigation (scroll up).
#amaBhungane: Indian politician’s deal with Gupta partner
The Guptas chartered Cricket World Cup flights and bankrolled a luxury hotel stay for the family of Kapil Sibal.
amaBhungane and Scorpio
Former Indian government minister and leading Congress Party politician Kapil Sibal has refused to explain a business deal with Worlds Window, a firm that apparently helped the South African Guptas to launder hundreds of millions around the world.
The suspicious money flows are explained in a new investigation (scroll up) by amaBhungane and Scorpio, based mainly on the #GuptaLeaks.
There is no evidence that Sibal was party to money laundering or corruption, but it is worth noting his refusal to explain a deal with Worlds Window, an Indian scrap metal and logistics conglomerate.
Sibal is also a top lawyer in India.
Between 2010 and 2015, hundreds of millions of rand flowed between companies linked to the Guptas and Worlds Window.
The money included Chinese kickbacks for Transnet crane and locomotive contracts. The transactions moved money between South Africa, China, UAE and India.
Lacking commercial substance
Many transactions appeared to lack commercial substance, although the source of the money was not always known.
Worlds Window was founded by Indian national Piyoosh Goyal.
After entering business with the Guptas in 2010, Goyal visited South Africa often. The Guptas also visited India.
In 2011, Gupta staff chartered flights to ferry the families of Sibal, Goyal and the Guptas between Delhi and Mumbai, for a Cricket World Cup match.
Sibal had been a government minister since 2004 and was, at that time, in charge of two portfolios: communications and information technology and human resource development. He was also a member of parliament.
Sibal was joined by his wife and adult son Akhil, also a lawyer.
Sibal senior said: “I have never had any dealings financial or otherwise with the Guptas. I have met Mr Gupta in Delhi only once when my friend Piyoosh Goyal invited me to watch the Cricket World Cup.
No Gupta invite
“We did not travel on the invitation of Mr Gupta nor am I aware of any charter by him. My wife, Akhil and I went on the invitation of Piyoosh. Even while watching the match we did not sit with Mr Gupta nor go to the ground with him.”
Akhil also said he did not know the Guptas had chartered the flight.
Later that year, the Guptas paid for Akhil and his wife to stay at the luxurious Queen Victoria Hotel at Cape Town’s V&A Waterfront over Christmas and New Year, the #GuptaLeaks show.
Akhil said: “I had requested Mr Goyal to help with arranging a car in Cape Town, and offered to pay the charges… I have known him for several years, and he is my client.”
The leaks show Goyal passed the request on to Gupta staffers, who arranged the car.
Akhil said he tried to pay in full for the hotel accommodation.
But, he said: “At the time of checking out of the hotel in Cape Town, when we asked to settle the bill for incidental expenses at the hotel, apart from the room rate, which was already settled by us in advance, the hotel staff informed us that the incidentals had been settled at the instance of Mr Goyal.
“Subsequent to my return to India, I discovered the pre-paid charges for the accommodation were also reversed. None of this was done at my request. Despite my remonstrations with Mr Goyal, on his insistence, I accepted his generous gesture.”
The #GuptaLeaks show the Guptas’ company Sahara actually paid. Akhil said he had no knowledge of this.
In November 2013, India’s Central Bureau of Investigation (CBI) charged Goyal with allegedly bribing a senior state banker for a loan.
The CBI reports to a number of ministries, including law and justice. Kapil Sibal was law and justice minister from May 2013 to May 2014.
There is no evidence to suggest Sibal interfered in Goyal’s case. In fact, CBI told us that it filed a charge sheet with a Mumbai court in 2015.
The case is still outstanding.
The Grande Castello deal
Indian corporate records show that, in February 2017, Sibal became a director of Grande Castello. Until then, Grande Castello had been a 100% Worlds Window subsidiary. It appeared to be a shell company, without assets or revenues.
We asked Sibal to explain his directorship of “Worlds Window subsidiary Grande Castello”.
He was curt: “You don’t seem to have your facts right.”
We provided him with details from the corporate records and asked him which facts were incorrect.
He stonewalled again, saying: “I have never been a director of any subsidiary company of any company.”
We provided proof the corporate register listed him, not a different Kapil Sibal.
He did not respond.
On further investigation, we discovered that Worlds Window had transferred ownership of Grande Castello into Sibal’s name in November 2016.
We explained this to him asked him to explain in light of his previous responses. We also asked him to explain substantial new loans on Grande Castello’s balance sheet and name the lender.
He said: “From your last mail, it is apparent that your assertion regarding Grande Castello in your first mail was incorrect. You now abandon that position, assert a new fact, and still wrongfully accuse me of lying.
“Sans a relevant factual foundation, you nevertheless proceed from conjecture to wild speculation and deem it reasonable to ask unwarranted questions, entirely ignoring the categorical responses already provided to you, which sufficiently answer your queries.
“I am now convinced that your intent is mischievous and your approach less than objective. I don’t intend to correspond with you any further.”
Dubai: the Guptas’ city of shells
Angelique Serrao and Pieter-Louis Myburgh
On the surface, Dubai is one of the world’s great success stories.
Its towering skyscrapers and glaring opulence bear testimony to a desert boom-town that has experienced nearly unrivalled economic growth in the last few decades.
But the shiny office blocks, luxury hotels and colossal shopping malls conceal a decidedly seedier side to the city; a darker character that exhibits all the traits of a modern day tax haven.
According to the Tax Justice Network’s 2015 Financial Secrecy Index, Dubai “stands out above many other jurisdictions in terms of its lack of interest in transparency, and the laxity with which its offshore sector is supervised and regulated”.
It also has an “ask-no-questions, see-no-evil” approach to commercial transactions, financial regulation and crimes.
The report also highlighted Dubai’s reputation for attracting “large quantities of criminal and tax evading money from Asia, Africa and further afield”.
The story of the globe’s illicit cash flows would not be complete without looking at how it relates to South Africa – in particular to the Gupta family.
There has been much speculation about the amount of rands that travelled across South African borders to the Guptas’ new base in Dubai.
The #GuptaLeaks have clearly shown that the Gupta brothers and their close associates have amassed a considerable collection of companies and properties in the United Arab Emirates (UAE).
Find all you need to know about #GuptaLeaks here
The network of shell companies established by the family was apparently put to good use when they needed to conceal and process the vast fortunes they’d siphoned off from government contracts in South Africa.
Dubai has a well-known reputation as a play place for the rich.
It boasts the world’s tallest building, and its premier shopping mall counts among the largest ever built.
One expat we met described the city as a “Disneyland for adults”.
Thanks to this combination of world-class amenities, upmarket shops and a conveniently opaque financial system, Dubai represents a perfect fit for South Africa’s famously profligate Gupta family.
The #GuptaLeaks have helped to unearth staggering details on how the Guptas and their associates moved the dubious proceeds of state tenders in South Africa to their collection of shell companies in and around Dubai.
We travelled to Dubai to see what the Guptas’ new base was like. We also hoped to gain a deeper understanding of the mechanics of their network of shell companies.
Our first stop was a considerable distance out of town. We were looking for a scrap metal dealership inside the Hamriyah Free Zone, a large industrial area located next to a golf course and otherwise surrounded by the desert’s soft, powdery sand.
JJ Trading, or JJT, the first Gupta shell on our list, should have been a thriving business.
Apart from its scrap metal activities, the company received at least R760 million in revenue linked to Transnet port crane and train tenders.
However, the security guards at the boom gate had never heard of JJT and advised us to go into the office.
A sign outside indicated that it was the Hamriyah Free Zone.
We were assured that they would have a list of all the businesses inside the Free Zone.
But JJT was not on any such list.
“I don’t know this company,” said the guard behind the desk. “Call them [JJT],” he suggested.
Other than on paper, the company did not appear to exist.
Webster’s New World Finance and Investment Dictionary describes a shell corporation as a “company that has legal status but provides no service or products and has few, if any, assets”.
“Shell companies may be set up for illegal purposes, such as tax evasion, or formed in anticipation of attracting funding,” according to the dictionary.
We concluded that this definition applied to JJ Trading.
The Hills have eyes
We arrived in Dubai at night and the first thing we saw was the dazzling luminance of a trail of skyscrapers that marched into the distance.
One of these colossal structures stood out among the rest.
It was the Burj Khalifa, the world’s tallest building. Its head-turning height was obvious even at night, with its massive frame etched against the backdrop of a dark horizon.
As the metro train carried us from the airport into downtown Dubai, the city’s monetary abundance became increasingly visible.
It was as if the emirate’s riches had been poured into its structures.
The city’s developers clearly believe in the adage ‘the bigger the better’, as evidenced by the row of concrete, steel and glass giants that engulfed us as we entered the central business district.
The impressive skyline represents an overwhelming abundance of money, an unapologetic display of wealth that lay as far and wide as the glittering lights allowed our eyes to see.
True to their spendthrift ways, Tony Gupta and his two older siblings chose Dubai’s most expensive house in the most exclusive area when they bought their first property in the city in 2015.
Villa L35 in the Emirates Hills estate is the perfect sanctuary for the Guptas, and the family did not mind parting ways with a cool R331m for the property.
In order to get to Emirates Hills, one needs to drive past yet another golf course.
Only those who’ve experienced the city’s formidable heat could fully appreciate the volumes of effort and water that must go into the maintenance of these oasis-like playgrounds.
It was 41 degrees Celsius on the day of our visit to Emirates Hills. According to some of the locals we spoke to, this constituted “cool weather” compared to the summer months.
A boom gate with cameras and security guards confirmed that we had arrived in one of Dubai’s wealthiest suburbs.
Emirates Hills is a sprawling residential development, so we had quite a distance to cover between the entry point and Guptas’ villa.
But the drive was by no means boring, with the view of mansions of every shape and size serving as our entertainment during the car ride.
Even on such a blistering hot day, the Guptas’ house looked cool, thanks to the trees and plants around the villa.
A family crest on the fence showed that this was indeed the Gupta residence.
We wondered what one would encounter if one were to venture beyond the house’s Indian-style arches and the line of lanterns outside, and finally through the impressive wooden door that keeps unwanted visitors at bay.
But we couldn’t hang around for too long. A group of men who looked like security guards were sitting in the garden, and our presence had drawn their attention.
We duly told our taxi driver to move along.
King of the mythical beasts
During the same time that the Guptas started shopping for a house in Dubai, they were also in the market to rent office space.
One of the potential commercial addresses mentioned in the #GuptaLeaks was an office in the financial district.
However, it was on the opposite, slightly run-down side of the highway, away from the glitzy buildings that top companies prefer to occupy.
Listed on a name board at the reception of the Al Moosa Tower was the name of the Gupta-linked company we were looking for: “Griffin Line General Trading”.
While the company is said to trade in rice, the leaked emails reveal that the Guptas mainly used its accounts for travel bookings.
There is a paper sign on the glass door, bearing the company’s name. Its emblem is a bird of prey that has its eye in the shape of a “G”.
The griffin – a mythological half eagle, half lion creature -was thought to be the king of all the beasts.
This obscure shelf company’s name probably speaks volumes about how the Guptas view their position in the business world, we joked.
We knocked on Griffin Line’s door and tried to open it.
But the door was locked, and there was no response to our knocking.
The word “hello” was scribbled in blue on the company’s printed sign.
We obviously weren’t the first people to have come here, only to find an empty office behind a locked door.
As we were about to leave, a woman came out of an office on the opposite side of the floor. We asked her if she knew anyone at Griffin Line.
“Only one lady works there,” she said.
“She comes and goes. I don’t know her name.”
This description of the scant activity at Griffin Line seemed wholly at odds with the thriving rice business it was made out to be on its website.
Milk and money
One of the key Gupta companies in the UAE is Fidelity Enterprises.
It is registered in Jebel Ali, one of the UAE’s free zones that allow foreign businesses to operate in the country.
Fidelity holds shares in Mabengela Investments, a key shareholder in Infinity Media Networks, which in turn owns ANN7.
It is also one of the Gupta shell companies that saw nearly R32m from the Free State’s failed Vrede dairy project travel through its bank accounts, only to eventually end up with the Guptas’ Oakbay Investments back in South Africa.
According to documents in the #GuptaLeaks, Fidelity is supposed to be located at “plot no 358 – 615” in Al Quoz, an industrial area just outside Dubai’s city centre.
Our taxi driver sounded confused when we gave him the address. He knew Al Quoz, but he explained that it was a part of town mostly filled with warehouses.
The driver dropped us off at the first warehouse he saw. It was a car workshop.
A mechanic with a sweaty brow was working on a red Lamborghini. When we showed the address for Fidelity Enterprises to the woman managing the workshop’s office, she frowned. Addresses there didn’t work that way, she explained.
There were no “plot” numbers for the area. We went outside and looked at all the warehouses around us.
The way in which the addresses were formulated bore no resemblance to Fidelity’s supposed address.
Whoever registered Fidelity clearly had no intention for the company to ever be found.
To get to the next Gupta shell on our list, we needed to travel some 18km to the north of downtown Dubai.
Global Corporation LLC is supposed to be located in a building next to an azure lagoon in Sharjah, one of the UAE’s seven emirates.
Like Fidelity Enterprises, money from the Free State diary project had also been washed through Global Corporation’s bank account.
We asked the security guard at the front desk for Global Corporation.
“This is a residential building. People come here all the time looking for businesses but there are no businesses here.
This is an apartment block. People live here,” he told us. He thought there might be another building somewhere nearby whose name contained the word “lagoon”.
But after asking another taxi driver familiar with the area and searching the internet, we concluded that Global Corporation’s address was a sham.
SAS Global, yet another Gupta shell, is the sole shareholder in a South African company that appears to be benefitting from provincial government tenders in South Africa, as revealed in the #GuptaLeaks.
The company’s address is in the HDS Tower, a 39-storey office block in Dubai’s Jumeirah Lakes area. We asked the building’s security staff for SAS Global and gave them the office number.
“No, you mean GBS Global,” one of the guards insisted. We nodded.
Sure, GBS Global it is. By then, we already knew that the chances of finding a real office were slim.
The first thing we noticed after getting out the lift on the 13th floor was how many empty offices there were.
We found a woman sitting at GBS’ reception desk. It looked like she was the only person there.
A GBS brochure stated that the company offers company incorporation services “in tax efficient offshore jurisdictions around the world”.
The woman had no idea who SAS Global was.
We had now been at the addresses of five Gupta “companies” without encountering an actual office.
Companies behind companies
The culture of secrecy is so tightly woven into Dubai’s corporate fabric that asking even basic questions about companies is frowned upon.
Trying to obtain simple information such as the name of a company’s directors or their contact details proved to be a near-impossible task.
This once again became clear when we went looking for SKG Holdings, a Gupta shell company that supposedly bears the initials of Shiv Kumar Gupta, the Gupta brothers’ late father.
The company’s registered address is in the Al Fattan Currency House, an elegant office block in the Dubai International Financial Centre (DIFC).
The building is a glass affair with spotless, blue-tinted windows.
A small army of window cleaners dangling from ropes had no doubt recently cleaned the structure’s slick exterior, as we’d seen it being done at buildings across Dubai.
However, the Al Fattan Currency House’s physical transparency stood in sharp contrast to the murky nature of the business conducted inside the building.
Once again, our lift opened onto a floor with a number of empty offices.
The address for SKG Holdings led us to a company called Intertrust – a firm that registers and incorporates companies inside the DIFC free zone.
SKG is one of their clients, an Intertrust employee told us.
We explained to her that we were struggling to get hold of SKG’s directors and asked her if she could provide us with any useful details about the company.
“Sorry. It’s an SPC. A Special Purpose Company,” she said.
She was unable to provide us with any further information.
All that glitters…
An expat we spoke to told us that the reason he chose to make Dubai his new home is because one can’t help but look up. You look up to the skyscrapers and the constant blue sky and you become aspirational.
“Of course,” he whispers, “everyone also knows that a large part of the city is built on dirty money from African dictators and Eastern European gangsters. It’s just that nobody talks about it”.
The metro train ride from our hotel back to the airport later afforded us a final view of Dubai’s soaring skyline. Our search for the Guptas’ companies had taken us into some of the glass and steel towers that were now rolling past the carriage’s window.
We couldn’t help but wonder how many of the companies in these buildings were nothing more than empty offices with printed signs stuck on locked doors.
The Guptas’ network of UAE front companies may very well be just one tiny component in an elaborate, glittering city of shells.
#GuptaLeaks: The captured presidency
The Gupta influence network reached into the heart of the Presidency, the #Guptaleaks show, drawing into their web at least three people who were just a whisper away from President Jacob Zuma. They targeted officials holding positions of personal trust closest to Zuma, offering gifts, favours and business deals.
Even the deputy president’s office was fair game. Investigations show they zeroed in on some of the nation’s most sensitively placed staff, including the head of the Presidential Protection Service as well as Zuma’s chief of staff, his private secretary and a chief director in the deputy president’s office.
In certain instances, some of these officials appear to have returned favours, potentially subverting their positions in the Union Buildings for the Guptas’ benefit.
The fact that Saxonwold’s most influential family attempted to recruit people close to the president raises questions about the nature of their relationship with Zuma: were they trying to spy on him? Or were they putting in place a back channel allowing him to communicate with them via trusted intermediaries?
Since the #GuptaLeaks provide mere glimpses of these relationships, only the president, the Gupta brothers and the officials in question know the whole truth. The four officials we feature here have all denied impropriety or said they carried out their duties with professionalism.
One official, however, said she would “be more vigilant and judicious in professional relationships” in future. The Presidency and the Guptas did not respond to detailed questions.
Major-General Muzingaye Mxolisi Dladla: head of Presidential Protection Service (2010-date) and long-time bodyguard to Zuma
As the Scorpions anti-corruption unit were raiding Zuma’s Johannesburg home in August 2005, two vehicles screeched to a halt outside the gates. Out poured several automatic rifle-toting members of the elite Presidential Protection Unit.
A tense armed stand-off ensued between Zuma’s protectors and his would-be prosecutors. Zuma – then a private citizen – was entitled to protection by this elite South African Police Service unit, who guard the country’s current and former presidents and deputy presidents together with their families.
Among the protectors who rushed to Zuma’s side that day was Dladla.
Ever since then, their fortunes have closely tracked one another. Zuma escaped the corruption charges and became president; Dladla rose rapidly through the police ranks to head the Presidential Protection Service, as it is now called. Both are controversial figures.
Zuma’s indiscretions are well known, but Dladla escaped attempted murder charges in 2010 after he was accused of spraying three Uzi submachine gun rounds at an elderly motorist in Durban who got in the way of Zuma’s blue light cavalcade.
Zuma paid tribute to Dladla at a funeral in 2011, thanking him and other members of the so-called Echo Squad for standing by him during his darkest days in politics, including thwarting an alleged assassination attempt when he was deputy president.
The relationship has only grown closer: investigative magazine Noseweek alleged in 2012 that Dladla commanded a secret spy unit within the protection service, tasked with monitoring Zuma’s rivals and ensuring his re-election as ANC president.
It now appears that Zuma’s friends, the Guptas, became equally enamoured of Dladla – and rewarded him for his specialist services.
An early clue of their relationship includes an August 2010 email chain from the #GuptaLeaks showing that a Sahara sister company intended to send Dladla and his then wife, long-serving Presidency official Mogotladi “Mo” Mogano (see below) on a weekend getaway to the Maldives.
Both Dladla and Mogano told us they never travelled to the Maldives, with Mogano confirming that “whilst Sahara did make an offer, my then partner and I did not receive tickets and did not undertake the offered travel”.
However, the emails indicate that Gupta executive Ashu Chawla went as far as requesting a Johannesburg travel agent to “issue and email me the [air] ticket” for the couple, quoted at R9 290 per person on Emirates.
A source, who asked not to be named for their own safety, told us that the Guptas at one stage prepared documents transferring legal ownership to Dladla, but then the property burned down.
A second source in the Presidency independently recalled how a house where Mogano was living with Dladla in 2010-11 had burned down.
Mogano referred our queries about the property to Dladla, who claimed that his company never traded but remained silent on the circumstances in which he appears to have made extensive use of a Gupta-owned property.
What use did the Guptas make of their connections with Dladla? An unsigned 2013 affidavit unearthed in the #GuptaLeaks shows Tony Gupta explaining to the police how he procured VIP blue light escort services for the family’s wedding guests.
The Guptas were in trouble because the black BMW escort vehicles they used had been illegally fitted with blue lights and false number plates.
Gupta’s affidavit, submitted as part of the police investigation into the wedding debacle, makes the astonishing claim that the president’s top bodyguard was responsible for procuring the illegal VIP escort service.
Gupta states: “I requested General Dladla to advise me on road transport security under circumstances explained to him … where guests arrived at Waterkloof Air Force Base and had to travel by car through rural areas to Sun City.”
“I indicated that I would pay for these services without any reservation. I am aware of an initiative within the South African Police Service where members of the public can insist on protection/control services at a prescribed fee.
“General Dladla requested me to furnish him with information and inter alia the flight schedules of the guests,” Gupta states, after which Dladla appears to have taken care of the Guptas’ needs.
“On or about 30 April 2013, I noted certain protection vehicles and members of the SAPS accompanying the group of guests from Waterkloof … to Sun City. I did not find this awkward given the requests mentioned,” says Gupta.
“I expected an invoice from the SAPS for the services rendered … On or about 30 April 2013, I received an invoice from a company called S & M Transport … indicating a request for payment for an amount in excess of R500 000. I did not expect an invoice from S&M Transport and I do not know who S&M Transport is. I further do not know who Salomie Manamela is and I had no arrangement with the aforesaid person to send me an invoice for ‘escort services’.”
Gupta, who was in serious trouble at the time, may have been playing dumb but the identity of S&M Transport and Manamela remains a mystery.
But that was the end of the matter: there is no mention of the company or Dladla’s alleged role in securing its services in the inquiry’s final report.
Responding to our questions, Dladla flatly contradicted Gupta, saying he played no part in “any logistic arrangements either at Sun City or at Waterkloof Air Base”.
However, he confirmed that he “provided an affidavit to SAPS which set out the facts as part of an investigation which was held”. This investigation’s findings have never been made public, but all indications are that both Dladla and Gupta wriggled off the hook.
Like a cat with nine lives – again, mirroring his boss, Zuma – there is one final similarity. Michael Hulley, Zuma’s private legal advisor, prepared Dladla’s responses to our questions.
Denying that he had been captured by the Guptas, or acted to further their interests, Dladla said: “I have performed my duties in relation to President Zuma as a member of SAPS with the discipline and professionalism that it deserves.”
Lakela Kaunda: deputy director-general and head of private office of the president (2009-); chief operating officer in the Presidency (2014-)
Lakela Kaunda is Zuma’s fiercely loyal chief of staff, who has worked beside him in various roles since the mid-1990s.
On the fourth occasion Kaunda met Gupta, the email calendar shows a “Bruce” attending – a possible reference to Bruce Koloane, the then chief director of state protocol.
Kaunda’s own meetings with Gupta shortly before this raise questions about her role in the Waterkloof landing debacle.
Koloane was subsequently forced to resign for her role in facilitating the Gupta wedding plane landing at Waterkloof air base, and several military officers who approved the landing later testified they believed instructions had emanated from “Number One” – a codename for Zuma.
Kaunda does not dispute the meetings with Gupta, only that Koloane was not present.
He could not be contacted to verify this. Kaunda also denied playing a role in facilitating the Guptas’ aircraft landing needs, saying, “I actually discovered about the wedding landing at Waterkloof when Radio 702 broke the story on the day of the landing itself. I was totally unaware of it before then.”
Be this as it may, the Guptas were keen at this point to do business with Kaunda. Between the third and fourth successive meetings, as scheduled in Gupta’s email calendar, Kaunda ceded her 100% share in Ntomb’nkulu Investments CC to her son, Siphesihle.
She then forwarded confirmation of the new shareholding to Gupta on 23 January, stating that “we will use this vehicle”.
Asked why she had ceded her shares to her son, and for what activity would Ntomb’nkulu be a “vehicle”, Kaunda repeated the explanation she had given to the Sunday Times in June: “I initially thought of closing down the company as I was not using it, but then felt it would be cost effective to keep as it already existed and we had paid for the establishment. I then decided to cede it to my son,” she said.
“When they [the Guptas] said they wanted to offer a business opportunity and asked if I had a company that could be utilised, I then sent that email about Ntomb’nkulu … the offer of going into business with the family was declined and the matter was never pursued.”
At the time, Islandsite 255’s joint directors were Tony Gupta and Zuma’s son, Duduzane. Islandsite 255 is Gupta-controlled Oakbay Resources and Energy’s BEE partner in Shiva Uranium.
In response, Kaunda said: “It is the first time actually that I hear of that cession of the shares or that resolution. Ntomb’nkulu Investments does not own shares in any company whatsoever.”
Dixie Investments, the company meant to cede the shares to Ntomb’nkulu, retained its stake. For now, at least, the public will have to take Kaunda’s denials on trust.
Delsey Sithole: private secretary in the private office of the president (2009-2012); director: events and protocol in the Presidency (2012 to date)
Zuma’s private secretary coordinates both his official and private diaries, and so knows what the president is doing when his formal duties are over for the day.
