ANALYSIS

Why the latest Gupta court victory bodes badly for the NPA – and South Africa

By Rebecca Davis 29 May 2018
Caption
Estina Dairy Farm in Vrede. Free State, South Africa. 29 January 2018. Photograph: John Hogg

On Monday, the Free State High Court ruled that R250-million of Gupta-linked assets seized by the Asset Forfeiture Unit should be released. This is – depending on who’s counting – the fourth occasion on which the Guptas have succeeded in stopping the NPA from freezing the family’s assets. The most alarming aspect of the judgment? The court’s finding that it was not reasonable to believe that a criminal case against the accused for theft, fraud and money laundering would one day succeed.

Many South Africans have fantasised about the Guptas getting their day in court, and the inevitable comeuppance that would follow.

Excitement peaked in February, when seven people linked to the Guptas’ alleged Vrede Dairy scam were arrested and appeared in court. On that occasion there was even an actual Gupta in the dock: nephew Varun Gupta, who was allowed to leave the country this month for a religious ceremony in India but reportedly returned in time for Monday’s court date.

But the fantasy of a Gupta court smackdown seems to recede a little more every month. The reality is that Gupta lawyers have now successfully fought three court battles to have Gupta assets unfrozen, with a fourth case – aiming to freeze the Guptas’ Optimum and Koornfontein mine rehabilitation trusts – withdrawn by the NPA.

Monday’s ruling in the Free State High Court is a particular setback – not just because of its outcome, which will see R250-million of Gupta-linked assets returned, but because of the judge’s scepticism that a future criminal case on the Vrede Dairy matter will succeed.

As exposed by the #GuptaLeaks investigations, the Vrede Dairy scam saw more than R200-million given by the Free State Department of Agriculture to the Guptas’ then-unknown Estina company to run a farming operation and dairy, with millions landing up in the bank accounts of other Gupta companies and Gupta-linked individuals.

In April 2018, the NPA’s Asset Forfeiture Unit raided the Guptas’ compound and seized around R250-million in assets – which the Guptas went to court to demand back.

In order to uphold the freezing of Gupta assets for now, Judge Philip Loubser explained on Monday:

There must be reasonable grounds for believing that the defendant may be convicted, that the court may find that the defendant benefited from the unlawful activities, and that the court may therefore make the exercise of a confiscation order.”

Yet based on the evidence presented to him by the state, Judge Loubser concluded that “reasonable grounds are lacking for believing that the [Gupta-linked companies] may one day be convicted of the offences alleged, and that a confiscation order may one day follow on that conviction”.

The crux of the problem with the state’s case appears to have been the same issue which torpedoed the state’s first attempt to seize assets related to the Vrede Dairy scam earlier in 2018.

Papers submitted by the NPA showed that the Free State provincial agriculture department made five payments into the Guptas’ Estina company bank account between April 2013 and July 2014, totalling R144-million.

In May 2015 and May 2016, the government department made two further payments amounting to R106-million.

Around R110-million was then transferred in eight tranches from the Estina account to a Bank of Baroda account, which then made its way to the bank account of Oakbay, the Guptas’ holding company.

It was the state’s assertion, then, that Oakbay was unlawfully receiving money paid by the government intended to be used by Estina for the Vrede Dairy project.

But the problem is that the Bank of Baroda account which the NPA used as the basis for its arguments is a pool account servicing 750 separate clients.

The pool account is therefore not a reflection of the flow of funds of specific clients,” said Judge Loubser.

To draw conclusions based on movements from the Baroda pool account would be “inaccurate, misleading and unreliable”.

This was the same conclusion arrived at by Judge Fouche Jordaan in the earlier attempt to seize Vrede Dairy-related assets.

Judge Loubser also pointed out that R370-million was paid by Estina to other parties, which suggested that the company had millions available in its bank account which had not been paid into it by the government.

There was “no rational basis” on which to contend that the money transferred from Estina to Oakbay stemmed from the government funds rather than other sources.

A second defence from Oakbay was that money paid to it from Estina consisted of the repayment of loans that Oakbay had made to Estina.

Interestingly, though, the evidence shows that Mr Kamal Vasram, who was the only director of Estina, received loans from Oakbay and he then lent the same money to Estina. Estina then repaid the loan to Mr Vasram, who in turn repaid his funds to Oakbay,” Judge Loubser said.

Why the flow of funds between Oakbay and Estina took place via Mr Vasram in his personal capacity remains unclear.”

Unclear – but ultimately also irrelevant.

The present inquiry is not dependent on a finding upon the veracity of the evidence against the applicants,” Judge Loubser said. “It is also not dependent on any suspicions.”

Loubser was clearly unimpressed by the quality of the state’s case. When it came to evidence against two other Gupta-linked companies, Westdawn Investments and Annex Distribution, the judge said:

The sum total of the NDPP’s [National Director of Public Prosecutions] case comprised of computer printouts said to be bank statements of Baroda’s pool account.”

As far as the other Gupta companies were concerned, Judge Loubser stated that the NPA’s evidence “shows many shortcomings that remain unexplained at this point”.

Primary among them were the uncertainty surrounding the pool account of the Bank of Baroda, and the possibility that Oakbay was telling the truth when it suggested that the money transferred to it by Estina was for the repayment of loans.

Because Judge Loubser found that there did not exist reasonable grounds to believe that a conviction and confiscation order might in future be granted against the Gupta-linked companies, he followed the same reasoning with the three Gupta-linked individuals who were implicated: Oakbay directors Ashu Chawla and Varun Gupta, and Oakbay CEO Ronica Ragavan.

The NPA’s Luvuyo Mfaku was quoted as saying after the ruling that it was “a serious blow to the fight against organised crime”.

But if the NPA fails to get its case against the Guptas in order, it will also be a serious blow to South Africans hungry to see some evidence of legal consequences for the years of damaging State Capture. DM

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