A scandal involving the BoB’s South Africa operations, a cabal of businessmen of Indian origin, and South African President Jacob Zuma, has undermined the reputation of India’s second largest bank and resulted in an unprecedented penalty by the South African Reserve Bank.

• This article was first published in the Hindustan Times.

In June 2017, an anodyne footnote to the Bank of Baroda’s (BoB) quarterly results mentioned a fine levied by the South African Reserve Bank (SARB), headquartered in Pretoria.

The sum — R11-million — was insignificant for an institution the size of BoB. No further details were given; the penalty passed unnoticed in India.

But in South Africa, the SARB’s actions suggested BoB’s involvement in the “State Capture” scandal: an avalanche of allegations that President Jacob Zuma was under the sway of three brothers from Saharanpur, Uttar Pradesh — Ajay, Atul, and Rajesh Gupta, collectively known as “The Guptas”.

As the scandal continues to unfold, BoB’s role as the Gupta family’s banker of choice for their most controversial deals, has attracted increasing attention from South African regulators, investigators and the press.

A joint investigation of thousands of pages of court documents, bank records, SARB records, internal Gupta company correspondence, and interviews with bank officials, by Hindustan Times, South Africa’s amaBhungane Centre for Investigative Journalism, Finance Uncovered and the Daily Maverick’s Scorpio unit, reveals a laundry list of potential violations, and a seeming disregard for banking ethics and regulations by BoB executives.

An example: As early as 2010, BoB financed the purchase of a luxurious house that was bought in the name of President Jacob Zuma’s fourth wife, but paid for by the Guptas through BoB accounts operated by secretive trusts.

And as late as November 2016, an investigation into the Guptas’ controversial purchase of a coal mine by the South Africa’s Public Protector, a constitutional public ombudsman, found that “the conduct of the Bank of Baroda appears highly suspicious” in the bank’s role in underwriting the deal.

BoB stood by the Guptas as four major South African banks shut their bank accounts in 2016 on the grounds that anti-money laundering laws made it too risky to do business with the family.

While BoB executives say they began to “exit” their relationship with the Guptas in July 2016, the bank sent out account termination notices a full year later in July 2017.

The Guptas took the bank to court.

At the time of going to press, BoB was stuck with the accounts of at least 35 Gupta companies according to the most recent court disclosures.

What follows is an inside account of how a culture of wilful blindness in BoB’s South Africa operations exposed India’s second largest bank to a damaging investigation in a foreign jurisdiction.

Bank executives sought personal favours from the Guptas and enjoyed their hospitality, emails show, while the family used BoB accounts to funnel millions through an international network of secretive companies and trusts.

Personal favours aside, the systemic shortcomings identified by the SARB audit lead back to BoB’s compliance department in Mumbai, raising questions about the bank’s operations in India and across the world.

South African investigators now are probing if the money in these accounts included kickbacks for prominent South African politicians for awarding dodgy government contracts to the Guptas.

In October 2017, the Financial Times reported that American authorities had begun probing the Gupta family as some of these transactions were in US dollars, raising questions of how much BoB knew, and what action, if any, the bank took?

Today, as the Indian government prepares to pump Rs 88,100 crore into the country’s ailing public sector banks, of which BoB will get Rs 5,307 crore, the bank’s actions in South Africa offer a sobering glimpse of how some of India’s biggest banks may be doing business.

When Hindustan Times sent BoB a detailed questionnaire, the bank arranged two interviews with CEO PS Jayakumar, only to cancel both meetings without explanation at the last minute. BoB has not responded to repeated requests for comment on the events described below.

Hindustan Times also wrote to the Gupta brothers, their family lawyer, and the South African High Commission in India, but did not receive a response.

A House for Mrs Zuma

On June 29, 2010, Bank of Baroda signed off on a mortgage of R3.84-million for a residential property in Waterkloof Ridge, a leafy suburban neighbourhood with some of the most expensive real estate in Pretoria.

The loan, mortgage documents reviewed by Hindustan Times reveal, was to be repaid in monthly instalments of R79 715.

It was unusual for BoB to offer this home loan in South Africa, as the bank did not offer retail banking services and its primary products in the country were fixed deposits, trade credit and overdraft facilities.

Stranger still was that the loan was granted to Sinqumo Trust, whose primary trustee was Bongekile Gloria Ngema Zuma, the fourth wife of Jacob Zuma, the President of South Africa.

Sinqumo’s other trustee was Duduzane Zuma, President Zuma’s son from a previous marriage. “Sinqumo”, is the name of President Zuma’s son with Ngema Zuma.

The documentation included a declaration by Ngema Zuma, under South Africa’s Financial Intelligence Centre Act of 2001, that the loan was to finance the purchase of the house, and the money used to repay the loan was her own.

Yet transaction details and emails reviewed by Hindustan Times suggest that the loan was repaid by the Guptas by routing regular payments to Sinqumo’s BoB accounts via an entity called Mabengela Investments, a company controlled by Duduzane Zuma and Rajesh “Tony” Gupta.

An email by Ugeshni Naidu, an accounts officer for the Guptas, shows how this worked: In a mail dated February 8 2012, Naidu lists a cascading array of transactions in which a large sum of money is moved between three Gupta fronts before R65 000 is transferred to Mabengela, and then from Mabengela to Sinqumo’s BoB current account, and from the current account to the BoB’s mortgage account.

Hindustan Times found 17 such emails, including one in September 2013, in which a lump-sum of R535 000 was transferred from Mabengela to Sinqumo.

These transactions correspond to what money laundering experts call ‘structuring’, where large sums are broken into smaller transactions to evade detection, ‘layering’, in which the money moves through multiple companies to remove links to its source, and ‘integration’, where layered funds are gathered in a seemingly innocuous investment – like buying a house.

“By this stage it is practically impossible to trace the funds to its originator or illicit origins except as ‘disproportionate assets’,” said M Nanda Kumar, a London-based anti-money laundering specialist, who declined to comment on specific Gupta transactions.

BoB internal documentation, viewed by Hindustan Times, lists Sinqumo as a Gupta affiliated entity, indicating that the bank knew the Guptas, the Zumas, and Sinqumo Trust were connected, and of the complications this posed, yet went ahead with the loan anyway.

Indian, South African, and international banking laws require banks to identify Politically Exposed Persons (PEPs) like Ngeme Zuma — and flag suspicious transactions within 15 days.

BoB labelled Sinqumo Trust as PEP only in 2015, five years after giving the loan.

“A loan to a President’s wife, in a foreign country, serviced by a private company, is an immediate red flag,” said Hemindra Hazarika, an independent banking analyst, “As an Indian, government-owned bank, Bank of Baroda should not have touched this loan.”

A former BoB official put it more bluntly: “Imagine a purchase of a house for the wife of a prominent Indian politician, involving Chinese businessmen and a loan from a Chinese state-owned bank,” the official said.

