Business Maverick

THE GUIDE THROUGH SA STATE CAPTURE

Part Five: How the Guptas used their loot

Illustrative image | Sources: Ajay and Atul Gupta (Photos: Gallo Images / Business Day / Martin Rhodes / Sunday Times / Simphiwe Nkwali)
By Paul Holden
11 Jul 2021 14

In the previous instalment, I set out how the Gupta enterprise laundered its money in South Africa and abroad, using pre-existing criminal laundries inside the country and out. Today, I’ll show how they moved some of this loot back into the country and what they used it for – to expand their local empire to take advantage of State Capture, as shown in the example of the purchase of the Gupta enterprise’s last remaining asset in South Africa, Optimum Holdings.

Read Part One here, Part Two here, Part Three here and Part Four here

Tegeta purchases Optimum Holdings

On 14 April 2016, Tegeta Exploration & Resources transferred R2.084-billion from its Bank of Baroda current account into the trust account of the law firm Werksmans. The transfer secured and finalised Tegeta’s purchase of Optimum Holdings from Glencore. Considerable evidence has emerged showing that Glencore only undertook the sale after pressure from Gupta-linked officials and Eskom.

To finance this, the Gupta enterprise mobilised R1.82-billion in capital that was derived from criminal and/or questionable sources. In the table below I provide a summary of these flows, but then delve deeper into two particularly notable streams: the Centaur and Albatime flows. 

Note, however, my very specific phrasing: I say that the Gupta enterprise mobilised R1.82-billion in questionable capital to purchase Optimum, not that the Gupta enterprise paid this amount. This is because the Gupta enterprise’s financial manoeuvring meant that a good portion of this capital flowed back to its source, while more than R1-billion of the real costs actually derived from Eskom. I’ll deal with this towards the end of this piece.

I have also included here a step-by-step visualisation of all of these money flows, some of which I’ll reproduce below.

In late 2015, the Guptas opened up a new company based in Dubai called Griffin Line Trading. In one email from the #Guptaleaks, the Guptas’ chief lieutenant, Ronica Ragavan, appears to explain to Tony Gupta that Griffin Line would be controlled or represented by Kamal Singhala. Singhala is Ajay Gupta’s son.

Beginning in 2013, the Gupta enterprise also started discussing potential investments with Daniel McGowan and Simon Hoyle, directors of a company called Centaur Asset Management, who also directed a company called Centaur Holdings. By 2015, the Gupta enterprise and Centaur had established a joint venture called Centaur Ventures. 

Centaur Ventures’ shareholding was split 50/50 between Centaur Holdings and Aakash Garg, i.e. Aakash Jahajgarhia, the man who married Vega Gupta at the infamous Sun City wedding. Centaur Ventures held a 100% shareholding in Centaur Mining in Mauritius, which, in turn, held a 100% share of Centaur Mining in South Africa. In effect, Centaur Mining in South Africa was 50% owned by Aakash Jahajgarhia – in reality, the Gupta enterprise. 

In January 2016, Centaur Mining and Centaur Ventures entered into a loan agreement whereby Centaur Ventures would loan R1.5-billion to Centaur Mining. But this money was actually sourced from Griffin Line, which had given a $100-million loan to Centaur Ventures. 

These back-to-back loans allowed Griffin Line – a Gupta enterprise company – to move the money it hoarded from questionable sources abroad, back into South Africa, without anybody being the wiser as to the source of the funds. Indeed, we only know of these back-to-back loans because Centaur and the Guptas fell out and became involved in acrimonious court battles in Bermuda, where Centaur Ventures is based.

This back-to-back loan – in reality Gupta enterprise money – was moved from Centaur Ventures to Centaur Mining, from Centaur Mining to Tegeta Resources, and from Tegeta Resources to Werksmans. This was achieved as follows:

First, between 26 February and 1 April 2016, Centaur Mining drew down (i.e. got paid) R885-million into its Standard Bank account. Between 9 March 2016 and 4 April 2016, Centaur Mining transferred this amount into its Bank of Baroda current account, where it was then transferred into a fixed deposit account on 12 April 2016. On the same day (12 April) the Bank of Baroda issued a loan worth R842-million to Tegeta Resources and Exploration. This amount was then paid to Werksmans. 

But this does not mean that Griffin Line/Centaur actually paid R842-million towards the purchase of Optimum; it only means that they provided R842-million in capital towards the purchase. In fact, about 40% of this was returned to Centaur Ventures and the shortfall covered by Eskom and Glencore. It worked like this:

First, on 5 April 2017, Eskom paid R249-million to Optimum and Koornfontein Mine (the latter an asset the Gupta enterprise acquired when it bought Optimum). Of this, R242-million was paid into Tegeta’s loan it had taken out against the Centaur Mining fixed deposit. 

Second, on the following day, Centaur Mining closed its fixed deposit with the Bank of Baroda and eventually paid the capital and accumulated interest (R905-million) back to Centaur Ventures, settling this much of the R1.5-billion loan facility.

The fact that Centaur Mining was able to close its fixed deposit with Baroda at this point reflects particularly poorly on the Bank of Baroda. By this point, Tegeta had only paid back R242-million of the R842-million loan that was secured against the Centaur Mining fixed deposit. By letting Centaur Mining close this fixed deposit, which secured Tegeta’s loan, the Bank of Baroda exposed itself to R600-million in loans that might not be repaid. Either Baroda knew what was really going on, or it was astonishingly cavalier about its own potential losses.

Third, between 11 and 20 April 2017, Centaur Ventures recycled R651-million of the R905-million it had just been repaid back into South Africa. This money was deposited into Optimum Coal’s Baroda account. Of this, R470-million was paid to Tegeta, which immediately used this to pay down its mega-loan, while the remainder was paid out to various other Gupta enterprise companies.

