NPA hits back after Gupta win

First sight of new report reveals details of Estina 'fraud and money laundering'


The Guptas drew blood by striking a heavy blow against the NPA in the High Court in Bloemfontein on Friday, prosecutors have hit back by producing new evidence that seeks to prove the family siphoned R169-million from the Estina dairy project.
The NPA scaled up efforts against the Guptas in its ongoing war on state capture by seizing R1.7-billion in mine rehabilitation funds as part of the latest preservation order granted by the High Court in Pretoria last week.
The High Court in Bloemfontein on Friday dealt the Asset Forfeiture Unit a blow by rescinding R180-million of funds linked to Estina the AFU had previously secured preservation orders against in the same court.
But the Guptas are not going down without a fight.After their “victory” in Bloemfontein, lawyers for the family wrote to National Director of Public Prosecutions Shaun Abrahams demanding that the “sham” Estina case be dropped or NPA officials could expect to be held personally liable for the “seriously misconceived” prosecution.
The Guptas’ legal representatives have criticised the case against their clients, saying it was driven by ulterior motives and “reckless incompetence”.
The state believes it has the evidence it needs to prove its Estina case is watertight through an interim report produced by curator Eugene Nel, who was appointed to oversee the project’s affairs. The Sunday Times has seen the interim report.
Nel’s report shows Gupta involvement in alleged fraud and money-laundering totalling R169-million, paid from Estina to Dubai-based and Gupta-owned Gateway Limited. The report is expected to bolster claims of criminal activity previously made by the AFU in its court documents in support of the preservation orders.
In his report, Nel points out that Estina’s sole director, Kamal Vasram, opened three loan accounts with Bank of Baroda, and “funds that flow from the Estina Baroda account are taken to settle Kamal Vasram’s loan accounts”.
“What is meaningful is that the funds that Kamal Vasram borrows from Baroda is utilised to pay Oakbay Investments, Kamal Vasram and Aerohaven (sic).”
Nel reveals that Oakbay received R11-million in this manner, and Aerohaven R8.9-million. Vasram paid himself R9-million.
Nel says Vasram’s first loan account was “taken out on the same day as the funds start flowing from the department of agriculture to Estina, which is the 18th of April 2013. The very next day, payment of R5-million is made to Oakbay.
Nel argues that either Bank of Baroda must pay back the full R33-million identified in these transactions — or it must be repaid by Oakbay, Aerohaven and Vasram Nel’s report was not admitted as evidence, however, when the High Court in Bloemfontein delivered a scathing ruling on Friday — which the Guptas and their associates believe can be used as the basis to have the money-laundering case against them withdrawn.
BDK Attorneys, the law firm representing the Guptas, sent a strongly worded letter to Abrahams hours after the high court found that there was not sufficient evidence to justify freezing R220-million of Atul Gupta and other Gupta companies assets as the “proceeds of crime” linked to Estina.
The AFU had argued that Atul and Gupta companies had received millions intended for the empowerment of poor black farmers.
Atul has not been criminally charged for what the AFU contends was the Estina project “scam”; but his nephew, Varun Gupta‚ close associate Ashu Chawla‚ former Oakbay CEO Nazeem Howa and his successor Ronica Ragovan are all out on R100,000 bail in connection with the case.In the wake of Judge Fouche Jordaan’s ruling on Friday, they want the case dropped. Judge Jordaan noted that Bank of Baroda transactions involving the Estina dairy project account and Gupta-linked accounts may be “suspicious”, but he effectively found there was not adequate proof to show they were connected.
The judge also pointed out that Bank of Baroda had produced Estina project bank statements, which did not show any payments to Atul or Gupta companies.
It appeared that AFU investigators had relied on transactions conducted through Bank of Baroda’s Nedbank pool account — which served 800 clients — to make a case that Atul and various Gupta-owned companies had received Estina funds.
The Guptas’ lawyers have now argued that the state’s Estina case is “based on the same fundamental misunderstanding of the bank account of Estina (Pty) Ltd and the pool account of the Bank of Baroda”.
