Gupta Watch

South Africa to remain Gupta milking cow

Milking masters
gupta brothers.jpg

The Guptas will probably keep on milking the South African economy and its taxpayers for years to come.

The structures and networks to do that, is coming into place as the ANC government is dragging its feet in setting-up the commission of enquiry into State Capture. Even parliament’s teeth are being pulled, preventing it from taking the first step towards preventative and restorative action.

The nature of the of the transactions, suddenly – maybe not so sudden behind the scenes – structured for selling the Gupta’s Oakbay Holdings’ media and coal mining companies last week, deserve closer scrutiny.

The financing of the deals, via vendor capital, initially captured the most attention. However, more importantly, it implies that the Guptas will be seeking ways to continue doing business in SA, despite not having local bank accounts.

In the process, the Gupta empire can side-step existing domestic regulatory regimes, requiring banks to do their bit in combating money laundering and other questionable business transactions.

And, it is not only President Jacob Zuma’s public image that will suffer in the process.

Listening to deputy-president Cyril Ramaphosa tip-toing his way around the issues surrounding the Gupta’s, their relationship to president Zuma, and state capture investigations, last week while facing question in parliament, there was a strong sense of the Gupta-contamination spreading.

Words of condemnation, promises of investigations, and ‘implied’ threats are just not good enough anymore. The people of South Africa are already losing billions. Firm, even drastic, action is what is now called for do damage control – it is already too late to avoid some damage.

Banking sector

Not every private sector institution is an angel by a long shot, but the South African banking sector has done their bit by largely severing their ties with the Gupta conglomerate.

The latest Gupta move – selling their SA businesses to largely shelf companies, via vendor financing – allow them to work their way around this problem.

It also allows them to secure new ways of doing business in the country and shifting the income to themselves, and probably taking it off shore.

And, if former ANC Member of Parliament and original whistle blower on Gupta state capture, Vytjie Mentor, is correct, there is some insult to injury waiting for the South African taxpayers.

According to a Facebook post by Mentor, at least one of these deals is financed by the Industrial Development Corporation (IDC) – a state owned financial institution.

The need for urgent action

Against this background, former Minister of Finance, Pravin Gordhan, rang alarm bells last week – calling for urgency with state capture probes.

“We should have our urgency fuelled by the successive disposals within 48 hours of South African (Gupta) assets,” he said.

Referring to some of the oddities of the deals, he added: “… something strange is going on,”  he said as parliament’s portfolio committee on public enterprises was meeting parliamentary functionaries to seek resources to continue with its probe into deals relating to three state enterprises, Eskom, Transnet and Denel, allegedly caught up in the Gupta state capture net.

It is now on close to a month that the committee’s investigation has been delayed because of the alleged lack of resources, like funds for a competent evidence leader.

Besides Mentor’s calls, and by Gordhan, ANC alliance partner, the South African Communist Party (SACP) in a statement reaffirmed its call for an independent judicial commission of inquiry into state capture.

The SACP also noted that under the deal structured for the sale of Gupta media entities, ANN7 TV and The New Age newspaper, “will fundamentally remain Gupta controlled.”

Bloomberg reported that Darias Jonker, an Africa analyst at risk advisory firm Eurasia Group, said: "I wouldn't be surprised that as these deals progress and we take a closer look, we find that there's been no real transfer of ownership."

The sale of Tegeta Exploration and Resources to a Swiss shell company, reportedly netting Oakbay R870m in a turnaround of less than 24 months, has even more ominous undertones, considering the involvement of first Eskom in the original purchase of the Optimum mine, and now the IDC’s rumoured involvement in financing the resale of the company.

In the meantime, in his reaction to the questions to him in parliament, deputy president Ramaphosa on the issue of the Guptas and state capture, again promised an independent commission of enquiry. He, however avoided details, on who will appoint whom, terms of reference, time frames, and the like.

With every week action is postponed, the danger of the South African economy and its taxpayers suffering further losses amounting to billions, are mounting.

International embarrassment

And, in the context of Gupta-gate, as it become known, and the issue of probable money laundering, another major international embarrassment for the country might be waiting just around the corner. The Guptas might for the first time be prosecuted in another country for potential crimes regarding money laundering originating in South Africa.

Historically, while used to cover-up other crimes, money laundering itself was not classified as a crime. By the mid-1980s this, however, changed dramatically. Now, in most countries globally, and under international law, money laundering is recognised as a crime.

Also read: Where the Gupta laundromat comes from?

Now the Democratic Alliance (DA) is planning to send an indictment to the United Kingdom (UK) accusing the family of money laundering. It allegedly happened when R30m, intended for a Free State dairy project, was diverted to pay for the wedding of a Gupta relative at Sun City in 2013.

The leaked #GuptaLeaks by Scorpio and amaBhungane revealed that a UAE registered Gupta company, with bank accounts with the UK’s Standard Charted Bank, was used to launder the money.

The UK has jurisdiction to investigate the matter because money laundering is a cross border international offense.

It could become a huge embarrassing situation if the UK should summon some of, or all, the Gupta brothers, who became South African citizens – with the assistance of a sped-up process – to appear in court there. UK authorities might even approach international institutions to assist to see justice is done by their book.

by Intelligence Bulletin Team

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