Gupta money-laundering suspicions mount

Experts believe unconventional payments by Gupta-owned Sahara Computers into unknown offshore accounts could point to money-laundering.

Information on the payments is contained in leaked e-mails linked to the Guptas, their associates and companies.

The data show that between February 2013 and September 2015 Sahara Computers, which at the time was the Gupta empire's flagship company, made 113 overseas payments totalling almost R552-million.

Experts say characteristics that could raise suspicions over money-laundering included that the payments were all rounded off and carried no detailed descriptions or invoice numbers.

In normal business practice, bank statements are expected to show business expenses and income.

Four of the payments were to the Bank of Baroda and 109 to the State Bank of India for transfer overseas.

A cash-flow analysis showed the amounts and payment frequencies increased over the two fiscal years, which could have tax implications. 

Werksmans Attorneys director and tax lawyer Ryan Killoran said the number of transactions and their value was unusual, indicating that they might not be loans but invoiced expenses.

"One has to ask, why so many related party loans; most companies do not operate this way?"

The payments to the banks, which were both dealers authorised by the SA Reserve Bank, were unlikely to be loans, he said. This was because the Reserve Bank would generally not allow, without approval, loans to be given to foreigners overseas, Killoran said.

Neither could the money have been interest payments because the figures were too round and infrequent.

This meant that the payments could either be in respect of invoices or the Guptas were making payments to themselves in another country. They are unlikely to be approved payments to immigrants. 

"Capital payments to emigrants from South African funds need tax clearance and are usually not so frequent. Back in 2014 and 2015 they [the Guptas] were definitely not emigrants.

"These payments look more like related-party invoices, where groups of companies would transact in rounded amounts," he said.

A payment of R2.6-million was made through Bank of Baroda in February 2013.

The other three payments were made in 2015: January (R7-million), September (R5-million) and December (R5-million).

The biggest transaction through the State Bank of India was for R4.5-million in 2013.

In 2014 the largest transaction was R20-million and in 2015 it was R67-million.

The highest number of transactions was in 2015.

According to sources with in-depth financial sector knowledge, Sahara Computers' bank at the time should have "theoretically" flagged these transactions with the Financial Intelligence Centre.

Killoran said the lack of descriptions on the transactions was concerning and could indicate possible tax avoidance.

He said that all reserve bank authorised dealers were required to know the details of the transfers, and that SARS was entitled to obtain this information from the Reserve Bank. The flagging to the FIC by South Africa’s banks over the loans transfers would have occurred if the descriptions were vague.

Between December 2015 and April 2016, South Africa’s four major banks - Standard, FNB, Absa and Nedbank - closed the accounts of companies controlled by the Guptas.

In court papers, filed in former Finance Minister Pravin Gordhan’s matter against Oakbay Investments, the banks revealed that they had feared that money laundering was taking place.

Gordhan wanted the court to rule on whether he could have intervened between the banks and its clients. The court is yet to hand down judgment.

The FIC had also flagged 72 transactions worth R6.8bn because "there had been no apparent business or lawful purpose" for them.