Further, they say, the purpose of their letter to Abrahams is to “advise” him that both the Directorate for Priority Crime Investigation — the Hawks — and the NPA have acted with “male fides (bad faith) in instituting this prosecution, with a wilful disregard for the constitutional rights of our clients and any basic notion of fairness and with reckless incompetence”.
“Our clients ought not to have been arrested, detained, compelled to apply for bail, released on bail and subjected to stringent bail conditions, in circumstances where the investigation in this matter was far from complete as is evidenced by the long postponement (of the Estina criminal trial) to August 17 2018.
“You are called upon forthwith to withdraw the charges against our clients so that they are released from the status of being under arrest ... and can go about their normal lives unhindered by being the subject of arrest and vilification in the public eye.”
In a last salvo, BDK Attorneys warns Abrahams that “those officials responsible for the unlawful arrest, detention and malicious prosecution of our clients will not be excluded or protected from personal liability for the wrongful acts perpetrated against our clients”.
The AFU on Thursday secured its third preservation order, granted by the High Court in Pretoria, this time in relation to nearly R1.75-billion in rehabilitation funds from the Gupta-owned Optimum and Koornfontein mines.
The funds are already frozen under an interim court order obtained by the Organisation Undoing Tax Abuse in September.
“We are seeking to complement the work done by Outa,” acting AFU head advocate Knorx Molelle explained, adding that the chief concern was with the announcement by the Bank of Baroda, which holds the funds, that it was exiting the country.'FRAUD AND/OR THEFT'
“The process initiated by Outa would only be finalised late in March, and the AFU’s process is an expedited way to ensure that these funds are ring-fenced.”
Baroda has announced its intention to shut its operations in South Africa. In court papers filed in response to Gupta entities challenging its decision, Bank of Baroda had stated it would transfer the funds to a trust account held by Tabacks Attorneys.
Molelle, in his affidavit in support of the application, relies heavily on financial analysis done on Baroda accounts by former public protector Thuli Madonsela and on evidence presented by Outa in its court bid.
He outlines the movement of funds out of and into Baroda accounts holding the rehabilitation funds.
Between June 22 and September 16 2016, months after the controversial sale of Optimum Coal Holdings from Glencore to the Guptas’ Tegeta Resources and Energy was finalised, 54 transactions were conducted through the account holding the rehab funds.
The funds are transferred to accounts controlled by the Gupta family and their companies, all held with Baroda.
Madonsela highlighted that the splitting of the funds into various accounts “significantly reduced the investment potential” thereof.
By law, the funds must be held in interest-bearing accounts, and the interest must be recapitalised into the same account.
By September 16, the account was left with only R293-million of the R1.6-billion it contained on June 22. These funds are still split into various accounts held with Baroda.
Molelle argues that the accessing of these funds contravened the Mineral and Petroleum Resources Development Act, the National Environmental Management Act, and the Income Tax Act.
These acts make clear the specific conditions under which mining rehabilitation funds may be accessed, and at all times with the express permission from the Department of Mineral Resources.
“The findings of investigations by the public protector clearly demonstrates that Tegeta used the Optimum and Koornfontein rehabilitation trust funds for purposes other than the intended purposes in contravention of the MPRDA, NEMA and the Income Tax Act,” Molelle states.
“The said funds were never ring-fenced for purposes of investment and capital growth as contemplated by NEMA. Instead they were used to fund cash flow of Tegeta’s operations as and when required.”
“Consequently, Tegeta and/or the trustees of the Optimum and Koornfontein Rehabilitation Trust Funds have committed fraud and/or theft.”

This article is reserved for Sunday Times subscribers.

A subscription gives you full digital access to all Sunday Times content.

Already subscribed? Simply sign in below.

Registered on the BusinessLIVE, Business Day or Financial Mail websites? Sign in with the same details.

Questions or problems? Email or call 0860 52 52 00.