It is a unique special position of trust and responsibility, which entails liaising with the president’s security detail after hours to ensure he is safe.
The president’s private secretary is also a regular traveller as part of the president’s delegation on overseas trips. The woman Zuma entrusted with the task at the outset of his Presidency, Delsey Sithole, was very soon in the Guptas’ crosshairs.
Financial reconciliation records from the #GuptaLeaks indicate that Sithole received cash amounts totalling R8 310.78 from a Gupta company in June 2009, just a month after Zuma became president.
It is not known what the payment was for, and Sithole did not provide any clarification in her response to our detailed questions.
Fast-forward a year, Gupta brother Rajesh invited Sithole and her teenage son to watch the opening match of the 2010 FIFA World Cup.
A spreadsheet contained in the #GuptaLeaks shows that Sithole found herself amidst illustrious company in the luxurious Sahara suite in the iconic Soccer City calabash. Her inclusion hints at the development of a special relationship with the Guptas.
The family’s other guests for the match included India’s wealthiest businessman Mukesh Ambani and his family, as well as one of Zuma’s wives, his son Edward, and some of Zuma’s most trusted spies – the head of police crime intelligence, Richard Mdluli and his sidekick Nkosana “Killer” Ximba.
Sithole did not dispute her presence that day, telling us that, “I received many offers of hospitality from various companies during the 2010 FIFA World Cup.”
Fast-forward another two years, to early May 2013, and Sithole publicly displayed her loyalty to the Guptas. Despite the outpouring of public anger about the family’s brazen takeover of Waterkloof military air base to land a planeload of overseas wedding guests, Sithole crowed on her Facebook page: “Its [sic] good to be at Sun City. Some people are being tjatjarag [over-excited]. I am enjoying the wedding.”
By this stage, Sithole had been removed from her position as private secretary and redeployed to head the events and protocol division in the Presidency.
A source in the Presidency recalled a “security incident” involving Zuma’s diary that had occurred in 2011, after which Sithole was moved.
Details about the incident, including a rumour that the Guptas had accessed confidential details about Zuma’s diary via Sithole, could not be independently verified.
Sithole did not respond to the allegation specifically, but said: “In my previous capacity as private secretary, I interacted with various stakeholders on a number of occasions, involving various activities and my interaction with the Gupta family was in that capacity. Such interaction never promoted any unethical activity.”
She added that her move to protocol and events happened at her request, for “career growth and advancement” reasons.
But even after she moved out of Zuma’s private office, the #GuptaLeaks suggest that Sithole and Tony Gupta retained ties. For example, in September 2012, Sithole sent him the guest list for a Jacob Zuma Foundation fundraising dinner. The list includes a number of prominent Nigerian businessmen with investments in South Africa.
How Sithole obtained this it is unclear, as are her motives for disclosing it. Was she moonlighting on social events for Zuma’s private foundation and leaking intelligence to the Guptas about Zuma’s would-be private benefactors?
Sithole did not provide any answers.
The #GuptaLeaks emails show Tony Gupta accepting a diary appointment with one “Delicy Sithole” at Sahara’s Midrand offices in January 2013. Notably, this meeting was scheduled around the time of a flurry of meetings between Gupta and Kaunda (Sithole’s former boss in Zuma’s private office).
Sithole did not dispute that the meeting took place as scheduled.
A few days after this meeting, Sithole sent Chawla a CV for one Phatse Justice Piitso – a former SACP provincial secretary in Limpopo and South African ambassador to Cuba between 2009 and 2011 – requesting that Chawla “please forward to Tony”.
Again, Sithole is silent on the purpose of her email. As for Piitso, he was – or was soon to be – Sithole’s husband. Sithole told us that she sent the CV “in good faith to a stakeholder and acquaintance [Gupta] and there was never an encouragement of untoward expectations”.
Piitso said that he has sent his CV to many people, but denied that he got “any employment from the Gupta family or anything else from Mr Tony Gupta”. However, Piitso has cropped up recently as a pro-Gupta commentator.
The Guptas had hired the London-based PR firm on a monthly £100 000-plus (R1.5m-plus) contract, aimed at distracting public attention from the family’s murky business dealings.
Other pro-Gupta commentators and luminaries on the Bell Pottinger list included Andile Mngxitama, Ben Ngubane, Kebby Maphatsoe, Tshepo Kgadima and Lindiwe Zulu.
Earlier in 2017, Piitso also penned an eloquent defence of Brian Molefe, who had been exposed by the public protector as one of the Guptas’ accomplices in the nexus of state capture.
Piitso lavished praise on the former Eskom chief executive – then on his way to Parliament as an MP – calling him “one of the finest young leaders our movement has ever produced”.
In language that has become synonymous with pro-Gupta lobby, Piitso urged Molefe to “take forward the revolutionary programme of the second phase of our transition for radical transformation”.
Piitso ignored our question about his inclusion in the Bell Pottinger list, but said: “The revolutionary concept of white monopoly capital is not an invention of the Gupta family. It is a concept which seeks to define the development of monopoly imperialism and its characteristic features within the South African realities.
Throughout my life, I have written so many views about this important theoretical question and I will continue to do so.”
Piitso added that he did not seek compensation for his written work from any media houses.
Mogotladi “Mo” Mogano: assistant private secretary to the president (pre-2009); chief director in office of the deputy president (post-2009)
Mogano has worked in the Presidency for more than a decade, initially as assistant private secretary to Thabo Mbeki.
When Kgalema Motlanthe became president in September 2008, he inherited her services.
After Zuma succeeded Motlanthe, Mogano moved to the deputy president’s office with him, where she remains under Cyril Ramaphosa.
Because she has been ensconced in the office of Zuma’s main political rivals down the years, whilst married to one of Zuma’s most trusted bodyguards, Mogano’s relationship with the Guptas is worth highlighting. (See Muzingaye Mxolisi Dladla, above.)
Mogano can be linked to the Guptas since at least February 2009, when company registration records show that she became a co-director with Tony Gupta and Zuma’s son Duduzane in Karibu Hospitality.
The company became dormant in 2011 and was deregistered in 2013. Mogano said “nothing came of the venture,” adding that “I resigned before any business could be conducted or any trading could take place.”
We have already seen that a Sahara sister company booked return flights to the Maldives in 2010 for Mogano and her then-husband, the head of the Presidential Protection Service Muzingaye Mxolisi Dladla. Both have denied receiving the gift.
The couple also appears to have lived for a while in a Gupta-owned property, about which Mogano referred our query to Dladla, who in turn ignored it.
A source in the Presidency told us several years ago that Mogano had also “flirted with” a job offer from the Guptas, a tip-off that appears to be borne out by a June 2011 email from the #GuptaLeaks in which Mogano sends her “comprehensive resume” to Tony Gupta.
What job Mogano was applying for remains a mystery – she told us “there was no outcome” and she remains gainfully employed in the Presidency.
Mogano confirmed her attendance, with a friend, after her husband dropped out. She added that she had declared the hospitality as a gift in her annual declaration of interests. Mogano now appears keen to dissociate herself from the Guptas and Dladla, from whom she says she separated three years ago.
She concedes: “With concerns of state capture and as valid as they are, I do accept that such associations can raise doubts about one’s professionalism and loyalty to the public service code of conduct.”
But she argued that she joined the Presidency “with the full desire to serve the country and not personalities” and had maintained her top security clearance throughout her decade in service.
“I have not allowed my association with elements of the Gupta family enterprise to influence my work adversely or unethically, but have also learnt from recent events to be more vigilant and judicious in professional relationships,” she said.
#GuptaLeaks: Working for the Guptas, where sexual harassment was part of the job
Working closely with the Gupta brothers on a daily basis came with perks for female employees: extensive international travel, for one, together with other ad-hoc gifts and rewards. But the downside was allegedly very dark indeed. Sexual harassment by at least two of the Gupta brothers of their female personal assistants has been alleged by three former employees – with cash pay-outs and the threat of unemployment allegedly used to silence the women in question.
“It was the worst 24 hours of my life.”
That is how a former personal assistant to Tony Gupta describes her time working for him. She lasted just one day.
Her name and identity has been confirmed by Scorpio, but for her own protection we will call her Christine. All the women who spoke to us for this story insisted on anonymity out of fear for their personal safety.
Christine said that on the first – and only – day of working for Tony Gupta, she was required to accompany him from Johannesburg on what would be an overnight business trip to Cape Town. On the Guptas’ private jet, Tony Gupta did not speak to her at all. Upon arrival at a house in Cape Town, she was offered a Coke to drink and told that she was not allowed to use her cellphone at any time.
“I couldn’t even let my husband know I was there safely,” Christine remembers. She was then instructed to go into a bedroom for a “meeting” with Tony Gupta.
“He told me that all his PAs are expected to give him massages and sleep in the same bed as him,” Christine says. “I told him I was not comfortable with that and would prefer my own bed and bathroom. He then asked me to give him a massage. I declined.”
She says that throughout her time in the house, she was offered no food but continuously urged to accept Cokes to drink.
“I had another Coke and I don’t know what happened, but it was like I had been drinking [alcohol],” Christine says.
While Tony Gupta had a meeting in another part of the house, he allegedly proceeded to lock Christine in the bedroom. By now thoroughly frightened – and unable to shake the suspicion that her drinks might have been spiked with something – Christine used her cellphone to call her husband and tell him what was happening.
“[Tony Gupta] walked in and asked me what I was doing. He told me I wasn’t allowed to be on the phone.” Desperately seeking an excuse to leave, Christine told him that her grandmother had unexpectedly died. “He put his arms around me and said ‘You’re not going’,” she says.
At this point the two were interrupted by the woman with whom Tony Gupta had conducted his earlier meeting, which is what Christine credits with the fact that she was eventually permitted to leave.
“I ran out of the gate so fast I left three items in the house, including a cellphone charger,” she says. “I actually hid in a bush waiting for [a relative] to come fetch me.”
When she was safely away, Christine immediately emailed her resignation to Sahara CEO Ashu Chawla. The email is part of the #GuptaLeaks trove, and it reads: “I, [Name], [ID number], hereby hand in my resignation letter with immediate effect under the circumstances of Sexual Harassment”.
Christine’s husband subsequently confronted Chawla and the Guptas about what had happened.
“They accused me of dancing provocatively,” says Christine, “which I did not.” Christine’s husband was given R10 000 in cash to go away.
Christine’s experience was allegedly not isolated. Another former PA contacted by Scorpio, who was in the Guptas’ employ for a short period,claimed that stories of this nature were common. On several occasions, she suggested, the Guptas may have made cash pay-outs to prevent the stories from becoming public.
A third former female employee, who worked for the Guptas for several years, and who we shall call Janet to protect her identity, told Scorpio: “All three [Gupta] brothers tried their luck with me.”
Ajay Gupta, Janet said, “tried to get me to touch him inappropriately.” Tony Gupta allegedly tried to blackmail her into sexual favours if she wished to keep her job. Details of further incidents have been given to Scorpio, but cannot be published due to the victim’s concern that identifying details may lead to recriminations against her.
“I kept this information to myself in fear of losing my job, which I really needed back then,” Janet says. “But now that I think of it I was given ‘gifts’ to keep me quiet. After every [inappropriate] incident, I would get a small ‘payback’ for all my hard work.”
Ajay Gupta, Janet says, would “force himself on me and kiss me multiple times. I eventually just let it happen to make sure I didn’t lose my job. He would put my hand down his pants.”
Janet was also allegedly asked to “entertain” high profile guests.
“I am not sure what they expected, as I refused to hear any of it and just said no before details were discussed,” she says.
The Guptas have successfully kept such experiences out of the media until now. But their wider business empire also saw allegations of sexual harassment, suggesting that a sex-pest culture went beyond the Guptas’ immediate employ.
In 2011, a court case against Sahara Computers was brought by a female employee whose name is known to Scorpio, who alleged that a male employee subjected her to persistent sexual harassment. In court papers, she claimed that Sahara failed to create a safe workplace environment. The judge agreed, finding that Sahara “delayed overly in taking action”, and awarded the plaintiff R60 000 and costs.
An appeal by Sahara failed, and in 2014 Gary Naidoo – managing editor of The New Age newspaper and frequent Gupta family spokesperson – emailed Atul Gupta: “I think we should just settle [the case] as I am not confident because the last two attempts proved unsuccessful and we should try to minimize negative publicity around this case.”
There is no record within the email trove of Atul Gupta’s response.
Gupta lawyer Gert van der Merwe referred a request for comment on these allegations to Gary Naidoo, who provided an email address for Oakbay’s corporate communications unit, which did not yield a response.
#GuptaLeaks: A third Gupta-Transnet ‘kickback’ contract unearthed
Just after President Jacob Zuma attended the BRICS summit in China earlier this month, City Press reported that the China Communication Construction Company was gearing up to close South African state contracts worth R70-billion, with no public tender. But CCCC’s subsidiary Shanghai Zhenhua Heavy Industries, which sold port cranes to Transnet, was already embroiled in the corruption contagion spreading from Zuma’s administration and the #GuptaLeaks. Now we have found the crane manufacturer’s kickback agreement with a Gupta intermediary.
Transnet bought seven of the world’s most expensive port cranes because its Chinese state-owned supplier inflated the price to pay off the Guptas, a kickback contract shows.
Shanghai Zhenhua Heavy Industries (ZPMC) delivered the cranes to Durban container terminal in 2012 and 2013.
When Transnet awarded the contract in September 2011, the cranes were worth no more than $81-million (R570-million then), but ZPMC inflated the price to $92-million (R650-million then) to make room for “commissions and fees”.
This is according to an “agent agreement” between ZPMC and a Dubai company called JJ Trading (JJT).
JJT stood to take most of the crane price increase, plus an extra cut, altogether totalling $12-million (R84-million). In return, JJT would make sure ZPMC got its contract.
However, financial records in the #GuptaLeaks show that JJT was largely a cut-out for the Guptas, who got most of the JJT money.
The implication is that ZPMC paid bribes to the Guptas, who somehow influenced Transnet to give it the contract.
A crane expert described this as “the most expensive crane sale of its type ever recorded”. (The expert did not want to be named.)
This kickback contract adds to a mounting body of evidence that the Guptas were gatekeepers of Transnet contracts from which they extracted enormous tolls.
JJT styles itself as a scrap metal trader, but the #GuptaLeaks suggest it runs a brisk money laundering service.
Transnet said it was investigating.
China: ‘What corruption?’
This is the third Gupta-Transnet alleged kickback contract we have found. The others involved locomotive manufacturer China South Rail (CSR) and German software giant SAP.
Global firms SAP, KPMG, McKinsey and Bell Pottinger responded to the #GuptaLeaks by removing top executives and investigating. Bell Pottinger clients fled and it fell into business administration.
By stark contrast, the two state-owned Chinese firms, which are among the most seriously implicated, just shrugged off the allegations.
CRRC Corporation Limited, which absorbed CSR in 2015, ignored our questions.
After repeated emails and two preceding articles, ZPMC said: “What you intend to report relevant to ZPMC is untrue. We have no business or other relationship with the Guptas, your president Jacob Zuma or his family.”
It declined to explain its relationship with JJT but demanded that we retract our preceding articles.
The Gupta brothers Atul, Ajay and Tony are close to Zuma, bought a house for one of his wives and are in business with his son.
The Guptas have consistently declined to answer questions, but Atul did tell the BBC the #GuptaLeaks were fake.
Agents of ‘graft’
In late 2010, Transnet tendered to buy two ship-to-shore gantry cranes to move containers to and from ships at Durban container terminal.
Brian Molefe was Transnet’s chief executive officer from February 2011. Last week, he told us: “A lot of the shipping companies were at pains to tell us about the congestion at Durban port, and it was not possible to work with the cranes. They were very old. They were already breaking down, and there were huge delays, so the port needed new cranes.”
Meanwhile, a shadowy group of agents got to work on the tender behind the scenes.
A port insider with knowledge of Transnet’s crane deals alleged that the agents lobbied Transnet to change the crane specifications to suit certain bidders and to increase the number of cranes from two to seven.
The insider also alleged that the agents obtained and shared confidential documents, including port budgets, upcoming procurement plans and competing bidders’ proposals.
Such inside information could make or break competitors’ bids.
The #GuptaLeaks show that in December 2011, a senior Gupta manager emailed a person linked to JJT a confidential Transnet document outlining an upcoming crane tender.
The document metadata indicates that it was drafted by an employee in Transnet’s Office of the Chairperson and Group CEO. Then CEO Molefe told us he did not know how the Guptas got it.
‘Nothing to see here’
Transnet spokesperson Molatwane Likhethe said the company knew of nothing untoward: “A technical assessment indicated that the two 20-metre gauge rail cranes that the company initially planned to buy would not meet the weight requirements for the quay wall due to excessive wheel loads.
“The study revealed that the quay wall could only handle nine cranes of a lighter specification, two of which could only be purchased after the completion of the berth deepening project.”
So, Transnet cancelled the two-crane tender and issued a second one in 2011 for seven more expensive “tandem lift” ship-to-shore cranes.
But, the crane expert said: “The first two cranes Transnet planned to buy were dramatically lighter than the ones they ended up buying. Also, you can always add more wheels to disperse the weight and comply with individual wheel loads. Anyone that knows anything about cranes knows that.”
Transnet did not respond to follow-up questions.
In June 2011, ZPMC marketing manager Aqwa Chen signed an “agent agreement” with an unidentified JJT representative.
It describes Transnet’s tender for the seven tandem-lift cranes and states that JJT “has agreed to assist [ZPMC] as an agent to facilitate in this bid”.
The contract describes an apparently innocent role for JJT.
JJT would “facilitate” and “handle” ZPMC’s bid “and other relevant matters”. It would communicate with Transnet on behalf of ZPMC and help the Chinese staff to understand South African laws, codes and customs. JJT would even send out invitation letters, make hotel reservations and arrange airport shuttles.
But, critically, ZPMC would only pay JJT on condition that Transnet gave it the contract.
Four months later, Transnet awarded the contract to ZPMC.
- Read the #GuptaLeaks documents here.
News reports said these were the first tandem-lift cranes to be installed in the southern hemisphere.
World Cargo News reported that no one outside of China used them, except for a Dubai port, which had by then adopted a different solution.
But the crane expert told us this was for a good reason: “Why did Transnet need the most expensive type of crane ZPMC makes when the Port of Los Angeles and the Port of Long Beach, which are premier high efficiency ports, don’t use it? Everyone knows they don’t work that well.”
They said that port logistics crews often battled to manage the double lift, so the efficiencies were seldom realised.
But, last week, Molefe told us: “We decided on the tandem-lift cranes of that size because the type of vessels that were calling into Durban were quite wide, and our cranes could not reach to the other side of the vessels. These new cranes can, and they can take two containers at a time instead of one.”
He said this would double the cranes’ efficiency.
Again, the crane expert disagreed: “Most cranes can do the double container lifts.” The tandem lift capability was not necessary for this.
Ultimately, it is not clear if Transnet’s decision to buy expensive cranes from ZPMC made technical and economic sense, but if it did not make sense, as alleged, that is probably because ZPMC was paying off the Guptas.
We recently reported that JJT and related shell companies received about R1.5-billion in Transnet kickbacks.
CSR paid most of this. The first Gupta kickback contract we published showed that the payments were in return for the “agents” making sure Transnet gave CSR a locomotive contract. Most of this was paid on to Gupta-controlled companies in the United Arab Emirates.
From other JJT transfers, we identified about R55-million that ZPMC paid to the Guptas, through JJT, between 2011 and 2013.
Now that we have the ZPMC-JJT kickback contract, it is clear that ZPMC was in fact paying the Guptas to make sure it got the Transnet contract.
Together, the kickback contract and a related document explain that JJT was to be paid $12-million (R84-million then) – if ZPMC won the Transnet contract.
The documents explained that even though ZPMC “offered” to sell its cranes for $81-million, Transnet would pay an inflated price of $92-million, to make room for the “commissions”.
JJT would keep 85% of the increase plus 3% of the Transnet price – this all totals $12-million.
It is not clear who got the remaining 15% of the increase – $1.7-million.
We previously reported that during the tenures of Molefe and Anoj Singh, Transnet’s former chief financial officer, Transnet spent about R30-billion on contracts against which suppliers kicked back about R5.6-billion to the Guptas.
Meanwhile, the Guptas bankrolled Singh’s alleged girlfriend, hosted him in luxury in Dubai six or seven times, opened a secret offshore shell company for him and, the #GuptaLeaks suggest, gave him large amounts of cash.
Singh and Molefe said they were not bribed.
We have not traced anyone who admits to representing JJT.
#GuptaLeaks: How Anoj Singh sang for his supper
Anoj Singh is in big trouble. Evidence in the #GuptaLeaks and elsewhere points to a criminal conspiracy to defraud South Africans of billions. Singh was a central and willing player as CFO at Transnet and then Eskom – while accepting a secret offshore company, hospitality and seemingly large amounts of cash from the Guptas.
Suspended Eskom chief financial officer Anoj Singh allowed billions in public money to slip through his fingers and into the Guptas’ pockets while they paid him offshore, the #GuptaLeaks suggest.
We have identified around R30-billion in crane, train and other Transnet contracts against which Gupta companies stood to get about R5.6-billion in kickbacks.
These were all during Singh’s tenure at Transnet, alongside chief executive Brian Molefe, where the Gupta-friendly duo executed a spending plan worth hundreds of billions.
Meanwhile, the Guptas opened a shell company for Singh in a highly secretive United Arab Emirates (UAE) jurisdiction – just after Transnet kickbacks started rolling into their accounts.
The #GuptaLeaks contain glimpses of the Guptas paying someone who appears to be Singh hundreds of thousands in cash in Dubai.
They also show that the Guptas employed Singh’s alleged mistress and seemingly helped her to buy a house with a loan.
Meanwhile, the Guptas bankrolled six or seven luxury Dubai stays for Singh (and at least one for his alleged mistress), some of which coincided with key decisions he made in their favour.
When he moved from Transnet to Eskom in 2015, Singh’s conflicting interests – the Guptas’ versus South Africans’ – followed him and found expression in his actions there.
Eskom’s lenders recently demanded Singh’s removal, and he was suspended in July.
Both the opposition Democratic Alliance and the lobby group Organisation Undoing Tax Abuse have laid criminal charges against him for his actions at Eskom. Three Eskom-commissioned investigations and another by the National Treasury indicated he has a case to answer.
Did he look away on purpose? Did he get his hands dirty? The evidence suggests both, though Singh says he is clean.
He told us he would cooperate with law enforcement authorities, but at the time of writing they had not yet approached him.
If they ever do, he has a lot to explain.
“Just a soapie”
On July 19, this year, Singh presented Eskom’s financial results.
They were bad, and Eskom’s auditors provided a gruesome account of the company’s internal controls, which were so weak that the bean counters could not be sure which expenses were regular and which were not.
On the day, we asked Singh a few questions.
Why did the Guptas repeatedly host him in Dubai? Why did they pay many thousands for his massages there? Why did they pay him money offshore? Was he bribed?
The usually smooth-talking CFO leaned uncomfortably on the table as he spoke into the microphone.
“I can go on record to say I have not received a bribe of any sort or taken a bribe from anybody,” he said. “I think, as it relates to the gifts, I will be submitting a tell-all document, so let’s just wait for that, and we will see where that lands up.”
Seven weeks later, Singh has yet to produce the document.
But Singh was irritated.
In response to written questions, he said: “As you may remember, during the Eskom results presentation, speculative information was presented by a journalist to me in this very public platform, which had very little relevance to the substantive issues raised but was presented nonetheless in a very deliberate way designed to impugn my character and reputation in the court of public opinion.
“In this vein,” he said, “I [will] not participate in the soap-opra-fication (for lack of a better word) of my alleged role in alleged corruption in the companies that I’ve worked in.”
He said: “Issues of corruption are currently subject to forensic investigation. The [National Prosecuting Authority] and the Hawks have recently indicated that they are beginning an investigation into these matters, and I will cooperate with any law enforcement authority if required to do so.”
In a recent BBC Radio 4 interview, Gupta brother Atul denied wrongdoing. He said: “Let’s talk Gupta leaks; there is no authenticity of Gupta leaks at all. They are all everyday deception-mongering to drive their own agenda.”
The Gupta brothers and their associates have otherwise consistently declined to comment on detailed #GuptaLeaks allegations.
A servant of the people
Singh, now 44, is a qualified chartered accountant. He studied at the University of Durban-Westville (now University of KwaZulu-Natal) before working as an accountant in the Spar group. Later, he headed big accounts at the auditing firm Deloitte.
He joined Transnet in 2003 where he worked as a senior financial manager in the company’s biggest operating division, Transnet Freight Rail. He later moved into the Transnet group head office where, in 2009, he became acting CFO.
In an email to us, Singh, described the “pivotal role” he thought state-owned companies played in South Africa’s economic transformation. “Tens of millions of people rely on the services, which has a direct bearing on their quality of life, opportunities and economic prospects.