“How would that look?”

The purchase of Mrs Zuma’s house is not the only controversial Gupta deal underwritten by Bank of Baroda.

The bank underwrote progressively riskier Gupta deals until it caught the attention of South African regulators.

Indians with a Business Plan

Bank of Baroda’s Africa connections date back to 1953, when the bank opened its first foreign branches in Mombasa and Kampala to cater to traders from the Gujarati diaspora.

The bank opened shop in South Africa in 1997 in Durban, another diaspora hub, followed by Johannesburg in 2007.

Ajay, Atul and Rajesh Gupta moved from Saharanpur, Uttar Pradesh, to South Africa in the mid 1990s, and opened their first South African BoB account in 2005, court documents show.

Over two decades starting in the 1990s, the brothers used their business acumen and political connections to build an empire spanning everything from computer peripherals to uranium mining, and lucrative government contracts.

“Our international operations go where the Indian diaspora goes,” said a BoB executive seeking anonymity, “So when the Guptas came to us, we just saw them as Indians with a business plan.”

Over the next decade, the client-banker relationship would deepen to the point where senior bank executives tasked with monitoring Gupta accounts were instead asking for personal favours from their riskiest client.

Visas, Internships, Hotel Rooms

On January 30, 2013, Ashu Chawla, a key Gupta aide, sent an email to Jack Monedi, Chief Director of Permits at South Africa’s Department of Home Affairs, requesting him to expedite the renewal of the work permit of Ramesh Salian, a senior manager at the Johannesburg Branch, who oversaw the Gupta loan accounts.

The trailing mails contained a long-running correspondence between Salian, from his official BoB email address, and Monedi’s department, regarding a waiver of certain technical requirements for Salian’s visa.

Chawla’s mail to Monedi was direct: 

“Dear Sir,
As discussed, I request you to sign the below waiver tomorrow. Thanks
Ashu”

Salian got the waiver on February 22, 2013, and a new work permit, signed by Monedi, soon after.

Two years later, in July 2014, Salian sent another email from his official BoB email account to the Guptas — this time to get a study permit for his daughter to pursue a degree in South Africa.

Salian wasn’t the only BoB official requesting Gupta favours.

On February 17, 2014, Salian’s superior, Sanjiv Gupta, wrote a one-line mail from a personal Yahoo account to Chawla, “Please find enclosed herewith CV of my son for internship at T systems from 15.05.2014 to 15.07.2014.”

Chawla forwarded the email right away to his boss Rajesh “Tony” Gupta, saying “This is the CV I received for BoB Chief Manager son; please advise how to go further.”

On February 26, Sanjiv, the BoB manager wrote to Evan Tak, a Gupta employee, saying, “Archit Gupta will be available for internship from 15th May to 15th July. He plans to travel from 10th May to 19th July.”

Tak wrote back a week later with a return ticket on Emirates in Archit’s name: Delhi to Johannesburg on May 10, 2014, with a return two months later on July 19, 2014.

BoB’s chief executive for South Africa, Murari Lal Sharma’s name appears in a hotel bill for at Taj Palace Hotel in New Delhi, dated July 24, 2015, for two nights in Room 872 as a guest of Rajesh Gupta.

Other guests on the same bill include Duduzane Zuma — President Zuma’s son, and co-owner of the house that BoB provided the mortgage for.

Murari Lal Sharma, is now a General Manager at BoB’s corporate office in Mumbai, where he heads the asset recovery division.

If these allegations were proved true, Hazari the analyst said, “It would appear that BoB’s senior management was asleep at the wheel, while executives at Johannesburg were complicit.”

Dodgy Deposits

The Guptas gradually came to account for a disproportionate share of BoB’s South Africa business, to the point that it posed a risk to the bank.

“When we go into a foreign country, we don’t do loans where only one party accounts for 40% of our book,” said another BoB executive, speaking off record. “We don’t involve ourselves with risky clients. We don’t do business we don’t understand.”

But in South Africa, it seems BoB did.

Email records suggest that the bank’s exposure to the Guptas was even higher than what was reflected on the books.

In 2011-12, BoB offered a R16-million loan overdraft facility to Everest Global Metals, a company controlled by Piyoosh Goyal – an Indian businessman accused by the CBI of allegedly bribing a senior State Bank of India executive to enhance a 250-core loan facility in November 2013.

A CBI spokesperson said a chargesheet has since been filed.

Everest Global Metals is not a known Gupta company; BoB court documents listing all Gupta-related accounts held by the bank make no mention of Everest.

Yet, much like Zuma’s house, the Guptas made the monthly interest payments on Everest’s BoB loan.

Emails reveal BoB would send Everest a monthly statement on the loan, which Everest would forward to the Guptas.

The money would then be wired from JIC — a Gupta company — to Everest, who would settle accounts with the BoB.

This circular lending, three bankers interviewed by HT said, is a not uncommon, but illegal, practice to surreptitiously give new loans to a favoured client who already owes the bank too much money.

“You want to give someone a loan, but you can’t because you are already over-exposed to them,” said a risk officer with a European bank who asked not to be identified. “So, you give the loan to a front company instead.”

In this case, the fronting was so transparent that when Everest missed a payment on November 13 2012, Salian, the BoB manager, wrote directly to Ronica Ragavan, a director of several Gupta companies, to say, “Good Day, we are yet to receive credit for interest charged on M/S Everest Global Pty Ltd for the month of October 12.”

Politically Exposed Bank

On December 9, 2015, President Jacob Zuma fired his well-regarded finance minister Nhlanhla Nene.

The move spooked investors and prompted intense speculation that Nene had been removed at the behest of the Guptas. The media outcry was so intense that even the normally placid BoB was moved to act.

On December 13, BoB senior manager in Johannesburg, Gurbax Singh sent a note to his superiors recommending that 35 accounts held by the Guptas and Gupta affiliated companies at the Johannesburg branch be designated “Politically Exposed Person” accounts “which pose a high money laundering risk to the bank because of their position of influence.”

Included in the list was Sinqumo Trust, the entity used by the President’s wife to buy her house, and Mabengala Investments, the company used by Tony Gupta and Duduzane Zuma to pay for the house.

“Banks must conduct extra scrutiny of PEP accounts as laundering risk is high,” said a retired official of the Reserve Bank of India, questioning why the bank didn’t flag the accounts as politically exposed earlier, when they knew the President’s family was involved.

“Why did they wait till 2015?”

Sanjiv Gupta, the chief executive who had asked the Guptas for an internship for his son, signed off on the note, saying the accounts could be kept open on the condition of “enhanced due diligence” and that “transactions must be monitored.”

BoB opened eight fresh accounts for the Guptas from January to May 2016.

Meanwhile, South Africa’s biggest banks severed their ties with the family citing money laundering concerns.

