Shadow World Investigations
The Guptas’ Laundromat: Estina – an all-purpose criminal vehicle
Last month, Shadow World Investigations made a detailed submission to the Zondo Commission on State Capture, tracing and explaining the full details of the money laundering vehicles used by the Gupta enterprise in stealing and hiding vast kickbacks from Transnet contracts. SWI is now making the submission public. In the third and final article picking out the highlights of the submission, SWI shows how Estina, the company at the centre of the Vrede dairy project scandal, had formed an important node in an elaborate money-laundering scheme run by the Guptas – a full year before Estina won the Vrede dairy project contracts. Or, more simply, by the time Estina won the Free State contract, it was already a well-used part of the Guptas’ criminal enterprise.
In December 2019, Shadow World Investigations (SWI) made a detailed submission to the Zondo Commission of Inquiry about the connections between the Gupta criminal enterprise and Estina. Our search of the #Guptaleaks archives revealed just how extensively the Gupta clan was involved in Estina.
One example of these connections was the linkages between Estina’s sole director – Kamal Vasram – and the Gupta enterprise. Our research showed that Vasram had worked with Gupta employees as an IT salesperson as far back as 2008, and started developing closer links with the family from 2010 onwards. This included monthly payments made by Gupta company Linkway Trading to Vasram from March 2011 until at least 2012.
The full extent of Estina’s integration into the Gupta enterprise was made clearer only when we began investigating another major State Capture scandal – the capture of Transnet. In August 2020, SWI made a detailed submission about the capture of Transnet, and how the Gupta enterprise used elaborate “laundromats” to wash and launder billions of rand in kickbacks.
The first of those laundromats saw the Gupta enterprise collaborating closely with the Worlds Window Group, an Indian conglomerate that allegedly traded in scrap metal. Our investigation, along with those conducted by amaBhungane, showed how the Worlds Window Group controlled two companies – JJ Trading and Century General Trading – that were used to receive kickbacks from Chinese state rail manufacturers and pay them onwards to Gupta-controlled companies.
In investigating the Worlds Window Group, it became clear that the Guptas and the Worlds Window Group had developed a close and busy business relationship from at least 2010 onwards that involved multiple different schemes. One of those schemes took place between March 2011 until at least January 2013, when the Worlds Window Group and the Guptas collaborated on a money-laundering exercise known as a loan-back.
Loan-backs are a common money laundering technique. Under these systems, one party takes out a loan against a certain asset, and transfers the entirety of the loan proceeds to a second party. The second party then pays back the loan through a third company. This circular system is useful for obscuring money flows and hiding the ultimate recipient of funds.
In the loan-back scheme that operated between 2011 and 2013, the Worlds Window Group took out a loan from the Bank of Baroda valued at R16-million, using a company it controlled called Everest Global Metals. Everest Global Metals was a subsidiary of Everest Metals FZE, which was itself controlled by the Worlds Window Group.
Shortly after Everest took out the loan, it transferred R15-million of the loan taken out to Westdawn Investments, a South African company controlled by the Guptas. Then, on a monthly basis, Everest Global Metals would repay a specific loan amount to Bank of Baroda, which they would, in turn, invoice to Westdawn. The circular system worked like this:
(Graphic: polygram.co.za)The effect of this system was that it allowed Westdawn to secure a line of credit from Bank of Baroda against accounts held by Everest, but in such a way that Westdawn’s involvement would be obscured to any outside agency. It also created a circular flow of funds that could artificially inflate revenue or otherwise obscure the flow of funds to frustrate investigators.
Estina appears to have been used at least twice in this elaborate loan-back system. First, on 3 May 2011, a Worlds Window employee emailed key Gupta lieutenant Ashu Chawla. The Worlds Window employee requested that Chawla get Everest to make out an invoice to Estina, the text of which the employee also provided to Chawla. The invoice charged Estina an amount of R125,400. This was just a little more than had been paid the previous month by Everest Global Metals to the Bank of Baroda in interest. Other records from the #Guptaleaks strongly suggest this amount was paid from the Estina account, and only after the request for payment had been sent to, amongst others, Gupta lieutenants Ashu Chawla and Ronica Ragavan.
Estina was integrated into the loan-back scheme once more. On 18 July 2011, Everest Global Metals sent an invoice to Estina for “consultation charges” valued at R120,000, with a further R16,800 in VAT: a total of R136,000, equal to the slightly varying monthly amount Everest was due to pay Bank of Baroda in servicing this loan.
Thus, on at least two occasions, Estina was used as a conduit to facilitate a money-laundering scam on behalf of the Gupta criminal enterprise.
But perhaps the most important thing to note is the date of the transfers and invoices above: 2011. This was the year before Estina was given the contract to establish the Vrede dairy farm in 2012.
These records thus show that Estina was being used as an all-purpose criminal vehicle by the Gupta enterprise a full year before the Vrede dairy project. Combined with what we know about the Guptas’ later involvement in the Vrede dairy project – including how Estina was used to steal taxpayer cash and transfer it to Gupta front companies – it is now clear that Estina was, before and after the Vrede Dairy Scandal, nothing more than a useful corporate front for the enrichment of the Gupta criminal enterprise. DM
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