“This is why I chose a career in the public sector.”
People who know or have worked with Singh said he was charming, persuasive and fiendishly clever. One said he was “a frikken genius at fundraising”.
In a 2012 interview, CFO South Africa asked Singh what he was most proud of. He said: “My role as the CFO at Transnet. We recently launched a R300 billion capital investment programme, the Market Demand Strategy. It is an ambitious plan that is expected to create 588 000 economy-wide jobs and transform Transnet Freight Rail into the world’s fifth biggest rail freight company.”
But it was exactly this R300-billion strategy that made the Guptas inordinately wealthy.
Seven Chinese cranes
Let us begin in 2011.
A Transnet operating division, Transnet Port Terminals, bought seven cranes to lift containers from ships at Durban harbour.
The Chinese state-owned Shanghai Zhenhua Heavy Industries (ZPMC) supplied the cranes for $92-million (R650-million then).
At the same time, ZPMC started paying off a Dubai shell company called JJ Trading, which quickly paid similar amounts to Gupta companies in the UAE and South Africa.
We shall see that the Guptas frequently used JJ Trading, whose beneficial ownership is unclear, to wash kickbacks.
Singh said of this and a later crane deal: “If a procurement activity has gone through all the process checks and balances, why would any CFO question it on face value? I as CFO had very little involvement in the process per my delegation of authority.”
ZPMC said: “We have no business or any other relationship with Guptas.”
It asked us to retract our earlier article about it, but then declined to explain the JJ Trading payments.
95 Chinese locomotives
In 2012, Transnet appointed Singh permanently. He and CEO Brian Molefe then launched their legacy project, the R300-billion capital investment plan.
Later in 2012, Transnet signed one of the first big contracts under the plan. Another Chinese firm, China South Rail (CSR), would supply 95 electric locomotives for R2.7-billion.
Against this, CSR agreed to pay R537-million in kickbacks to Gupta front companies in Dubai and Hong Kong.
JJ Trading washed a lot of this money, again.
CSR did not respond to questions.
Molefe and Singh were still planning to buy another 1 064 locomotives, at about R50-billion.
In preparation, Singh needed to raise cash, so in December 2012, Transnet went to tender and appointed a consortium of financial advisors.
The consortium was to be led by McKinsey, a renowned corporate advisory firm, that is today in hot water over Eskom benefits it allegedly channelled to the Gupta-linked company Trillian, now led by one Eric Wood.
Back in 2012, Wood was a partner at Regiments Fund Managers. Regiments was supposed to be McKinsey’s minority partner at Transnet, for roughly a R10-million cut.
Instead, Regiments effectively elbowed McKinsey out of the way and took over the job. Its scope and cost of services blossomed to about R266-million.
Singh and Molefe provided the fertiliser through a series of motivations and approvals.
For example, in a letter to McKinsey, Singh wrote that the main scope of the McKinsey engagement would be reallocated to Regiments.
A subsequent contract addendum purported to be between Transnet and McKinsey, but Wood scratched out “McKinsey” and signed for Regiments. Singh signed alongside, increasing Regiments’ portion of the contract to R21-million.
In a later memorandum, Singh retrospectively motivated for Regiments to be paid an extra R89-million. Molefe approved.
Along the way, Regiments picked up other Transnet contracts worth at least R219-million.
There were no open tenders for the extra contracts, but Regiments said all was above board.
Over the same period, Regiments paid at least R84-million to a Gupta shell company in South Africa called Homix.
Homix, we shall see, was also used by the Guptas to wash kickbacks for other Transnet contracts.
100 Chinese locomotives
Around the end of 2013, Transnet decided to buy another 160 locomotives, supposedly because the big 1 064 purchase was delayed. China South Rail would provide 100 of these. There is no evidence of an open tender.
Once again, the #GutpaLeaks show, CSR agreed to kick back to JJ Trading and other Gupta fronts offshore: R924-million against a R4.4-billion Transnet contract.
22 Swiss cranes
In February 2014, Transnet contracted to buy 22 more cranes for Durban harbour, this time from the Swiss firm Liebherr.
On the day that the contract was awarded, one of several Liebherr payments hit the Guptas’ UAE accounts. In the #GuptaLeaks, we identified payments totalling $4.2-million (about R46-million then).
After we published this in July, Liebherr said it was investigating: “We take the allegations very seriously. The business practices described in the article are unacceptable to us. We currently expect the investigation’s results during next week.”
That was 10 weeks ago. Liebherr did not respond to subsequent emails.
359 Chinese locomotives
The next month, March 2014, Transnet announced the big one.
Transnet had chosen four companies to supply the 1 064 electric and diesel locomotives. China South Rail got the biggest chunk: 359 locomotives at about R18-billion.
Against this, CSR was to pay a staggering R3.8-billion to JJ Trading and other Gupta fronts.
On Monday, April 21, 2014, one month after the contract, JJ Trading paid the Guptas 7.3-million Emirati dirham (AED; R20.9-million then) in cash, the #GuptaLeaks show.
On Wednesday, it paid another AED 1.8-million (R5.1-million), this time to one of their Bank of Baroda accounts. Another AED 3.3-million (R9.4-million) followed on Thursday. And so on.
A month later, JJ Trading had already paid the Guptas about R590-million.
Singh’s little secret
On March 20, 2014, just three days after Transnet awarded China South Rail the 359-locomotive contract, the Guptas opened up a shell company in the UAE.
It was called Venus Limited, and it cost the Guptas AED 11 000 (R32 000 then) in administrative fees to open.
Venus was registered in the name of a man who regularly worked for the Guptas. This man, the #GuptaLeaks show, sometimes moved huge amounts of cash into their Dubai accounts for them – a textbook “bagman”, it seems.
Five weeks later, just after the JJ Trading money landed with the Guptas, Singh boarded a plane to Dubai.
There, the Guptas hosted him at the Oberoi hotel where, the #GuptaLeaks have shown, the Gupta brothers regularly looked after South African cabinet ministers, politicians, fixers and officials.
Singh was joined at the Oberoi by brother Tony Gupta and their business partner Salim Essa, travel bookings show. While they were there together, the Gupta “bagman” transferred Venus into Singh’s name.
Where “Confidentiality is King!”
Venus is registered in Ras Al Khaimah, one of the seven emirates of the UAE.
It is notorious – or “popular” – for two reasons: Financial secrecy and tax avoidance.
Online websites that tout Ras Al Khaimah explain “the surprising level of banking privacy” in “RAK”, where “Confidentiality is King!”
According to one: “RAK Offshore sets the bar very high in terms of internal, local, federal and international compliance yet keeping customers’ confidentiality at the heart of the system” (their emphasis).
In other words, should someone send illicit funds to Singh’s new company, no one would know.
Singh declined to explain the company’s purpose.
“Mr A Singh’s” cash
We have seen no financials for Venus and do not know if the Guptas or their associates paid money to it. However, they appear to have given him cash around that time.
On June 6, 2014, Singh jetted off to Dubai for his second Gupta sojourn. There he spent two nights at the Oberoi with Tony Gupta.
One month later, the Guptas booked Singh in for a third stay at the Oberoi, although evidence suggests he may not have made this appointment.
But Singh was back in Dubai on August 29, his travel records show, when Tony Gupta appeared to give him AED 200 000 (R578 000 then) cash.
This is according to the Guptas’ internal accounting records, where a spreadsheet appears to record expenses incurred by Tony Gupta. The entry notes: “Mr A Singh Atlantis”.
It appears “Mr A Singh” was paid at Atlantis, The Palm, an ostentatious resort in Dubai.
This spreadsheet records 97 transactions. They are not listed chronologically, so it is suggestive that immediately below the AED 200 000 paid to “Mr A Singh”, a second record notes that AED 200 000 (R584 000 then) was paid to “AS Global” a few weeks earlier.
Putting aside the possibility that “AS” refers to Singh’s initials, a reliable source told us this company was for Singh’s benefit. We could not independently verify this.
Singh declined to explain these payments.
On November 7, 2014, Singh was back at the Dubai Oberoi to spend two nights. Again, travel booking records suggest Tony Gupta and Essa were there too.
Coincidentally, at that point, the South African telecommunications network company Neotel was trying to clinch a big deal to service Transnet.
According to a report later commissioned by Neotel’s board, the negotiations had been tough. Transnet and Neotel were caught on a few “sticking points”.
These were surmountable, Neotel’s investigators noted, but a month later, Transnet “inexplicably” informed Neotel that negotiations were off.
So Neotel CEO Sunil Joshi sat down with Singh in the seedy, subterranean gloom of SLOW Lounge, Sandton on December 11, 2014.
Describing Joshi’s account, Neotel’s investigators reported that Singh confirmed the deal was off.
“Mr. Joshi was shocked and failed to comprehend how there could have been such a change in attitude from Transnet,” they reported.
Returning to Neotel’s offices, Joshi asked his staff to call up a company called Homix – the same company that Regiments paid R84-million, and who we now know to have been little more than a Gupta money cleaner.
Joshi was already acquainted with Homix because, earlier that year, Neotel paid it a R35-million “success fee” to close a different Transnet contract, the investigators reported.
That evening and twice the following morning, a Neotel manager met with someone from Homix. The two agreed that Neotel would pay Homix 2% of the Transnet contract plus R25-million later.
Like magic, the negotiations were back on track, and the R1.8-billion contract was signed a few days later.
Two months later, Transnet had Neotel in a bind once more, and again Singh featured.
In February 2015, Neotel and Homix signed a “business consultancy agreement” to finally give effect to the promise to throw Homix its pound of flesh: R36 million, or 2% of the contract.
Neotel took so long to finalise this because, unsurprisingly, its compliance staff were unhappy with the arrangement.
Come February 25, 2015 the company had not yet paid Homix.
That same day, it so happened Singh was back at the Dubai Oberoi for another two-night stay with Tony Gupta.
Coincidentally, on that day, Transnet failed to pay Neotel for its January and February services.
This was on the “express instruction” of Singh himself, Neotel staff told the investigators – and “precisely” because Neotel had not paid Homix.
The logjam was broken when Transnet paid Neotel and Neotel paid Homix in succession – while Singh and Tony Gupta were together in Dubai.
Transnet and Neotel’s relationship evidently improved because, the following month, Transnet ordered CCTV cameras worth R505-million from Neotel.
True to the pattern, Neotel’s subcontractor on the CCTV job then funnelled R15-million to The New Age, then the Guptas’ newspaper company.
Two unconnected people told us how, during his Transnet days, Singh travelled to Dubai with a “girlfriend” who once worked at Transnet.
We have identified a woman matching this description in the #GuptaLeaks. She is not the same person as Singh’s wife.
The leaks showed this woman was listed to attend a Gupta company year-end party in Sandton with Singh as her “partner”.
Singh, who confirmed knowing her, asked us not to name her because he was concerned about her state of mind. Having spoken to her ourselves, we agreed. She declined to comment on the substantive issues.
The #GuptaLeaks reveal that Sahara Computers employed Singh’s “girlfriend” as a project manager in January 2015.
At Sahara, the woman’s monthly salary was R50 000. This was the seventeenth highest salary of 260 employees, equalling that of her line manager – in spite of an apparently non-descript role.
Other documents in the leaks show that Sahara lent her R400 000 later that year, filling the hole between her bank loan and the price tag on her second house, a R1.36-million property in Midrand.
Such generous treatment was uncharacteristic for Sahara, a usually stingy company. The suggestion is that, for some reason, the Guptas appeared to take a particularly special interest in caring for Singh’s alleged mistress.
In an email found in the leaks, the woman wrote to her line manager on February 25 to tell him: “I will be away from office tomorrow and Friday as Mr T Gupta has requested me to go to Dubai.”
Singh was already in Dubai. When she landed there the next day, her airport pickup, accommodation and meals were charged to his room.
Singh’s total invoice was for AED 18 310 (R60 000 then). Singh was recorded as being from the Gupta company Sahara Computers, and the bill was paid for with a Gupta employee’s credit card.
There was one more thing about Singh’s February 2015 Dubai trip that raises questions.
His Oberoi stay was extended for three days. During this extra time, the Guptas arranged for one of China South Rail’s vice presidents to join him there, #GuptaLeaks emails show.
At that time CSR was still paying kickbacks to Gupta-linked companies for contracts awarded by Singh’s Transnet.
The confluence of these three people, orchestrated by the Guptas, is notable.
Two weeks later, the CSR vice president, Tony Gupta and Essa, the Guptas’ partner, travelled together on a chartered flight in India.
A few days after this, an email from the CSR vice president was recirculated among senior Gupta personnel. Attached to the email was a spreadsheet that reconciled kickbacks CSR owed and had already paid to JJ Trading on the three Transnet locomotive contracts.
Not long after, Essa and CSR signed a new kickback contract. According to this, the CSR kickbacks would be diverted from JJ Trading to an Essa company in Hong Kong.
Singh declined to explain.
Ructions at Eskom
Not two weeks after Singh returned from that Dubai trip, on March 12, 2015, the Eskom board suspended its CEO, finance director and two other executives.
Eskom’s then chairman said this was to make way for an investigation into Eskom’s poor power generation performance and related problems. He said: “There is nothing sinister happening. This is a fact-finding inquiry … which will last for three months.”
But many viewed the suspensions as a sham to get executives out of the way. Indeed, three of them soon resigned. President Jacob Zuma later apologised to the former CEO.
The upshot, however, was that the way was cleared for the tag team of Brian Molefe and Anoj Singh to take over at the public power utility – where the Guptas and their associates had battled to close coal and financial contracts.
Molefe was seconded to Eskom in March 2015 as acting CEO. Singh moved across, also in an acting role, a little later – but not before another trip to the Dubai Oberoi.
An Eskom briefing?
Singh flew back to Dubai on June 11, 2015. This was his sixth trip to be arranged by the Guptas.
As usual, Tony Gupta was there.
In the circumstances, it seems reasonable to ask: Was Singh there to receive his Eskom briefing?
One month later, Singh was seconded to Eskom – and two days after that, Tony Gupta, Ajay Gupta’s son Kamal, and Jacob Zuma’s son Duduzane were all present at the Oberoi.
The Guptas and Duduzane were about to benefit hugely under the new Eskom regime.
Just two weeks later, Molefe and Ajay Gupta spoke on the phone. This was first of 78 phone interactions between Molefe and the Guptas that were reported on by the former public protector in her “State of Capture” investigation.
In the closing months of 2015, the Gupta partner Essa founded the financial advisory firm Trillian Capital Partners.
Recall that on at least two of Singh’s trips to the Dubai Oberoi, Essa was booked in alongside him, so the two were likely acquainted.
Earlier, the Guptas had tried to buy Regiments – the company that Transnet enriched through questionable payments on Singh’s watch and which had made dubious payments to Gupta front companies.
But Eric Wood’s partners at Regiments had turned the Guptas away.
So, Wood started moving his affairs to Essa’s new group, Trillian.
The details of Wood’s transfer to Trillian are entangled in controversy. Regiments’s remaining partners have claimed that both Transnet and Eskom paid Trillian for work their company had done.
Among the disputed Transnet payments was R94-million to Trillian that December, for work allegedly done by Regiments.
Even though Singh was at Eskom by then, people close to Transnet described such payments as “the cigarette that Anoj left burning in the ashtray when he left”.
Got a light?
Over at Eskom, with Singh and Molefe in place, Wood and Essa appeared to peel open a new pack of cigarettes.
Eskom and McKinsey signed an agreement in September 2015 to work on an Eskom corporate plan. Regiments worked directly on the plan alongside McKinsey, with the intention that the former would become the latter’s supplier development partner.
It was Singh who allegedly asked Regiments to help prepare Eskom’s corporate plan, according to a recent investigation by Advocate Geoff Budlender, conducted on the Trillian chair’s instruction.
McKinsey said the Regiments supplier development contract was never formalised.
But as Wood began to split away from Regiments to establish Trillian with Essa, McKinsey followed suit. It adopted Trillian as its intended supplier development partner on another big Eskom project, “the turnaround plan”.
Eskom has said Singh was not responsible for later signing a master services agreement for this plan, but one well-placed source said he was responsible for key negotiations.
McKinsey said: “Trillian ultimately failed McKinsey’s due diligence and the consultancy terminated its discussions with Trillian in March 2016.”
Eskom has admitted that it paid Trillian, however.
Wood and his staff, whether as Regiments or Trillian, also appeared to do other work at Eskom under Singh.
For example, senior Eskom staffers told us how, after Singh arrived, he started touting Regiments’ services for various jobs.
Their standard response was: “But we’ve already done that.” Or: “But we can do that ourselves.”
Then, the staffers alleged, Singh went quiet, and they learned indirectly that he had Wood doing jobs behind their backs.
In December 2015, Singh introduced Wood to Eskom’s insurers, who were covering a blown boiler, and Wood and his staff apparently advised Eskom on this project.
But some McKinsey staff appeared to feel that Wood and his colleagues were simply along for the ride or an “unwanted piece of baggage”, as one Trillian executive described it to Budlender.
For example, the Trillian executive recounted how, in a meeting, a McKinsey employee said: “Regardless of the [Trillian] resources allocated to projects, Trillian will still get their 30%”, and: “It doesn’t really matter as long as you get your percentage.”
Budlender concluded: “The Eskom contract price included 30% for Trillian, which from those [McKinsey] representatives’ point of view served little purpose other than to provide a substantial financial benefit to Trillian and its shareholders — and presumably to induce Eskom to award the contract to McKinsey”.
McKinsey replied that it took “supplier development and professional standards seriously, and that it would only ever consider entering into a supplier development partnership which would achieve impact and value for its clients, and build local capabilities in parallel”.
“Singh’s got our back”
Budlender also described an encounter between Wood and a Trillian executive, as recounted by her. She had fretted because a McKinsey due diligence concluded that Trillian was too politically exposed because of Essa’s relationship with the Guptas.
Budlender reported: “[She] said that she discussed this with Dr Wood in April 2016. He said that she was not to worry, as he would discuss the matter with Mr Anoj Singh of Eskom. He said that Trillian had responded to an Eskom request for proposals, and Mr Singh would appoint Trillian through that process.
“The obvious question which arises is how [Wood] could be so confident that Eskom would appoint Trillian.”
Eskom has admitted to paying R495-million to Trillian without contracts. We understand the true figure to be nearly R600-million.
Trillian has denied wrongdoing and said it “delivered a high standard of work to its clients”.
Another well-told story, involving Singh and the Guptas, is how, over 2015 and early 2016, Eskom sandwiched Glencore, the owner of Optimum Coal Holdings, between a gigantic fine for poor quality coal and a tough negotiating position on Optimum’s coal prices – all while the Guptas tried to buy Optimum’s mine and related assets.
The former public protector chronicled this in her “State of Capture” report.
She showed how Eskom CEO Molefe and mines minister Mosebenzi Zwane were in close contact with the Guptas while putting the squeeze on Glencore.
Singh showed his hand a few times.
He provided a boost to the Gupta balance sheets when, late in December 2015 – when most of his staffers were on holiday – he arranged a R1.6-billion Eskom guarantee against the Guptas’ future coal supplies.
An insider explained to us that it was not unusual for Eskom to give such guarantees to help establish new mines and therefore secure future coal supplies.
What was questionable in this case (aside from Singh’s close and beneficial relationship with the Guptas), was that Optimum was already up and running. No capital investment was necessary to secure its coal supplies, they said.
Singh reaches out again
In “State of Capture”, the public protector analysed bank records and alleged that Trillian ultimately contributed R235-million towards the Guptas’ Optimum purchase consideration. Trillian denied this, although a recent report suggested a financial regulator has corroborated the public protector’s finding.
Much of Trillian’s money was presumably derived from Eskom and Transnet payments, made under Singh’s watch. But at least one invoice, for R30.6-million, was sent directly to Singh on April 14, 2016 – the same day that the Guptas’ Tegeta Exploration and Resources had to pay R2.1-billion for Optimum.
The Guptas were struggling to come up with the cash, so this payment may have been urgent for them.
The invoice was stamped “paid” on the same day that Singh received it.
At the same time, the Guptas were battling to come up with the last R600-million they needed to close the deal.
The banks would not help, and Eskom’s board tender committee held an eleventh-hour meeting and agreed that Eskom would prepay the Guptas R659-million for coal to be provided in the future.
Singh’s job included making sure the Guptas’ coal was not overpriced. Treasury investigators have complained that it was and that Singh failed to do a proper due-diligence, while accepting gifts from the Guptas in the form of the Oberoi stays.
In a recent report, they said an investigation was needed into whether Singh accepted “gratuities” to improperly influence his decisions.
The Guptas immediately used Eskom’s cash to buy Optimum.
Eskom has countered that the coal was fairly priced, that it was supplied and that Tegeta offered shares as security.
Eskom also said it urgently needed the coal to avert load shedding – yet, just two weeks earlier, public enterprises minister Lynne Brown told parliament: “Load shedding has become a thing of the past… The group chief executive officer, Brian Molefe, has assured me that there is no prognosis for load shedding over the winter months,”
Singh and the “state capture year-end party”
In December and January 2015, the Guptas invited a long list of officials, politicians and fixers to join them at the Oberoi.
Over a few weeks, they were joined by Duduzane Zuma, former finance minister Des van Rooyen (he had been appointed and fired a few days before arriving in Dubai), Free State Premier Ace Magashule’s sons, arms deal and Gupta fixer Fana Hlongwana, then deputy minister of public service and administration Ayanda Dlodlo (Hlongwana paid for himself and Dlodlo), public enterprises minister Lynne Brown’s allegedly powerful personal assistant, Denel chairman Dan Mantsha and Eskom’s group executive for generation, Matshela Koko.
Sars commissioner Tom Moyane also happened to be in town, according to news reports. But this was purely coincidental, he said.
Singh was there too.
Most of the people listed have been linked to benefits that the Guptas and their partners derived from the state.
And given that President Jacob Zuma had just attempted (but failed) to install a Gupta friend to the finance ministry, it is tempting to view the Oberoi gathering as a “state capture year-end party” – albeit with the finance minister glitch.
Singh’s attendance was significant given the events then playing out at Eskom involving Regiments, Trillian and the Optimum coal deal.
On the morning after Eskom’s results presentation in July this year, Singh appeared on the TV talk showMorning Live.
The host, Peter Ndoro, asked Singh about his relationship with the Guptas and his trips to Dubai.
Singh ducked: “As I indicated yesterday, there is a document that I am currently preparing that will reveal the nature of the trips…”
Ndoro interrupted: “But Anoj, this isn’t brain surgery. You either went or you didn’t. Did you go?”
“No. I mean, yes, I did.”
“Did the Guptas pay for it?”
“No they didn’t.”
“But they didn’t give you any gifts whatsoever?”
“So what is your relationship with the Guptas?”
“Well I think it’s like any other South African business person. I know them. I’ve been with them. I’ve met them, by and large as a result of the The New Age breakfasts, so ja.”
“So nothing unusual is going to come up in these emails to suggest that an impropriety or a relationship that is inappropriate between someone who is doing work for Transnet and then the CFO… Because you should have distanced yourself a little bit more once they had contracts with you, right?”
Anoj blinked hard, then screwed up his face thoughtfully: “Well if you look at the Transnet environment, I don’t think there was any contracts with Sahara that Transnet had entered into.”
Nobody said there were.
Singh continued: “Maybe on the Eskom side a bit more diligence would have been required. And the emails currently paint a relatively… a picture, and I think that’s the reason for the document being prepared to give perspective in terms of what the actual reality was.”
By then, Singh looked as if he felt a little hot under the collar.
Leaked emails show beyond doubt that Gupta employees arranged seven bookings at the Oberoi for Singh. They received his invoices, haggled over his rates and, in four cases, we have evidence that they paid using company credit cards.
The invoices included Singh’s numerous massages, airport limo pickups, meals and his alleged mistress’s charges, in one instance.
Once, an Oberoi staffer wrote to a Gupta employee: “Please note that with approval of Mr Gupta we also charged the credit card which you provided to us for Mr Singh charges.”
On another occasion, one Gupta employee told another to “please swipe the card for all charges” against Singh’s expenses.
And after another trip, a Gupta employee sent Singh’s Oberoi bill to Tony Gupta who responded: “Ok.”
In response to our long list of written questions, Singh conceded that, “with regard to procurement, the buck does stop with me”.
And: “With the benefit of hindsight and new facts (assuming they are correct) – presented by amaBhungane and other journalists – which I was not aware of at the time, these transactions could look suspicious and may very well be irregular,” he said.
But he thinks journalists are treating him unfairly.
“What has been distressing for me,” he said, “are speculative reports about my role in alleged corruption, concluded through largely speculative reporting written in a pointed way to substantiate the ‘state capture’ narrative. As if to say that I am some overlord that wields a magic pen and blank a cheque book at will.”
We could not have phrased it better.
* This story was edited after publication to correct the circumstances of McKinsey’s relationship with Regiments and Trillian at Eskom and to include extended comment from McKinsey.
#GuptaLeaks: Software giant SAP paid Gupta front R100-million “kickbacks” for state business
To clinch Transnet business, business software giant SAP agreed to pay 10% “sales commission” to a company controlled by the Guptas. The evidence suggests the company – a little-known outpost of the Gupta empire – was deliberately interposed to obscure Gupta involvement and to launder the proceeds to them.
