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ICM Files: Meet the company directors who helped the Guptas capture South Africa

ICM Files: Meet the company directors who helped the Guptas capture South Africa

This is the third piece in a series on a company called Integrated Capital Management and its directors, who enabled and benefited from State Capture at Transnet, but have yet to be held to account.

In the swanky Melrose Arch precinct of Joburg, a few men in suits would become the architects of one of the Guptas’ most notorious companies: Trillian. There were two offices. One belonged to Gupta enterprise kingpin Salim Essa. His neighbour in a nearby office was Integrated Capital Management (ICM), a small investment and advisory company. 

The story of ICM and its links to State Capture has become lost in the larger schemes that dominated the Zondo Commission’s work. But ICM and its three directors — Stanley Shane, Clive Angel and Marc Chipkin — helped the Gupta enterprise to thrive.

ICM is a relatively small firm, but its role in State Capture is big. The company’s directors have been implicated in wrongdoing at Transnet and Alexkor, and enabled the establishment of Trillian Capital Partners and its subsidiaries.

Trillian is infamous for its corrupt relationships with Eskom and Transnet, which illicitly scored the company millions in public funds. Essa and his associate Eric Wood became the faces of Trillian through their respective roles as the majority owner and CEO of Trillian. But, behind the scenes, it was the ICM directors who established Trillian and executed Essa’s instructions.

In the first article in this series, we showed how ICM was the beneficiary of at least R9.3-million in public funds laundered from Transnet in November 2015. The company then made several payments between November 2015 and March 2016 to companies linked to its directors. Some of the payments directly referenced Chipkin, Shane and Angel, indicating they may have benefited from money which was illicitly funnelled out of Transnet.

Each of the directors is implicated in various State Capture scandals. Evidence submitted to the Zondo Commission shows Chipkin is linked to corruption at state diamond company Alexkor, while the statements of former Trillian employees to Parliament implicate Angel in wrongdoing at Trillian. 

Our previous article in this series showed Shane’s complicity in State Capture crimes while he was both a director at Transnet and chairperson of its pension fund. 

Yet, while Eric Wood has been arrested in relation to corruption at Transnet, and the National Prosecuting Authority has indicated it will seek the extradition of Essa, the ICM directors seem to have escaped the much-needed attention of law enforcement agencies. 

icm files

The Trillian job

In October 2015, Bianca Goodson received a phone call that would lead her into the core of State Capture. On the other end of the line was ICM director Angel and he had a proposal for Goodson: an exciting new management consulting firm was launching, and he wanted her to join. A few weeks later, Goodson became the CEO of Trillian Management Consulting (TMC) — the consulting subsidiary in the Trillian group.

Goodson testified before Parliament’s Committee on Public Enterprises in 2017, and again before the Zondo Commission in 2021, blowing the whistle on Trillian’s role in Eskom. But she also revealed how closely linked ICM was to Trillian’s business.

By the time Goodson arrived at Trillian — which had barely been established — the company was already confident it would secure work at Eskom. In their initial discussions, Goodson expressed concern to Angel that she may not be able to find enough work for Trillian to make money. But Goodson suggests that Angel knew there was nothing to worry about.

“And he explicitly said to me, ‘you do not have to worry about that because the work is secured’,” Goodson told the Zondo Commission. 

Angel’s confidence that the Eskom deal would go through is surprising. Goodson was one of two employees who worked at Trillian Management Consultants in late 2015. There were no other employees at TMC at the time. How would a company which had almost no employees and no record of work be able to secure work with Eskom? 

The history is well known. Eskom paid Trillian for work it never did on a contract that never existed. It supposedly had contracted as a partner to McKinsey, but as was later revealed, McKinsey itself did not have a contract with Trillian. 

A 2017 investigation undertaken by advocate Geoff Budlender SC into corruption allegations involving Trillian found that Angel and Wood signed a memorandum in December 2015 with McKinsey South Africa’s partners Vikas Sagar and Alex Weiss that outlined Trillian and McKinsey’s partnership on the Eskom work.

