Three months after putting up fierce resistance to a deal with the Guptas, the Industrial Development Corporation (IDC) has signed off on a settlement totalling R366-million. 

In doing this, the IDC appears to have satisfied earlier concerns it had about the source of funds to be used for payment or its obligations under the Financial Intelligence Centre Act (FICA). 

A draft settlement signed by both sides was submitted to the high court last week and made final on Wednesday, 13 September 2023.  

The deal provides for an unfamiliar company, Africa Gulf International Mining (AGIM), to put up the R366-million settlement figure.

This covers the balance of a 2010 loan the IDC dispensed to help the Gupta family’s acquisition of Shiva Uranium, the interest and legal fees.  

AGIM must pay the IDC via a direct deposit within 30 days of Wednesday’s court order. 

The entire arrangement is pursuant to AGIM’s own unspecified commercial agreement with the Gupta-owned Oakbay Resources which owns Shiva. 

Court papers do not provide any details about the company, but a cursory check of electronic company records shows it was registered in South Africa a year ago and lists only one current director, a 29-year-old by the name of Helmi Tatakani.

Read the IDC’s statement here

The Gupta brothers, two of whom are regarded as fugitives from justice by law enforcement in South Africa, have been under international financial sanctions since 2019 and their companies were stripped of banking facilities amid the State Capture storm as far back as 2016/17. 

This initially triggered jitters about precisely how they would mobilise the cash to settle the IDC civil claim, or that law enforcement investigating the Guptas may set its sights on the cash once it lands in the IDC’s Absa account. 

Daily Maverick first revealed details of plans for the settlement in June 2023 when the IDC was dead set on subjecting the Gupta-owned Oakbay and the then unnamed third-party funder to its own stringent FIC onboarding checks in terms of South Africa’s anti-money laundering laws. 

The Gupta companies resisted such checks, arguing that Oakbay ought to have been subjected to the IDC’s FIC checks previously. 

While the court order is silent on this issue, Daily Maverick understands that that checks were done in the end, the extent thereof is not known.

But is the cash kosher? An earlier undertaking by Oakbay director Ronica Ragavan.

Lawyer for the Gupta companies, Pieter van der Merwe, previously told Daily Maverick they had given assurances that the money to be used to pay the IDC was not the proceeds of crime. 

Said Van Der Merwe at the time: “Our client already confirmed that funds, to be utilised to pay the IDC, are not proceeds of crime and will, subject to normal confidentiality principles, be able to be audited as being lawfully acquired.

“Our client tendered full transparency in verifying the source of funding and that it is not proceeds of crime, obviously subject to confidentiality.”

He said the IDC was misguided in its initial belief that the Gupta companies, defendants in the matter, should complete its FICA forms before accepting payment. 

“We reiterate that the source of funding can be validated and that we will divulge same to the IDC’s own Compliance Department.

“There is a difference between validating the source of funding from a defendant (the Gupta companies) and FICA requirements for new clients. 

“It should further not be lost out of sight that the IDC is a shareholder in our client, being a previously listed company, and that the IDC has already, when it became a shareholder in our client, conducted thorough FICA verification processes. Any refusal in accepting payment, which the IDC itself claims, therefore raises serious questions pertaining to the IDC’s bona fides where it is in any event already in receipt of all FICA documentation, unless it is the IDC’s case that they have not done any FICA verification processes previously?”

Risky business

A crucial concern previously raised was that cash, once paid over to the IDC, was at risk of being seized by law enforcement due to several unrelated investigations involving Gupta companies. 

However, the five-page court order specifically provides the IDC with a guarantee against various eventualities that may risk it losing its money. 

A clause in the agreement indemnifies the IDC against damages it may suffer against, among other things, “any cause whatsoever, including, but not limited to, any findings, directives, instructions that may affect the settlement payment”.

Should law enforcement take an interest in the money being paid on Oakbay’s behalf through this settlement with the IDC, the Gupta companies will likely already be fired up for a big-guns battle, one that is likely to stretch beyond the limitations of the National Prosecuting Authority (NPA). 

While most of the Gupta companies crashed or were caught up in business rescue amid the State Capture storm that engulfed them, Oakbay Resources and Oakbay Investments have remained firmly under control of the Guptas.

This is through Ronica Ragavan, a long-time Gupta enterprise executive.

Ragavan, acquitted in the NPA’s doomed Nulane prosecution, was arrested on charges of fraud and money laundering and contravention of laws relating to the R1.7-billion heist of a mining rehabilitation fund in May 2022.

The Guptas, through Oakbay, own Shiva Uranium, a high-value asset at the centre of the fight against the IDC. Any shares previously acquired by the IDC through the debt-conversion deal will now be returned. 

It is likely that the Gupta companies will next try to wrest control of Shiva from the business rescue practitioners who were tasked with the management thereof after it was placed into voluntary rescue in 2018. 

This freshly inked deal marks the end of nearly six years of litigation between the parties and will settle all litigation between the IDC and the affected Gupta companies.

This includes the IDC’s application to liquidate Shiva Uranium. 

The IDC filed its lawsuit in 2017 against the previously listed Oakbay Resources, the Gupta family’s flagship company, Oakbay Investments Limited, Shiva Uranium and the now defunct Action Investments, registered in Mauritius, over nonpayment of the balance of the R250-million loan it issued in 2010. 

It also sought to reverse a questionable arrangement struck in 2014 through which the debt was restructured with the IDC then acquiring a stake in Shiva.  

The IDC later took its fight for repayment all the way to a US court where it secured an order to access records from 17 New York banks for paperwork linked to the three Gupta brothers, their associates and various companies in their stable. 

Daily Maverick previously reported that the Guptas had twice averted the liquidation of Oakbay by settling debts of R2-million and R3.8-million, respectively, at the 11th hour. 

Any successful liquidation of Oakbay, a blind spot for criminal investigators pursuing the Guptas, would place the company in independent hands.

This could help plug massive holes in overall efforts to bring the Guptas to book in South Africa. DM

IDC vs the Guptas: A recap

• April 2010: The IDC grants the Gupta enterprise R250-million to buy what would later become known as Shiva Uranium;
• June 2014: Due to nonpayment the loan is restructured into a debt-to-equity deal, giving the IDC a small stake in Shiva;
• October 2016: In an unrelated move, Gupta bank accounts are terminated, leading to litigation in which former finance minister Pravin Gordhan reveals R6.8-billion in suspicious Gupta transactions reported to the Financial Intelligence Centre;
• November 2017: The IDC launches a lawsuit to set aside the 2014 loan-restructuring agreement and to recover the rest of its money with interest;
• August 2020: US court allows the IDC access to records from 17 New York banks as part of its civil case against the Gupta companies in South Africa;
• April 2023: South Africa fails in its bid to extradite two Gupta brothers from the United Arab Emirates and two weeks later their company, Oakbay, makes an offer to settle the IDC claim; and
• September 2023: The parties reach a settlement. (Compiled by Jessica Bezuidenhout)