With €22-billion (about R330-billion) in revenue last year, German software multinational SAP should have all the expertise it needs to close major deals.
Instead, the #GuptaLeaks and related information show, the world’s third largest software company is not above calling in help from the politically connected, risking contravention of international anti-bribery laws.
AmaBhungane and Scorpio can reveal that in August 2015, SAP signed a “sales commission agreement” with a small Gupta-controlled company that specialises in selling 3D printers.
The terms suggest a thinly disguised kickback arrangement: If the Gupta company were the “effective cause” of SAP landing a Transnet contract worth R100-million or more, it would get 10%.
In the year to follow, SAP paid the company, CAD House, a whopping R99.9-million, suggesting SAP used the Gupta influence network to drive sales of a billion rand to Transnet and other state-owned companies.
SAP denies it paid kickbacks or was party to laundering the payments, arguing that CAD House had “the necessary skills in terms of positioning our solution” and was paid a sales commission for acting as “an extension of the sales force”.
But there are factors suggesting that SAP’s denial does not hold water: There is no evidence that CAD House had any experience marketing or selling SAP software. And CAD House appears to have been used as a front, both to distance the transaction from the Guptas and to launder the proceeds to them.
Neither CAD House nor the Gupta family responded to detailed questions.
In 2014, Transnet was considered so key to SAP’s business that it was defined as a “strategic customer” – a designation given to just 300 out of 197,000 SAP customers worldwide, according to an SAP presentation found in the #GuptaLeaks.
Despite its special relationship, SAP was seemingly having trouble closing deals with Transnet and turned to the Guptas for help, the trove shows.
CAD House, which specialises in selling 3D printers, is not widely known to be part of the Gupta empire. At the time it was, on paper, half owned by Santosh Choubey, a key Gupta lieutenant employed by their Sahara Systems.
Minutes and other #GuptaLeaks records show, however, that CAD House was managed as a subsidiary of the Sahara group – indicating that beneficial ownership rested with the Guptas themselves.
In an interview, SAP South Africa chief financial officer Deena Pillay claimed that CAD House was no different to other sales agents SAP uses. “They’re small guys who would go out there, identify business and come to SAP with that opportunity. It’s a lever available to SAP to sell its software… We’ve got a sales force that we employ, so these are the agents on the ground… They are an extension of the sales force.”
In SAP’s world, commission agreements are not unusual. Except in this case Transnet was already a client of SAP and the commission agreement with CAD House made it clear SAP was not so much hiring a sales agent to market a product to Transnet as a fixer to clinch the deal.
The commission agreement was signed on 20 August 2015 by Pillay and another senior SAP executive. It promised CAD House 10% if CAD House was the “effective cause” of Transnet signing a R100-million-plus deal with SAP.
CAD House’s “main purpose”, it specified, “is to assist [SAP] in obtaining Customer consent to the Customer Contract and Customer’s requisite signatures to such agreement”.
SAP’s Pillay told us that an “external reputable company” did a “rigorous due diligence” on CAD House before the agreement was signed. Pillay’s colleague Candice Govender, who is SAP South Africa head of legal, confirmed that SAP was aware CAD House was connected to Sahara, but found “no red flags”.
Yet, by the time SAP signed the commission agreement in August 2015, the red flags were in plain sight.
Three weeks earlier, amaBhungane and the Mail & Guardian had revealed how telecoms firm Neotel agreed to pay letterbox company Homix R104-million in what were also termed “commissions” – clearly kickbacks – to land Transnet contracts.
Our exposé at the time showed that a Gupta man was behind Homix. Immediately after the exposé, Neotel’s chief executive and chief financial officers went on “special leave”, ultimately to lose their jobs.
- Read ‘Kickback’ scandal engulfs Transnet here
Two possibilities present themselves: Either SAP ignored the obvious red flags about the Guptas’ alleged involvement as fixers at Transnet, or it signed up for exactly the same service.
In a settlement with the US Securities and Exchange Commission last year, SAP agreed to pay a $3.9-million fine after a senior SAP official paid bribes for state business in Panama via a local partner.
The SEC had jurisdiction because of SAP’s secondary listing on the New York Stock Exchange.
The road to closure
Even for questionable commission agreements, 10% appears to be high. One industry insider put the usual “fixer” fee at closer to two or three percent. With the Neotel deals, Homix was to receive roughly 5% of the roughly R2-billion Transnet contract value.
But SAP not only wanted a Transnet deal worth a minimum of R100-million, it wanted it signed within just one month.
In an attached timeline of deliverables, referred to in the commission agreement as the “Road to Closure”, CAD House and Choubey were expected to secure a meeting with Transnet chief financial officer Garry Pita within just three days to “position the financial benefit” of SAP’s proposal.
After that it was not a sales effort, but one simply of getting Pita and Transnet to give the necessary approvals. The timeline provided that Pita would have the required R100-million-plus “budget reallocated for capital approval” only a week later.
By 21 September 2015, a month after SAP signed the commission agreement, CAD House was expected to “fast-track and attempt to obtain contract signature” from Pita and Transnet’s chief information officer – although it had leeway until the end of December still to qualify for the commission.
While there is scant information in the agreement about how CAD House would work such a miracle, the agreement – in common with many commission contracts – contained extensive anti-bribery clauses, making CAD House promise that it would not pay any money in turn to government, state-owned company or party officials.
But the circumstances suggest this was little more than a fig leaf.
Fronting for the Guptas
The evidence suggests that CAD House was interposed as a front to avoid exactly the kind of red flags that the Guptas as politically connected persons would have raised during a due diligence.
For a company with a turnover of less than R20-million and struggling to make any profit at all, the prospect of millions in commission should have been a major development.
Yet, #GuptaLeaks minutes of monthly CAD House meetings straddling the date of the commission agreement make no mention of the expected windfall. The meetings, at Gupta holding company Oakbay Investment’s Sandton offices, were attended by both Sahara and CAD House officials and discussed revenue-generating proposals for the latter.
A CAD House budget signed off in February 2016 – six months after the commission agreement was signed and shortly before SAP’s payments were to start rolling in – made no mention of the income either.
As we shall see, this was with good reason: SAP’s payments were not to stay with CAD House, but flow straight out to other Gupta companies.
Although SAP vehemently defended the decision to hire CAD House, Pillay and Govender seemed unable to explain why a company that sells 3D printers was an ideal partner for a complex software deal.
“We were doing a proof of concept and CAD House was an existing vendor at Transnet and we were looking at doing 3D models for these guys to show them the value and the benefit of using our solution,” Pillay told us.
When pushed for further detail of what SAP product required it to be modeled in 3D, Pillay said: “[The deal] was about Transnet in terms of the rail infrastructure, the way the operations work, the yards, the trains – all of that these guys were able to do the necessary 3D modelling as well as being able to position the SAP solution.”
When we pointed out that CAD House’s speciality is selling printers that make physical 3D models, Govender deflected: “At the end of the day they [CAD House] were vetted internally and externally; SAP was happy that they added value; [Transnet] was happy that they added value… Look, you have the CFO and SAP head of legal in front of you… If you need more technical detail you don’t have the right people in front of you.”
There are compelling reasons to be sceptical of SAP’s explanation:
One, Pillay signed the commission agreement on behalf of SAP and would surely have been privy to why SAP was giving away 10% of a minimum R100-million deal.
Two, If SAP honestly did want plastic models of its software solution it could have bought them at a fraction of the cost.
And three, despite Pillay maintaining that SAP engaged CAD House because of its “existing relationship [and] understanding the processes within Transnet”, Transnet denied it had any relationship with CAD House whatsoever.
Pita, the Transnet chief financial officer and “Road to Closure” target of SAP and CAD House’s lobbying efforts, wrote in reply to our questions: “According to our records, Transnet has not conducted business with CAD House. I have never heard of CAD House or dealt with them, nor have I had any discussions with a Mr Choubey about them.
“I have never been approached by CAD House or Mr Choubey to discuss Transnet’s contract with SAP or SAP’s services and products. I have not met with any third party to discuss contracts between Transnet and SAP.”
All in all, a more plausible explanation for the payments to CAD House may be that SAP willingly entered into a kickback agreement where both parties knew the Guptas, not CAD House, were to receive SAP’s millions and use their politically-derived influence to secure business for SAP. This is supported by what happened in the run-up to the deal.
The start of a beautiful friendship
The #GuptaLeaks show that Lawrence Kandaswami, SAP South Africa’s managing director, was the software multinational’s key contact with the Guptas.
As far back as 2014, when he was still SAP’s account director responsible for Transnet, Kandaswami exchanged emails with Choubey, who used his Sahara Systems email address.
At the time, SAP was trying to close a separate deal with Transnet to buy SAP Hana, a database management product.
A day after meeting with Transnet, Kandaswami forwarded Choubey the SAP presentation marked “strictly confidential”, detailing the proposed deal.
Kandaswami’s message read: “This is to prompt movement on the opportunity.” Choubey immediately forwarded the email to Salim Essa, with a note saying: “Sir – FYI – Supporting for Hana from SAP.”
Essa, a key Gupta lieutenant, has often been the family’s most direct point of contact at Transnet and Eskom.
The #GuptaLeaks do not show what Essa did after receiving Kandaswami’s email but Transnet confirmed that it agreed to go ahead with the proposed SAP Hana deal in late 2014.
By February 2015, Kandaswami had been promoted to SAP South Africa’s head of public sector, according to his LinkedIn profile. Both Transnet and Eskom’s accounts were now under his purview.
There are indications that a similar role was played at Eskom too.
On 17 February 2016, the #GuptaLeaks show, Choubey scheduled a meeting between Sahara and SAP. Two weeks later, on 2 March, Kandaswami emailed Eskom chief financial officer Anoj Singh, head of procurement Edwin Mabelane and head of generation Matshela Koko about an urgent deal for Eskom to acquire SAP Hana.
The offer would expire, he warned, at the end of March unless Eskom seized the opportunity.
In a pattern that has now become familiar, Kandaswami almost immediately forwarded this email to Choubey, who forwarded it to one of the Gupta brothers’ adult children.
Eskom spokesperson Khulu Phasiwe confirmed that Eskom signed two contracts with SAP during 2015 and 2016, but declined to provide any further detail, citing a confidentiality agreement signed with SAP.
Shortly after these exchanges took place, Kandaswami was promoted to managing director for SAP South Africa.
Following the signing of the Transnet commission agreement, the money started flowing to CAD House – and straight out again.
The first SAP payment we know about landed in CAD House’s bank account in April 2016. The R17-million did not stay there long; on the same day R2-million was transferred out to Sahara Computers and R2.3-million to an obscure Eastern Cape company whose owner we have been unable to trace.
Within five days another R10-million was transferred out: R9-million to Sahara Computers and a million to Baroda, the Guptas’ bank of choice.
A similar pattern was repeated that July when R9.2-million came in from SAP. Within two days, R7.7-million bounced to Sahara Systems and R1.1-million to the Eastern Cape company.
In December that year, a massive R73.7-million rolled in from SAP. Within a fortnight, R71.1-million had gone out to three companies in the Sahara orbit: Cutting Edge, Futureteq and Sahara Systems.
All in all, we identified R99.9-million in SAP payments of which only R5.7-million did not flow straight out.
The amount appears not to relate only to the R100-million minimum Transnet contract that was the subject of the commission agreement we know about. Pillay and Govender confirmed that SAP paid CAD House in respect of “other customers” too, but refused to give details, citing client confidentiality.
This pattern, of money being cycled through Gupta-controlled accounts at a rate that defies all commercial reason, has become familiar through the #GuptaLeaks.
When we put it to SAP that it may have become party to a money laundering scheme by contracting with CAD House, Govender objected strongly, saying: “We are not aware of any payments being made to Sahara or anybody else. Our contract is with CAD House.”
Pillay added: “What the partner does with their money I have no control over. If you say these guys pass the money up the line, I have no control over that, I have no visibility over that.”
SAP may end up having to explain that to the Securities and Exchange Commission too, which will have SAP on a watch list after last year’s settlement over bribery in Panama. In that matter, the SEC found that SAP “failed to devise and maintain an adequate system of internal accounting controls” to prevent bribery.
Transnet did not respond to questions other than to mirror Pita’s comments, saying it had “never conducted any business with CAD House. The company is not aware of CAD House’s involvement with SAP or Mr Choubey”.
Detailed questions were sent to SAP’s Kandaswami and Sahara’s Choubey, but neither responded.
In a written statement, Govender said: “SAP is dedicated to conducting every aspect of our business responsibly and in accordance with the highest legal standards… With regard to CAD House and SAP SA Business Development Partners in general, please note that any selected SMMEs and/or partners are verified, both in terms of SAP’s rigorous internal forensic procedure as well as by an independent forensic law firm.”
#GuptaLeaks: Guptas and associates score R5.3bn in locomotives kickbacks
In our first exposé from the #GuptaLeaks, we show how the president’s friends and their associates are diverting billions of rand from Transnet’s purchase of locomotives to their offshore accounts.
In a scheme so audacious and lucrative that it puts the notorious arms deal to shame, they:
- Entered kickback agreements totalling R5.3-billion with the Chinese manufacturer that became Transnet’s favourite locomotive supplier;
- Influenced procurement processes through their associates at Transnet;
- Are pocketing R10-million from each R50-million locomotive that Transnet is buying.
This story presents the most direct evidence yet of the Guptas and their associates amassing fortunes offshore by tolling contracts at state-owned entities they control.
Just over two years ago in Shenzhen, the China mainland boomtown abutting Hong Kong, Salim Essa put his signature to a “business development services agreement”.
Neatly laid out over 19 pages of legalese, the contract seemed standard for the world of trade and investment. A firm named CSR (Hong Kong) Co Ltd had approached another called Tequesta Group Ltd to “provide advisory services” for “Project 359” in South Africa.
Tequesta, represented by Essa, had “a familiarity with [the] regulatory, social, cultural and political framework” in South Africa and could give the necessary assistance. But that is where “standard” ended.
CSR (Hong Kong) was a subsidiary of China South Rail (CSR), the mainland-based rolling stock manufacturer that had won the biggest share – 359 – of a tender for 1,064 new locomotives that Transnet, South Africa’s state-owned freight operator, had awarded to four suppliers in March 2014.
Essa, a dealmaker and trusted Gupta family lieutenant, was the sole director of Tequesta, also a Hong Kong company. Essa and a CSR executive signed the contract on May 18, 2015.
At the very end of the document there is this provision: “The company [CSR] will not require any proof of delivery of the above services since it is understood that the project would not have materialised without the active efforts of Tequesta to provide the services listed above.”
In other words, the be-all and end-all of Tequesta’s “service” was to have won the tender for CSR 14 months earlier.
And the consideration? The contract records that “Tequesta shall be entitled to an advisory fee of 21%” … of the contract value for Project 359” – a staggering about R3.8-billion of the R18.1-billion contract.
Put differently, more than R10-million of the R50-million that South Africa is paying for each CSR locomotive would be diverted to an offshore company controlled by the Gupta lieutenant.
As will be seen, similar agreements provided for about R1.5-billion more on two smaller Transnet CSR orders, bringing the total to almost R5.3-billion on contracts worth over R25-billion.
The amounts alone elevate the fees beyond consultancy to where only one explanation is possible: that these are the proceeds of corruption.
The interpretation is bolstered by a simple fact: Key decision-makers at Transnet, including those directly involved in its procurement function, were Gupta associates.
The CSR agreements provide the most direct evidence yet that the Guptas and their associates are amassing fortunes offshore by tolling contracts at state-owned entities they control.
Gigaba takes charge
But let us go back to where it began.
After Malusi Gigaba, now finance minister, was appointed to the public enterprises portfolio in late 2010, he shook up the state-owned companies under his control.
This included appointing Iqbal Sharma, an Essa and Gupta friend, to the Transnet board almost immediately, and Brian Molefe, now a known Gupta intimate, as Transnet chief executive in 2011.
Still in 2011, Gigaba reportedly wanted to elevate Sharma to board chair, but this was shot down by his Cabinet colleagues. Sharma was then made chair of the board acquisitions and disposals committee, a new structure to oversee large procurement.
A third important Transnet appointment came in July 2012: that of Anoj Singh as chief financial officer. The procurement function resorted under him.
That same month, July 2012, Transnet issued its tender for 1,064 freight locomotives; 599 electric and the rest diesel. The roughly R50-billion price tag made it South Africa’s largest locomotive procurement yet, the company later said.
Three months later, Transnet announced the outcome of an earlier, “accelerated” tender: CSR would supply 95 electric locomotives. amaBhungane was told at the time that the Guptas would benefit from this award, but was unable to confirm it – until now.
In December 2012, Transnet appointed a consortium led by global consultants McKinsey to advise on the 1,064 procurement.
As amaBhungane previously reported, advisory firm Regiments Capital, not originally part of the McKinsey consortium, was subsequently included and given an increasingly dominant share of the workload.
Much of this was driven by Singh, who signed the contract amendment bringing in Regiments. For the McKinsey consortium, Regiments director Eric Wood signed.
Wood’s entry is important for two reasons.
One, he too was close to Essa and the Guptas. He remains locked in litigation with his former colleagues at Regiments after he left them to form a competing advisory firm, Trillian Capital Partners, with Essa.
Two, Regiments, then still represented by Wood, was key to determining the outcome of the 1,064 tender.
In a memorandum to Molefe that amaBhungane previously reported on, Singh credited Regiments for a decision to split the tender between four bidders.
Regiments’ purported logic was that even though each manufacturer would charge millions more per locomotive, as it would produce fewer units and sacrifice economies of scale, this would be outweighed by hedging and inflation savings because the locomotives could be delivered earlier.
Be that as it may, when Molefe announced the split tender award on March 17, 2014, CSR was the biggest winner with 359, or 60%, of the 599 electric locomotives sought.
But that was not the end of CSR’s winning streak.
Sharma saves the day
Six months earlier, in October 2013, Transnet’s Sharma e-mailed Rajesh Gupta and senior Gupta employee Ashu Chawla.
By this time, it should be noted, Sharma was about to be a business partner to Essa and the Guptas – he was negotiating his and their imminent joint acquisition of VR Laser, a steel cutting business.
But these e-mails were not about VR Laser.
To Chawla, Sharma sent a memorandum that had been submitted to the acquisitions and disposals committee, which he headed. It motivated for the urgent acquisition by “confinement” – that is, without a tender – of 100 electric locomotives from Japan’s Mitsui & Co pending the finalisation of the 1,064 tender, which had been delayed.
If the Guptas were batting for CSR, the award to a competitor would have threatened their interests. Sharma provided the solution.
To Rajesh Gupta, better known as Tony, Sharma e-mailed two letters: One from him to the department of public enterprises director-general, and the other a draft reply from the director-general.
The letter to the director-general was in the form of Sharma seeking advice from the department, which represents government as Transnet’s shareholder.
But in it Sharma expressed serious doubt about the acquisition, saying: “My own view as chairman … is to decline the request for confinement and procure by way of an open and transparent tender process.”
He added that it “could appear” that Transnet’s freight rail division, which had motivated the acquisition, wanted to favour “particular companies that have enjoyed similar treatment in the past”.
The director-general’s draft reply – which, metadata shows, Sharma authored himself – concluded: “We do not readily support the use of confinement as a method of procurement and in this instance we would urge the [acquisitions and disposals committee] to not grant approval for this procurement with a confinement.”
The record shows that Mitsui & Co did not get the contract for the extra 100 locomotives, but that CSR did. We could find no evidence that this followed an open tender.
End result: By early 2014, CSR had contracts to supply Transnet with 95, 100 and 359 locomotives – 554 units in total.
Singh goes travelling
The ink was barely dry on the 359 contract award when Singh, the Transnet chief financial officer, paid what appears to be the first of multiple visits to Dubai, where he stayed at The Oberoi, the Guptas’ hotel of choice.
Numerous e-mail exchanges show Chawla, the Gupta employee, handling the reservations and in some instances the payment.
In August 2014, Chawla forwarded a Singh reservation to a Gupta associate in Dubai, saying: “Please swipe the card for all charges.”
After an extended December 2015 stay Chawla forwarded Singh’s UAD20, 454 (about R85,000 then) bill to Tony Gupta, who replied: “Ok”.
Singh’s first recorded booking was for a luxury suite from June 6 to 9, 2014, three months after the 1,064 tender award. Tony Gupta had a booking for the same period, but in the presidential suite.
The purpose of Singh’s visits is not clear, but there is evidence of business involvement with the Guptas.
Company documents submitted to the Ras al-Khaimah Investment Authority indicate that on May 1, 2014, Indian national Vivek Sharma transferred ownership in a company, Venus Ltd, to Singh. We could not establish its purpose.
Ras al-Khaimah is one of seven emirates making up the United Arab Emirates. The investment authority provides a highly secretive offshore company jurisdiction.
Vivek Sharma and his father were Gupta associates, numerous e-mail exchanges show. This includes an invitation for Tony Gupta to attend Vivek’s wedding in March 2014.
The #GuptaLeaks include a January 2015 reconciliation of the “receivables” CSR were to pay and had already paid.
It tabulated the value for each of the three Transnet contracts: R2.7-billion, R4.4-billion and R18.1-billion, and the “fee” CSR was to pay on each: R537-million, R924-million and R3.8-billion (21%).
Of the total about R5.3-billion, CSR had by then paid US$124-million (R1.4-billion in January 2015 rands).
But the kickbacks were not being paid directly to Gupta companies at the time – the 95 locomotive “fee” went to a company initialled “CGT”, while in respect of the other two contracts it went to a company initialled “JJT”.
We could not establish CGT’s identity, but JJT is JJ Trading FZE, an Emirati company associated with Piyoosh Goyal, the chair of India’s Worlds Window group, which had a mining joint venture with the Guptas in Mpumalanga.
The reconciliation shows that JJ Trading and CGT were to keep 15% of the CSR payments for themselves, and pay the rest onwards as “expenditures”.
A Gupta whistle-blower told amaBhungane that JJ Trading was essentially a front for the Guptas: it signed the original agreements with CSR but remitted proceeds to Gupta companies.
Presumably the same went for CGT in respect of the 95 locomotives.
The “fronting” relationship was not to last. We do not know why, but one possibility may be Goyal’s exposure to the law in India, where in 2013 the Central Bureau of Investigation placed him under investigation in a high-profile bribery case.
Whichever way, Essa registered Tequesta in Hong Kong in June 2014 and signed the contract with CSR in May 2015, under which the 21%, R3.8-billion “fee” for the 359 locomotives became due to Tequesta.
Bearing out the allegation that JJ Trading had initially fronted for the Guptas, the agreement recorded that a prior agreement with JJ Trading had been cancelled, and made provision for how to handle disputes between the two.
CSR’s delivery of locomotives to Transnet are continuing. And so, presumably, are the kickbacks.
#GuptaLeaks: How Sahara handed SA jobs to foreigners
Gupta agents Ashu Chawla and Naresh Khosla fraudulently orchestrated South African work permits for Indian nationals by falsifying and backdating the Indian employment contracts on which these permits hinge.
This administrative sleight of hand allowed the Guptas to import and employ foreign labour at the expense of local jobseekers, and conveniently sidestepped the onerous legal red tape meant to protect South African workers from being overlooked in favour of foreign employees.
Chawla was a key Gupta lieutenant and director of the now-bust Sahara Computers (Pty) Ltd (Sahara Computers), as well as its counterpart in India, Sahara Computer and Electronics Limited (SCEL).
Khosla was Chawla’s co-director at SES Technologies, another Indian company belonging to the Guptas. The #GuptaLeaks show how the pair abused their positions as directors to sign off on the dodgy contracts.
As Parliament’s home affairs committee last week heard officials explain the intricacies of the Gupta family’s dubious early naturalisation, it also emerged that scores of their non-South African employees were working locally using “intra-company transfer visas”.
Department of Home Affairs director general of immigration Jackson McKay told committee members in his written answers that none of the foreign employees employed by ANN7, or any other Gupta company, were working in South Africa using visitor or tourist visas.
Instead, these Indian nationals were issued with “intra-company transfer” permits. McKay told the committee that an earlier raid on the Gupta-owned television station found 31 Indian nationals working for ANN7 under such permits. A further nine were in South Africa using visitor’s permits, but only to attend meetings.
This means at least 40 foreign employees were working at ANN7 alone.
In March this year, former ANN7 editor and Gupta-employee-turned-whistleblower Rajesh Sundaram published his book, Indentured: Behind the Scenes at Gupta TV. In it, he tells of his turbulent months working for the Gupta family as they tried to get the fledgling television news station off the ground. He also directly implicates Chawla in circumventing visa requirements.
“I had heard his (Chawla’s) name mentioned for the first time when I was asked to apply for my temporary residence permit under the intra-company transfer process before I left India for South Africa,” Sundaram wrote.
Sundaram tells of how an Indian executive of one of the main shareholders of Infinity Media, ANN7’s holding company, lamented the difficulties in obtaining a work visa for foreigners in South Africa.
