The National Prosecuting Authority (NPA) has applied for leave to dispute the authority of BDK Attorneys to represent a Gupta-owned company that is currently the subject of an interim restraint order.

“Show us the proof of your authority to act,” is what the NPA effectively is asking of the law firm. 

The Gupta-owned Islandsite Investments 180 is in business rescue and the business rescue practitioners, represented by attorneys Smit Sewgoolam, have not delegated authority to act on behalf of the company to anyone else, the NPA says.

Islandsite was attached in June 2021 when the Investigating Directorate (ID) of the NPA obtained an interim order to secure assets belonging to members of the Gupta family and former associate Iqbal Sharma and his company Nulane Investments 204 pending the outcome of a criminal case. 

Sharma and brothers Atul and Rajesh Gupta along with their wives, Chetali and Arti, are co-accused in a R24.9-million criminal case in the Free State.

Sharma is out on bail of R500,000 while South Africa’s request for Interpol Red Notices in respect of the four fugitive Guptas remains pending.

The NPA’s interim restraint order returned to court on Thursday for argument as to why it should not be made final. 

The court is expected to rule on this on November 18, but it is scheduled to decide next week on the NPA’s application in respect of the law firm’s authority to act on behalf of Islandsite.

In court papers, the NPA argues that BDK lacks the legal authority to represent Islandsite. This is because Islandsite is in business rescue and under the legal care of business rescue practitioners (BRPs) Kurt Knoop and Louis Klopper. And the BRPs have confirmed, in correspondence, that they did not delegate authority to anyone else to act on behalf of the company.

An affidavit by Hermione Cronje, head of the ID, says BDK, purporting to act on behalf of the company, had served the NPA with a notice of intention to oppose the restraint. The firm then filed an answering affidavit by longtime Gupta lieutenant Ronica Ragavan in her capacity as a director of Islandsite. (Read Daily Maverick’s archive piece on Ragavan, once described as a Gupta aide like no other, here).

Ragavan, in her affidavit in response to the NPA’s application, maintains there is a dispute about whether or not Islandsite is still in business rescue. And, even if the company was to be in business rescue under the control of the BRPs, Knoop and Klopper could not represent or purport to represent the company in criminal proceedings. 

This, Ragavan says, remains a function of the directors of the company. Besides, the BRPs have no knowledge of the merits of the restraint application or of the alleged criminal charges it stems from. 

This affidavit, Cronje says, did not disclose any authority for Ragavan to represent the company in the restraint matter.

The NPA became aware of an ongoing dispute over control of Islandsite between the Guptas and Knoop and Klopper when the BRPs provided it with an affidavit setting out Islandsite’s assets. 

In this document, the BRPs also set out the ongoing legal dispute with the Guptas over control of the company.

In a nutshell, Islandsite went into business rescue in February 2018 when Knoop and Klopper were appointed. One of the four shareholders, Chetali Gupta, later obtained a high court order for their removal. By November and December 2020 the BRPs had secured two different Supreme Court of Appeal (SCA) orders that effectively reinstated them. But the Guptas then headed to the Constitutional Court – albeit outside the prescribed period, court papers state. 

As a result, the Guptas now have an application pending for condonation for late filing and only once the apex court decides on this, is there likely to be clarity on their prospect of a Constitutional Court appeal that may swing control of Islandsite back their way. 

While the Guptas argue that the pending Constitutional Court application suspends the SCA orders that confirmed Knoop and Klopper as the BRPs, the NPA argues otherwise. 

An affidavit by Ragavan states that an Islandsite Board resolution had been passed which authorised her to depose an affidavit on behalf of the company and to appoint BDK to oppose the restraint order. 

However, the NPA believes that full management control of Islandsite is vested with the BRPs in terms of the Companies Act and that the opposition to the restraint order was filed without Knoop and Klopper’s approval.

Advocate Suna de Villiers for the ID’s asset forfeiture team, in an affidavit says: “It follows that Ms Ragavan is not authorised to represent Islandsite in these proceedings and BDK Attorneys also lacks similar authority.

“To entertain any further opposition to the restraint application in those circumstances would simply compound the irregular and invalid conduct of BDK Attorneys and Ms Ragavan.”

There may well be a dispute between the directors of Islandsite and the business rescue practitioners, but this does not change the legal position as regards the continued validity of the BRPs’ appointment, De Villiers said. DM