On June 1, 2016, Standard Chartered Bank faxed a letter to the Guptas’ lawyers explaining they were shutting accounts as continuing business with the family would expose them to “an unacceptable level” of risk of prosecution under local and international anti-corruption laws.

A year would pass before BoB’s head of international banking would formally write to the Guptas to terminate their account on July 1, 2017.

By then BoB had already concluded its most controversial deal, which would lead to an audit and penalty from South Africa’s Reserve Bank.

Optimum Coal Mine

Like the mortgage for Mrs Zuma’s house, the first question haunting the Guptas’ controversial purchase of the Optimum coal mine is why such a complex deal was structured by BoB’s tiny, understaffed office of 16 employees rather than its South African competitors with many thousand employees on their rolls.

In 2015, Optimum Coal Holdings (OCH) — a subsidiary of global mining and commodity giant, Glencore – was bankrupt.

The company was saddled with millions of rand worth of debt, and a looming penalty from its principal customer, Eskom – South Africa’s state-run electricity utility.

In September that year, the Guptas offered to buy the company. On December 10, 2015, Glencore agreed to sell for R2.15-billion.

Bankruptcy resolution professional Piers Marsden said the deal was concluded on the understanding that the Guptas had the money to buy OCH.

“We were given a letter of comfort from their bankers that they did have the funds available to conclude the transaction,” Marsden said in a sworn testimony to Parliament.

“We relied on that letter for concluding the transaction.”

But on April 11, 2016, 10 days after BoB’s letter of comfort expired, Nazeem Howa, a Gupta aide, approached Marsden to say the Guptas were R586-million short of the agreed price and asked if OCH’s lender consortium would finance the shortfall to ensure the deal went through.

The consortium declined, but the Guptas mysteriously stumped up the cash in three days and bought Optimum.

It later emerged that Eskom, the electricity utility, had given the Guptas the same amount of money – R586-million — as a pre-payment for future sales of coal.

The Guptas used the money to conclude the sale.

The revelation that South Africa’s state-owned electricity utility had part-financed a Gupta takeover of OCH resulted in a public scandal, and an investigation into the acquisition.

In a parliamentary inquiry into the deal, South African lawmakers expressed bewilderment about the credibility of the BoB’s letter of comfort.

“The Bank of Baroda says we’ve got 2.15 to pay over for the transaction, am I right?” asked Pravin Gordhan, a former finance minister who had clashed with the Guptas.

“But just prior to that 585 was the missing amount out of the 2.15.”

Misappropriated Funds

When the Guptas bought OCH, they also became custodians of two mine-rehabilitation trusts called Optimum and Koornfontein, collectively worth R1.75-billion, that they deposited in BoB accounts.

Under South African law, the money in mine-rehabiliation trusts is meant to ameliorate the environmental impacts of mining, and cannot be used by the mining company for commercial purposes.

But the Guptas wanted to get at the money locked away in these trusts, so BoB found a way.

BoB documents indicate that in June 2016, the bank used R170-million deposited in the Koornfontein Rehabilitation Trust as collateral to give the Guptas a R150-million loan.

This was a threat to both the bank and the environment.

“If indeed the mine used the Rehab Trust fund as collateral for a business or bank loan, and the mine went into liquidation or bankruptcy, then the bank would attach the rehab fund,” said Stephanie Fick, head of legal affairs for Organisation Undoing Tax Abuse, a South African NGO.

“The public will be without the funds required to rehabilitate the environment.”

Alternately, if the bank was legally prevented from seizing the rehabilitation fund, it would not have been able to recover the loan.

“If indeed the BoB were ignorant of the prevailing laws I imagine this would be of great concern to amongst others the shareholders of BoB,” Fick said.

Audit Woes

“As a bank, you never want to be audited by a regulator,” said an anti-money laundering investigator, seeking anonymity as he works with banks and auditors. “Once they go in, they are always going to find something.”

In BoB’s case, the SARB found that the bank’s Financial Crime Risk Manager (FCRM) system, software that automatically flags suspicious transactions, was incorrectly configured.

BoB’s FCRM, the audit noted, was run out of a data-centre in India, suggesting the BoB might be struggling to adequately monitor transactions in India as well.

Auditors also found that BoB had not “applied sufficient scrutiny/ care while processing transactions involving loans and fund transfers among entities within the same group” – which accounted for a lion’s share of the bank’s business with the Guptas.

The SARB’s findings were backed up by BoB’s own auditors in the South Africa branch’s 2017 annual report.

“The bank did not maintain a complete record of business relationships,” the auditors wrote.

“Furthermore, documents subsequently submitted by the bank appeared inconsistent with those submitted for audit purposes, thereby raising suspicion.”

When BoB’s acting chief executive in South Africa Manoj Kumar Jha appeared before the South African high court for permission to close Gupta accounts, he noted that the SARB fine “is the most severe sanction that may be imposed before the imposition of a restriction or suspension of the bank’s business.”

Keeping Gupta accounts open, Jha continued, was not feasible as any compliance slip-ups in the future would have prohibitive consequences for the bank’s operations.

The SARB could impose a fresh penalty, Jha said, prompting investigations by every regulator the 26 countries where BoB operates.

“The adage that the currency of every bank is trust is absolutely true,” Jha said. “The international community will lose all trust in the bank.”

amaBhungane and Scorpio

Former Indian government minister and leading Congress Party politician Kapil Sibal has refused to explain a business deal with Worlds Window, a firm that apparently helped the South African Guptas to launder hundreds of millions around the world.

The suspicious money flows are explained in a new investigation by amaBhungane and Scorpio, based mainly on the #GuptaLeaks.

There is no evidence that Sibal was party to money laundering or corruption, but it is worth noting his refusal to explain a deal with Worlds Window, an Indian scrap metal and logistics conglomerate.

Sibal is also a top lawyer in India.

Between 2010 and 2015, hundreds of millions of rand flowed between companies linked to the Guptas and Worlds Window.

The money included Chinese kickbacks for Transnet crane and locomotive contracts. The transactions moved money between South Africa, China, UAE and India.

Many transactions appeared to lack commercial substance, although the source of the money was not always known.

Worlds Window was founded by Indian national Piyoosh Goyal.

After entering business with the Guptas in 2010, Goyal visited South Africa often. The Guptas also visited India.

In 2011, Gupta staff chartered flights to ferry the families of Sibal, Goyal and the Guptas between Delhi and Mumbai, for a Cricket World Cup match.

Sibal had been a government minister since 2004 and was, at that time, in charge of two portfolios: communications and information technology and human resource development. He was also a member of parliament.

Sibal was joined by his wife and adult son Akhil, also a lawyer.

Sibal senior said: “I have never had any dealings financial or otherwise with the Guptas. I have met Mr Gupta in Delhi only once when my friend Piyoosh Goyal invited me to watch the Cricket World Cup.

