Eating the state capture elephant one bite at a time

Tuesday, March 29, 2022

The National Prosecuting Authority (NPA) made a significant breakthrough this week in the ongoing effort to end impunity for high-level corruption. The preservation orders in the Optimum Coal Mine case are a demonstration that the wheels of justice in relation to complex crime are starting to turn in meaningful ways.

The case also demonstrates the multifaceted nature of the NPA’s response to complex corruption matters, which includes civil processes to preserve assets with the ultimate aim being to bring back the money stolen and looted during the state capture years.

The Gauteng High Court granted preservation orders to the Asset Forfeiture Unit (AFU) of the NPA against those who, in 2016, were involved in “financing” the purchase of Optimum Coal Mine (OCM) for R2.1-billion by the Gupta-owned Tegeta Resources.

The preservation orders – issued in terms of section 38 (2) of the Prevention of Organised Crime Act (POCA) – effectively prevents any further steps to remove or dispose of the OCM assets, as they are now regarded as having been bought with the proceeds of criminal activity.

A curator has been appointed by the court to provide a proper valuation of OCM. The curator will also find a purchaser at fair value – which is good news for all the people who have been concerned about the fate of the mine, and the community in which it is situated.

A mammoth heist

The scale of the “heist” at OCM is unprecedented, as demonstrated by the size of the preservation orders; at least R3.4-billion. This is the largest preservation order in the history of the NPA.

The NPA developed a well-coordinated case strategy that was implemented by a team of expert prosecutors, who successfully brought two applications. The first pertains to all the Gupta-owned Tegeta shares in OCM and Optimum Coal Terminal, and the entire OCM business. The second pertains to a claim of R1.3-billion from Templar Capital Limited in relation to OCM.

In respect of the second application, Templar’s owner, Daniel McGowan, had stated under oath that the funds advanced to his company derived from “money stolen from the South African government”. The funds in question were advanced by Griffin Line -- a company nominally controlled by Ajay Gupta’s son, Kamal Singhala – and, in Mr McGowan’s words, “laundered via Mr Singhala on behalf of his father and wider family members”.

These funds were, in effect, part of the elaborate “washing machine” used by the Gupta family and their associates to launder billions of rands of money stolen from the people of South Africa, to fund the purchase of OCM.

Legitimising the proceeds of crime

The High Court rulings stop any further attempts to implement a so-called business rescue plan at OCM, which the NPA has long argued would effectively have legitimised the proceeds of crime.

Moreover, the OCM ruling is significant for a number of reasons:

The civil court orders clear the way for criminal proceedings against those involved in the various money-siphoning and money-laundering aspects of the Optimum deal.

It confirms the central role played by the Gupta family in structuring the various “loans” and transactions, through various business entities.

The names of Gupta-owned companies and associates litter our court documents, naming them as recipients of millions of rands stolen from the public purse, and misappropriated through front companies as “loans” and “advances”. These companies include well-known Gupta companies such as Sahara Computers, Islandsite Investments and the then-JSE listed Gupta flagship, Oakbay Investments.

It confirms the large-scale theft of public funds to build the Gupta empire – including the corruption and deception which took place at Eskom, where rules were broken to steal public funds by rushing through contracts, which would enable Tegeta to part-fund its purchase of Optimum Coal. It also confirms the misappropriation of pension money from the Transnet Defined Benefit Scheme, facilitated by Gupta facilitators such as Trillian and Regiments.

Finally, it demonstrates the effectiveness of the NPA’s Asset Forfeiture Unit (AFU), working with investigators in the Investigating Directorate (ID) from the DPCI, in applying the provisions of the POCA to deal with the proceeds of crime and corruption, whether through criminal or civil actions.

A well-coordinated approach

The rulings also demonstrate the coordinated approach of the NPA and the DPCI, and send a strong signal about the NPA’s growing capacity to deal with State Capture and ensure accountability for those involved, and to seize, recover and return the stolen money.

It is a first and meaningful step in asserting the NPA’s capacity to use all avenues at its disposal to ensure justice is delivered for the most complex crimes in our country. The next step is to obtain a forfeiture order which will allow the curator to sell the property to a legitimate buyer at the correct market value.

What’s next?

The matter has been handed to the NPA’s ID for further criminal investigation and prosecution.

Colleagues are already hard at work preparing case files against all implicated roleplayers, and will be building on the court orders this week to ensure that the case is effectively and fairly prosecuted.

A prosecution to hold accountable those responsible in this seminal case, will go a long way towards restoring confidence in the criminal justice system in SA, and will be a powerful demonstration to state capture looters, that crime in SA does not always pay.

*Advocate Ouma Rabaji-Rasethaba is Deputy National Director of Public Prosecutions: Asset Forfeiture Unit