The National Prosecuting Authority (NPA) has moved to seal an extraordinary R500-million settlement with Daniel McGowan’s Templar Capital.

The deal will see Templar’s indirect subsidiary in South Africa, Liberty, pay for the forfeiture, part of which is earmarked for the Criminal Asset Recovery Fund.

It will also settle two forfeiture applications, one involving Optimum Coal Mine and Optimum Coal Terminal, and another in respect of a R1.3-billion creditor claim that allowed Liberty to acquire OCM from business rescue through a debt swap deal.

Details of the settlement emerged through an application by the NPA which seeks an expedited court hearing to secure two interlinked forfeiture orders flowing from the agreement with Templar.

Remarkably, the draft orders are borne out of an agreement that some of the cash used for the Gupta family’s purchase of Optimum in 2015 as well as a portion linked to a creditor claim that allowed Templar Capital’s indirect subsidiary, Liberty Coal, to acquire the business, are the undisputed proceeds of crime.

Read more in Daily Maverick: Part Five: How the Guptas used their loot

The agreement specifically states that neither Templar nor McGowan, its controlling director, were aware of the unlawfulness at the time.

It also states that the facts agreed to for the purpose of this settlement are not to be construed as an admission of guilt either in these proceedings or any other matter, McGowan states in a submitted affidavit.

Saving jobs

The settlement is both rational and proportionate, says the NPA’s Asset Forfeiture head, Juliana Galetlane Rabaji-Rasethaba, in an affidavit filed.

It is aimed at preserving the value of the mine and related assets and safeguarding hundreds, if not thousands of jobs, she says.

Drawn-out litigation would severely impact the mine’s prospects and ultimately, creditors.

The parties have recorded an agreement of undisputed facts relating to the proceeds of crime that inform the forfeiture settlement, which are:

• That the NPA has conceded that only an aggregated R960-million of the Optimum purchase price can be accepted as being the proceeds of crime. Templar is not disputing this, although it says it had no knowledge thereof at the time.
• In respect of the Templar creditor claim, an aggregated R255-million has been agreed to as being the undisputed proceeds of crime. Again, Templar says that it had no knowledge thereof.

Proportional forfeiture calculated on the above amounts is R461-million in respect of Optimum Coal and R19-million for Templar.

In the Optimum case, money deemed to be the proceeds of crime is listed as Eskom’s R660-million prepayment used towards the Gupta purchase of Optimum as well as Bank of Baroda fixed deposits that were held by Trillian Capital Management and Albatime, and which were used as security for loans towards it.

Templar has agreed to a forfeiture based on this portion, but not to a second category of funds that originated from a Gupta-linked company in the UAE, Griffin Line Trading.

While deemed – on a balance of probabilities – to have been the proceeds of crime too, this part cannot be resolved without a trial.

Rabaji-Rasethaba says the NPA is significantly hampered by outstanding evidence it had hoped to procure through foreign mutual legal assistance from the UAE.

It is opting for the forfeiture settlement because this process has been slow and is by no means certain and delays would severely impact the value of the preserved assets.

An end to litigation

The Gupta family’s most prized asset in South Africa, Optimum Coal Mine (OCM) and Optimum Coal Terminal (OCT), have been the subject of forfeiture applications by the NPA.

The NPA obtained a preservation order for the Gupta shares in Tegeta Exploration and Resources – owner of Optimum until Liberty acquired it through a debt-to-equity deal with business rescuers – in May last year.

This was pending the outcome of the forfeiture application.

In a second case, the NPA attached a R1.3-billion Templar’s creditor claim that allowed for Liberty to buy the mine out of business rescue.

The settlement informing the intended forfeiture orders is aimed at ending both sets of litigation.

Further monies provided for in the agreement are for the NPA’s associated legal costs (R20-million in total across the two cases) and fees and disbursements due to the current and former curators of the estate.