“It can take months to get a South African work permit. It is a cumbersome process. We have to advertise the position in South African newspapers and then wait for six months, after which we provide evidence that we have not found a suitable local candidate. Only then can we start the process of getting a work permit. Even so, if there is an official who does not agree, the request for a work permit can still be rejected.”
But they had a plan.
“But Ashu-ji (Chawla) is a genius, and he has found a way around it. We will show the visas of people going to work in South Africa as intra-company transfer. Just fill in the visa form, get police and medical clearance and get back to my office. My office will issue papers certifying that you are an employee of Essel Media being transferred to South Africa.”
Later in the book, Sundaram asked the same Indian executive a question that hinted at how the operation worked:
“But all the people I have recruited to be the core team to launch ANN7 have got contracts from Infinity Media [in South Africa] and not Essel Media [in India]. They have never worked for Essel Media. I hope this is not illegal?”
The Immigration Act, 2002, and its regulations require a South African business seeking to employ a foreign national to first jump through a plethora of legal hoops before the foreign employee can take up work in a local business.
Björn van Niekerk, operations director for Intergate Immigration, told News24 that a local employer needs to consider South African applicants for the position first.
“An employer intending to employ a foreigner is required to confirm that that they have first made a reasonable effort to find, interview and consider South African applicants for the position that is required to be filled. The employer must confirm that:
- they have conducted a diligent search for a suitable South African candidate;
- they were unable to find a suitable South African with the relevant skills, experience, etc.
The lengths to which the employer went to advertise the position nationally, how many South Africans were interviewed, and why the South African candidates interviewed were not considered would all be taken into account.
“These efforts are assessed by the Department of Labour which will offer a recommendation based on whether they consider the need for a foreigner to be employed, over any potential South African, to be justified. The applicant also needs to have their qualifications assessed and evaluated by SAQA (South African Qualifications Authority).”
These requirements are meant to protect South African jobseekers, and to prevent employers from simply shipping in cheap labour from overseas to do jobs local citizens can perform.
But the Gupta family found a way to circumvent these requirements.
By claiming that the applications were for “inter-company transfer visas” instead of “general work visas”, Chawla and his Sahara Computers only needed to show that these employees had been in the service of one of their Indian sister companies for a period of at least six months.
They did this by falsifying and backdating the Indian employment contracts struck with these workers.
The fraud was trivialised because Chawla was also the director of the Indian companies creating the forged records, as well as the South African Sahara Computers that employed them locally. The same occurred between Essel Media and Infinity Media, where the directors of the two companies arranged employment contracts for ANN7 staff from India.
The documents and emails contained in the #GuptaLeaks shed some light on the logistics of the scheme. Between October 15 and December 15, 2014, 22-year old Karan Singh visited South Africa from his home country of India on the invitation of Sahara Computers and Chawla. He was later joined by his parents and sister: Sunil, Sunita and Vidushi Yadav were also invited by Sahara Computers on tourist visas from December 4 to 10, 2014.
The invitation letter to Singh’s parents claimed that Singh was an intern at Sahara Computers. This is despite a tourist visa prohibiting a foreigner from being employed in the country while issued with such a visa.
During his time in South Africa, Singh also met with Jitendra Tiwari, the human resources professional for Sahara Computers. Tiwari was responsible for the majority of the employment agreements between the foreign employees and Sahara, and the #GuptaLeaks show he was involved with most of the visa applications contained therein. Flight bookings contained in the #GuptaLeaks show that Tiwari accompanied Singh and his family on a flight from Johannesburg to Cape Town and back between December 8 and 10, 2014.
On December 16, 2014, the day after their return to India, Chawla forwarded Singh’s passport to Tiwari, who responded with a draft employment contract between Singh and South African Sahara Computers, appointing him as a “project manager” from January 12, 2015.
Shortly afterwards, Chawla sent an email to Khosla, a fellow director at SES Technologies in India, containing the passport of Singh.
“Please send me an appointment letter in SES for about eight months before as a project manager and I am doing inter-company transfer for him (sic).”
Khosla responded within hours, attaching a backdated appointment letter stating that Singh was appointed as a project manager at SES Technologies. SES Technologies is an Indian company of which Chawla and Khosla were co-directors.
Although the letter was backdated to May 16, 2014, the pair made a mistake. Singh’s commencement date with SES Technologies would only be on July 21, 2014, an error that was picked up on by the South African consulate. They refused Singh his visa on the basis that he had not been employed with SES Technologies for long enough, and on January 11, 2015, Singh wrote to Chawla:
“I will submit [my visa application] tomorrow. They had rejected the application before because the letter [you] had send earlier had date of joining as 21 July 2014, so [they rejected] it as it was not completing 6 months. Will submit it again tomorrow attaching the letter u had again sent me showing 21 May 2014 as the joining date for 6 months in India. Hope the embassy will not complain for the change in date (sic).”
The consulate didn’t complain, and Singh obtained his visa. He landed at OR Tambo International Airport on February 8, 2015. Two days later – on February 10, 2015 – Singh sent Chawla an email containing a scan of his passport and work permit, proudly displaying the words “intra-company transfer permit”.
- READ: ANC, ministers threatened Standard Bank to force it to keep Gupta accounts open, state capture commission hears
A second example originated late in March of 2014. Chawla received an email from Mr Sanjeev Gupta, enclosing his daughter Esheetaa’s resume and payslip for April 2014. Sanjeev Gupta, while unrelated to brothers Tony, Atul and Ajay, was closely connected with the Bank of Baroda’s chief executive officer in South Africa, Murari Lal Sharma. So close, in fact, that Esheetaa Gupta’s resume used Sharma’s mobile number as her South African contact number.
Esheetaa Gupta, an intellectual property lawyer working for a Wipro Technologies in India, was seemingly keen to secure work in South Africa.
On April 4, 2014, Chawla forwarded Esheetaa Gupta’s passport, CV and payslip to his secretary. Later that same day, she scanned and forwarded a bundle of documents signed by Chawla.
Among these was an employment agreement between Sahara Computers and Esheetaa Gupta, confirming she would be appointed as an “IP analyst” from May 15, 2014. It contained a letter from Sahara Computers to the South African consulate, stating the following:
“This letter serves to confirm that Ms Esheetaa Gupta will be transferred from SES Technologies to Sahara Computers (Pty) Ltd for a period of 24 months. This transfer qualifies as an intra-company transfer since these companies form part of the same global group. Esheetaa Gupta holds a foreign contract of employment with SES Technologies in India.”
It also contained a letter dated April 4, 2014, to the South African consulate (erroneously referred to as an “embassy”) from SES Technologies, the same company used to fabricate the employment contract for Singh. The letter from SES Technologies was also signed by Chawla and contained an exact copy of the paragraph confirming that Esheetaa Gupta was employed by SES Technologies.
These documents were sent to Esheetaa Gupta’s father on the same day. Esheetaa Gupta responded to Chawla on May 8, 2014, requesting additional documents, and in particular she required a “job offer letter from Indian company provided earlier at the time of employment”.
A comedy of errors and mistakes followed, as Chawla and his secretary compiled the documents requested by Esheetaa Gupta.
The pair could not keep their story straight. Suddenly, the employment confirmation letters and backdated employment offer, previously done on the SES Technologies letterhead, resurfaced sporting SCEL letterheads, Sahara Computer’s sister company in India.
The initial set of documents also claimed that Esheetaa Gupta had started working for SCEL as an IP analyst in 2010, a peculiar oddity considering that her resume claimed that she only began working in the intellectual property field a full year and a half later, in June of 2011. Her resume stated that at the time she was employed as a project trainee at Nucleus Software Exports Limited.
The final backdated employment offer sent to Esheetaa Gupta had a more reasonable commencement date of June 27, 2013, although this still does not explain why Esheetaa Gupta’s resume sent to Chawla in April 2014 does not mention either SES Technologies or SCEL in either her employment history or references.
It also does not explain how she obtained a payslip for April 2014 as an employee of Wipro Technologies, if she was an employee of either SCEL or SES Technologies at the time.
Both Esheetaa Gupta and Karan Singh were sent detailed questions regarding these allegations. They were asked to confirm their employment history with either SES Technologies or SCEL, and the reasons for the subsequent intra company transfers.
Despite follow-up requests, neither Singh nor Gupta have responded to our requests for comment.
Khosla was also requested to provide comment on the evidence contained in the #GuptaLeaks but did not respond to our questions.
Questions were also emailed and sent via WhatsApp to both Chawla and his wife, Harsh Chawla. No response has been forthcoming.
#GuptaLeaks: Direct evidence Gupta henchmen prepared fake race-baiting tweets
Scorpio has previously exposed how the Guptas and their British PR firm Bell Pottinger make use of fake social media profiles to disseminate a counter-narrative of “white monopoly capital” in order to defend their operations in South Africa. For those yet to be convinced, there is direct evidence from the #GuptaLeaks emails of one of the family’s lieutenants composing tweets for broadcast by fabricated Twitter accounts.
Haranath Ghosh’s LinkedIn profile lists him as head of sales and marketing for Infinity Media Networks, the media arm of the Guptas’ business which includes TV station ANN7 and newspaper The New Age.
But he has also held another job, serving as the Gupta family spokesperson on occasions in the past when Gupta actions have required spinning.
Evidence from the #GuptaLeaks emails shows, however, that it was not just the Guptas that Ghosh composed statements for. On at least one occasion, Ghosh also fabricated tweets to be sent out via the Guptas’ army of fake bots.
In September 2015, former Business Day editor Peter Bruce penned a column for the Sunday Times questioning President Jacob Zuma’s son Duduzane’s close relationship with the Gupta family.
The Guptas evidently felt that the charges warranted rebutting.
The #GuptaLeaks emails show that erstwhile The New Age publisher and then Oakbay CEO Nazeem Howa was roped in to compose a letter to be sent to Sunday Times editor Phylicia Oppelt for publication under Duduzane Zuma’s name.
“In my culture I have been taught to be respectful of my elders, so let me start with apologising in advance for taking issue with you and your columnist Peter Bruce for the almost defamatory references to me in his column on Sunday,” the letter begins.
“I know I am a young man, who grew up on the streets of Maputo, Lusaka and Harare before the fall of apartheid, so I am not as well-schooled as either of your good selves in customary business etiquette.”
It proceeds to complain: “Mr Bruce refers to me in the column almost as if I am a commodity that was traded for favours, claiming that I was enriched by the Guptas in order to ‘help’ our president.”
As amaBhungane and Scorpio previously reported, this statement of victimhood is richly ironic given that it was literally written by a Gupta henchman on behalf of Zuma junior.
But the letter alone was clearly not considered enough. What needed to accompany the letter was a flurry of tweets drawing attention to it and expressing support for both Duduzane Zuma and the Guptas.
Enter Haranash Ghosh.
In an email sent to the Guptas’ top brass – among others, Oakbay CEO Ronica Ragavan, Sahara CEO Ashu Chawla and Howa – Ghosh writes on 25 September 2015: “Attached suggested tweets which can be tweaked & tweeted in the social media”.
In the document attached to the email, Ghosh has listed proposed tweets to be broadcast – presumably from the Guptas’ collection of fake Twitter accounts.
The tweets were as follows:
- Good to see Duduzane come out and speak in his defence: Media can be ruthless on young black entrepreneurs Peter Bruce must apologise
- Dudu should sue this Bruce chap : so many innuendos in one article: is it not personal vendetta?
- In our media eyes all successful blacks are corrupt and immoral #sundaytimesfail
- If Guptas are immigrants then all jews are also immigrants: Peter Bruce is spreading poison here
- This article by Peter Bruce borders on the line of Xenophobia: Dudu Zuma should demand apology
- Peter Bruce makes sweeping statements in this article- he also knows President hasn’t met Guptas after waterkloof- Age catching up with him
- Guptas created over 7000 jobs and stay invested in our country…what is Peter Bruce’s claim to fame.
- After Duduzane’s response Sunday Times should apologise in their paper-nothing was true in the article.
The race-baiting tone of the fake tweets is doubly questionable if one considers the evidence to emerge from the #GuptaLeaks emails that the Guptas themselves appear to hold some racist, anti-black sentiments.
There is no sign that any of the tweets ended up being used in the direct form that Ghosh proposed, but the hashtag #sundaytimesfail was employed on numerous occasions by one of the Gupta sockpuppet accounts, @luiz_judy.
It remains to be uncovered just how extensive the Gupta network of fake social media accounts was – or is. The casual tone of Ghosh’s email suggests, however, that the use of fabricated tweets to undermine opponents and bolster support for the Guptas may have been routine.
Ghosh failed to respond to a request for comment before deadline.
Gupta lawyer and regular spokesperson Gert van der Merwe has refused to comment on #GuptaLeaks claims, saying: “I have no documents or context or instructions. It is inappropriate.”
#GuptaLeaks: How captured ambassador lobbied the Dutch
he government official that helped the Guptas obtain permission to land a private jet at Air Force Base Waterkloof has been using his position as South Africa’s ambassador to the Netherlands to negotiate business deals on behalf of the controversial family.
New information from #GuptaLeaks indicates that Bruce Koloane, who got his diplomat job after being suspended as chief of state protocol at the department of international relations and cooperation (Dirco), also forwarded information on the base directly to Gupta lieutenant Ashu Chawla around the time of the 2013 Waterkloof debacle.
The #GuptaLeaks also show that:
- Koloane, appointed as ambassador to the Netherlands in August 2014, met with Dutch businessmen in The Hague in 2015 to negotiate a deal with a manufacturer of greenhouse systems on the Guptas’ behalf;
- Koloane’s friends were allowed to stay at the Guptas’ upmarket private game lodge in Limpopo around the time of the negotiations with the Dutch greenhouse company;
- Koloane sent Chawla documents on a prospective coal mining site in KwaZulu-Natal in the midst of the Waterkloof fallout; and
- He attended the Gupta wedding at Sun City and stayed at the resort for three nights.
THE DUTCH DEAL
Correspondence between Koloane, the owners of Dutch company KPG Greenhouses and Rajesh “Tony” Gupta suggests Koloane used his position as ambassador to help the Guptas clinch business deals in the Netherlands.
In July 2015, KPG Greenhouses’ Marco van ’t Hart sent an email to Koloane’s official embassy email address and CCed Herman van der Kroef, the department of trade and industry’s representative to the Netherlands, in the email.
“Thank you for visiting our company in Maasland. In the meeting you asked if we would consider to sell our company for at least 50% and if we would be interested to start a production site in South Africa,” he wrote.
It is clear from the email that Koloane and Van der Kroef were representing someone else’s interests during their visit to the company, situated a 30-minute drive away from the South African embassy in The Hague’s city centre.
“…for this your investor can better talk too Mr Koppert himself (sic),” wrote Van der Kroef, referring to KPG Greenhouses’ owner, André Koppert.
A day later, Koloane forwarded the email to Tony Gupta, the youngest Gupta brother, saying, “As promised”.
Koloane’s bidding set in motion protracted negotiations between Tony Gupta and Koppert, although it is not clear from the emails whether a deal was clinched.
Later in July 2015, Koppert emailed Tony Gupta to enquire about the family’s intentions and Gupta replied: “Dear Mr Andre, thx for your mail. Our group is very diversely invested eg OAKBAY resources, Sahara computers, JIC mining services, The new age newspaper etc. we are looking to invest in agriculture sector (hydroponic) so we are looking to takeover or invest in your company also… (sic).”
But Koppert apparently was not keen to sell such a large stake in his company.
He did, however, suggest that KPG Greenhouses and the Guptas explore opportunities together to invest in a greenhouse manufacturing facility in South Africa.
Tony Gupta, though, was not overly excited by this offer, responding in late July 2015: “Honorable Mr. Koppert, thx for your mail and sorry to delay my reply. I will not be keen for your below mention idea… Once again thanks (sic).”
Tony Gupta and Koppert kept in touch throughout August and September to try to set up a meeting, but it is not clear from the emails whether they ever did.
News24 contacted Van ’t Hart on WhatsApp this week. He said he was in a meeting, but did not respond to later queries. Koppert did not respond to phone calls or messages.
A month after Koppert and Gupta had exchanged emails, Koloane again made contact with a member of the Gupta business network, this time to help two of his friends score a weekend stay at the Guptas’ luxury Clifftop Lodge in the Welgevonden private game reserve in Limpopo.
“Please find forwarded an email confirming arrival dates for my friends from the USA. Brother Tony has asked that I forward you the info so that you can make arrangements at the Lodge for a game visit. (One couple) Please check with him on this matter and confirm reservation with me by email and please copy Chelsea Jennings as well (sic),” Koloane wrote to Chawla in August 2015, using his Yahoo email account.
A few days later, Chawla responded to Koloane with an email that included a PDF document for the booking at the lodge, saying: “Dear sir. As discussed here is the booking attached for your reference (sic).”
The document indicates that Jennings and her partner stayed at Clifftop for two nights in September 2015. Their stay included three meals and two safaris and from the booking it appears that they were not charged.
Koloane’s relation to Jennings is unclear from the emails.
News24 sent queries via WhatsApp to a cellphone number she included in an earlier email to Koloane. The messages appear to have been read, but Jennings did not respond.
In October 2013, barely six months after Koloane helped the Guptas secure the Waterkloof landing, he received documents from one Funokwakhe Cedric Xulu detailing a study done on a prospective coal mining site near Empangeni, KwaZulu-Natal.
The study was conducted at Xulu’s request by Pietermaritzburg scientist Chris Whyte, and details the viability of coal mining in the Mpisi prospecting area.
Koloane subsequently forwarded the study and other documents on the Mpisi coal reserve to Chawla.
“Dear Ashu. Please find attached a geological report for a coal asset as discussed with Tony,” wrote Koloane.
The #GuptaLeaks trove shows that Chawla eventually forwarded the documents to Tony Gupta in March 2014.
Whyte confirmed he had compiled the study and was commissioned by Xulu. He said he had no idea the report would end up with the Guptas.
Xulu did not respond to an SMS and did not answer his cellphone.
BACK TO WATERKLOOF
A spreadsheet containing the names of about 260 guests for the wedding of the Gupta brothers’ niece, Vega at Sun City also suggests that Koloane attended the lavish affair, and spent three nights at one of the resort’s hotels with an unknown guest.
According to the document, which appears to reflect invitees who had RSVPed by April 22, “Vusi B Koloane” was marked as “attending”. The spreadsheet indicates he and a partner were to stay at Sun City for three nights.
News24 made numerous attempts to obtain comment from Koloane and from Dirco spokesperson Clayson Monyela, but no responses were forthcoming.
#GuptaLeaks: Duduzane Zuma’s UAE residency confirmed
On October 10, 2015 Duduzane Zuma, President Jacob Zuma’s son was given residency of Dubai in the United Arab Emirates, a few months before the Gupta family had penned two letters to the Crown Prince of Abu Dhabi, General Sheikh Mohammed Bin Zayed Al Nahyan and Vice President and Prime Minister, Sheikh Mohammed Bin Rashid Al Moktoum, stating Zuma and his family intended to make the UAE a second home.
Duduzane’s profession on the coveted residency is listed as “investor” and his sponsor “Lion Gate Electronics Trading”.
The permit was issued on October 10, 2015 and expires on October 4, 2018. It was issued a few months before two letters which appear to have been drafted on behalf of President Zuma were circulated between Tony Gupta to Sahara CEO, Ashu Chawla and Duduzane Zuma.
Leaked emails have also revealed that two months later, in December 2015, Duduzane, with the help of the Gupta family, bought an R18 million apartment situated in Burj Khalifa, the tallest building in the world. Duduzane, through Wens Holdings Ltd, co-owned with the Gupta family and registered in Dubai bought the luxury apartment.
The unsigned letters, which were written in January 2016, were addressed to “His Highness Crown Prince of Abu Dhabi, General Sheikh Mohammed Bin Zayed Al Nahyan” and “His Highness Vice President and Prime Minister, Sheikh Mohammed Bin Rashid Al Moktoum”.
Both letters heap praise on the leaders and request their “guidance” with regard to making the UAE a second home.
“I fondly remember our meeting in the UAE [United Arab Emirates] and the gracious hospitality and warmth extended to me during my visit. It is with this sentiment that I am happy to inform you that my family has decided to make the UAE a second home.
“It will be a great honour for me and my family to gain your patronage during our proposed residency in the UAE,” reads one of the letters penned by the Guptas on Zuma’s behalf. Two months later, Zuma visited Dubai as a last-minute stop-over during his visit to Saudi Arabia. At this meeting the President met Sheikh Mohammed Bin Rashid Al Maktoum, to reportedly discuss a “number of regional issues”.
After the revelations President Zuma through his spokesperson, Bongani Nqulunga, denied that he had any intention of living anywhere else.
“I have my home in Nkandla and I have no intention of living anywhere else. When I retire I will go home to Nkandla. This is a pure fabrication. Duduzane has never spoken to me about living in any other country. He has never shown me any letter. It’s shocking in the extreme. It’s absolute mischief aimed at sowing confusion”.
Obtaining the coveted residency of the UAE is not easy. The first option requires the applicant to have purchased a property valued at no less than 1 million dirhams. This option does not require the applicant to register a company.
In this instance the residency visa is only valid for two years and does not grant the right to work in the UAE.
The second option requires the registration of a company in one of the Free Trade Zones in the UAE. It enables the applicant, as a shareholder of the company, to apply for residency.
This type of visa is valid for three years. In Duduzane Zuma’s case this is the type of residency he appears to have gained. Emails to Duduzane Zuma with regard to his residency have remained unanswered.
#GuptaLeaks: How Bank of Baroda’s misadventures dragged it into SA’s political crisis
07 Feb 2018 – Hindustan Times with amaBhungane and Scorpio
A scandal involving the BoB’s South Africa operations, a cabal of businessmen of Indian origin, and South African President Jacob Zuma, has undermined the reputation of India’s second largest bank and resulted in an unprecedented penalty by the South African Reserve Bank.
- This article was first published in the Hindustan Times.
In June 2017, an anodyne footnote to the Bank of Baroda’s (BoB) quarterly results mentioned a fine levied by the South African Reserve Bank (SARB), headquartered in Pretoria.
The sum — R11-million — was insignificant for an institution the size of BoB. No further details were given; the penalty passed unnoticed in India.
But in South Africa, the SARB’s actions suggested BoB’s involvement in the “State Capture” scandal: an avalanche of allegations that President Jacob Zuma was under the sway of three brothers from Saharanpur, Uttar Pradesh — Ajay, Atul, and Rajesh Gupta, collectively known as “The Guptas”.
As the scandal continues to unfold, BoB’s role as the Gupta family’s banker of choice for their most controversial deals, has attracted increasing attention from South African regulators, investigators and the press.
A joint investigation of thousands of pages of court documents, bank records, SARB records, internal Gupta company correspondence, and interviews with bank officials, by Hindustan Times, South Africa’s amaBhungane Centre for Investigative Journalism, Finance Uncovered and the Daily Maverick’s Scorpio unit, reveals a laundry list of potential violations, and a seeming disregard for banking ethics and regulations by BoB executives.
An example: As early as 2010, BoB financed the purchase of a luxurious house that was bought in the name of President Jacob Zuma’s fourth wife, but paid for by the Guptas through BoB accounts operated by secretive trusts.
And as late as November 2016, an investigation into the Guptas’ controversial purchase of a coal mine by the South Africa’s Public Protector, a constitutional public ombudsman, found that “the conduct of the Bank of Baroda appears highly suspicious” in the bank’s role in underwriting the deal.
BoB stood by the Guptas as four major South African banks shut their bank accounts in 2016 on the grounds that anti-money laundering laws made it too risky to do business with the family.
While BoB executives say they began to “exit” their relationship with the Guptas in July 2016, the bank sent out account termination notices a full year later in July 2017.
The Guptas took the bank to court.
At the time of going to press, BoB was stuck with the accounts of at least 35 Gupta companies according to the most recent court disclosures.
What follows is an inside account of how a culture of wilful blindness in BoB’s South Africa operations exposed India’s second largest bank to a damaging investigation in a foreign jurisdiction.
Bank executives sought personal favours from the Guptas and enjoyed their hospitality, emails show, while the family used BoB accounts to funnel millions through an international network of secretive companies and trusts.
Personal favours aside, the systemic shortcomings identified by the SARB audit lead back to BoB’s compliance department in Mumbai, raising questions about the bank’s operations in India and across the world.
South African investigators now are probing if the money in these accounts included kickbacks for prominent South African politicians for awarding dodgy government contracts to the Guptas.
In October 2017, the Financial Times reported that American authorities had begun probing the Gupta family as some of these transactions were in US dollars, raising questions of how much BoB knew, and what action, if any, the bank took?
Today, as the Indian government prepares to pump Rs 88,100 crore into the country’s ailing public sector banks, of which BoB will get Rs 5,307 crore, the bank’s actions in South Africa offer a sobering glimpse of how some of India’s biggest banks may be doing business.
When Hindustan Times sent BoB a detailed questionnaire, the bank arranged two interviews with CEO PS Jayakumar, only to cancel both meetings without explanation at the last minute. BoB has not responded to repeated requests for comment on the events described below.
