Centaur Mining SA’s bid to fend off a R400-million claim from liquidators of the controversial Trillian group of companies seems to have backfired.

It now finds itself accused of having been a puppet in the hands of Gupta protagonists like Salim Essa, the South African businessman marooned in Dubai while battling the effects of Magnitsky sanctions. 

Centaur’s director, Daniel McGowan — presently in pole position to take over the Gupta family’s Optimum Coal Mine (OCM) — has been working hard to manage public perceptions of his historical business association with the Gupta enterprise.

Centaur had allegedly helped mobilise cash for the Gupta family’s purchase of Optimum and, on its own version, provided a loan to Trillian, cash that was ultimately used for Essa’s bid to buy the auditing firm Nkonki after South African banks terminated a horde of Gupta bank accounts.

Now liquidators Cloete Murray, Sivalutchmee Moodliar and Ndumiso Sibiya charge that Centaur Mining SA (CMSA) was a Gupta affiliate. 

Murray, in an affidavit filed at the High Court in Johannesburg, says that ultimately, “Gupta associate Centaur Ventures” funded  Oakbay/Tegeta’s acquisition of OCM, the largest coal supplier to Eskom; and Essa’s acquisition of Nkonki.

“Seen in its simplest form, CVL was the source of the offshore Gupta funding that was required to supplement the proceeds of the ill-gotten Gupta revenue generated pursuant to their unlawful local commerce and to advance the Gupta empire; locally expended through CVL’s SA representative, CMSA.

“CVL, CMSA and Trillian were all and remain puppets in the hands of the Gupta protagonists.”

This highly damaging contention by liquidators does not bode well for the Dubai-based McGowan. He recently landed unconditional approval from South Africa’s Competition Commission for his Liberty Coal to take over Optimum. McGowan is also hoping to intervene in proceedings brought by Optimum’s business rescue practitioners, Kurt Knoop and Louis Klopper, to liquidate the Gupta flagship company, Oakbay Investments.

Trillian Management Consulting (TMC), a subsidiary of Trillian Capital Partners, was liquidated at the instance of Eskom over its inability to repay the parastatal R595-million — ill-gotten gains — per a high court order handed down in June 2019. 

The liquidators obtained an order in terms of Section 20 (9) of the Companies Act to collapse several other Trillian companies into TMC in January 2021. This allowed for a composite liquidation, insolvency process and administration on the basis that each one of the companies was insolvent and needed to be wound up as one single and indivisible operation.

The 20 (9) application was backed by the report of a forensic accountant (used in legal proceedings that the SA Revenue Service brought against Trillian), who concluded that the business of the various Trillian companies was indistinguishable and effectively managed as one single economic entity. The order covered Trillian Capital Partners, Trillian Securities, Trillian Nominees, Shared Services, Trillian Property and Trillian Financial Advisory (TFA).

Court papers do not refer to Trillian Holdings, the entity through which Essa previously held a majority stake in Trillian, in this regard.

“Section 20 (9) legislates a statutory basis for piercing the corporate veil of otherwise separate and distinct legal entities,” court papers state.

Within a few weeks of landing this order, liquidators slapped Centaur Mining with a R400-million voidable disposition claim. They were on the verge of landing a default judgment when Centaur got wind of the claim that it is now defending. Centaur then hit back with a legal challenge of the 20 (9) order, in part because it claims that it is in fact owed money by one of the Trillian companies that landed up in liquidation as a result of it.

TFA owes Centaur Mining just over R40-million, this being the balance of certain loans advanced to Trillian, McGowan says in an affidavit filed in early August.

By deeming TFA and Trillian Shared Services (TSS) not to be separate juristic entities, Centaur cannot enforce its rights under certain loan agreements, McGowan says.

“What is clear is that CMSA (Centaur) cannot claim payment of the outstanding balance of the loan from TFA. At best it may have a claim against TMC in liquidation (but this is uncertain).”

McGowan says while expedient, the section 20(9) application brought by the liquidators was without legal foundation. 

Whose loan is it anyway?

Centaur fears it would have to fight for its money as an unsecured creditor against the likes of Eskom, Transnet and the SA Revenue Service, with the taxman having a claim in excess of R400-million.

But, that is if indeed Centaur has a valid claim. Liquidator Cloete Murray reckons not and sets out his reasons for rejecting Centaur’s view of being a creditor in a lengthy affidavit filed on September 2.

Centaur Mining has not taken issue with the facts put up in support of the 20(9) application and they are accordingly accepted as being true and correct, Murray says:  

“As will appear from what follows, a particular central theme prevailed within Trillian and the entities associated with the Group, particularly also CMSA.”

These companies, Murray says, were allegedly “demonstrably applied” by certain individuals to carry on the business either recklessly or with gross negligence in order to perpetrate massive fraud and corruption.