“We did not travel on the invitation of Mr Gupta nor am I aware of any charter by him. My wife, Akhil and I went on the invitation of Piyoosh. Even while watching the match we did not sit with Mr Gupta nor go to the ground with him.”

Akhil also said he did not know the Guptas had chartered the flight.

Later that year, the Guptas paid for Akhil and his wife to stay at the luxurious Queen Victoria Hotel at Cape Town’s V&A Waterfront over Christmas and New Year, the #GuptaLeaks show.

Akhil said: “I had requested Mr Goyal to help with arranging a car in Cape Town, and offered to pay the charges… I have known him for several years, and he is my client.”

The leaks show Goyal passed the request on to Gupta staffers, who arranged the car.
Akhil said he tried to pay in full for the hotel accommodation.

But, he said: “At the time of checking out of the hotel in Cape Town, when we asked to settle the bill for incidental expenses at the hotel, apart from the room rate, which was already settled by us in advance, the hotel staff informed us that the incidentals had been settled at the instance of Mr Goyal.

“Subsequent to my return to India, I discovered the pre-paid charges for the accommodation were also reversed. None of this was done at my request. Despite my remonstrations with Mr Goyal, on his insistence, I accepted his generous gesture.”

The #GuptaLeaks show the Guptas’ company Sahara actually paid. Akhil said he had no knowledge of this.

In November 2013, India’s Central Bureau of Investigation (CBI) charged Goyal with allegedly bribing a senior state banker for a loan.

The CBI reports to a number of ministries, including law and justice. Kapil Sibal was law and justice minister from May 2013 to May 2014.

There is no evidence to suggest Sibal interfered in Goyal’s case. In fact, CBI told us that it filed a charge sheet with a Mumbai court in 2015.

The case is still outstanding.

Indian corporate records show that, in February 2017, Sibal became a director of Grande Castello. Until then, Grande Castello had been a 100% Worlds Window subsidiary. It appeared to be a shell company, without assets or revenues.

We asked Sibal to explain his directorship of “Worlds Window subsidiary Grande Castello”.

He was curt: “You don’t seem to have your facts right.”

We provided him with details from the corporate records and asked him which facts were incorrect.

He stonewalled again, saying: “I have never been a director of any subsidiary company of any company.”

We provided proof the corporate register listed him, not a different Kapil Sibal.

He did not respond.

On further investigation, we discovered that Worlds Window had transferred ownership of Grande Castello into Sibal’s name in November 2016.

We explained this to him asked him to explain in light of his previous responses. We also asked him to explain substantial new loans on Grande Castello’s balance sheet and name the lender.

He said: “From your last mail, it is apparent that your assertion regarding Grande Castello in your first mail was incorrect. You now abandon that position, assert a new fact, and still wrongfully accuse me of lying.

“Sans a relevant factual foundation, you nevertheless proceed from conjecture to wild speculation and deem it reasonable to ask unwarranted questions, entirely ignoring the categorical responses already provided to you, which sufficiently answer your queries.

“I am now convinced that your intent is mischievous and your approach less than objective. I don’t intend to correspond with you any further.”

• The amaBhungane Centre for Investigative Journalism is an independent non-profit. Be an amaB supporter to help it do more. Sign up for its newsletter to get more.
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amaBhungane and Scorpio

Britain’s biggest metal recycling firm holds a 49% stake in Indian firm Worlds Window, which moved hundreds of millions in kickbacks around the world for the Guptas.

The money flows are exposed in a new amaBhungane and Scorpio investigation, based in large part on the #GuptaLeaks.

The British firm, European Metal Recycling (EMR), is a Liverpool-based business. It says its “heritage” reaches back to the 1940s. It turns over more than £2-billion a year, and is largely owned and run by one family, the Sheppards.

EMR bought 49% of Worlds Window Impex India (the parent company) in 2008. EMR’s audited financials state that it “exercises significant influence over the operating and financial policies of” Worlds Window.

EMR has regularly injected capital into Worlds Window, EMR’s financials and other records show.

There is no evidence that EMR knowingly contributed to Worlds Window’s suspicious financial activity.

Between 2010 and 2015, Worlds Window directors and staff involved themselves in private bids for multibillion-rand crane and locomotive tenders at state-owned logistics company Transnet.

The Worlds Window directors and staff then worked with offshore shell companies, which received “agent fees” – structured like kickbacks – and helped to disperse the money around the world, including to businesses associated with the Gupta family in South Africa and abroad.

Together, the Guptas and Worlds Window also moved more millions in many suspicious transactions, according to our investigation. These transactions bore multiple hallmarks of money laundering, although the source of the money was not always known.

The Guptas are friends with president Jacob Zuma and kept Zuma’s son on their payroll. They have been accused of grand corruption here.

This week, the Asset Forfeiture Unit moved to seize R1.6-billion in assets linked to the Guptas and firms they did business with. It said it hoped to seize at least R50-billion in 17 related cases under investigation.

EMR responded to our initial questions. It said that before 2008, it had “a pretty long established trading relationship with Worlds Window who effectively acted as a sales agent into India”.

It said: “EMR is disturbed to hear press reports of the alleged involvement of Worlds Windows in money laundering, which we became aware of late last year through #GuptaLeaks. We are currently carefully looking at this investment as a consequence.”

We had asked EMR if it also had a business relationship with a number of offshore companies central to the laundering of Transnet kickbacks. These included JJ Trading, Century General Trading and IMR General Trading, all registered in UAE financial havens.

EMR’s response was confusing. It said: “EMR has no involvement with any of the companies mentioned, however a few companies have been counterparties in the legitimate trade of scrap metal.”

We asked it to explain, name its trading partners and provide evidence of legitimate business. It did not.

EMR spokeswoman Olivia Healey sent us a general response, referring to a statement in EMR’s audited financials in which it classifies Worlds Window companies as “associate undertakings” because EMR “exercises significant influence over the operating and financial policies of the company”.

She said this statement “misrepresents the reality of this situation”.

She continued: “When consolidating our accounts, we work on standard assumptions as follows: ‘An associate is an entity in which the group has significant influence, but not control, over the operating and financial policies of the entity. Significant influence is presumed to exist when the investor holds between 20% and 50% of the equity voting rights.’

The important word in here is presumed. So, for the purpose of accounting, Worlds Windows is presumed to fall into this category as we have a significant minority interest.

“The reality of the situation is that [EMR] had no board representation and exercised no management control over the business. This financial investment was effectively managed by a post audit financial review which had not raised any red flags to date.

“So unfortunately we are simply unable to assist you any further with your enquiries.”

Among our questions, we had asked EMR whether it knew about or had influence over Worlds Window’s business relationship with the Guptas, the apparent laundering of kickbacks via JJ and Century General and whether it condoned other suspicious money flows, outlined in our investigation.

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• The amaBhungane Centre for Investigative Journalism is an independent non-profit. Be an amaB supporter to help it do more. Sign up for its newsletter to get more.