Hindustan Times also wrote to the Gupta brothers, their family lawyer, and the South African High Commission in India, but did not receive a response.
A House for Mrs Zuma
On June 29, 2010, Bank of Baroda signed off on a mortgage of R3.84-million for a residential property in Waterkloof Ridge, a leafy suburban neighbourhood with some of the most expensive real estate in Pretoria.
The loan, mortgage documents reviewed by Hindustan Times reveal, was to be repaid in monthly instalments of R79 715.
It was unusual for BoB to offer this home loan in South Africa, as the bank did not offer retail banking services and its primary products in the country were fixed deposits, trade credit and overdraft facilities.
Stranger still was that the loan was granted to Sinqumo Trust, whose primary trustee was Bongekile Gloria Ngema Zuma, the fourth wife of Jacob Zuma, the President of South Africa.
Sinqumo’s other trustee was Duduzane Zuma, President Zuma’s son from a previous marriage. “Sinqumo”, is the name of President Zuma’s son with Ngema Zuma.
The documentation included a declaration by Ngema Zuma, under South Africa’s Financial Intelligence Centre Act of 2001, that the loan was to finance the purchase of the house, and the money used to repay the loan was her own.
Yet transaction details and emails reviewed by Hindustan Times suggest that the loan was repaid by the Guptas by routing regular payments to Sinqumo’s BoB accounts via an entity called Mabengela Investments, a company controlled by Duduzane Zuma and Rajesh “Tony” Gupta.
An email by Ugeshni Naidu, an accounts officer for the Guptas, shows how this worked: In a mail dated February 8 2012, Naidu lists a cascading array of transactions in which a large sum of money is moved between three Gupta fronts before R65 000 is transferred to Mabengela, and then from Mabengela to Sinqumo’s BoB current account, and from the current account to the BoB’s mortgage account.
Hindustan Times found 17 such emails, including one in September 2013, in which a lump-sum of R535 000 was transferred from Mabengela to Sinqumo.
These transactions correspond to what money laundering experts call ‘structuring’, where large sums are broken into smaller transactions to evade detection, ‘layering’, in which the money moves through multiple companies to remove links to its source, and ‘integration’, where layered funds are gathered in a seemingly innocuous investment – like buying a house.
“By this stage it is practically impossible to trace the funds to its originator or illicit origins except as ‘disproportionate assets’,” said M Nanda Kumar, a London-based anti-money laundering specialist, who declined to comment on specific Gupta transactions.
BoB internal documentation, viewed by Hindustan Times, lists Sinqumo as a Gupta affiliated entity, indicating that the bank knew the Guptas, the Zumas, and Sinqumo Trust were connected, and of the complications this posed, yet went ahead with the loan anyway.
Indian, South African, and international banking laws require banks to identify Politically Exposed Persons (PEPs) like Ngeme Zuma — and flag suspicious transactions within 15 days.
BoB labelled Sinqumo Trust as PEP only in 2015, five years after giving the loan.
“A loan to a President’s wife, in a foreign country, serviced by a private company, is an immediate red flag,” said Hemindra Hazarika, an independent banking analyst, “As an Indian, government-owned bank, Bank of Baroda should not have touched this loan.”
A former BoB official put it more bluntly: “Imagine a purchase of a house for the wife of a prominent Indian politician, involving Chinese businessmen and a loan from a Chinese state-owned bank,” the official said.
“How would that look?”
The purchase of Mrs Zuma’s house is not the only controversial Gupta deal underwritten by Bank of Baroda.
The bank underwrote progressively riskier Gupta deals until it caught the attention of South African regulators.
Indians with a Business Plan
Bank of Baroda’s Africa connections date back to 1953, when the bank opened its first foreign branches in Mombasa and Kampala to cater to traders from the Gujarati diaspora.
The bank opened shop in South Africa in 1997 in Durban, another diaspora hub, followed by Johannesburg in 2007.
Ajay, Atul and Rajesh Gupta moved from Saharanpur, Uttar Pradesh, to South Africa in the mid 1990s, and opened their first South African BoB account in 2005, court documents show.
Over two decades starting in the 1990s, the brothers used their business acumen and political connections to build an empire spanning everything from computer peripherals to uranium mining, and lucrative government contracts.
“Our international operations go where the Indian diaspora goes,” said a BoB executive seeking anonymity, “So when the Guptas came to us, we just saw them as Indians with a business plan.”
Over the next decade, the client-banker relationship would deepen to the point where senior bank executives tasked with monitoring Gupta accounts were instead asking for personal favours from their riskiest client.
Visas, Internships, Hotel Rooms
On January 30, 2013, Ashu Chawla, a key Gupta aide, sent an email to Jack Monedi, Chief Director of Permits at South Africa’s Department of Home Affairs, requesting him to expedite the renewal of the work permit of Ramesh Salian, a senior manager at the Johannesburg Branch, who oversaw the Gupta loan accounts.
The trailing mails contained a long-running correspondence between Salian, from his official BoB email address, and Monedi’s department, regarding a waiver of certain technical requirements for Salian’s visa.
Chawla’s mail to Monedi was direct:
As discussed, I request you to sign the below waiver tomorrow. Thanks
Salian got the waiver on February 22, 2013, and a new work permit, signed by Monedi, soon after.
Two years later, in July 2014, Salian sent another email from his official BoB email account to the Guptas — this time to get a study permit for his daughter to pursue a degree in South Africa.
Salian wasn’t the only BoB official requesting Gupta favours.
On February 17, 2014, Salian’s superior, Sanjiv Gupta, wrote a one-line mail from a personal Yahoo account to Chawla, “Please find enclosed herewith CV of my son for internship at T systems from 15.05.2014 to 15.07.2014.”
Chawla forwarded the email right away to his boss Rajesh “Tony” Gupta, saying “This is the CV I received for BoB Chief Manager son; please advise how to go further.”
On February 26, Sanjiv, the BoB manager wrote to Evan Tak, a Gupta employee, saying, “Archit Gupta will be available for internship from 15th May to 15th July. He plans to travel from 10th May to 19th July.”
Tak wrote back a week later with a return ticket on Emirates in Archit’s name: Delhi to Johannesburg on May 10, 2014, with a return two months later on July 19, 2014.
BoB’s chief executive for South Africa, Murari Lal Sharma’s name appears in a hotel bill for at Taj Palace Hotel in New Delhi, dated July 24, 2015, for two nights in Room 872 as a guest of Rajesh Gupta.
Other guests on the same bill include Duduzane Zuma — President Zuma’s son, and co-owner of the house that BoB provided the mortgage for.
Murari Lal Sharma, is now a General Manager at BoB’s corporate office in Mumbai, where he heads the asset recovery division.
If these allegations were proved true, Hazari the analyst said, “It would appear that BoB’s senior management was asleep at the wheel, while executives at Johannesburg were complicit.”
The Guptas gradually came to account for a disproportionate share of BoB’s South Africa business, to the point that it posed a risk to the bank.
“When we go into a foreign country, we don’t do loans where only one party accounts for 40% of our book,” said another BoB executive, speaking off record. “We don’t involve ourselves with risky clients. We don’t do business we don’t understand.”
But in South Africa, it seems BoB did.
Email records suggest that the bank’s exposure to the Guptas was even higher than what was reflected on the books.
In 2011-12, BoB offered a R16-million loan overdraft facility to Everest Global Metals, a company controlled by Piyoosh Goyal – an Indian businessman accused by the CBI of allegedly bribing a senior State Bank of India executive to enhance a 250-core loan facility in November 2013.
A CBI spokesperson said a chargesheet has since been filed.
Everest Global Metals is not a known Gupta company; BoB court documents listing all Gupta-related accounts held by the bank make no mention of Everest.
Yet, much like Zuma’s house, the Guptas made the monthly interest payments on Everest’s BoB loan.
Emails reveal BoB would send Everest a monthly statement on the loan, which Everest would forward to the Guptas.
The money would then be wired from JIC — a Gupta company — to Everest, who would settle accounts with the BoB.
This circular lending, three bankers interviewed by HT said, is a not uncommon, but illegal, practice to surreptitiously give new loans to a favoured client who already owes the bank too much money.
“You want to give someone a loan, but you can’t because you are already over-exposed to them,” said a risk officer with a European bank who asked not to be identified. “So, you give the loan to a front company instead.”
In this case, the fronting was so transparent that when Everest missed a payment on November 13 2012, Salian, the BoB manager, wrote directly to Ronica Ragavan, a director of several Gupta companies, to say, “Good Day, we are yet to receive credit for interest charged on M/S Everest Global Pty Ltd for the month of October 12.”
Politically Exposed Bank
On December 9, 2015, President Jacob Zuma fired his well-regarded finance minister Nhlanhla Nene.
The move spooked investors and prompted intense speculation that Nene had been removed at the behest of the Guptas. The media outcry was so intense that even the normally placid BoB was moved to act.
On December 13, BoB senior manager in Johannesburg, Gurbax Singh sent a note to his superiors recommending that 35 accounts held by the Guptas and Gupta affiliated companies at the Johannesburg branch be designated “Politically Exposed Person” accounts “which pose a high money laundering risk to the bank because of their position of influence.”
Included in the list was Sinqumo Trust, the entity used by the President’s wife to buy her house, and Mabengala Investments, the company used by Tony Gupta and Duduzane Zuma to pay for the house.
“Banks must conduct extra scrutiny of PEP accounts as laundering risk is high,” said a retired official of the Reserve Bank of India, questioning why the bank didn’t flag the accounts as politically exposed earlier, when they knew the President’s family was involved.
“Why did they wait till 2015?”
Sanjiv Gupta, the chief executive who had asked the Guptas for an internship for his son, signed off on the note, saying the accounts could be kept open on the condition of “enhanced due diligence” and that “transactions must be monitored.”
BoB opened eight fresh accounts for the Guptas from January to May 2016.
Meanwhile, South Africa’s biggest banks severed their ties with the family citing money laundering concerns.
On June 1, 2016, Standard Chartered Bank faxed a letter to the Guptas’ lawyers explaining they were shutting accounts as continuing business with the family would expose them to “an unacceptable level” of risk of prosecution under local and international anti-corruption laws.
A year would pass before BoB’s head of international banking would formally write to the Guptas to terminate their account on July 1, 2017.
By then BoB had already concluded its most controversial deal, which would lead to an audit and penalty from South Africa’s Reserve Bank.
Optimum Coal Mine
Like the mortgage for Mrs Zuma’s house, the first question haunting the Guptas’ controversial purchase of the Optimum coal mine is why such a complex deal was structured by BoB’s tiny, understaffed office of 16 employees rather than its South African competitors with many thousand employees on their rolls.
In 2015, Optimum Coal Holdings (OCH) — a subsidiary of global mining and commodity giant, Glencore – was bankrupt.
The company was saddled with millions of rand worth of debt, and a looming penalty from its principal customer, Eskom – South Africa’s state-run electricity utility.
In September that year, the Guptas offered to buy the company. On December 10, 2015, Glencore agreed to sell for R2.15-billion.
Bankruptcy resolution professional Piers Marsden said the deal was concluded on the understanding that the Guptas had the money to buy OCH.
“We were given a letter of comfort from their bankers that they did have the funds available to conclude the transaction,” Marsden said in a sworn testimony to Parliament.
“We relied on that letter for concluding the transaction.”
But on April 11, 2016, 10 days after BoB’s letter of comfort expired, Nazeem Howa, a Gupta aide, approached Marsden to say the Guptas were R586-million short of the agreed price and asked if OCH’s lender consortium would finance the shortfall to ensure the deal went through.
The consortium declined, but the Guptas mysteriously stumped up the cash in three days and bought Optimum.
It later emerged that Eskom, the electricity utility, had given the Guptas the same amount of money – R586-million — as a pre-payment for future sales of coal.
The Guptas used the money to conclude the sale.
The revelation that South Africa’s state-owned electricity utility had part-financed a Gupta takeover of OCH resulted in a public scandal, and an investigation into the acquisition.
In a parliamentary inquiry into the deal, South African lawmakers expressed bewilderment about the credibility of the BoB’s letter of comfort.
“The Bank of Baroda says we’ve got 2.15 to pay over for the transaction, am I right?” asked Pravin Gordhan, a former finance minister who had clashed with the Guptas.
“But just prior to that 585 was the missing amount out of the 2.15.”
When the Guptas bought OCH, they also became custodians of two mine-rehabilitation trusts called Optimum and Koornfontein, collectively worth R1.75-billion, that they deposited in BoB accounts.
Under South African law, the money in mine-rehabiliation trusts is meant to ameliorate the environmental impacts of mining, and cannot be used by the mining company for commercial purposes.
But the Guptas wanted to get at the money locked away in these trusts, so BoB found a way.
BoB documents indicate that in June 2016, the bank used R170-million deposited in the Koornfontein Rehabilitation Trust as collateral to give the Guptas a R150-million loan.
This was a threat to both the bank and the environment.
“If indeed the mine used the Rehab Trust fund as collateral for a business or bank loan, and the mine went into liquidation or bankruptcy, then the bank would attach the rehab fund,” said Stephanie Fick, head of legal affairs for Organisation Undoing Tax Abuse, a South African NGO.
“The public will be without the funds required to rehabilitate the environment.”
Alternately, if the bank was legally prevented from seizing the rehabilitation fund, it would not have been able to recover the loan.
“If indeed the BoB were ignorant of the prevailing laws I imagine this would be of great concern to amongst others the shareholders of BoB,” Fick said.
“As a bank, you never want to be audited by a regulator,” said an anti-money laundering investigator, seeking anonymity as he works with banks and auditors. “Once they go in, they are always going to find something.”
In BoB’s case, the SARB found that the bank’s Financial Crime Risk Manager (FCRM) system, software that automatically flags suspicious transactions, was incorrectly configured.
BoB’s FCRM, the audit noted, was run out of a data-centre in India, suggesting the BoB might be struggling to adequately monitor transactions in India as well.
Auditors also found that BoB had not “applied sufficient scrutiny/ care while processing transactions involving loans and fund transfers among entities within the same group” – which accounted for a lion’s share of the bank’s business with the Guptas.
The SARB’s findings were backed up by BoB’s own auditors in the South Africa branch’s 2017 annual report.
“The bank did not maintain a complete record of business relationships,” the auditors wrote.
“Furthermore, documents subsequently submitted by the bank appeared inconsistent with those submitted for audit purposes, thereby raising suspicion.”
When BoB’s acting chief executive in South Africa Manoj Kumar Jha appeared before the South African high court for permission to close Gupta accounts, he noted that the SARB fine “is the most severe sanction that may be imposed before the imposition of a restriction or suspension of the bank’s business.”
Keeping Gupta accounts open, Jha continued, was not feasible as any compliance slip-ups in the future would have prohibitive consequences for the bank’s operations.
The SARB could impose a fresh penalty, Jha said, prompting investigations by every regulator the 26 countries where BoB operates.
“The adage that the currency of every bank is trust is absolutely true,” Jha said. “The international community will lose all trust in the bank.”
Why you should care about the #GuptaLeaks — an international view
After eight disastrous years of a Jacob Zuma presidency, the Rainbow Nation dream of Nelson Mandela lies in tatters.
At an historic secret ballot of no confidence in the South African Parliament yesterday, the country’s scandal-hit president survived – but by a small majority of 21 as up to 40 of his own ANC MPs rebelled against him.
South Africa is now at yet another crossroads.
At the recent funeral of one of Nelson Mandela’s closest friends and fellow long-time Robben Island detainee, his ex-wife Winnie Madikizela-Mandela (herself an MP) said: “All what we fought for is not what is going on right now … our country is in crisis and anyone who cannot see that is just bluffing themselves.”
At the very spot in Cape Town where Mandela gave his first speech after his long walk to freedom in 1990, thousands of protesters assembled and then marched on Parliament today to demand Zuma’s removal.
This being fractured South Africa, they were joined by large numbers of pro-Zuma supporters.
Meanwhile, roads from the Mandelas’ one-time township home in Soweto into the economic capital Johannesburg were barricaded with rocks and burning tyres from early morning as protesters took action across the province.
Unemployment hit a 14-year high this week as Zuma’s stewardship of a fragile resources-based economy – now officially in recession – bites deep.
A promising national economic blueprint dreamed up at the start of Zuma’s presidency has been abandoned.
The economy of South Africa – a member of the exclusive G20 club of nations — is now growing at half the worst-case scenario rate envisaged by the experts Zuma appointed five years ago.
State-owned companies — the supposed engines of economic growth and job creation in ANC’s economic policy – have stuttered and stalled.
The state electricity utility, the freight and passenger rail companies, the national airline and the arms manufacturer all enjoy near-monopoly status in South Africa, but are increasingly being propped up financially by the government.
To support them, public money is diverted from other urgently needed social programmes – education, health, housing.
It is here – in the beating heart of the country’s economic machine – that a huge corruption scandal threatens to engulf Zuma, his party and perhaps the country.
And it is a scandal that has been exposed by good old fashioned investigative journalism in the face of sinister intimidation and threats of violence.
Over the past several weeks, the terms “state capture” and #Guptaleaks have dominated social media in South Africa, but beyond its borders not much is known.
What are the #GuptaLeaks and ‘state capture’?
The phrase “state capture” has emerged to describe a situation where a business family, the Guptas, enjoying close ties to Zuma, have manoeuvred themselves into a position where they allegedly wield control over state-owned companies and their huge procurement budgets, diverting huge sums into their own pockets and, by extension, Zuma’s family.
The Guptas are a family of Indian immigrants who arrived in South Africa from the early 1990s onwards, apparently spurred by the business promise of a newly democratic, post-apartheid state.
The family is headed by three brothers — Ajay, Atul and Rajesh.
So closely have the Zumas and Guptas become entwined that they are popularly referred to as the Zuptas.
The key connection is Zuma’s son, Duduzane, whom the Gupta brothers took under their wing a decade ago and groomed for a role as a director – and billionaire shareholder – in the family’s business empire.
The Guptas are allegedly able to influence state procurement through the cascading appointment of their cronies, via Zuma-appointed cabinet ministers to key positions on decision-making committees.
In several instances, would-be ministers have reportedly been informed of their cabinet appointments first by the Guptas, before receiving the official call from President Zuma.
All this has been highlighted by one of the biggest leaks in the history of South African journalism.
Earlier this year, investigative journalists obtained an enormous trove of emails and documents from the heart of the Gupta business empire. The subsequent exposés, dubbed the #GuptaLeaks, appear to confirm the state capture hypothesis that journalists have been chipping away at for years.
For example, the latest story from the leaks, published on Tuesday, reveals how the Guptas bankrolled the loan repayments for a house owned by President Zuma’s fourth wife.
They channelled the money in part via Duduzane, dipping into a Dubai-based slush fund set up to receive kickbacks from the successful Chinese winner of a major South African state locomotive tender.
The #GuptaLeaks have lifted the lid on a multinational money laundering machine, dubbed the Dubai Laundromat, into which the Guptas allegedly funnel cash derived from state contracts in South Africa.
How did the Guptas benefit financially?
The cash is derived in two ways: either directly from contracts with state-owned companies won by Gupta-owned businesses; or from “success fees” solicited from international companies wanting to do business with the South African state.
So far, the #GuptaLeaks have exposed how kickbacks were paid or facilitated to the Guptas by foreign companies throughout the world.
They include a Swiss construction company, two German IT giants, a multinational management consultancy, a Chinese state outfit, and a major accounting firm.
- #GuptaLeaks: all the latest on the Gupta-Zuma scandal.
And the Guptas certainly know how to spend their gains.
Having operated somewhat under the radar during the early years of Zuma’s presidency, the Guptas shot to national infamy in 2013 when they persuaded a raft of government departments to bend the law, allowing them to land an airliner of wedding guests from India at a high-security military air base near the capital, Pretoria.
The South African “wedding of the millennium” between a Gupta niece and her Indian fiancé, was designed to showcase the family’s wealth and influence in their adopted home.
Their Indian guests were whisked to the sprawling Sun City leisure complex by a VIP convoy of blue light-fitted vehicles normally reserved for government dignitaries, where they mingled with a who’s who of South African politicians and businessmen.
An inquiry held in response to the public outrage about multiple breaches of national security and protocol heard that “Number One” – an apparent reference to President Zuma – had pulled strings in the Guptas’ favour.
The #GuptaLeaks have subsequently revealed how the Guptas sucked cash out of a state-funded rural development programme and sent it to Dubai, where it briefly washed through the “Laundromat” of Gupta companies before it was used to pay the wedding bills back in South Africa.
Multinational auditing firm KPMG waved the transactions through, turning an apparent blind eye to “related party” transfers, thereby allowing the Guptas to also claim millions in tax-deductible expenses.
KPMG said it “stood by our work done and audit opinions issued”, but its former Africa head attended the wedding and wrote thanking the Guptas gushingly afterwards: “I have never been to an event like that and probably will not because it was an event of the millennium.”
Meanwhile, the leaks have also unearthed a letter, drafted by the Guptas on President Zuma’s behalf, in which they ask the Abu Dhabi crown prince to consider granting Zuma and his family residency in the country. While Zuma denied wishing to make the emirate a “second home” it has been confirmed that Duduzane obtained residency.
Suspicions that the Guptas have been preparing a Dubai bolthole for Zuma were enhanced by media reports, based on the leaks, that the Guptas had acquired a £19-million mansion in an exclusive Dubai neighbourhood intended for Zuma’s use. The property is just a few doors down from a pad owned by Zimbabwe dictator Robert Mugabe.
Zuma’s spokesperson said he owned no property outside South Africa.
Paralysis of the proud ANC
Throughout these, and many other scandals throughout the Zuma presidency, the once-proud African National Congress (ANC) party has stood paralysed, unable or unwilling to confront the Zupta state capture phenomenon.
With many of its officials allegedly “captured” by the Guptas, the ANC’s inaction is perhaps unsurprising.
The social cost has been enormous – not least in the fraying of race relations which Mandela’s ANC worked so hard to build.
As the public outcry against the Guptas reached a crescendo last year, UK public relations firm Bell Pottinger – founded by Margaret Thatcher’s former PR guru Lord Tim Bell – stepped into the breach to spin for the Guptas on a £100,000-a-month contract.
So, despite the mountain of dirty laundry already in the public domain about the Guptas relationship with Zuma, the firm accepted a brief – partly in consultation with Zuma’s son Duduzane – to run a counter-campaign blaming white-owned businesses for perpetuating “economic apartheid” in South Africa.
Somehow, it was “white monopoly capital” standing in the way of genuinely aspirant black businessmen – like the immigrant Gupta family – from fulfilling their full economic potential in the country.
Bell Pottinger now stands accused of stoking racial tension in the country, aimed at its white population in general and at the media in particular.
Intimidation of journalists
A pop-up movement called Black First Land First has subsequently targeted editors and journalists at the forefront of exposing the Guptas’ dealings.
At one point, Bell Pottinger gave feedback about a prospective article proposed by the movement’s leader. The PR firm also scripted speeches subsequently delivered by ANC politicians at political rallies.
For the past eighteen months, an army of fake Twitter bots and one-man blogs have spewed a torrent of racially-charged invective into public discourse around the Guptas and Zuma.
Although such tactics have not been conclusively shown to be the brainchild of Bell Pottinger, a public outcry forced them to drop the Guptas last year.
Last month Bell Pottinger’s CEO James Henderson initially offered “a full, unequivocal and absolute apology”.
He then told the BBC in an interview last week: “At worst, we were very naive in what we got involved with, but there was, at any point, no intention to create the impact that is claimed we created.”
But the atmosphere in South Africa remains poisonous. Black First Land First recently barricaded an editor in his home, scrawling graffiti on his garage door, and assaulting a colleague.
Ignoring a subsequent court order barring them from intimidating journalists, the same group hijacked a public event hosted by investigative journalists to explain the #GuptaLeaks, manhandling a journalist to the ground.
A judge ruled earlier on Tuesday that the movement was in contempt of court, and handed its leader a three-month jail sentence, suspended on condition that they did not breach the order again.
For his part, Zuma will seek to direct the appointment of his successor to protect him and his family from future prosecution when his term as president ends in 2019.
But if he does one day face trial, expect the #GuptaLeaks to feature strongly as evidence.
#GuptaLeaks: How the Guptas paid for Zuma home
As President Jacob Zuma’s fate hangs in the balance, new evidence shows it was not only his son Duduzane, but also his fourth wife and their young son – and by extension he – who benefited from Gupta largesse. The #GuptaLeaks show that millions were paid towards an exclusive property purchase – trashing years of denial. The evidence also suggests that some of the money that found its way to the purchase was the proceeds of bribery, laundered from the UAE.
On 9 February 2016, Bell Pottinger sent Gupta lieutenant Santosh Choubey a document entitled “Master Q&A”, a menu of ready-made answers for the media.
In response to the question “Did the Guptas help President Jacob Zuma’s wife, Bongi Ngema-Zuma, pay off her R3.8-million home loan?” Bell Pottinger wrote, “No. This story is completely false. The Gupta family has not assisted Bongi Ngema-Zuma in any way.”
