The flow of money allegedly paid by the Free State Department of Agriculture and Rural Development to Nulane Investments, a company owned by former Transnet board member and Gupta associate Iqbal Sharma, has been the subject of weeks of scrutiny at the first State Capture trial under way in the Free State High Court in Bloemfontein.

The trial, which began four weeks ago, is based on allegations that R24.9-million was paid by the department to Nulane Investments without any of the correct procurement procedures being followed.

Several government officials testified that a “deviation memorandum” had punted Nulane as the sole service provider to conduct a feasibility study. The State alleges that the company did not have the capacity to conduct the study and that Deloitte had subsequently been subcontracted at a cost of R1.5-million.

The feasibility study led to the controversial Vrede Dairy Project, a flagship project for the Free State department that had a price tag of R280-million.

Read more in Daily Maverick: “Government employee tells Vrede Dairy Project trial: I did not report allegedly irregular Nulane Investments transaction”

Eight people are on trial for charges ranging from money laundering, fraud, corruption and contravening the Public Finance Management Act (PFMA).

Two of the accused, Peter Thabethe and Limakatso Moorosi, are former heads of the Free State department. It is alleged they unlawfully and wilfully contravened the PFMA, resulting in wasteful expenditure.

The other accused include former department chief financial officer Seipati Dhlamini, Dinesh Patel, Nulane Investments’ director Iqbal Sharma, Ronica Ragavan as well as a second company, Islandsite Investment.

Investigator’s integrity

Thesele Rankuoatsana, a senior financial investigator for the NPA’s Investigative Directorate, took the stand for the better part of the past week, reading his report into the court records.

The defence grilled him about the integrity of his report after two witnesses testified that he had been present when investigating officer Mandla Mtolo had taken statements from them. Rankuoatsana said he had merely been typing the statements.

He also testified that his investigation only focused on the transactions and flow of money between Gupta-linked companies and Nulane Investments between 8 November 2011 and 6 July 2012. He could not provide a reason why he had focused on that timeframe.

Rankuoatsana said he had not contacted the directors of the companies under investigation about the movement of millions between their companies.

He said the scope of his investigation did not include payments made to the South African Revenue Service or the verification of contact details on some of the documents he had at his disposal.

Rankuoatsana testified that he had followed the trail of the money up to where it had been deposited in Islandsite Investments’ Absa account. Once that had been done, it was mixed with other funds and was impossible to follow the destination of the money or determine its purpose.

Although Rankuoatsana listed transactions done through an account of the Indian Bank of Baroda, he had not obtained statements from these offshore accounts.

Politically connected

Bronwynne Forbay, the legal representative for Sharma and Nulane Investments, questioned Rankuoatsana about Ashok Narayan, an adviser to former Free State premier Ace Magashule.

When Rankuoatsana said he had heard Narayan’s name before, Forbay told him that Sharma had handed over Nulane Investments to Narayan to manage its affairs.

Kenny Oldwadge, representing Patel, questioned Rankuoatsana about his relationship with investigating officer Mtolo. Rankuoatsana said they had worked together as part of a task team investigating corruption at Estina dairy farm when he had been stationed at the Hawks.

Oldwadge said he believed their relationship had preceded the investigation into Estina and reminded him that “he is wearing an NPA cap”.

Read more in Daily Maverick: “Vrede Dairy project — Mosebenzi Zwane appears in high court for corruption pretrial”

Mike Hellens, representing Islandsite Investments and Ragavan, meticulously went through every transaction involving the company. He told Rankuoatsana all transactions were fully documented and nothing was suspicious or irregular.

‘Easy explanation’

Hellens said the flow of money could be traced and it had not disappeared into a black hole. He said if Rankuoatsana had included the debtor’s ledger and financial statements of these companies as part of his investigation, he would have been able to easily explain the flow of money as the companies were lending money to each other, paying for services or repaying loans.

Hellens put it to the witness that Islandsite Investments was performing a “treasury” function including providing financial support to all other Gupta-linked companies.

The following companies are listed in the financial report that was registered on the Gupta’s Absa Cashflow Manager:

• Annex Distribution
• Confident Concept
• Islandsite Investments
• JIC Mining
• Linkway Trading
• Oakbay Investments
• Pragat Investments
• Sahara
• Sahara Computers
• Sahara Systems
• Sahara Consumables
• Arctos Trading
• Tegeta Resources
• Blackedge Exploration

Rankuoatsana’s report covers all transactions previously mentioned in the testimonies of bank employees.

Read more in Daily Maverick: “Atul Gupta, Vrede Dairy Project and the ‘dodgy’ transactions — court hears how millions were shifted between accounts”

Hellens has previously stated that Pragat Investment was not owned by the Gupta family, but that its owner was a “trusted” businessman. This was raised at the trial as Rankuoatsana’s report includes an email sent by a director of Sahara Computers – with an attached letter on a Nulane Investments letterhead – to the Bank of Baroda. The letter instructs the Bank of Baroda to transfer an amount to Pragat Investments.

The case continues on Monday, 20 February, with investigating officer Mandla Mtolo on the witness stand. DM