Transnet bought seven of the world’s most expensive port cranes because its Chinese state-owned supplier inflated the price to pay off the Guptas, a kickback contract shows.

Shanghai Zhenhua Heavy Industries (ZPMC) delivered the cranes to Durban container terminal in 2012 and 2013.

When Transnet awarded the contract in September 2011, the cranes were worth no more than $81-million (R570-million then), but ZPMC inflated the price to $92-million (R650-million then) to make room for “commissions and fees”.

This is according to an “agent agreement” between ZPMC and a Dubai company called JJ Trading (JJT).

JJT stood to take most of the crane price increase, plus an extra cut, altogether totalling $12-million (R84-million). In return, JJT would make sure ZPMC got its contract.

However, financial records in the #GuptaLeaks show that JJT was largely a cut-out for the Guptas, who got most of the JJT money.

The implication is that ZPMC paid bribes to the Guptas, who somehow influenced Transnet to give it the contract.

A crane expert described this as “the most expensive crane sale of its type ever recorded”. (The expert did not want to be named.)

This kickback contract adds to a mounting body of evidence that the Guptas were gatekeepers of Transnet contracts from which they extracted enormous tolls.

JJT styles itself as a scrap metal trader, but the #GuptaLeaks suggest it runs a brisk money laundering service.

Transnet said it was investigating.

China: ‘What corruption?’

This is the third Gupta-Transnet alleged kickback contract we have found. The others involved locomotive manufacturer China South Rail (CSR) and German software giant SAP.

Global firms SAP, KPMG, McKinsey and Bell Pottinger responded to the #GuptaLeaks by removing top executives and investigating. Bell Pottinger clients fled and it fell into business administration.

By stark contrast, the two state-owned Chinese firms, which are among the most seriously implicated, just shrugged off the allegations.

CRRC Corporation Limited, which absorbed CSR in 2015, ignored our questions.

After repeated emails and two preceding articles, ZPMC said: “What you intend to report relevant to ZPMC is untrue. We have no business or other relationship with the Guptas, your president Jacob Zuma or his family.”

It declined to explain its relationship with JJT but demanded that we retract our preceding articles.

The Gupta brothers Atul, Ajay and Tony are close to Zuma, bought a house for one of his wives and are in business with his son.

The Guptas have consistently declined to answer questions, but Atul did tell the BBC the #GuptaLeaks were fake.

Agents of ‘graft’

In late 2010, Transnet tendered to buy two ship-to-shore gantry cranes to move containers to and from ships at Durban container terminal.

Brian Molefe was Transnet’s chief executive officer from February 2011. Last week, he told us: “A lot of the shipping companies were at pains to tell us about the congestion at Durban port, and it was not possible to work with the cranes. They were very old. They were already breaking down, and there were huge delays, so the port needed new cranes.”

Meanwhile, a shadowy group of agents got to work on the tender behind the scenes.

A port insider with knowledge of Transnet’s crane deals alleged that the agents lobbied Transnet to change the crane specifications to suit certain bidders and to increase the number of cranes from two to seven.

The insider also alleged that the agents obtained and shared confidential documents, including port budgets, upcoming procurement plans and competing bidders’ proposals.

Such inside information could make or break competitors’ bids.

The #GuptaLeaks show that in December 2011, a senior Gupta manager emailed a person linked to JJT a confidential Transnet document outlining an upcoming crane tender.

The document metadata indicates that it was drafted by an employee in Transnet’s Office of the Chairperson and Group CEO. Then CEO Molefe told us he did not know how the Guptas got it.

‘Nothing to see here’

Transnet spokesperson Molatwane Likhethe said the company knew of nothing untoward: “A technical assessment indicated that the two 20-metre gauge rail cranes that the company initially planned to buy would not meet the weight requirements for the quay wall due to excessive wheel loads.

“The study revealed that the quay wall could only handle nine cranes of a lighter specification, two of which could only be purchased after the completion of the berth deepening project.”

So, Transnet cancelled the two-crane tender and issued a second one in 2011 for seven more expensive “tandem lift” ship-to-shore cranes.

But, the crane expert said: “The first two cranes Transnet planned to buy were dramatically lighter than the ones they ended up buying. Also, you can always add more wheels to disperse the weight and comply with individual wheel loads. Anyone that knows anything about cranes knows that.”

Transnet did not respond to follow-up questions.

Success fee

In June 2011, ZPMC marketing manager Aqwa Chen signed an “agent agreement” with an unidentified JJT representative.

It describes Transnet’s tender for the seven tandem-lift cranes and states that JJT “has agreed to assist [ZPMC] as an agent to facilitate in this bid”.

The contract describes an apparently innocent role for JJT.

JJT would “facilitate” and “handle” ZPMC’s bid “and other relevant matters”. It would communicate with Transnet on behalf of ZPMC and help the Chinese staff to understand South African laws, codes and customs. JJT would even send out invitation letters, make hotel reservations and arrange airport shuttles.

But, critically, ZPMC would only pay JJT on condition that Transnet gave it the contract.

Four months later, Transnet awarded the contract to ZPMC.

• Read the #GuptaLeaks documents here.

Ribbon cutting

There was much fanfare when ZPMC delivered the cranes in 2012 and 2013. Molefe and then public enterprises minister Malusi Gigaba attended the ceremony.

News reports said these were the first tandem-lift cranes to be installed in the southern hemisphere.

World Cargo News reported that no one outside of China used them, except for a Dubai port, which had by then adopted a different solution.

But the crane expert told us this was for a good reason: “Why did Transnet need the most expensive type of crane ZPMC makes when the Port of Los Angeles and the Port of Long Beach, which are premier high efficiency ports, don’t use it? Everyone knows they don’t work that well.”

They said that port logistics crews often battled to manage the double lift, so the efficiencies were seldom realised.

But, last week, Molefe told us: “We decided on the tandem-lift cranes of that size because the type of vessels that were calling into Durban were quite wide, and our cranes could not reach to the other side of the vessels. These new cranes can, and they can take two containers at a time instead of one.”

He said this would double the cranes’ efficiency.

Again, the crane expert disagreed: “Most cranes can do the double container lifts.” The tandem lift capability was not necessary for this.

Kickbacks

Ultimately, it is not clear if Transnet’s decision to buy expensive cranes from ZPMC made technical and economic sense, but if it did not make sense, as alleged, that is probably because ZPMC was paying off the Guptas.

We recently reported that JJT and related shell companies received about R1.5-billion in Transnet kickbacks.

CSR paid most of this. The first Gupta kickback contract we published showed that the payments were in return for the “agents” making sure Transnet gave CSR a locomotive contract. Most of this was paid on to Gupta-controlled companies in the United Arab Emirates.

From other JJT transfers, we identified about R55-million that ZPMC paid to the Guptas, through JJT, between 2011 and 2013.