This demonstrates the extent to which Angel — an ICM director — was involved in Trillian, and the power he had to sign deals on behalf of the company. The Enablers report, published by Open Secrets in 2020, gave a comprehensive account of Trillian’s relationship with McKinsey.

The involvement of ICM in Trillian is significant. Goodson states that while Essa was the majority shareholder of Trillian, Angel was its CEO when the company was establishing itself and signed Goodson’s employment contract on behalf of Trillian. According to Goodson, Angel also referred to Essa as the “boss” whose instructions ICM would execute.

Goodson resigned from Trillian in March 2016 just five months after she joined the company. Trillian stated in 2017 that Goodson had resigned after a dispute over a larger share in the company’s profits. She is not the only CEO within the Trillian group of companies to make allegations against ICM. Mosilo Mothepu, the CEO of Trillian Financial Advisory, told Parliament’s Committee on Public Enterprises that the ICM directors ran Trillian’s operations. Notably, Mothepu said that ICM had registered Trillian as a company and opened its bank accounts. 

“They were essentially very operational in the running of Trillian as I said. They controlled the bank accounts, they made strategic decisions that made operational decisions. To our dismay, because we thought, no but we are exco, why is it that Mr Salim Essa, Eric Wood and the three Integrated Capital Partners make all the strategic and operational decisions at Trillian, while we are directors and essentially will bear the director risk? So this was a bone of contention for us,” Mothepu said.

Mothepu went on to say that the ICM directors received a retainer of R700,000 per month from Trillian and were allegedly promised a shareholding in the company. 

The report released by Parliament’s Committee on Public Enterprises on corruption allegations at Eskom found that Trillian was first established as a company by ICM. The Zondo Commission made similar findings. But for now, the ICM directors are facing little pressure to account for their role in State Capture.

While the directors’ close involvement in Trillian is the strongest showing of their link to the State Capture network, they have also featured in corruption allegations at state diamond mine Alexkor where Chipkin played a key role in the audacious events that were to transpire.

icm files

The Alexkor deal 

In the Northern Cape, there is a stretch of land known as Little Namaqualand. A portion of this land runs parallel to the Atlantic Ocean, past the mouth of the Orange River and stops just south of Port Nolloth. It is here where the Richtersveld community, the indigenous people of this land, lived for centuries until they were forcefully dispossessed after diamonds were found in the area in 1928. They had used the land for years, but in 1992, state-owned mining company Alexkor obtained the rights to mine the land for minerals, and the Richtersveld community became increasingly dispossessed.

In 2003, the Constitutional Court found that the Richtersveld community must be restituted and that they would have the exclusive right to own the land and use its resources — including its precious stones — to their benefit. Alexkor, the state and Richtersveld reached a settlement agreement in 2007 where Alexkor and the Richtersveld community agreed to establish a joint venture called the Pooling and Sharing Joint Venture (PSJV). According to the agreement, Alexkor would get a 51% stake and hold marine mining rights in the area, while the community would hold 49% and the land mining rights. 

Although the PSJV should have enabled the Richtersveld community to own what had been taken from it, the venture was captured just eight years after it had been formed.

In December 2014, a company called Scarlet Sky Investments 60 (SSI) was awarded a tender to market, sell and complete post-extraction processes on the diamonds mined by the PSJV. Up until it submitted an interest in the tender process, SSI had been a dormant shelf company, according to the Zondo Commission. It had no previous experience working in the mining or diamond industry, and it did not have the necessary licence, required by the Diamonds Act, to trade diamonds. 

According to the Zondo Commission, SSI had clear links to the Gupta network through its former majority owner Kuben Moodley. Moodley is a known Gupta associate. The Zondo Commission also found SSI’s minority shareholder, Daniel Nathan, may have links to the Gupta family. The affidavit of Zondo Commission investigator Peter Bishop shows that Nathan’s company, Knox, was used to store safety deposit boxes for Moodley and another Gupta lieutenant, Anoj Singh. 