As the NPA’s agreement with Templar accepts that an aggregated R960-million of money used towards the Gupta purchase of Optimum were the undisputed proceeds of crime, the NPA concedes it would not be proportionate to seek the forfeiture of Optimum in its entirety.

As such, Templar has agreed to a forfeiture of R416-million, representing just over 43% of the current value of just over R1-billion (a curator’s valuation filed at court).

Of this, R100-million is to be paid to an independent administrator for distribution to qualifying creditors immediately upon a forfeiture order being issued by the high court, while the balance of R361-million will be released to the administrator in deferred monthly payments of R14.5-million, also for the benefit of creditors.

The deal specifically excludes claims based on shareholder loans and various companies in the Gupta stable.

Court papers list those as Confident Concept, Shiva Uranium, Westdawn Investments, Blackedge Exploration, VR Laser, Gateway Trading, OCT and Griffin Line.

It is not immediately clear who the eligible creditors are and whether, or how, it would cover Eskom which has a substantial claim against Optimum.

Rabaji-Rasethaba, in setting out the rationale for the NPA’s settlement, said the magnitude and complexity of issues to be traversed would likely see the case run for several years.

This is because even when it’s done, there may be appeals to the Supreme Court of Appeal and the Constitutional Court, which would ultimately impact the timing of any final forfeiture order, papers state.

The settlement, Rabaji-Rasethaba says, allows for a speedy resolution that would realise the full value of the Optimum assets before they are further dissipated or lost for reasons beyond the control of any of the parties involved.

If not done, the already dilapidated condition of Optimum would deteriorate further, which would make it impossible to find a buyer willing to make a roughly R2-billion investment to bring the mine back to operation.

The deal will likely see the lifting of a suspension of Optimum’s slots at the Richards Bay Coal Terminal (RBCT) to allow for the resumption of coal exports – without which the companies cannot be economically viable.

Ulrich Bester, director of Liberty Coal, also in an affidavit filed, says the forfeiture agreement was done for commercial reasons aimed at saving the business and protecting creditor claims.

Richards Bay coal terminal access

The real value of the assets sits in Optimum Coal Terminal which has, as its only asset, an export allocation at Richards Bay.

The export of, typically, higher grade coal via these slots is vital to the profitability of Optimum Coal Mine and its continued existence, says Bester.

In addition, it is vital to the livelihood of employees and contractors.  Since business rescue commenced in February 2018, there have been significant job losses that have impacted employees and contractors.

The situation has been compounded, in part, by the drastic decline in operations due to the NPA’s forfeiture applications as it triggered the RBCT suspension.

The business has languished and suffered large-scale vandalism and opportunistic theft as rescue dragged on, Bester says.

Templar pitched the debt-conversion deal in 2019 after a liquidation threat. It did this on the back of a creditor claim acquired, via a cession, from Centaur Ventures Limited (CVL).

McGowan, the controlling director of Templar and Liberty, was previously a co-director of CVL along with Akash Garg, the Gupta son-in-law whose Sun City wedding caused a national outcry in 2013.

CVL was among various entities that channelled money towards the Guptas’ 2015 purchase of Optimum.

Templar’s creditor claim is affected by the proposed forfeiture deal because of pre-payments linked to an Eskom contract with Trillian.

The R19-million to be forfeited to the Criminal Asset Recovery Fund represents roughly 12% of aggregated “undisputed proceeds of crime” linked to pre-payments that underpinned its creditor claim.

Bester says Liberty has already coughed up R300-million in shareholder contributions to RBTC to preserve this valuable entitlement while litigation over a suspension of the slots played out over the past year.

This included a R36.9-million payment to avoid a final termination of the slots due to arrears in late December. Monthly payments of R14-million to RBTC also continue.

A legal bid by Gupta Inc’s Ronica Ragavan to intervene in the matter on behalf of Tegeta was crushed in December 2023. An appeal against that ruling is set down for early February 2023. DM