Now that we have the ZPMC-JJT kickback contract, it is clear that ZPMC was in fact paying the Guptas to make sure it got the Transnet contract.

Together, the kickback contract and a related document explain that JJT was to be paid $12-million (R84-million then) – if ZPMC won the Transnet contract.

The documents explained that even though ZPMC “offered” to sell its cranes for $81-million, Transnet would pay an inflated price of $92-million, to make room for the “commissions”.

JJT would keep 85% of the increase plus 3% of the Transnet price – this all totals $12-million.

It is not clear who got the remaining 15% of the increase – $1.7-million.

We previously reported that during the tenures of Molefe and Anoj Singh, Transnet’s former chief financial officer, Transnet spent about R30-billion on contracts against which suppliers kicked back about R5.6-billion to the Guptas.

Meanwhile, the Guptas bankrolled Singh’s alleged girlfriend, hosted him in luxury in Dubai six or seven times, opened a secret offshore shell company for him and, the #GuptaLeaks suggest, gave him large amounts of cash.

Singh and Molefe said they were not bribed.

We have not traced anyone who admits to representing JJT.

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If you want to extract a hundred million or so from the state, dairy farms and coal contracts are the way to go.

But if you want to extract billions – as those involved in state capture do – then consulting contracts are highly effective.

After months of denials, Eskom finally admitted in July that it paid fees of R1.6-billion to consulting multinational McKinsey and Trillian Capital Partners, the local advisory firm until recently controlled by Gupta lieutenant Salim Essa.

That Eskom initially lied about making any payments to Trillian at all is an issue, but as our investigation shows, the problem is far bigger than that.

An interim report, commissioned by Eskom and produced by G9 Forensic, details how Eskom’s own legal advisers warned it not to enter into an agreement with McKinsey because the proposed revenue model might be illegal. They were ignored.

Leaked documents and emails also show how McKinsey and Trillian – the latter allegedly a key “state capture” player – planned how to extract up to R9.4-billion in fees from Eskom, including by consulting on nuclear.

For McKinsey, a firm with an $8.4-billion (R109-billion) a year reputation, its flirtation with Trillian could end up costing it dearly. It stands accused of having got into bed with a partner whose main role was to help secure stunningly lucrative contracts by dint of its political connectivity.

Corruption Watch this week said it was preparing a submission asking the US department of justice for an investigation into McKinsey’s conduct, “which on our reading is in gross contravention of the US Foreign Corrupt Practices Act”.

McKinsey said in a statement to us: “The fees we charged at Eskom are in line with similar projects we, and other firms, undertake in South Africa and elsewhere around the world. We are proud of our work at Eskom and stand fully behind the impact and value we delivered.”

Trillian said it “charged appropriate fees for all work done”. Trillian added it had not been formally notified about Eskom’s investigation but said all Trillian’s work was carried out by “appropriately qualified professionals which resulted in considerable savings for Eskom”, all of which was approved by an Eskom steering committee.

The R9.4-billion payday

In December 2015, representatives of McKinsey and the newly minted Trillian Capital Partners sat down to divide between the two firms R9.4-billion in consulting fees that they anticipated they could extract from Eskom over four years.

McKinsey had by then spent months negotiating a “no fee, at risk” contract with Eskom to implement a sweeping turnaround project.

There was no competitive bid; instead McKinsey had presented Eskom with a special offer: The turnaround project would be carried out 100% “at risk”, meaning McKinsey would get only a percentage of any upside it achieved for Eskom.

Or, as Eskom said in later press statements: “[I]f no benefits were derived for Eskom no payment would be made.”

McKinsey said in a written response: “A growing share of our work is undertaken ‘at risk’, meaning we are paid based on agreed performance improvements as a direct result of our work.”

It was a gamble for Eskom – if McKinsey could find savings or benefits it would be entitled to just over 10%. But with no limit set and the potential for manipulation, there was a risk that McKinsey’s fees could soon spiral out of control.

As part of Eskom’s “supplier development” requirements, McKinsey needed to ensure that 30% of the contract went to a local, black-owned firm. Enter Trillian.

During the first half of December, emails we have seen show, McKinsey and Trillian representatives had meetings and exchanged spreadsheets detailing how consulting fees from various Eskom projects under proposal would potentially be split.

Work in the primary energy division of Eskom, where coal is procured, was expected to be the most lucrative, with R1.7-billion in fees to be earned over four years. McKinsey was to receive 65%, while Trillian would take 35%.

The spreadsheet included consultancy work beyond the scope of the turnaround project and for which neither McKinsey nor Trillian had yet bid. Fees apparently on the highly contentious nuclear build programme, for instance, were chalked up at R300-million, with R210-million for McKinsey and R90-million for Trillian.

In total, McKinsey and Trillian projected they could extract R4.96-billion and R4.46-billion respectively – all from Eskom, a state-owned entity that recently told the energy regulator it desperately needed a tariff increase of 20% next year.

McKinsey and Trillian did not deny that these exchanges took place, but characterised the discussions as exploratory.

McKinsey’s version of events, often repeated in recent weeks, is that it initially planned to partner with Regiments Capital, another black-owned firm, but that when senior partner Eric Wood decided to split from Regiments to form Trillian, McKinsey “inherited” Trillian.

“Discussions on the possible division of revenue took place during the period of time when we trialled working with Trillian … There was no presumption on our part that we would get work beyond the scope of the [turnaround project],” McKinsey said, adding: “There may of course have been discussions about hypothetical potential future work.”

Trillian, likewise, told us in a written statement:

“It is incorrect that McKinsey and Trillian had identified or earmarked R9.4-billion of work. It is correct that McKinsey and Trillian had agreed to partner to do work for Eskom … and as such Trillian continued to explore possible opportunities.”

Although it is unlikely that Eskom was privy to this spreadsheet of spoils, inside Eskom, opposition to the turnaround project, for which a contract had yet to be signed, was growing.

It won’t cost you a cent

Government consulting contracts are so lucrative and so open to abuse that national Treasury issues practice notes warning departments and state-owned entities not to use consultants unless absolutely necessary, and capping hourly rates.

When the proposed contract for the turnaround project reached Eskom’s general manager of legal services, Advocate Neo Tsholanku, he baulked.

G9 Forensic recounts in its report: “[Tsholanku] was called in towards the end of negotiations to provide legal opinion on the remuneration model and the sole sourcing question; with a view to approving the SLA [service level agreement with McKinsey].

“He stated that he had on numerous occasions warned Edwin Mabelane and Prish Govender that the remuneration model was not consistent with law… Tsholanku confirmed that he did not approve the SLA, which was in essence a McKinsey drafted document.”

Govender, Eskom’s head of capital projects, and Mabelane, its acting head of procurement, led negotiations with McKinsey.