In 2019, the Zondo Commission seized the safety deposit boxes, believing there were reasonable grounds that they were used to deposit “cash bribes” from the Guptas’ network. Singh later admitted to having the safety deposit boxes, but denied they were used to store Gupta funds. Nathan’s lawyer, Michael North, did respond to questions at the time of publishing. However, Nathan submitted an affidavit to the Zondo Commission, distancing SSI from State Capture links. 

Significantly, Bishop’s affidavit also details how ICM played an important role in SSI’s operations. Bishop lists ICM as one of the entities involved in the scheme to exploit the PSJV. According to Bishop, ICM was responsible for managing SSI’s administration and finances. ICM director Marc Chipkin had a notable job as SSI’s corporate adviser.

When SSI expressed interest in the PSJV tender, they wrote that Chipkin would be responsible for all correspondence in relation to the tender. However Nathan, in an affidavit to the Zondo Commission, denied that SSI had any close ties to ICM, saying that the company was only an “arms-length service provider” in the tender submission process. 

At the time, Selwyn Nathan, Daniel Nathan’s father and a former member of the ICM board, committed to the PSJV that ICM would secure a R50-million funding guarantee once SSI won the bid. Mervyn Carstens, the CEO of the PSJV, had demanded the funding guarantee on the award of the tender. The role of Selwyn Nathan and Chipkin in SSI demonstrates how closely ICM worked with SSI to secure its irregular contract with the PSJV. 

Carstens also had numerous interactions with ICM directors between 2014 and 2017. Bishop’s affidavit revealed several telephone calls Carstens had with Chipkin, Angel, Shane and Selwyn Nathan in this period. The nature of the calls is not identified in the affidavit, but they show that a relationship existed between the PSJV and the ICM directors. 

While SSI’s deal with the PSJV has become overshadowed by bigger State Capture schemes, it is serious enough that the Zondo Commission recommended law enforcement agencies investigate Daniel Nathan and others at SSI for possible violations of the Diamonds Act.

According to the Zondo Commission’s final report, SSI may have violated the Diamonds Act by trading diamonds without the required licence. It is also accused of failing to account for 196.15 carats of diamonds worth R5.1-million in its register. 

The commission stated that SSI may have underpaid the PSJV by R1.7-million in relation to the sale of some of its diamonds. Daniel Nathan denied any wrongdoing in an affidavit to the commission, supplying documents to challenge the alleged irregularities. However, the commission found that Nathan’s affidavit failed to adequately address all allegations made against SSI and recommended that he and others be investigated. In the meantime, the Special Investigating Unit has been investigating allegations of corruption at Alexkor since December 2021.

While the Zondo Commission made recommendations against SSI, it made no recommendation to law enforcement agencies to investigate ICM. According to commission investigator Peter Bishop, ICM helped to administer SSI and manage its finances. Chipkin was SSI’s corporate adviser.

It is highly unlikely that ICM’s directors were unaware that SSI did not meet the standards to be awarded the PSJV tender, but nonetheless, they aided SSI’s bid for the tender.

ICM has been largely at the periphery of State Capture scandals, but its presence looms large in the institutions that orchestrated and benefited from State Capture crimes. This was most apparent in ICM’s involvement in a scheme to launder funds out of Transnet.

The Transnet cash

Our first article in this series showed how ICM benefited from the proceeds of crime at Transnet. In November 2015, ICM’s bank account reflected notable payments: R9.3-million had been paid to ICM from a company known as Green Blossom. The Zondo Commission found it was a money laundering scheme. 

