How Guptas conspired to loot Eskom
'Front man bought auditing firm Nkonki'
A trail of leaked documents has exposed shocking details of how Gupta-linked company Trillian bought an auditing firm so it could loot Eskom with impunity.
E-mails and financial documents show how Trillian and its former owner, Salim Essa, allegedly used Mitesh Patel, a minority shareholder in the black-owned Nkonki auditing firm, as a front.
Nkonki had several contracts with state entities including Transnet and Eskom. After the buyout, it secured several new contracts with Eskom, whose board at the time included several Gupta supporters.
As part of the deal, dubbed Project Antwerp, Trillian paid R130m to buy Patel 81% of the shares in Nkonki in 2016, making him the majority shareholder.
Trillian's purchase of Nkonki was reported by amaBhungane last year. But now, a new tranche of documents leaked to the Sunday Times, which corroborate details of the sale, show how the Gupta family, their lieutenant Essa and Trillian hatched their plan to capture Eskom and other state enterprises.
The payment was made in three portions. In one e-mail, Essa asked his Trillian colleague Faheema Badat to tweak the Nkonki share purchase agreement to say that if all three payments were not made, the money already paid would be returnable.
"I don't want to have paid 87m and then some f**k up and lose my 87m and have no shares," he wrote.
The documentation shows that Patel tried to borrow the money from Centaur Ventures, a Bermuda-based company reportedly 50% owned by Gupta nephew-in-law Akash Garg Jahajgarhia. Two sources close to the deal said the Centaur loan was aborted because of exchange-control criteria, and that the money for the buyout came from Trillian.
The documents show that shortly before the sale, Trillian Financial Advisory (TFA) conducted due diligence of Nkonki.
Patel told amaBhungane last year that at first he did not know Trillian would provide the money to buy out his former partners, Sindi Zilwa and Mzi Nkonki, who started the company. He claimed he learnt of Trillian's involvement only in January 2017.
This week he reiterated his denial to the Sunday Times. But e-mails show Patel was in discussions with Trillian staff from September 2016 about Nkonki's clients, including Eskom.
Bank statements seen by the Sunday Times show payments were made to Nkonki's Intsikelelo Trust with Patel's name as a reference via Trillian's lawyers, Stein Scop Attorneys, between December 2016 and February 2017.
Mzi Nkonki, who said he was responding to questions of behalf of himself and his sister Zilwa, claimed they were not aware that Trillian was behind Patel's buyout.
He said they had encouraged the buyout because of Patel's ambition to own part of Nkonki and because it was part of their succession plan. Documents show that Zilwa received R76m in the sale and Nkonki R54m.
Nkonki also denied knowing about TFA's appointment before the buyout.
"Patel had full authority to engage any service provider … and did not require our permission to do so," said Nkonki.
However, e-mails show that Nkonki was in communication with Trillian employees as early as September 2016.
Bradley Scop, the lawyer who facilitated the payment, told the Sunday Times that all parties had from the beginning been fully aware that Trillian was buying Nkonki.
He said his company had been briefed by Trillian, which gave them a mandate from Nkonki and Patel to perform a due diligence investigation.
"Trillian funded Patel in buying out his partners. At no time was the relationship a secret. Agreements were prepared and commented on by both sides.
"We were not instructed that Nkonki was to be used as a state-capture vehicle for Eskom. We were not aware of any conflict."
Scop said the firm had made no attempts to hide Nkonki's relationship with Trillian or the work that Nkonki did.
He said it came to the firm's attention only later, when Trillian became the subject of media attention, that the Nkonki partners had purportedly tried to obscure their relationship.
"When Trillian was the subject of an ultimately aborted asset forfeiture, we co-operated with relevant authorities, disclosing all fees and transactions with Trillian. We will continue to do so."
Patel resigned last April after his involvement was exposed, and Nkonki soon became the next casualty of the Guptas' state capture. Soon after, auditor-general Kimi Makwetu said his office would end audit contracts with Nkonki.
Media reports on "matters arising from the shareholder transactions involving [Nkonki] were of grave concern and pose significant risk [to] the reputation of my office", Makwetu said at the time.
In the same month, Nkonki's main Sunninghill division went into voluntary liquidation.
Patel's lawyer, Rebecca Solomon, said on Friday: "Our client denies any involvement in allegations regarding state capture, the looting from state entities, fronting for any party and has not received monies in respect of these allegations."
Badat failed to answer detailed questions, including whether she had reported any red flags. She confirmed the Trillian Financial Advisory-Nkonki agreement and that TFA had performed due diligence.
She said Trillian was responsible for executing Project Antwerp and she had managed the team.