As South Africans have come to expect from Bell Pottinger’s now infamous disinformation campaign, the story, however, was completely true.
Bank records, accounting records and budgets show the Guptas and Duduzane Zuma paying as much as R3.4-million of the bond on the property, after making what appears to be an initial down payment of R1.15-million – giving a total of over R4.5-million.
The younger Zuma’s role in routing these payments suggests he was not in business with the Guptas “on his own accord”, as his father has claimed, but at least partly as a bagman for the Zuma family.
Equally damning, the money trail suggests the president’s wife – and by extension Zuma himself – benefited from the proceeds of corruption laundered from Dubai.
The presidency, Ngema-Zuma and the Guptas did not reply to questions sent late last week.
A gift with a view
Set on the exclusive Waterkloof Ridge that overlooks Pretoria and the Union Buildings, the property was bought for R5.24-million in April 2010 and became Ngema-Zuma’s home.
A person with first-hand knowledge said that the president personally inspected the sprawling property before the purchase. A neighbour said he had been known to visit regularly.
Deeds office records of the transfer identified the Sinqumo Trust as the buyer, and Ngema-Zuma as its trustee.
Named after the president and Ngema-Zuma’s young son, Sinqumo, the trust is more opaque than most. Public lists on the department of justice website, which usually shows trustees and other basic detail, omit the Sinqumo Trust altogether.
In response to earlier amaBhungane attempts to inspect the trust records, the master of the high court in Pretoria, where the records should be kept, maintained they could not be found.
In the absence of the records it is not known whether the president is a trustee alongside Ngema-Zuma or has rights to the trust assets. But even if he has no formal connection to the trust, he arguably benefits given that the property is home to his wife and son.
Six years of denial
R3.84-million of the R5.24-million purchase price was bond financed by Bank of Baroda, the Guptas’ favourite lender.
Given the provenance of the bond, amaBhungane asked a Gupta spokesperson in 2011 whether the family had helped Ngema-Zuma to buy the property by paying the purchase price, facilitating financing or helping repay the bond. He said: “The answer to all your questions is no.”
When amaBhungane confronted the Guptas with additional evidence of their links to the bond in 2012, one of their senior executives dismissed it as “irrelevant” and “absolute rubbish”.
The #GuptaLeaks show that the bond was serviced by the Guptas and Duduzane Zuma generally at a rate of R65,000 a month from the outset.
They also show that on 18 August 2010, the day after the deeds office effected the transfer to the Sinqumo Trust, R1.15-million was paid into Sinqumo’s current account. This is consistent with it being a down payment; the bulk of the difference between the purchase price and the bond amount.
The R1.15-million in turn came from Gupta company Islandsite Investments via Pragat Investments, which at the time was involved in a scandal over the attempted hijacking of iron ore mining rights at Sishen.
Although Pragat was nominally owned and controlled by then Gupta executive Jagdish Parekh, #GuptaLeaks records suggest it was financially integrated with the Guptas’ Oakbay group. Parekh did not answer questions before going to press.
Duduzane, the businessman bagman
When President Zuma appeared in Parliament in June this year, he was pressed by DA leader Mmusi Maimane on Duduzane’s relationship with the Guptas.
Zuma painted his son as an ordinary citizen who was legally entitled to go into business, like anyone else. Duduzane, he said, was “involved in business on his own accord” and that “whoever he does business with, is his own business”.
The #GuptaLeaks evidence strongly suggests that Zuma’s statement was untrue. Whatever business the younger Zuma may have done on his own accord, he also was an apparent conduit for Gupta money to benefit the Zuma family.
Mabengela Investments, a company named after the hills overlooking President Zuma’s Nkandla homestead, is majority owned and controlled by Duduzane Zuma and Rajesh “Tony” Gupta.
Records show that Gupta money was routed through Mabengela to pay the Waterkloof Ridge bond.
So, for example, the same R65,000 amounts that ended up as the first three instalments in September, October and November 2010, can be seen from accounting records to have flowed to Mabengela from Islandsite Investments and Oakbay Investments, both Gupta companies.
Transfer instructions submitted to Absa, as well bank records, show that these “investments”, as they were called, were used to pay monthly installments of R65,000 on the bond during those two years.
In some months, Mabengela directly transferred R65,000 to Sinqumo Trust’s Bank of Baroda accounts. In others, Mabengela transferred the same amount of R65,000 to “D Zuma”, “DZ – BOB” and “DZ”, in apparent reference to Duduzane Zuma.
Trains, cranes and kickbacks
Apart from the monthly bond repayments, Mabengela also paid a R535,000 lump sum to Sinqumo on 2 September 2013.
Of this, nearly a third seems to trace back to offshore Gupta accounts stocked with kickbacks from Transnet contracts.
It would be a serious indictment if bribes were laundered to a sitting president’s wife.
We exposed the alleged Transnet kickbacks in June and July. These included R1.4-billion received from locomotive manufacturer China South Rail (CSR) and at least R55-million from Swiss crane manufacturer Liebherr.
A contract between CSR and a Gupta-related company made it clear the CSR payments were commissions in return for Transnet locomotive contracts. Similarly, payments from Liebherr flowed contemporaneously with Transnet crane contracts.
Gupta accounting records then show the funds flowing into and through their offshore network.
Sitting in the middle was the Guptas’ US relative Ashish Gupta.
In 2013, he was just 26 years old with no apparent business profile. Yet, he somehow had over R100-million at his disposal, which he transferred to Oakbay Investment in a handful of tranches between 30 August and 6 September.
Purportedly, the money was Ashish Gupta’s “advance” contribution for a mining partnership, but there is scant evidence that his money was used for this.
The payments landed in Oakbay’s State Bank of India account. Typically, the cash was immediately disbursed across a number of Gupta company accounts using multiple back-to-back transfers.
Among these, Oakbay paid R150,000 to Mabengela on 2 September 2013. Immediately after receiving the funds, Mabengela transferred R535,000 to Sinqumo’s account at Baroda.
Ten months later, Ashish Gupta’s R100-million was reimbursed by Accurate Investments. Accurate is a Gupta front company in the United Arab Emirates, which by then had received much of the CSR and Liebherr money.
CSR and Ashish Gupta have not responded to emailed questions. Liebherr has said it is investigating the allegations.
While the Guptas repeatedly lied to South Africa about their funding the purchase, there was one entity which was well aware of the true nature of the arrangement and which also had a legal obligation to report suspicious transactions: Bank of Baroda.
Baroda had Ngema-Zuma swear a statement entitled “Information Required by the Bank to Comply with the Financial Intelligence Centre Act”, as part of the process to obtain the bond.
Ngema-Zuma declared that “the source of income/funds to finance the purchase of the property by [Sinqumo] is the following: – own funds and Bank loans”.
Even if Baroda – the Guptas’ long-standing banker – was not at that moment privy to the real source of Ngema-Zuma’s funds, it quickly should have been.
Records suggest the source of the funds was no mystery to Baroda. Regularly, as funds from Mabengela reached Sinqumo’s current account at Baroda, they were immediately used to pay Sinqumo’s bond instalments.
Baroda did not reply to questions.
A curious omission in Zuma’s financial disclosures
Zuma’s history of relying on others to support his family is well known.
His loans from arms-deal convict Schabir Shaik and Durban businessman Vivien Reddy are prime examples.
Zuma disclosed in the public section of his 2009 Cabinet interest declaration that a businessperson provided a luxury home for the use of another of his wives in Durban for free, even though some family benefits may be declared in a confidential section.
Yet, Zuma’s 2014 Cabinet declaration is conspicuously silent regarding Ngema-Zuma’s receipt of Gupta cash. Under “gifts/sponsorships – immediate family”, Zuma indicated under her name: “Nothing to declare.”
In the public section of his 2016 declaration – by which time the Waterkloof Ridge bond was presumably fully paid as it had a five-year term – Zuma declared the “use” of properties on the Durban beachfront and in Forest Town, Johannesburg.
He also declared two books he received – Mastering negative impulsive thoughts and Ethics in decision-making.
A party fit for a criminal enterprise
While countless questions about Zuma’s relationship with the Guptas remain, the #GuptaLeaks do, at the very least, shed light on their relationship with Ngema-Zuma.
In addition to the bond payments, Ngema-Zuma was also employed by the Guptas’ JIC Mining Services for a while as of 2010.
In 2011, JIC chief executive Jacques le Roux told amaBhungane that Ngema-Zuma “contributes in an important way towards JIC’s corporate goals and has the respect and admiration of all her colleagues”.
AmaBhungane and Scorpio can now report that Ngema-Zuma’s last official act at JIC (at least as revealed in the #GuptaLeaks) was to co-ordinate the company’s year-end party in 2011.
In retrospect, South Africans might consider the theme chosen for the evening particularly apt.
On 17 November 2011, Ngema-Zuma addressed an email to her colleagues, requesting that they RSVP.
Ngema-Zuma further noted: “Dress Code for the event is themed ‘MAFIA’.”
#GuptaLeaks: Gupta spin machine commissioned BLF’s Mngxitama
Black First Land First leader Andile Mngxitama did not only meet with the Guptas, he also received an instruction to write an article about BizNews editor Alec Hogg on their behalf.
This has been revealed in the #GuptaLeaks which shows that Mngxitama met with Gupta lieutenant Santosh Choubey in February 2016 and that he asked the family for funding around the same time.
Mngxitama has denied receiving any money from the Guptas despite aggressively defending them.
A new email has been discovered that suggests Mngxitama did more than just meet the Guptas; that he actually received instructions from the family and that his “free” voice may, at least once, have been steered by London PR firm Bell Pottinger and the Guptas.
In the trove of emails that form part of the leaks there is an email address, firstname.lastname@example.org, which is also known as “media profile”. The address seems to be a shared account where Bell Pottinger, the Guptas and staff including Choubey discussed their media campaigns.
It was from this email account that Mngxitama was sent a message on 11 March 2016.
The email was titled “Peter Bruce!” and it included an attachment of an opinion article written by Bruce, the Tiso Blackstar editor-at-large. The opinion piece was based on a legal letter the Guptas had sent to Hogg. Hogg published the letter sent to him by London-based reputation and privacy consultancy Schillings on his online site.
Bruce weighed in on what was seemingly a legal letter from Schillings, saying it showed the Guptas were anxious, but their move was sure to backfire because Hogg was no pushover, businessmen would help fund a defamation claim for Hogg and “it will intensify efforts to prove Gupta/Zuma links the London lawyers say don’t exist”. He also said a trial will open opportunities to discover what the Guptas had been up to.
In the body of the email, the author of “team media” asks Mngxitama, “Pls see, and the part where he writes about Alex (sic) Hogg funders, can you write on this something and send some questions to him, for source of funding, legal/illegal, who are the funders. Thanks.”
The email appears to be an instruction to Mngxitama to write about Hogg and to send him questions.
Hogg, along with Bruce, are among a list of journalists that Mngxitama has openly stated he is gunning for as “white racists”.
– Read: BLF warns white journalists
When called, Mngxitama told us he did not know what we were talking about and asked that he be emailed queries, which he has not yet responded to.
The Gupta leaks show that New Age journalists followed up on Bruce’s opinion piece by sending him and Hogg questions about the funding of Biznews.
Further emails to and from the “media profile” address give more insight into how Bell Pottinger and the Guptas were attempting to change the national narrative.
One of these was the PR firm writing “opinion pieces” and then publishing them, giving them bylines of people who either did not exist or in no way had anything to do with the writing of the piece.
On the same day Mngxitama was sent instructions on what to write, Choubey sent former Oakbay executive Nazeem Howa and other TNA staff an article titled “South Africa must break economic apartheid”.
The article was earlier sent to Choubey by Bell Pottinger employee Philip Peck in order to support the angle that the group was under attack for supporting black business.
In response to Choubey asking for space in the New Age, Howa responded that it “needs to go under someone’s name as an opinion piece”.
The article appears to have been published a few days later under the byline “John Britain”.
– Read it here.
An email from Bell Pottinger’s Peck further indicates the extent to which the firm was involved in managing fake Twitter accounts which were pushing a “white monopoly capital” agenda.
In his recent apology about work done for the Guptas, Bell Pottinger chief executive James Henderson said: “There has been a social media campaign that highlights the issue of economic emancipation in a way that we, having now seen it, consider to be inappropriate and offensive.”
On February 11, 2016, Peck emailed the “media profile” address to give feedback on his review of the Twitter accounts and websites of “sympathisers”.
The email said they had “reviewed the Twitter accounts and website of your sympathisers provided (from an objective / neutral point of view) and have the following observations:
• They are having little impact on the debate
• They are using information that hasn’t been changed much / at all from Oakbay Investment information
• They were set up recently and at a similar time to when the issues started.
“Based on these facts we believe that as long as these are not linked to you in any way or that you are not influencing the editorial agenda then just let them continue. Otherwise they should stop immediately.”
The email address was also used to send information to another company Oakbay hired to work in tandem with Bell Pottinger: Schillings.
Bell Pottinger’s Victoria Geoghegan, who had since been fired by Henderson, appears to have put the Guptas in touch with Schillings, sending Choubey a client care letter and standard terms of reference for an initial fee of £75 000 (about R1.2m), followed by two payments of £25 000 (about R419 000).
The Schillings agreement, which is included in the emails, indicates the law firm had been hired to send legal letters to media houses with the intention of preventing them from writing negative articles on the Guptas.
The objectives of their work were listed as:
• Reducing the volume of negative media coverage in national and regional South African media outlets;
• Ensure that future media reporting about you is based on true facts, as opposed to rumour and innuendo;
• Ensure that going forward you are contacted prior to publication and are given a proper opportunity to respond.
Their strategy was specifically framed around a successful legal complaint against a media house.
“As part of this strategy, we have discussed focusing our legal complaints on the Sunday Times and the Mail & Guardian, as they are the most prolific offenders. In addition, a successful legal complaint against one or both of them will send a strong message to other South African media outlets,” Schillings wrote.
The emails show that legal letters were sent to the newspapers. Another one was sent to Hogg, which he wrote about, leading to Bruce’s column.
After Hogg published the letter, Howa sent an email to the “media profile” email account, saying “Alex Hogg has decided to publish the Schillings letter. In one way, it is good that it gets broader audience, on the other hand he has called our bluff. Let’s decide next step today.”
Atul Gupta responded to the email, indicating he too had access to the media profile email address saying they must “handle him with full focus ASAP”.
Bell Pottinger employee David Bass said they too had seen “Alec’s latest piece of work”.
“We certainly need to make an example of him,” Bass responded.
In another email sent from the “media profile” address to Bass and Howa, there is a further instruction: “Brief to Schillings should be on the lines of Go for The Kill” referring to Hogg.
Asked for comment to their role in defending the Guptas, Schillings responded in two letters, putting us “on notice” if we published a story.
Video: #GuptaLeaks Ep.2 – Bell Pottinger’s PR campaign unpacked
The #GuptaLeaks are a massive trove of information made up of hundreds of gigabytes of documents and emails obtained by a team of journalists from the Daily Maverick’s investigative unit, Scorpio, amaBhungane and News24.
The latest episode of the #Guptaleaks looks at Bell Pottinger, the UK-based PR firm that brought South Africa to the brink of a race war to protect the reputations of the Zumas and the Guptas.
#GuptaLeaks: Bell Pottinger, ANCYL and MK veterans – the early days
A month after UK-based PR firm Bell Pottinger’s Financial and Corporate partner Victoria Geoghegan billed a Dubai-based company, part-owned by Gupta family lieutenant, Salim Essa, £100,000 for a consultation with President Jacob Zuma’s son Duduzane Zuma, the political spin doctors made a second trip to South Africa.
This time they charged £340,086 for a four-day trip which included a suggested speech for Collen Maine for the ANCYL’s National Rally on 7 February 2016 in Tshwane.
The team also composed a statement for the MK Veterans Association and suggested the firm might like to add to a statement by ANC North West Chair, Supra Mahumapelo, with regard to EFF leader Julius Malema’s threats to ban ANN7 journalists.
Six members of the Bell Pottinger team flew into Johannesburg from London between February 3 and February 7 2016 on a four-day boot camp to assist Gupta family businesses, the ANCYL, as well as Kebby Maphatsoe’s MK Veterans Association to communicate a narrative about the country’s economy from Oakbay’s perspective.
On February 6, 2016, a release by Mondli Mkhize, National Spokesperson for the ANCYL, with regard to a national rally that was due to take place on February 7 in Tshwane, was forwarded to the Bell Pottinger team, a trove of emails known as the #GuptaLeaks has revealed.
On the same day Victoria Geoghegan thanks the team for forwarding the notice, adding, “Are we able to supply points for the ANCYL leader? Can you find out from Mondli which journalists they are expecting to attend/report on the march?”
Later the same day, Geoghegan sent an email to the Bell Pottinger team as well as Gupta associates, including Oakbay CEO, Nazeem Howa, and Sahara Computers head of sales and marketing, Santosh Choubey, stating, “Please see below suggested content for ANCYL leader. This is deliberately short to ensure a clear message and soundbites for media.”
The “suggested content” read: “Apartheid ended in South Africa in 1994, however, since then South Africans continue to suffer from extreme poverty.
In fact, inequality in South Africa is greater today than at the end of apartheid:
- Economic control has remained in the hands of a minority of privileged and powerful individuals and families.
- 60%-65% of South Africa’s wealth is concentrated in the hands of just 10% of the population, this compared with 50%-55% in Brazil, and 40%-45% in the US (Thomas Piketty – Soweto, October 2015)
- The 2 richest people in South Africa own the same wealth as the poorest 50% of the population (Oxfam global inequality report – October 2014).
This means that the poorest people in South Africa remain significantly disadvantaged and are unable to work their way to better lives.
- In South Africa, a platinum miner would have to work for 93 years to earn the annual bonus of an average CEO (Oxfam global inequality report – October 2014)It is clear that this system needs to be ended once and for all and for inequality to be properly addressed. Talent and hard work need to be recognised and rewarded and profits shared. The privilege of the few needs to be replaced with opportunity for all.We need to END ECONOMIC APARTHEID.”
The following day, Bell Pottinger’s Nick Lambert thanked Choubey for forwarding a YouTube clip of Maine speaking saying “some very interesting remarks by the Youth Leader, and some good messages for us”.
He highlighted some of Maine’s key moments as “early remarks:
“White monopoly capital continues its stranglehold on economy. White monopoly capital decides what is printed in media.
Unemployment persists”, as well as “the EFF seeks to destroy those who tell good news in the media, and which is in the interests of our country – in particular ANN7 and New Age – these are for the people”, and “ANC respects the people, the markets do not.
The markets are controlled in London.
What they are doing to the Rand is not ok.”
The previous day, 5 February, Geoghegan edited and added to a draft statement penned by Oakbay CEO Nazeem Howa on behalf of the the MK Veterans’ Association with regard to Tegeta Exploration’s buying of the Optimum and Koornforntein coal mines.
Howa’s was a short statement to which Geoghegan added several paragraphs attacking the EFF.
In the end, the statement (with Geoghegan’s additions in red) that was sent out on behalf of MKVA read:
The Bell Pottinger team were kept busy during their visit.
One of the tasks, it appears from leaked emails, is an offer to assist ANC Bokone Bophirima Provincial Chairperson, Supra Mahumapelo, with a statement issued by his behalf by media officer Diale Kgantsi and attacking EFF CIC Julius Malema for banning ANN7 journalists from EFF events Geoghegan writes on 6 February, in response to the statement mailed to her”
“This content is broadly fine. If we think that the material will have more gravitas, or get more media pick up either *going out from ANC central command; and or * from one of the provinces…then we recommend that that take place.”
A message from the Bell Pottinger team reads, “this was released by one of the provinces. If you want to add something and release by the other provinces we will felicitate (sic). Kindly Advise”.
On 7 February, Geoghegan sent a note to the South African team confirming “actions” which included “BP to develop narrative”, “BP to draft Q&A” [About Oakbay and the Gupta family’s business interests], “SA team to forward requested facts”, “SA team to provide regular updates to BP re: on the ground developments.”
On February 11, long after Bell Pottinger had done their work and were safely back in London, Nazeem Howa forwarded to Bell Pottinger’s Nick Lambert a YouTube clip of ANC Deputy Secretary General, Jessie Duarte, being interviewed by the SABC:
Lambert replies: “Thank you. Some very positive messaging in this for us. Particularly like that Duarte’s language echoes that of Bell Pottinger’s mail from Sunday night. Let us deal in ‘cold, hard facts’ not innuendo.”
Daily Maverick approached Duarte with regard to Lambert’s comment. She responded that she had never met Bell Pottinger nor did she discuss any narrative with anyone.
“I answered questions put to me by an SABC journalist. I did not know what I would be asked. I also want to add that I have never discussed with any person how to answer questions,” said Duarte.
A request by the Daily Maverick to Geoghegan for an interview with regard to these as well as other revelations in the leaked emails has remained unanswered.
#GuptaLeaks: How Bell Pottinger sought to package SA economic message
In January last year Victoria Geoghegan, British-based PR firm Bell Pottinger’s Financial and Corporate partner, met with President Jacob Zuma’s son Duduzane to strategise a campaign aimed at marketing a “narrative that grabs the attention of the grassroots population who must identify with it, connect with it and feel united by it”.
In so doing, the firm directly undermined the ANC’s capacity to communicate its own policies and programmes to South Africans and hijacked the ruling party’s message, seemingly to benefit the image of the Gupta family.
Victoria Geoghegan later invoiced the Marketing Quotient, a Dubai-based company part-owned by Gupta family lieutenant, Salim Essa, a “project fee” of £100,000 (About R2.3-million according to exchange rates in January 2016) for a consultation with Duduzane Zuma.
The two met to discuss a brief for a five-month campaign which Duduzane later described in a reply to Geoghegan as “not primarily one to affect the outcome of the elections  but to turn the tide of our country’s trajectory in the long term”.
Earlier Geoghegan wrote to Duduzane that Bell Pottinger was keen to build a long-term partnership with Zuma and that “we want to stand shoulder-to-shoulder in communicating such a vital message for South Africa. The future of the country in terms of fair economic growth, an inclusive society and political stability, depends on it.”
Attached to the mail to Duduzane is a document titled “Reflections on meeting and next steps” in which Geoghegan sets out how she has had time to “reflect on our conversations and now have a deeper appreciation of the focus of the project and the potential for a long-term partnership between us”.
It reads: “1994 was a seminal year in South Africa’s history. The peaceful handover of power raised the hopes of many, and the expectation of imminent political AND economic enfranchisement was justified. The reality is that whilst political freedom has been attained there is a feeling that expectations of economic empowerment have not been met, with the wealth of South Africa sitting within a small grouping.
“With unemployment levels in excess of 20%, with the ANC approaching the 2017 elections following unbroken rule since 1994, with the political opposition (DA & EFF) upbeat there is a feeling that the next big key issue facing South Africa is that of delivering genuine economic empowerment. This feeling is widespread and has been expressed to us in emotive language using phrases such as ‘economic apartheid’ and ‘economic emancipation’.
“Furthermore, given that a lot of current criticism (for almost all of South Africa’s ills) is directed at President Zuma, and indirectly at the ANC, there is a need to explain in clear, unambiguous language that it is vital ‘economic emancipation’ is addressed.
The people of South Africa need to be told that their dissatisfaction is being heard and that concrete actions are being, or will be taken to address them.
“In addressing this issue, the language and psychology used will be crucial. If world markets become spooked by fears of a Mugabe-style programme of asset seizure, then it is all South Africans who will suffer. However, if the message is one of a process that generates wider economic inclusion, using contemporary business models, then ALL South Africans will benefit equally.
“Equally, the message we wish to disseminate is not one that can be sold overnight. For this campaign to be believed and to achieve credibility there will need to be discipline, continuity and consistency over a period, ideally running up to the 2017 elections and beyond. The key to any political messaging is repetition and we will need to use every media channel that we can, to let our message take seed and to grow.
“Below is a set of recommendations based upon an initial project, with the opportunity for further projects to evolve. These tactics are not exhaustive and would be developed into a full and comprehensive strategy.
- Create a non-party political narrative around the existence of economic apartheid and the vital need for more economic emancipation. This narrative should appeal to both potential third party advocates in the business and academic communities and the grass-roots population;
- Provide assistance and advice on the setting up of a vehicle (the ‘entity’) to be the public face of the narrative;
- Whilst the narrative/vehicle is intended to be political party-agnostic, it will create opportunities for political commentary and participation;
- Bell Pottinger will package the narrative into speeches, press releases, website content, videos/broadcast content, slogans and any other material required;
- The initial project would draw on the strengths of both parties:
- Bell Pottinger’s strategic messaging skills, experience, international reach, and overall brand & credibility; and
- This would be complemented by the South African team’s access to domestic media outlets, digital capabilities and its in-country network;
- Utilise compelling research, case studies and data which illustrate the apartheid that still exists, and the need for truly inclusive growth. Bell Pottinger will analyse the data (for example: power generation, ports) and create fact sheets and easily understood collateral for wider dissemination;
- Engage media both domestically in South Africa, and internationally. This will reach both the all-important domestic audience, but also achieve international endorsement which will add credibility to the narrative and feed back into the domestic media also;
- It is critical that the narrative grabs the attention of the grass roots population who must identify with it, connect with it, and feel united by it. In order to reach this audience, the Bell Pottinger and South African teams will need to strategise the appropriate engagement tactics, be this radio, social media and/or slogans e.g. #endeconomicapartheid #growthforall.
