Gupta machinations suspected in sale of Optimum mine

The National Prosecuting Authority’s court action over Optimum Coal Mine (OCM) this week appears to reveal a pattern of money laundering between Gupta associates that implicates the mine’s prospective new owners.   

The state’s court application for a preservation order on OCM comes three months before the mine was due to be transferred to Daniel McGowan, the owner of Bermuda-based company Templar Capital, which holds R1.3bn in claims against OCM. McGowan had persuaded business rescue practitioners and other creditors to convert the debt to equity and allow him to operate the business. 

This was set to happen by March 28, the deadline for the business rescue process, but it now hangs in the balance. 

While it is known McGowan was a partner of Gupta in-law and Sun City wedding groom Akash Garg in Centaur Ventures Ltd (CVL), it is links with Gupta lieutenant Salim Essa through financial dealings with Trillian that the NPA says could indicate that he participated in money laundering.

McGowan denied the NPA’s claims this week, saying he has already sunk R350m into OCM to resume operations. 

In his supporting affidavit in the preservation application, Investigating Directorate chief financial investigator Sibusiso Tshikovhe says the Guptas relied on laundered money to buy the mine from Glencore.

Tshikovhe has based his work on researcher Paul Holden’s study of the movement of stolen state capture funds, as well as reams of banks statements and an affidavit of former Trillian CFO Tebogo Leballo. It has enabled the NPA to uncover the movement of hundreds of millions of rands stolen through state capture and laundered through what appear to be legitimate transactions.

One alleged example is a R313m “loan” payment Trillian received from McGowan’s Centaur Mining that Leballo said was described as an “upfront engagement fee” after Trillian Advisory was appointed by Centaur to raise capital.

I’m confident that the NPA will be paying us damages at the end of the day

—  Daniel McGowan

“When challenged by Leballo on why a company looking to raise capital was in a position to pay R350m upfront, Essa changed his story repeatedly, first claiming they were advance payments to Trillian in relation to an acquisition, then claiming the payments were a loan to him to invest in Trillian, and finally accepting the payments could be treated in the books of Trillian as a loan from Centaur Mining,” Tshikovhe said. 

At Essa’s instruction Leballo transferred R266m of the money out of Trillian’s account  to a Sahara Computers subsidiary, Cutting Edge, and on to Sahara Computers’ Bank of Baroda account.  Sahara then moved R258m to Islandsite Investments, from where it was moved to Oakbay Investments and other companies.

The money almost corresponded to aggregate payments CVL made to Centaur Mining, most of which came from Gupta-owned Dubai-based Griffin Line Trading, controlled by Ajay Gupta’s son Kamal Singhala. 

In an affidavit before a Bermuda court, McGowan said the money Griffin Line paid to CVL was “stolen from the South African government and laundered via Singhala on behalf of his father and wider family members”, according to the NPA.

Tshikovhe’s affidavit also quotes an e-mail McGowan wrote to Essa in December 2016 in which he advises Essa to conclude certain loan agreements.  The NPA alleges these were designed retroactively to make money flows “originating with proceeds of crime offshore in Griffin Line, and then laundered through CVL, Centaur Mining, Trillian, Cutting Edge, Sahara, Islandsite and Oakbay into various operating companies of the South African Gupta group”, appear legitimate.  

But McGowan says the NPA took his e-mails out of context — they were simply discussing the need for a legitimate agreement after a verbal agreement was made to advance a loan to Trillian.

“The R313m could not have been part of money laundering because Centaur Mining advanced the monies as a loan to Trillian and Trillian repaid the loan (within six months). I am unsure how this could be classed as money laundering. I’m confident that the NPA will be paying us damages at the end of the day,” he said.

The repayment of the loan, however, provided the NPA with further instances of alleged laundering. Investigators traced money Trillian siphoned out of Eskom to amounts Trillian paid Centaur Mining in loan repayments.  

This money was, in turn, traced from Centaur to CVL,  and formed part of payments CVL made to Optimum under the guise of coal prepayments a week later. 

The money was part of R1.3bn CVL prepaid to OCM for coal, but the NPA isn’t convinced these were legitimate transactions either. 

“The NPA has reason to believe that the ‘contracts’ were not genuine coal contracts but rather money-laundering devices designed ‘to paper’ (McGowan’s phrase) transactions, the primary purpose of which was to introduce Gupta family proceeds of crime back into SA with a view to propping up Gupta family entities within SA,” Tshikovhe writes. 

The NPA has reason to believe that the ‘contracts’ were not genuine coal contracts but rather money-laundering devices

—  ID chief financial investigator Sibusiso Tshikovhe

“The Centaur payments to OCM were frequently transferred out of OCM and dissipated through a succession of Gupta family entities immediately upon their payment into OCM by Centaur pursuant to ‘contracts’ concluded by Garg,” the affidavit says.

“Almost without exception these payments were immediately transferred out of the OCM account and usually transferred through several other accounts before ending in the accounts of other Gupta family entities in SA or their creditors within a few days of the original CVL payment.”

Tshikovhe says hundreds of millions of rands from CVL payments were transferred within a matter of days to myriad Gupta companies, often “through several Gupta entity accounts on the same day”.

The NPA’s application now threatens the company’s business rescue plan, and with it the R200m in back pay and jobs of 540 employees, said National Union of Mineworkers branch secretary Richard Mguzulu.

“The deal we signed with him [McGowan] was that 20% would be paid within six months of him being granted the mining rights and becoming operational. Now this throws a spanner in the works, and we have taken a decision to march to the NPA office in protest next week,” said Mguzulu.