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Illustrative image | sources: Ajay and Atul Gupta. (Photos: Gallo Images / Business Day / Martin Rhodes) / Rawpixel
Evidence showing how Gupta family companies traded and laundered state funds from the Estina dairy project, as well as bribes from the Transnet locomotive deal, may be in the electronic vaults of more than a dozen New York banks. Now the IDC has received the keys.
- IDC gains crucial access to financial records related to the Gupta family in New York.
- The records are potentially a game changer for South African authorities, who have been trying to prove money laundering on a global scale.
- The Gupta family wants to commit that the records will only be used by the IDC in their litigation over a 2010 loan to buy Shiva Uranium.
In August, a Manhattan judge granted a secret court order granting the Industrial Development Corporation (IDC) access to Gupta’s financial records held at more than a dozen banks in New York.
The order allowed IDC attorneys in New York to name 17 banks that the Gupta family, its associates and several connected companies had used as part of the family’s global money machine to transact in dollars.
Payment systems work in such a way that Dubai-based transactions through the branches of the same banks could also be exposed.
The consequences of this order could be much broader than just giving the IDC the ammunition it needed to win its R287 million civil claim on a 2010 loan that it gave to the Gupta family to buy Shiva Uranium.
And the Gupta family knows it.
Through their flagship Oakbay, they are seeking to intervene in the Southern District of New York case, having learned of the order when the company and its Mauritius-based partner Action Investments were notified.
Oakbay wanted a commitment that the records obtained by the IDC would only be used in the ongoing litigation between the IDC and Oakbay in a higher court in South Africa, and furthermore that the records would be kept confidential.
The IDC did not object to the requested relief, according to court documents, but said it wanted the right to go to court in the future if it wanted to use the records elsewhere.
A conference call with Judge Katherine Polk Failla was scheduled for September 22 and the issues needed to be resolved.
But the subpoenas had already been served and, according to court documents, the IDC was requesting financial records, instructions, and bank transfer notes related to:
- Oakbay Energy and Resources
- Oakbay Investments
- Shiva Uranium
- Stock Investments
- Ajay gupta
- Atul gupta
- Rajesh gupta
- Investments in islands 180
- Gateway Ltd
- Loyalty companies
- Estina
- Accurate investments
- Unlimited electronics and computers
- Saranya Investments
Or in short, most of the Dubai and SA piggy banks from the Gupta empire.
For the Gupta family, the stakes were high: The records could put an end to their innocence protests about allegations of manipulation of the Oakbay share price list and allegations that the family made a round trip and laundered government funds from the Estina project and bribes from Transnet. to pay for the whole thing.
The IDC alleged in court documents that it had reason to believe that Estina’s laundered funds were used for stock price manipulation, but an amaBhungane investigation emanating from Gupta Leaks showed that the purchase of shares in Oakbay was financed by bribes. of Chinese railway manufacturers awarded the largest share of the multi-million dollar deal for Transnet 1064 locomotives.
amaBhungane and Scorpio #GuptaLeaks: The Trust Game: How Professionals Bypassed the Colossal Fraud at the Heart of Oakbay’s Listing
Way of war
The litigation between IDC and Oakbay had dragged on since 2017. Oakbay filed an exception in 2018, but the court ruled in favor of IDC in November 2018.
The IDC listed an unopposed motion to compel document discovery in October 2019 after Oakbay failed to file response affidavits in time, only for the IDC to drop the matter days later.
Fast forward to July 2020 and New York application.
“In the discovery in the South African proceeding, the IDC has reviewed documents detailing the unlawful conduct with respect to the allegations in the IDC claim, in part through the misuse of multiple international bank accounts,” the IDC stated in your notice of motion filed in the U.S.
The IDC explained that it had discovered that money was flowing freely between Estina’s accounts at the Bank of Baroda and the Standard Bank, money that the Free State government paid Estina for the Vrede Dairy Farm project.
READ | #GuptaLeaks: The Dubai Laundromat – How Millions Milked From The Free State Government Paid For Sun City Wedding
Oakbay Investments Limited (OIL), it told the court, had submitted an extract from its own Baroda account showing that, on September 25, 2013, it received two payments totaling approximately R31 million from the Dubai-based Gupta front. , Fidelity.
The fidelity was part of the money laundering machine that the Gupta family used to funnel funds back to South Africa from Dubai.
“OIL claims that it received payments from Fidelity related to an arm’s-length stock sale transaction with it. IDC believes that the funds evidenced in these two transfers flowed from Estina’s accounts, through Gateway and Fidelity, and ultimately to OIL’s account as part of a round-trip money laundering exercise, ”IDC said.
From the archives: amaBhungane and Scorpio #GuptaLeaks: The Dubai Laundromat – How Millions Milked From The Free State Government Paid For Sun City Wedding
Based on information and belief, Estina’s payments through UAE entities and ultimately to OIL were made in part in US dollars. The discovery indicates that at least one of those payments, made in March 2014, was through a bank in New York, “he added. Fidelity, IDC posited, used Mashreq Bank to send dollar money to OIL.
The net result of IDC submissions was that the registries could prove multiple securities fraud violations in both South Africa and the US.
“Given the abundance of evidence that South African defendants and those acting on their behalf routinely transacted in US dollars in settings where criminal activity has been credibly alleged, New York banks will likely disclose evidence today unaccounted for activities that would constitute further breaches of the Loan Restructuring Agreement and, in turn, justify IDC’s decision to terminate the agreement and seek redress in the South African court, ”IDC submitted.
For South African prosecutors, these records could prove to be an invaluable resource in bolstering their case against the Gupta family in the Estina affair and other investigations, if they could access them.
The state had tried, unsuccessfully, to prosecute the Estina case once before.
READ | Estina almost ready to go back to court, but state capture investigations remain at a standstill
“For obvious reasons, the defendants have not produced any incriminating documents,” the affidavit of IDC’s lead attorney, Nazeer Cassim, reads.
He added that the IDC would seek to cite more documents from South African banks, the JSE and the Bank of Baroda.
The IDC made a R250 million loan to Oakbay to buy Shiva Uranium in 2010, but when the loan payment matured and the Guptas were unable to pay, the loan was restructured.
The terms of the restructured deal were so favorable to the Gupta family that it prompted an expert to label it “commercially inexplicable”.
The Gupta family maintained their innocence and denied in court documents that they manipulated Oakbay’s share price.
Now it was up to the IDC to prove their allegations, and New York bank records could be the deciding factor. DM