Fourth, and finally, Glencore paid R135-million to Optimum on 26 April 2017, of which R130-million was used to pay off the Tegeta loan.

The net effect of all of the above was that, while Centaur had provided R842-million in capital, it actually only paid R470-million towards the purchase of Optimum. The remainder was made up of R135-million paid by Glencore and, most importantly, R249-million paid by Eskom.

The second stream of interest flowed via Albatime. 

As noted above, Albatime sourced its funding for this tranche from both Transnet directly (R93.4-million) and Transnet’s Defined Benefit Pension Fund (R56.1-million). These amounts transited either via Regiments or Trillian to Albtime. 

Albatime repeated the Centaur trick, paying R110-million of this into a fixed deposit, against which Tegeta took out a loan of R104.5-million that it used to contribute to the purchase of Optimum. 

But what is particularly interesting about the Albatime portion is what happened next. On 20 April 2016, less than a week after the Optimum purchase happened, Albatime closed its fixed deposit account and paid R110-million back into its Baroda current account.

Of this R110-million, Albatime transferred a total of R26,710,400 into three first-level laundry entities: Medjoul, Fortime Consultants and Birsaa Projects. 

Following this money, I’ve been able to track that $450,416 of the R26.7-million paid to the first-level laundry entities was paid via a local laundry, into two separate onshore-offshore bridges, and ultimately to Griffin Line Trading. So we have money from State Capture first being used to help the Guptas finance the purchase of Optimum, and once that objective had been achieved, portions of that same money were then paid out to a Gupta enterprise front company in Dubai.

The Gupta enterprise’s financial manoeuvring meant that more than half of the actual contribution towards the purchase of Optimum was paid by the taxpayer via Eskom. 

Thus, the Gupta enterprise relied on State Capture to force the sale of Optimum to Tegeta, then relied on State Capture to get Eskom to pay hundreds of millions to help that sale, and then used the asset they had bought to secure more illicit State Capture funding.

By my calculations, Eskom ultimately contributed R1,046-billion to the purchase of Optimum Holdings – all for the benefit of the Gupta enterprise.

Recently, Eskom and the SIU brought a claim for damages against Optimum for more than R3.8-billion. This claim, however, is being frustrated by a complicated dispute about who has the ultimate right to Optimum, the Gupta enterprise’s last remaining asset in South Africa.

Initially, Centaur Ventures claimed that it had a claim against Optimum because of its contribution to the purchase price. This claim was then ceded to a company called Templar Capital, which is controlled by Centaur’s Daniel McGowan.

But the clearly questionable source of Centaur Ventures’ funding of the purchase of Optimum, alongside the other questionable sources used to finance the purchase, must now attract the attention of the Asset Forfeiture Unit, Eskom and the SIU. If McGowan and Templar end up controlling Optimum, or extracting any value from it, it would be a travesty.

Hamba Kahle

For those who have had the patience and fortitude to read through these five explainers, I hope this has proved enlightening and worthwhile.

For those whose interest has been piqued and want to follow more, my full evidence bundle will shortly be online on the commission website. Running at more than 7,000 pages, it is, admittedly, quite a read; but I promise you that it is jaw-dropping nevertheless. DM

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All Comments 14

  • Thank you so much Paul Holden. Brilliant work and hope you will continue exposing more corruption here. We hope that one day the Guptas will be jailed. Aluta

  • According to who you listen to Optimum was losing millions per month pre sale and asked for more rands /ton. So why did Glencore have to be forced to sell and why was the purchase price in billions? Lies,damn lies and accountants.

  • Thank you for this research. Hopefully, it will result in a bunch of people wearing orange. In fact, South Africa could build a new prison just to house the “Zupta Old Boys Club.”

    • No need to build a prison, they (the Guptas) will say! There’s this place in Jozzi called Saxonwold that’s got security and surveillance of the highest order already and can quite easily be adapted to prison standards. It will also save you the bother of providing Department of Correction Services staff because we can pay for our own. Or there’s this other place in KwaZulu also with the highest order of security and surveilance called Nkunlu or Nkandma or something like that and it’s way out in the bush and far away from everything so we won’t enjoy it or anything …..

  • Do you know who devised and administered these schemes. Is one of the Guptas a brilliant financial engineer as well as being a crook or are other people involved.

  • It baffles my mind that no action has been taken against the Transnet Pension Fund officers. Surely that is an easy win and less time consuming than getting anything out of the Zuptas. I know that a lot of crimes have been committed in all this but if something is slapping one in the face, for goodness sake do something about it.

  • Such a web! The Transnet Pension Fund officers worry me too (as did the PIC, which funded another dodgy character).
    All we can do is salute Paul Holden and others who follow these convoluted trails into the darkness. They are national heroes.

  • Hi Paul, all of this devastating larceny was made possible by one person only. Jacob Zuma.
    Please tell us what he personally got out of it.
    We know that the Guptas could hire and fire anybody in government because of their association with Zuma. It’s what enabled them to place their lackeys into key government and SOE posts. Without Zuma’s complicity none of this would have been possible.
    Zuma sold this country out for a few pieces of silver. He betrayed the trust of the country. He violated his oath of office.
    His criminality was so deliberate, so carefully considered and executed and so egregious that he should be tried for nothing short of treason.

  • I am flabbergasted by Paul Holden’s research and his grasp of what has really happened to our country as a result of the Zuma ANC’s complicity. But I have only one complaint about Part5. The introduction should read ….. In the previous instalment, I set out how the Gupta enterprise laundered OUR money in South Africa …..