In 2014, China North Rail’s (CNR’s) South African consortium was contracted by Transnet to provide 232 diesel locomotives as part of the corrupt 1,064 locomotives deal. A year after the contract was concluded, a decision was taken to relocate CNR’s manufacturing plant from Pretoria to Durban. Another manufacturing plant, BT, was also to be relocated. 

The costs of the proposed relocation became inexplicably inflated when a shelf company, BEX, contracted with the CNR consortium to evaluate the relocation expenses. While the original cost was estimated to be R9-million, the consortium proposed in February 2015 that at least R100-million would be needed for the move to be executed. 

Once BEX came on board, the estimated cost rose to R580-million excluding VAT. In total, Transnet ended up paying R647-million on the contract. An egregious revelation was made after news of the relocation deal broke: there was no relocation. Mncedisi Ndlovu & Sedumedi Attorneys (MNS) investigated the relocation contract in 2019 and found no evidence of a “relocation”.

“Our view is that the use of the word ‘relocation’ is a misnomer in the context of the 1,064 locomotives transaction. Put differently, we have found there was no relocation of either BT or CNR,” MNS’s report read.

BEX pocketed R76-million from the deal in September 2015, and would then go on to launder this money through various companies. R9.3-million reached ICM’s account in November 2015. As shown in our first article in this series, ICM then made a series of payments between November 2015 and March 2016 that would connect several companies linked to ICM’s directors to money laundered from Transnet.

ICM’s own directors were referenced in payments the company made shortly after it received the R9.3-million transfer from BEX.

Importantly, ICM also helped Essa to register BEX in 2009 and Shane played a key role in his senior positions on the Transnet and Transnet Second Defined Benefit Fund boards to enable State Capture. As shown in our previous article, it is unclear whether Shane declared his interest in ICM’s benefits from the relocation deal to his board at Transnet.

Although ICM was mentioned at several important moments of capture, the Zondo Commission made only one finding against ICM in its report in relation to the Transnet-BEX deal. The commission recommended that ICM and its directors be investigated and possibly prosecuted for violations of the Prevention and Combating of Corrupt Activities Act and the Prevention of Organised Crime Act.

Significantly, a criminal complaint has already been lodged against BEX with the Hawks. The Zondo Commission confirmed that by 2017, non-executive directors of the CNR consortium had opened a case against BEX over the irregular R76-million it was paid. The commission stated that the Hawks, however, had made no progress on the matter in the past five years. 

In addition to this, the Independent Regulatory Board for Auditors (Irba) confirmed to Open Secrets that it had sent a document of reportable auditing irregularities to the Financial Intelligence Centre and the Hawks for further investigation. 

In 2017, KPMG auditor Fred von Eckardstein reported CNR’s South African consortium to Irba after finding that it had misrepresented the cost of the relocation and that its agreement with BEX appeared to lack substance and purpose. Again, it appears the Hawks have done little to act on this information, which could shed further light on the complicity of private sector actors like BEX and ICM in State Capture crimes.

In bad company

The Gupta empire had many enablers. Smaller companies like ICM may be in the shadows of the larger State Capture crimes, but the impact they had is significant. From Transnet to the Richtersveld community and Eskom: ICM was there. Its directors were wheeling and dealing for Essa and others in the Gupta network and there has been no apparent effort from law enforcement agencies to bring them to book.

The Zondo Commission has already recommended that Shane, Chipkin and Angel must be investigated — and potentially prosecuted — for their role in State Capture. The Hawks and NPA must act on this recommendation to hold the ICM directors to account.

Much of the evidence against ICM is already available: the Zondo Commission has reams of paperwork showing the company’s complicity in State Capture crimes. The Hawks and NPA can easily access it to build a case against ICM’s directors. It has been nearly 10 years since BEX laundered R9.3-million to the company. It’s time to bring these corporate directors to the dock. DM

Open Secrets is a non-profit organisation which exposes and builds accountability for private-sector economic crimes through investigative research, advocacy and the law. To support our work visit Support Open Secrets.

 

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