Zondo commission now has a chance to follow the money

The Guptas remain elusive figures as the inquiry moves to uncover how state funds were moved and where they are now

16 September 2018 - 00:00 By RANJENI MUNUSAMY

There is a sweet spot where politics and the law entwine. Battles between the country's legal titans and wisdom from the bench that brings some level of rationality to the tangled mess of politics often prove to be uplifting for a scandal-fatigued nation.
In its initial phase, the state capture inquiry composed a caricature of the Gupta brothers at the heart of the state capture machinery. Witnesses testified about their interactions with the shadowy figures who allegedly controlled the levers of power during the Zuma administration.
The brothers have been mythical figures - their activities went from being exceptionally secretive to the stuff of super-villains. The audacity of what they allegedly pulled off is sometimes difficult to conceive.
Testimony by Mcebisi Jonas, Vytjie Mentor and Themba Maseko took us into the Gupta bubble of power and privilege. Trying to entice people with money and positions, bragging about their control over the president and threatening to destroy people's careers and even kill them brought the Guptas to life in a way hundreds of media reports were unable to.
The Guptas' application to cross-examine witnesses and their offer to testify via video link was in line with the special status they demanded and enjoyed in SA.
Their advocate, Mike Hellens SC, who also represents Jacob Zuma in his corruption trial and his son Duduzane in his culpable homicide case, tried to convince deputy chief justice Raymond Zondo that the Guptas should be allowed to give evidence from a remote location, perhaps their hideout in Dubai.
Hellens said the Hawks and National Prosecuting Authority were so prone to bungling - "recklessly incompetent" as he put it - that they would wrongfully arrest his clients if they returned to SA.
His argument was meant to evoke sympathy.
There is an element of performance art at the commission. Hellens has the flamboyance of a tango dancer, evidence leader Vincent Maleka SC has the elegance of a waltz. Maleka warned that the Guptas wanted "selective treatment of the law" and were trying to use the commission to clear their name while refusing to submit to its jurisdiction. He said cross-examination was the lever to get the Guptas to testify.
Though Zondo dismissed the Guptas' application on Thursday, saying there was no reason for special treatment, he left the door open. Ajay and Rajesh could be granted leave to cross-examine those who implicated them should they appear in person.
The judge also reeled in Zuma, inviting the former president to respond in an affidavit to testimony by Mentor and Maseko knitting him to the Guptas. Zuma had so far tried to maintain plausible deniability. A crucial test will be how the commission follows the money - not easy given that the Guptas established a laundering machinery to channel through companies, individuals and front operations, in some cases to avoid forex controls.
To track the flow of funds, the extensive Gupta ecosystem that spans SA, Dubai, India, the US, Hong Kong and Singapore needs to be mapped out.
In SA, Oakbay Investments was the main vehicle, with a number of subsidiaries including TNA Media, Westdawn Investments trading as JIC Mining Services, Tegeta Exploration & Resources, Oakbay Resources & Energy (with a controlling interest in Shiva Uranium), Sahara Computers, VR Laser Services and Infinity Media, the holding company of ANN7. Their operations are a financial jungle with concocted accounting and audits to conceal the routing of funds.
The Gupta e-mails and media investigations have cranked open the endemic money-laundering scheme and exposed some of the lucrative contracts that contributed to the family's largesse.
amaBhungane reported that Transnet was the ground zero of state capture. The R54bn purchase of 1,064 locomotives cost as much as the arms deal, with a lot less public outrage. The Guptas and their associates signed kickback agreements totalling R5.3bn with China South Rail, making roughly R10m on each locomotive. Their commission from two contracts was approximately R10bn and this was laundered back into SA using front companies.
Some of the money-laundering vehicles are obvious. Homix, a letterbox firm with no discernible operations, was used to channel funds from Neotel to The New Age. Trillian Holdings, owned by Gupta associate Salim Essa, was a major beneficiary of payments from Eskom and Transnet. There is evidence of heavy-duty corruption in the public protector's "State of Capture" report and investigation by Geoff Budlender SC, which led to Trillian Capital Partners chairman Tokyo Sexwale stepping down.
Tomorrow, SA's four major banks will appear to explain for the first time the closure of Gupta accounts. Between December 2015 and April 2016, FirstRand, Nedbank, Barclays Africa and Standard Bank closed the accounts of Gupta companies. The brothers tried to apply political pressure on the banks which backfired and exposed their dodgy transactions.
Former finance minister Pravin Gordhan sought a declaratory court order stating that he could not get involved. Along with the Gupta companies, he cited the four banks as well as the director of the Financial Intelligence Centre (FIC) as respondents.
In August 2016, former FIC director Murray Michell issued a certificate identifying 72 "suspicious" transactions worth R6.8bn. In December 2016, FirstRand said it had closed the Gupta accounts because of suspicion of money laundering.
But the banks have not disclosed details of Gupta transactions. It remains to be seen how forthcoming they will be and whether Zondo will use his powers to follow the money. Tracking the money flow is where the rubber hits the road for the inquiry. It has not yet delved into who was paid what by the Guptas or where the money siphoned from the state is now.
While the Guptas are evading the hot seat, Duduzane will soon be testifying. He served as director in 11 Gupta companies, and might be the first to have to disclose their business practices. What better way to assess his father's contention that state capture is merely a "politically decorated expression"?
• Munusamy is associate editor: analysis at Tiso Blackstar Group..

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