McGowan was a director of Centaur Ventures Limited (CVL), a Bermuda-registered Gupta affiliated company. (CVL has since been placed into provisional liquidation in Bermuda.)

Tapping into evidence from a secret 417 insolvency inquiry, Murray highlighted just one transaction involving Essa, Trillian and CMSA and Essa’s Trillian Holdings.

The transaction, he says, serves to illustrate the involvement of CVL and CMSA in the affairs of Trillian and their alleged composite application in pursuance of the Gupta agenda to achieve State Capture.

Around September/October 2016 CVL, through CMSA, advanced R313.3-million to Trillian, purportedly in terms of two loan agreements signed by Trillian CEO Eric Wood and McGowan. The “loan” was paid out to TSS and TFA in several tranches.

Of the R313.3-million paid to Trillian, only R43.7-million was actually retained by the company while the balance was paid to Cutting Edge, another company caught up in the Gupta enterprise.

The TFA and TSS loans and loan agreements were, however, not a true recordal of what had in truth and in fact transpired, says Murray.

They were, rather, agreements “conjured up” in an attempt to retrospectively regularise or “paper” the flow of funds from CVL to CMSA and ultimately to its true intended recipient.

Says Murray: “As will appear from what follows, the moneys advanced to Trillian by CMSA in truth and in fact emanated from CVL. CVL, however, could not make payment to Trillian directly because doing so presented a risk that the SA Reserve Bank may pick up on the transaction. To conceal CVL’s funding of Trillian’s acquisition of the firm, CVL channelled the said funding through its local subsidiary, CMSA.” 

Project Antwerp was the reference for the deal to buy auditing firm, Nkonki.

Yet TFA and TSS repaid the “loan” to Centaur Mining in eight tranches totalling just over R280-million. 

“At all relevant times, and when all the aforesaid payments were made by Trillian and/or the relevant Trillian constituent, its/their liabilities exceeded their assets.”

Using the “terminology” employed by the parties at the time, Murray says the flow of funds from CVL through CMSA to Trillian then also had to be “papered” within the records of Trillian. 

In order to “paper” the receipt of the R313.3-million loan from Centaur, Essa signed a notice of advance. In terms of that notice, Essa recorded that he was advancing the R313.3-million to Trillian — as a shareholder loan via Trillian Holdings, the company through which Essa held his majority stake in Trillian at the time.

However, when the most superficial veneer of Trillian Holdings is pierced, it is clear that it existed on paper only and was nothing but a ruse, says Murray.

In summary, Murray emphasised that CVL, through CMSA, advanced R313.3-million to TFA and TSS and that Essa then misrepresented the same as a loan from Essa, through Trillian Holdings, to the two Trillian entities.

The money was disbursed to Trillian pursuant to the wishes of Essa, he says. Murray says Section 20 (9) of the 2008 Companies Act legislates a statutory basis for piercing the corporate veil of otherwise separate and distinct legal entities.

“On its plain wording, Section 20 (9) permits a court to disregard the separate juristic personality of a company where its incorporation, use or an act performed by or on its behalf  ‘constitutes an unconscionable abuse of the juristic personality of the company as a separate entity’.

“In addition to this section, Section 22 of the act also provides that a company must not carry on its business recklessly, with gross negligence, with the intent to defraud any person or for any fraudulent purpose. 

“It is rather obvious that perpetrators and beneficiaries of the mischief contemplated and sought to be addressed by Section 20 (9) and 22 of the 2008 act will, in some instances and particularly as we find in this matter, try their level best to avoid the consequences for the aforesaid highlighted statutory provisions.

“The true facts against which this application [that of CMSA] should be considered and upon which it ought to be determined — placed before court in terms of this affidavit and as set out hereunder — expose this application as being nothing more than an opportunistic and transparent attempt by CMSA, and those hiding behind it, to defeat the ends of justice.”

Centaur reckons the 2o (9) liquidation of the companies in question prevents it from pursuing its own claim through normal civil proceedings. Instead, it says, it has now been confronted with a suite of statutory claims under the Insolvency Act — claims, it argues, that did not exist prior to the companies being collapsed into TMC, the original Trillian entity liquidated.

McGowan argues that Centaur Mining will claim indemnity against the liquidators’ claim as an affected party because it didn’t have an opportunity to weigh in on the consolidated liquidation. 

TMC, he says, was not a shareholder, founder or controller of the various companies and merely one of several subsidiaries of Trillian Capital Partners. 

And, he questions why Zara W, a company that assumed full ownership of Trillian once Essa exited amid the storm in mid-2017, was not collapsed into the group for liquidation.

The order, McGowan argues, was partly incompetent and ambiguous.  DM

Centaur Mining is expected to file a reply to the liquidators in due course.