Unconvinced by Tsholanku’s opinion, Govender and Mabelane appear to have gone to Eskom’s external legal counsel. The opinion they got back “was also consistent with Eskom’s Legal Department’s view,” Tsholanku is reflected as telling G9 Forensic.

G9 Forensic recommends that Eskom’s board should answer whether it was “aware that the [service level agreement] drafted by McKinsey was heavily weighted in its [McKinsey’s] favour”.

The G9 report also states that Aziz Laher, Eskom’s group compliance manager and Public Finance Management Act expert, warned the same executives that the contract with McKinsey should not go ahead without national Treasury approval.

“He confirmed that he provided advice to Mr Edwin Mabelane, Mr Prish Govender and Mr Anoj Singh, either in emails or during formal and informal conversations that the [McKinsey] project could not or should not proceed without Treasury approval… In his opinion, irrespective of all of the ‘savings’ or positive impact … such would be nullified if … the expenditure would be deemed ‘irregular’.”

Eskom, it would seem, ignored Laher’s advice and only wrote to Treasury after the contract had been signed.

Eskom refused to comment on the contents of the G9 report, saying its investigations were ongoing. McKinsey said it was “not aware of the G9 investigation until it was completed”, but added that it offered to co-operate with other Eskom investigations.

Trillian, likewise, said G9 had never contacted it for comment and that as such it was sceptical about the veracity and integrity of the report.

McKinsey starts to worry

By January 2016, the contract between Eskom and McKinsey had been finalised.

For McKinsey this was a major coup. An internal McKinsey presentation from the time describes it as “the firm’s biggest at-risk contract”, with projected earnings of R3.6-billion over three years and with the number of McKinsey consultants on the ground increasing from 20 to 68 within the first year.

The contract was also not as risky as one might expect. A resolution presented to Eskom’s board tender committee in October 2015 had promised McKinsey a down payment of R475-million during the first six months of the project. McKinsey would also, according to its internal presentation, be entitled to claim back expenses.

Both McKinsey and Trillian say the down payment was ultimately not paid.

The contract appears also to have been heavily front-loaded in that McKinsey and Trillian were to receive most of the fees before the turnaround strategies were fully implemented and the benefits realised.

The contract was so good for McKinsey that internally the firm fretted that it would be exposed to reputational risk if the “[p]rogramme leaked to the media insinuating unfair placement with McKinsey, exorbitant fees, etc.”.

McKinsey told us in reply: “It is not true to assert that the contract was designed to benefit consultants – it was done on a ‘fees-at-risk’ basis designed to benefit the client… The fees we charged at Eskom are in line with similar projects we, and other firms, undertake in South Africa and elsewhere around the world.”

Meanwhile, McKinsey was also worried about Trillian, and internally warned that there was “[r]eputational risk through association with [Trillian]”. Its solution was to “[c]losely monitor public perception of our partner and in detail document contractual obligations and interactions”.

McKinsey could not sign a contract with Trillian until the latter passed a due diligence by McKinsey’s US headquarters.

At the time, Trillian was 60% owned by Salim Essa, who has become so intertwined with the Guptas that he is often referred to as “the fourth brother”. And Essa was likely to set off alarm bells as a politically exposed person in terms of the US Foreign Corrupt Practices Act.

McKinsey claimed in its response to us that Trillian did not disclose that Essa was a shareholder at any point during their six-month association, and that considering “operational and reputation risks … is standard, good practice”.

“We often assess possible risks from our client work or partnerships. When questions were raised about Trillian we undertook due diligence… Trillian failed our due diligence by, amongst other things, failing to provide information about who its shareholders were,” McKinsey said.

However, it seems unlikely that McKinsey senior partner Vikas Sagar, who was in charge of the Eskom project, was unaware of Essa’s involvement. The #GuptaLeaks includes emails between Essa and Sagar dating back to August 2014 in which Sagar, using his private email address, forwarded information from McKinsey analysts to Essa about uranium mines.

If McKinsey was truly ignorant of Trillian’s level of political connectivity, it is hard to imagine why McKinsey selected Trillian over other well-established and capable black-owned consulting firms that it initially identified in early drafts of its negotiations to share in the project – or why it raised the “reputational risk” of being associated with Trillian.

The same McKinsey document shows that McKinsey was so sceptical of Trillian’s ability to deliver that it proposed to “staff teams sufficiently to deliver out of our own steam”.

But while McKinsey doubted Trillian’s ability to deliver, Eskom pushed for Trillian’s stake to be increased to 50% of the contract, McKinsey’s internal presentation suggests.
(In the end, Eskom paid Trillian around 35% of the turnaround project fee.)

Trillian said it was “unaware of any role played by Eskom in negotiating Trillian’s fees with McKinsey”, while Eskom declined to comment.

As the project got under way in February 2016, McKinsey’s initial concerns appear to have given way to full-blown disdain.

At one point a McKinsey senior partner allegedly told Trillian that the general impression was that Trillian was merely there to receive 30% of the contract “in return for not much work”.

This was according to an internal complaint written by a Trillian executive and annexed to a report prepared by Advocate Geoff Budlender for Trillian.

In the same document, a senior Trillian executive accused McKinsey of treating Trillian like “an unwanted piece of baggage” that had come as part of the lucrative contract.
Whether Trillian was wanted or not soon became irrelevant.

By March 2016, McKinsey had dumped Trillian after it failed its US-run due diligence, and by June Eskom had cancelled the turnaround project completely.

For most companies this would be a major setback, but as we will show in Part 2 of our investigation, the cancelled contract would, as it turned out, deliver extraordinary returns.

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Suspended Eskom chief financial officer Anoj Singh allowed billions in public money to slip through his fingers and into the Guptas’ pockets while they paid him offshore, the #GuptaLeaks suggest.

We have identified around R30-billion in crane, train and other Transnet contracts against which Gupta companies stood to get about R5.6-billion in kickbacks.

These were all during Singh’s tenure at Transnet, alongside chief executive Brian Molefe, where the Gupta-friendly duo executed a spending plan worth hundreds of billions.

Meanwhile, the Guptas opened a shell company for Singh in a highly secretive United Arab Emirates (UAE) jurisdiction – just after Transnet kickbacks started rolling into their accounts.

The #GuptaLeaks contain glimpses of the Guptas paying someone who appears to be Singh hundreds of thousands in cash in Dubai.

They also show that the Guptas employed Singh’s alleged mistress and seemingly helped her to buy a house with a loan.

Meanwhile, the Guptas bankrolled six or seven luxury Dubai stays for Singh (and at least one for his alleged mistress), some of which coincided with key decisions he made in their favour.

When he moved from Transnet to Eskom in 2015, Singh’s conflicting interests – the Guptas’ versus South Africans’ – followed him and found expression in his actions there.

Eskom’s lenders recently demanded Singh’s removal, and he was suspended in July.

