Court finds grounds to believe funds used to buy Optimum mine were illegally obtained

The high court in Pretoria on Wednesday said the National Director of Public Prosecutions (NDPP) had established, at first glance, a case that there are reasonable grounds to believe that the Optimum Coal Mine (OCM) properties bought by a Gupta-owned company are the proceeds of unlawful activities.

The high court made this finding as it granted the NDPP an order to preserve all shares held in OCM, the business of OCM and all shares held in the Optimum Coal Terminal (OCT). Both OCM and OCT have been in business rescue since 2018.

The NDPP was also granted an order to preserve the claims held by Templar Capital Limited against OCM.

The NDPP had brought two applications and the court consolidated them into a single hearing.

The first application — regarding the application to preserve all shares held in OCM, the business of OCM and all shares in OCT — was opposed by business rescue practitioners.

On the application to preserve the claims held by Templar, Templar initially opposed the application, but later indicated it will abide by the decision of the court. This meant the second application became unopposed.

In its application, the NDPP explained in the founding affidavit that the assets targeted are the very assets that gave rise to the public protector’s findings in her October 2018 “State of Capture” report.

In that report, the public protector found irregular conduct by senior Eskom executives and senior state officials.

This conduct allegedly facilitated the acquisition by certain members of the Gupta family of the business of OCM through a transaction in terms of which a company known as Tegeta Exploration and Resources acquired all the shares and claims of Optimum Coal Holdings in OCM and OCT.

In its affidavit, the NDPP said South Africans came to learn, through the state capture commission, about the alleged widespread criminality that was linked to Tegeta’s acquisition of the OCM.

As a result of evidence pointing to the commission of multiple offences, the NDPP’s case is that there are reasonable grounds to believe that the property involved comprises the proceeds of crime or is the instrumentality of an offence and is thus liable to be preserved in terms of the Prevention of Organised Crime Act.

The full purchase price payable by Tegeta under the Optimum transaction was R2bn, which was paid into an escrow account held on behalf of the banks which had been financing OCM.

In its opposition, the business rescue practitioners said the NDPP had not established that the business was acquired from the proceeds of unlawful activities.

In their judgment, judges DS Fourie and Mandla Mbongwe said the property concerned in this application includes all of Tegeta’s shares in OCM and OCT as well as the business of OCM.

“There is sufficient evidence indicating that Tegeta obtained the funds to acquire these properties from several sources which were channelled through various transactions.

“Taking into account the evidence in this regard, as well as the undisputed objective facts, the NDPP has demonstrated that Tegeta obtained the funds to acquire the Optimum property through fraud, money laundering, corruption and theft,” the judges said.

They said in their view, the NDPP had established a prima facie case that there are reasonable grounds to believe that the properties concerned are the proceeds of unlawful activities.

The court also agreed with the preservation order proposed by the NDPP, which makes provision for the appointment of a curator bonis with certain powers and authority, subject to the business rescue practitioners of OCM retaining control of the business of OCM and to exercise all powers in respect of that business that they are lawfully vested in.

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