“We will draw our team from across the Bell Pottinger Group. The day-to-day account management will be overseen by Victoria Geoghegan, Jonathan Lehrle, Nick Lambert, Darren Murphy (Tony Blair’s political adviser), and supported by a much wider team. Lord Bell will be available for strategic counsel as and when required. We will also have in reserve other divisions (digital, crisis communications) should we need a wider skillset.
“Bell Pottinger is keen to build a long-term partnership with you. Given our deeper understanding of the assets you have at your disposal, we envisage an initial five-month project (February 2016 to June 2016 inclusive), at a fee of £100,000 per month, excluding costs.
“Any costs would be communicated to the South African team in advance, and would not be incurred without your prior approval. Principal costs would chiefly involve travel and accommodation and we envisage a team from Bell Pottinger visiting South Africa each month.
“We hope that this demonstrates our commitment to stand shoulder-to-shoulder with the South African team in communicating such a vital message for South Africa. The future of the country in terms of fair economic growth, an inclusive society and political stability, depends on it.”
On January 20, 2016 Duduzane responded to Geoghegan thanking her for her time and for making the trip to South Africa “on such short notice which created an immediate impression of the degree of seriousness from your side and I appreciate that.
You come highly recommended and you represent a powerful brand, I do not take that for granted.”
He writes that he has gone through Geoghegan’s document and, “I am quite happy and enthused by your understanding of what needs to be done and the time frames in which we need to do it in. I have to reiterate that, which you correctly put it, this ‘journey’ is not primarily one to affect the outcome of the elections but to turn the tide of our country’s trajectory in the long term.”
He ends with two requests, one that she forward the invoice to him and also asking for advice on another campaign he appears to be working on.
“It will include dispersing critical information, which I have researched and will share, in a short period of time. It will also require a visual campaign of sorts T-shirts/banners etc. Where I will require assistance whether it be in the designing and creating a hard hitting message along the lines of the #EconomicEmancipation or whatever it is.”
Tony Gupta Bio
Rajesh Gupta, better known as Tony, is the youngest brother at 45. Tony touched down in Johannesburg in 1997 and since renounced his Indian citizenship for South African. He holds a Bachelor of Science degree from JV Jain Degree College in India.
It is Tony who is thought to have the closest relationship with President Jacob Zuma’s son Duduzane, as evidenced by the fact that Tony was the first person who Duduzane phoned after getting into a car crash in 2014. Duduzane and Tony have shared directorships of several companies, including empowerment vehicle Mabengela Investments.
The #Guptaleaks emails suggest that Tony holds some unpleasant racial attitudes, having called security guards “monkeys” and having asked Sun City to confirm that all butlers used at his niece’s wedding would be white.
By 2016, Tony had reportedly already started spending more time in Dubai than South Africa. The family owns a house in the Emirates Hills estate. Tony is married to wife Arti.
Salim Essa Bio
Salim Aziz Essa (39) is relatively new to the Gupta fold, but over the last few years the businessman has taken on an increasingly important role in the family’s broader business network.
A source familiar with the Guptas’ business associates says Essa first became acquainted with Rajesh “Tony” Gupta in 2011. The two soon became fast friends, and before long Essa and the Guptas, along with Duduzane Zuma, were exploring business opportunities together.
Other sources familiar with the Guptas have claimed that Essa acts as a proxy for the controversial family.
Essa, through his company Elgasolve, is the majority shareholder in VR Laser Services, a company that has come under fire over its work with state-owned arms manufacturer Denel. VR Laser’s other shareholders are Tony Gupta and Duduzane Zuma.
Through Elgasolve, Essa also holds a 22% stake in Tegeta Exploration and Resources, the Gupta-owned mining firm that bought the struggling Optimum Coal Mine from multinational Glencore.
In one of the first major #GuptaLeaks exposés, Essa was identified as the main role-player in a racket that could see kickbacks worth billions of rands from Transnet’s R50 billion tender for new locomotives being channeled to the Gupta lieutenant.
Trillian Capital Partners, a company majority-owned by Essa, has been in the spotlight over lucrative transaction advisory work it has performed for Eskom and Transnet.
Ajay Gupta Bio
Ajay Gupta is the oldest brother, born in 1966. He holds a B. Comm degree from JV Jain Degree College in India. The Hindustan Times once described him as a “living god” to his friends and admirers, recounting how he has brought Bollywood celebrities and sports stars to his small home town of Saharanpur in Uttar Pradesh in India. Ajay himself told City Press in 2011: “Come with me to my hometown of Sahanpur, and maybe a few hundred people will come to meet with me.”
Unlike his siblings, Ajay does not have South African citizenship, and has been living in the country on the status of a permanent resident since 2003. His brother Atul says Ajay is the brains of the family: “a genius, out-of-the-box thinker”, and that he will “cancel any meeting” to play cards with his ageing mother. It is Ajay who is believed to call the shots in the Guptas’ business empire, and Ajay who has the strongest interest in politics.
He is described on his company website as an “avid sports enthusiast”, and is married to Shivani. He has two sons, Surya and Kamal Singhala Gupta – the latter of whom is involved in Gupta businesses including VR Laser.
Atul Gupta Bio
Atul Kumar Gupta (49) is the middle of the three Gupta brothers and the first to have come to South Africa.
In 1993, a 25-year-old Atul was sent to South Africa by his father, Shiv Kumar Gupta, to come and explore business opportunities in a country that stood at the doorstep of democracy.
The young Gupta first dabbled in selling shoes before he began establishing a series of information technology (IT) firms. These IT businesses would later lead to the formation of the Sahara group of companies, one of the cornerstones of the Gupta business empire in South Africa.
According to Oakbay Investments’ website, Gupta obtained a BSc qualification from the Meerut University in India in 1989. After graduating and before moving abroad, the middle Gupta son worked at one of his father’s businesses in New Delhi.
Atul once served as chairman of Oakbay Resources and Energy, a holding company for many of the Guptas’ ventures. The company was listed on the JSE in 2014, but was booted from the bourse in 2017. Atul resigned as Oakbay chairperson and gave up his directorships in a string of other Gupta entities following the outcry over the Guptas’ influence in government affairs in 2016.
Gupta’s wife, Chetali, also acted as a director in some of the Guptas’ local businesses.
Duduzane Zuma Bio
Duduzane Zuma, the 35-year-old son of President Jacob Zuma, emerges from the #GuptaLeaks as kept and captured by the Gupta family, appearing to serve as a key channel for influence on official decision-making, including his father’s.
The emails suggest that Duduzane played an intermediary role in his father’s appointment of Mosebenzi Zwane as mining minister.
In August 2015 Tony Gupta forwarded an e-mail to Duduzane attaching the “CV of MJ Zwane”, then a Free State MEC who had championed the Gupta’s controversial Vrede dairy project.
Shortly thereafter Zuma appointed Zwane to replace the incumbent minister Ngoako Ramatlhodi who had apparently become an obstacle to the Gupta campaign to buy Optimum coal mine.
Ramatlhodi recently revealed that Duduzane had tried to get him to meet the Guptas, but that he resisted their advances.
The files show that in turn the Guptas took care of Duduzane’s every need, from paying for a Mauritian getaway for him and his then girlfriend in 2012, to funding his lavish multimillion-rand marriage to Shanice Stork in April 2015, to setting him up with an R18-million Dubai apartment in the world’s tallest skyscraper, the iconic Burj Khalifa.
Both families have maintained there was nothing untoward in Duduzane’s meteoric rise from IT intern to be a major player in the Gupta empire.
By the end of 2010 he was a director of about a dozen Gupta companies.
The #GuptaLeaks also reveal the pivotal role played by the Guptas’ protégé in briefing the controversial British-based PR firm Bell Pottinger in January 2016.
The firm was brought in at a £100,000-a-month to salvage the reputations of the Gupta and Zuma families by portraying them as victims of a racist backlash by entrenched white business interests.
Jacob Zuma Bio
President Jacob Zuma hovers over the #GuptaLeaks like a ghost, nearly unseen. There are no emails between him and Atul Gupta. We haven’t found that anyone wired him funds or wrote down how bags of cash were delivered to Nkandla.
A list of payments made by a Gupta partner in India featured a $15 000 entry for “SA … President’s clothes (Cash)… India”. And yes, there was evidence the Guptas tried to plan a Dubai escape route and bolt-hole for the president – but Zuma denied this.
Rather, the Gupta-Zuma links were always hidden in plain sight: jobs, enormous salaries, homes and mining deals for his family and political supporters. Most notable was his son, Duduzane, who the Guptas spoiled from the day Zuma rose to power. Duduzane featured frequently in the #GuptaLeaks, while his dad was conveniently absent (though, we hear, he was giggling quietly in the next room) while the Guptas ran South Africa.
They controlled cabinet ministers, parastatal CEOs and board members, while billions in tender fees were dished out to themselves and Duduzane. South Africans were fooled at first, but by mid-2017, the #GuptaLeaks appeared to tip the scales against Operation Zupta.
#GuptaLeaks: Oakbay ‘doing the right thing even when no-one’s watching’
President Jacob Zuma hovers over the #GuptaLeaks like a ghost, nearly unseen. There are no emails between him and Atul Gupta. We haven’t found that anyone wired him funds or wrote down how bags of cash were delivered to Nkandla.
A list of payments made by a Gupta partner in India featured a $15 000 entry for “SA … President’s clothes (Cash)… India”. And yes, there was evidence the Guptas tried to plan a Dubai escape route and bolt-hole for the president – but Zuma denied this.
Rather, the Gupta-Zuma links were always hidden in plain sight: jobs, enormous salaries, homes and mining deals for his family and political supporters. Most notable was his son, Duduzane, who the Guptas spoiled from the day Zuma rose to power. Duduzane featured frequently in the #GuptaLeaks, while his dad was conveniently absent (though, we hear, he was giggling quietly in the next room) while the Guptas ran South Africa.
They controlled cabinet ministers, parastatal CEOs and board members, while billions in tender fees were dished out to themselves and Duduzane. South Africans were fooled at first, but by mid-2017, the #GuptaLeaks appeared to tip the scales against Operation Zupta.
#GuptaLeaks: Another software giant implicated in ‘kickback’ payments
A second German multinational has been caught red-handed entering questionable commission agreements with a Gupta-controlled company in the hope of securing lucrative state contracts. A company that manufactures billboards and a letterbox consulting company also stood to rake in millions.
The #GuptaLeaks have already revealed how German software multinational SAP turned to the Guptas in their hour of need to clinch a R100-million contract from Transnet.
Now emails and documents show a second German company, Software AG, entered into an apparent kickback agreement with a Gupta-controlled company in an attempt to secure a R180-million contract from Transnet Freight Rail.
In a pattern that is becoming familiar, Software AG agreed to pay Global Softech Solutions (GSS) up to 35% of the value of the contracts it secured with Transnet, the department of correctional services, Mangaung municipality, Sasol and MultiChoice.
The Guptas’ Sahara Systems was in the process of buying into GSS, an IT services company, at the time.
But, as the saying goes, there is no honour amongst thieves.
The #GuptaLeaks also provides evidence that Software AG’s high-powered sales director, Riaaz Jeena, created a second sales commission agreement seemingly to ensure that he too would receive a slice of the pie.
Software AG is one of Europe’s largest software companies – last year it boasted €872-million (R13-billion) in worldwide revenue.
Like SAP, Software AG appeals to have been willing to pay huge amounts of money to a Gupta-controlled company under the guise of “commissions” in the hope of unlocking huge contracts from the state.
In SAP’s case, this meant paying R100-million to CAD House, a small outpost of the Gupta empire that sells 3D printers.
With both SAP and Software AG there is little evidence that the Gupta companies contributed much beyond their political influence.
The Guptas did not respond to requests for comment. Software AG confirmed the partnership with GSS, but denied wrongdoing.
October 2014: The Mangaung deal
In 2014, Software AG was trying to replicate a fantastically lucrative deal it signed with Ekurhuleni – this time with Mangaung municipality in the Free State.
Ironically, it was Lawrence Kandaswami, the now-suspended managing director of SAP South Africa, who first introduced Software AG to GSS in October that year.
Although SAP and Software AG are competitors, Kandaswami appears to have been willing to act as go-between, passing information about the Software AG deal to GSS and the Guptas’ Sahara Systems, which was in the process of buying a 50% stake in GSS.
After receiving Kandaswami’s emails, Sahara’s Santosh Choubey passed them up the chain to Gupta lieutenant Salim Essa with the message: “The same can be replicated exact solution in North West and Limpopo.”
Software AG was close to finalising the Mangaung deal, Kandaswami explained, but was now facing opposition from the municipality’s chief financial officer, who wanted an open tender. (The municipality insists it went no further than an initial presentation.)
The #GuptaLeaks provide no detail of what Essa did with this information, but the #GuptaLeaks reveal that in the months to follow, GSS became Software AG’s chosen partner on a number of potentially lucrative opportunities.
March 2015: Sensational signs of a retro-kickback
Although Sahara Systems would only formally take up its shareholding in GSS by September 2015, minutes of monthly meetings show that by March that year already it was firmly in control of GSS.
On 4 March, Choubey sent GSS’s new budget to Essa and Tony Gupta. It included four Software AG deals with potential revenue just for GSS of R56.9-million by December 2015 and another R54-million by December 2016.
The largest was a R180-million project for Transnet Freight Rail. The Mangaung deal that Software AG was having trouble closing was also on the list.
The commission agreement that Software AG would eventually sign with GSS allowed GSS to claim “referral fees” and “sales assist fees” for helping Software AG identify leads and helping Software AG close these deals.
But it appears someone else was also cutting themselves a slice of the commission payments.
Attached to a 9 March 2015 email sent by Choubey to another Gupta lieutenant, Ashu Chawla, is a draft agreement between GSS and Sensational Signs, a small company in the south of Johannesburg that manufactures steel frames for billboards.
A partnership between a Gupta IT company and a billboard company is odd enough, but the content of the draft agreement is even more suspect.
Dubbed a “Prospect Lead Provider Fee Agreement”, it promised to pay a “finder’s fee” of between 4 and 15% to Sensational Signs for identifying potential software deals or “leads” for GSS.
“In the event that [Sensational Signs] identifies Lead but elects to not actively pursue the sales cycle itself, but rather to refer such Leads to GSS, Sensational Signs shall be eligible to receive a Lead Provider Fee,” the agreement reads.
The obvious question is what kind of leads would Sensational Signs be able to identify for an IT company?
The answer is hidden in the metadata.
Since Sensational Signs was registered in September 2014 Mohamed Mobeen Jeena has been its sole director. He happens to share a surname with Software AG sales director Riaaz Jeena.
It is not clear what their exact relationship is, but records show that at various times the two Jeenas have listed the same unit in a complex in Winchester Hills as their residential address.
Although the draft agreement was between GSS and Sensational Signs, the document properties showthat it was Riaaz Jeena who drew up the document on his Software AG computer.
And although Software AG was not mentioned by name anywhere in the agreement, the wording of the Sensational Signs agreement appears to have been lifted directly from Software AG’s own contracts.
Also, the potential deals listed in the four-page annexure are the same four leads listed in the GSS budget that Software AG was already pursuing: Transnet, Mangaung municipality, Sasol and MultiChoice.
It appears that what Riaaz Jeena was effectively putting in place was a retro-kickback agreement – a scheme designed to make sure that the person paying a kickback gets some of it back for himself or a nominee.
On the Transnet Freight Rail deal, for instance, GSS was potentially agreeing to pay R27-million to Sensational Signs as a “finder’s fee” for supposedly identifying the lead and passing it on to GSS.
On the Mangaung deal, the Sensational Signs agreement anticipated that GSS would take a 35 percent (R13.65-million) cut from Software AG while Sensational Signs, though not even in existence when the German multinational made its initial pitch to Mangaung, would be entitled to 10 percent (R3.9-million) supposedly for “finding” the deal.
Detailed questions were emailed to both Riaaz and Mohamed Jeena. Riaaz Jeena was “out of the office” all week and did not answer calls on his cellphone, while Mohamed Jeena terminated the call when told it was from amaBhungane.
May – July 2015: Software AG rolls out the red carpet
By May 2015, as the opportunities rolled in, Software AG and GSS were still formalising their new partnership.
Unlike CAD House, the Gupta-company implicated in the SAP scandal, GSS at least had a track record in the software industry.
“As part of extending the company skill set I attended the training courses … in Software AG learning academy,” GSS’s founder and one-time chief executive Leela Yemineni explained via email. “I started the partnership application with Software AG in November 2013 and company attained partnership in February 2014.”
But a “Power Up Partnership” agreement that was presented to GSS in May that year represented a major step up. In terms of the agreement, GSS would be recognised as a “co-sell” partner.
- Read the draft agreement between Software AG and GSS that would give the Gupta-controlled company a significant chunk of the German company’s software deals.
The Power Up agreement did not detail the percentage that GSS would earn from Software AG, but the Sensational Signs document estimated that GSS’s share would be between 22.5% and 35%.
Software AG sales director Riaaz Jeena now also had an additional connection to GSS – in April, his wife, Fehmeda Alibhai, had started working for Sahara Systems. Minutes show Alibhai was now present in all the GSS monthly meetings where the Software AG deals were discussed.
Although the Power Up agreement between Software AG and GSS was in most respects a standard sales commission agreement, the question is what GSS brought to the party to justify the more than R100-million in commissions it expected to make according to its budget.
The agreement was clear that “Software AG will not accept leads that have already been … identified by Software AG itself.”
In the case of the Mangaung, it is clear that Software AG had identified the deal long before GSS came into the picture.
This was confirmed by Mangaung communications manager Qondile Khedama, who said in an email: “Software AG South Africa … made a presentation to the city’s management team in July 2014.”
The Sensational Signs document also makes it clear that the deals on the list were not new – some were scheduled to be finalised in less than 30 days.
However, in terms of the Power Up agreement GSS could still earn a sales assist fee if it “actively drives [the] majority of the sales cycle with Customer”.
However, most of the customers we approached claimed never to have heard of GSS.
The Sasol deal
Sasol’s group head of media relations, Alex Anderson, said Sasol first approached Software AG in February 2015 and later invited Software AG and three other bidders to submit proposals.
“Sasol was not aware of GSS as an organisation nor of GSS’ involvement and association with Software AG. Sasol did not engage at all with GSS… All engagements … were through Software AG directly,” Anderson said in an email.
Despite both GSS and Sensational Signs being missing in action according to Sasol, the Sensational Signs document shows that GSS, the company controlled by the Guptas, expected to earn R10.5-million from the Sasol contract, R4.2-million of which would flow to Sensational Signs, the billboard company.
Sasol said no contract was awarded in the end.
The MultiChoice deal
Like Sasol, MultiChoice says it had also never heard of GSS or Sensational Signs.
“MultiChoice concluded a contract with Software AG in 2015 for the provision … of a number of IT related services,” general manager of corporate affairs Jackie Rakitla said.
“All payments in terms of the contract are made to Software AG and to no other entity. Global Softech Solutions (GSS) is not mentioned in the above contract. MultiChoice has no relationship with GSS…
MultiChoice is also unaware of any alleged agreement between Software AG and GSS. As far as we can ascertain, none of our employees or authorised representatives have met with GSS or Sensational Signs.”
Yet, according to the Sensational Signs document, GSS expected to earn R4.5-million from Software AG for the contract, of which Sensational Signs would get R1.5-million for “finding” the lead.
- Read the Sensational Signs agreement here.
Unlike Sasol, the MultiChoice deal did actually go ahead and a GSS spreadsheet details how the money appears to have flowed.
On 2 July 2015, Software AG paid R3 805 597 to GSS with the reference “MultiChoice deal”. The following day, GSS made two payments: One of R1.71-million (R1.5-million plus VAT) to Sensational Signs and another of R1.48-million to a company called Forsure Consultants. Both listed as a reference “MultiChoice deal”.
Little is known about Forsure Consultants except that it shares an address in Mayfair and a former director with Homix, the Gupta-linked letterbox company that amaBhungane previously revealed received kickbacks from Neotel and other companies on Transnet contracts.
The #GuptaLeaks spreadsheet also recorded that GSS transferred another R798 000 to Sahara Systems with the reference “MultiChoice deal”.
The Transnet deal
The only instance where GSS seems to have played an active role was at Transnet Freight Rail.
“Transnet received an unsolicited proposal from Software AG and Global [Softech] Solutions for the provision of a demurrage system…” Transnet spokesperson Viwe Tlaleane confirmed.
Transnet bills clients for demurrage fees when a scheduled rail trip cannot go ahead because of delays on the client’s side. The proposed system would help Transnet to increase the amounts it collects.
“At the time, [Transnet] did not have a structured way of determining demurrage fees, and saw the value in having a system that would enable it to ensure effective and optimal use of its rolling stock,” Tlaleane said.
This resulted in Transnet entering a pilot project with Software AG and GSS in 2015.
“The contract is commission based and fees will be determined by revenue generated by Transnet on a percentage that is less than 50%.”
The draft agreement between GSS and Transnet found in the #GuptaLeaks indicates that GSS would receive between 49.5% and 50% of the revenue generated for Transnet: a potential R263-million in total. Software AG would receive a royalty for providing the software.
Although GSS was supposed to be the main partner on the deal, email exchanges show that it was Software AG and Jeena, its sales director, that drew up GSS’s proposal for Transnet.
Although Transnet said the pilot project was ongoing, Software AG’s Cassoojee denied any knowledge of it: “Software AG has not generated revenue from any of the references made in your request … apart from one Private Sector transaction which we cannot disclose… All other Proposals have subsequently expired and we have not entered into any additional agreements with GSS since December 2015.”
The prisoner deal
In addition to the four opportunities already identified in GSS’s budget and the Sensational Signs agreement, emails show Software AG was also pushing for Sahara Systems to submit a bid for a prisoner tracking system.
Software AG appears to have been hoping to sell Software AG’s products and GSS’s services to the department of correctional services (DCS) by using its new partner’s political connections.
“I want you guys to get all the services business more than anything else on this deal… I don’t have an idea on the size of the [software] license deal implications as yet, but the services would be huge on a deal like this!” Software AG partner manager Joanne Foster told Sahara’s Choubey in an email, before adding: “Do you have contacts and leverage @ DCS?”
Foster ignored requests to comment. AmaBhungane previously reported the contract was awarded to another politically-connected company.
It is not clear how much flowed from Software AG to GSS as several of the opportunities identified did not materialise. But there is very little evidence that GSS earned its fees by identifying leads or doing the sales legwork.
As with SAP, the Software AG commission agreement comes across as stage-managed to disguise payments to politically-connected people and their companies, in essence an apparent kickback for helping Software AG to secure business.
Software AG South Africa’s Cassoojee responded in writing: “Software AG prospective Partners undergo a stringent verification process that ensures Partners are able to add value to the customer… Software AG is committed to conducting its business fairly, impartially, in an ethical and proper manner, and in compliance with all laws and regulations.”
Cassoojee did not, however, offer any insight into how GSS added value to its customers when three out of four potential customers claimed not to have heard of the company.
We also asked if Software AG sanctioned Jeena’s side deal between GSS and Sensational Signs. Cassoojee did not respond and none of the questions sent to Software AG’s head of corporate communications globally, Byung-Hun Park, went answered since our first email on 26 June.
We also put this allegation to Yemineni. He said via email: “Sincerely I was not involved in sales and finance from mid of 2014. Apologies.” He also said he had formally left the company in 2016.
In May 2016, Sahara Systems sold its 50% stake in GSS to Futureteq, which at the time was owned on paper by Imtiaz Emmamally and Fehmeda Alibhai. Circumstantial and source evidence suggests, however, that Futureteq is effectively controlled by the Guptas.
Either way, this potentially places Alibhai — Jeena’s wife — in prime position to benefit if the Transnet contract goes ahead.
Transnet’s Tlaleane told us: “The trial period is set to expire late this year and [Transnet] will make a decision on whether or not to roll out the project in full.”
For now, however, GSS seems to be keeping a low profile. Its phones went unanswered all week; emails sent to official GSS email addresses bounced back; and a visit to GSS in Rivonia turned up an empty office.
Detailed questions were put to Emmamally, Alibhai and Gupta spokesperson Gary Naidoo, but none responded.
Meanwhile, SAP has confirmed that the international law firm it hired to investigate allegations that it paid kickbacks to the Guptas will also look at a December 2015 bid amaBhungane previously reported on, where SAP planned to subcontracted 60% of an R800-million Transnet software contract to GSS as its “supplier development partner”.
SAP’s Ansohpie Strydom said: “The investigations cover SAP’s entire South African operation, and include a review of all contracts… SAP has committed to sharing the results of the investigations once they have been completed.”