Both the opposition Democratic Alliance and the lobby group Organisation Undoing Tax Abuse have laid criminal charges against him for his actions at Eskom. Three Eskom-commissioned investigations and another by the National Treasury indicated he has a case to answer.

Did he look away on purpose? Did he get his hands dirty? The evidence suggests both, though Singh says he is clean.

He told us he would cooperate with law enforcement authorities, but at the time of writing they had not yet approached him.

If they ever do, he has a lot to explain.

“Just a soapie”

On July 19, this year, Singh presented Eskom’s financial results.

They were bad, and Eskom’s auditors provided a gruesome account of the company’s internal controls, which were so weak that the bean counters could not be sure which expenses were regular and which were not.

On the day, we asked Singh a few questions.

Why did the Guptas repeatedly host him in Dubai? Why did they pay many thousands for his massages there? Why did they pay him money offshore? Was he bribed?

The usually smooth-talking CFO leaned uncomfortably on the table as he spoke into the microphone.

“I can go on record to say I have not received a bribe of any sort or taken a bribe from anybody,” he said. “I think, as it relates to the gifts, I will be submitting a tell-all document, so let’s just wait for that, and we will see where that lands up.”

Seven weeks later, Singh has yet to produce the document.

But Singh was irritated.

In response to written questions, he said: “As you may remember, during the Eskom results presentation, speculative information was presented by a journalist to me in this very public platform, which had very little relevance to the substantive issues raised but was presented nonetheless in a very deliberate way designed to impugn my character and reputation in the court of public opinion.

“In this vein,” he said, “I [will] not participate in the soap­-opra-­fication (for lack of a better word) of my alleged role in alleged corruption in the companies that I’ve worked in.”

He said: “Issues of corruption are currently subject to forensic investigation. The [National Prosecuting Authority] and the Hawks have recently indicated that they are beginning an investigation into these matters, and I will cooperate with any law enforcement authority if required to do so.”

In a recent BBC Radio 4 interview, Gupta brother Atul denied wrongdoing. He said: “Let’s talk Gupta leaks; there is no authenticity of Gupta leaks at all. They are all everyday deception-mongering to drive their own agenda.”

The Gupta brothers and their associates have otherwise consistently declined to comment on detailed #GuptaLeaks allegations.

A servant of the people

Singh, now 44, is a qualified chartered accountant. He studied at the University of Durban-Westville (now University of KwaZulu-Natal) before working as an accountant in the Spar group. Later, he headed big accounts at the auditing firm Deloitte.

He joined Transnet in 2003 where he worked as a senior financial manager in the company’s biggest operating division, Transnet Freight Rail. He later moved into the Transnet group head office where, in 2009, he became acting CFO.

In an email to us, Singh, described the “pivotal role” he thought state-owned companies played in South Africa’s economic transformation. “Tens of millions of people rely on the services, which has a direct bearing on their quality of life, opportunities and economic prospects.

“This is why I chose a career in the public sector.”

People who know or have worked with Singh said he was charming, persuasive and fiendishly clever. One said he was “a frikken genius at fundraising”.

In a 2012 interview, CFO South Africa asked Singh what he was most proud of. He said: “My role as the CFO at Transnet. We recently launched a R300 billion capital investment programme, the Market Demand Strategy. It is an ambitious plan that is expected to create 588 000 economy-wide jobs and transform Transnet Freight Rail into the world’s fifth biggest rail freight company.”

But it was exactly this R300-billion strategy that made the Guptas inordinately wealthy.

Seven Chinese cranes

Let us begin in 2011.

A Transnet operating division, Transnet Port Terminals, bought seven cranes to lift containers from ships at Durban harbour.

The Chinese state-owned Shanghai Zhenhua Heavy Industries (ZPMC) supplied the cranes for $92-million (R650-million then).

At the same time, ZPMC started paying off a Dubai shell company called JJ Trading, which quickly paid similar amounts to Gupta companies in the UAE and South Africa.

We shall see that the Guptas frequently used JJ Trading, whose beneficial ownership is unclear, to wash kickbacks.

Singh said of this and a later crane deal: “If a procurement activity has gone through all the process checks and balances, why would any CFO question it on face value? I as CFO had very little involvement in the process per my delegation of authority.”

ZPMC said: “We have no business or any other relationship with Guptas.”

It asked us to retract our earlier article about it, but then declined to explain the JJ Trading payments.

95 Chinese locomotives

In 2012, Transnet appointed Singh permanently. He and CEO Brian Molefe then launched their legacy project, the R300-billion capital investment plan.

Later in 2012, Transnet signed one of the first big contracts under the plan. Another Chinese firm, China South Rail (CSR), would supply 95 electric locomotives for R2.7-billion.

Against this, CSR agreed to pay R537-million in kickbacks to Gupta front companies in Dubai and Hong Kong.

JJ Trading washed a lot of this money, again.

CSR did not respond to questions.

Intangibles

Molefe and Singh were still planning to buy another 1 064 locomotives, at about R50-billion.

In preparation, Singh needed to raise cash, so in December 2012, Transnet went to tender and appointed a consortium of financial advisors.

The consortium was to be led by McKinsey, a renowned corporate advisory firm, that is today in hot water over Eskom benefits it allegedly channelled to the Gupta-linked company Trillian, now led by one Eric Wood.

Back in 2012, Wood was a partner at Regiments Fund Managers. Regiments was supposed to be McKinsey’s minority partner at Transnet, for roughly a R10-million cut.

Instead, Regiments effectively elbowed McKinsey out of the way and took over the job. Its scope and cost of services blossomed to about R266-million.

Singh and Molefe provided the fertiliser through a series of motivations and approvals.

For example, in a letter to McKinsey, Singh wrote that the main scope of the McKinsey engagement would be reallocated to Regiments.

A subsequent contract addendum purported to be between Transnet and McKinsey, but Wood scratched out “McKinsey” and signed for Regiments. Singh signed alongside, increasing Regiments’ portion of the contract to R21-million.

In a later memorandum, Singh retrospectively motivated for Regiments to be paid an extra R89-million. Molefe approved.

Along the way, Regiments picked up other Transnet contracts worth at least R219-million.

There were no open tenders for the extra contracts, but Regiments said all was above board.

Over the same period, Regiments paid at least R84-million to a Gupta shell company in South Africa called Homix.

Homix, we shall see, was also used by the Guptas to wash kickbacks for other Transnet contracts.

100 Chinese locomotives

Around the end of 2013, Transnet decided to buy another 160 locomotives, supposedly because the big 1 064 purchase was delayed. China South Rail would provide 100 of these. There is no evidence of an open tender.

Once again, the #GutpaLeaks show, CSR agreed to kick back to JJ Trading and other Gupta fronts offshore: R924-million against a R4.4-billion Transnet contract.

22 Swiss cranes

In February 2014, Transnet contracted to buy 22 more cranes for Durban harbour, this time from the Swiss firm Liebherr.

On the day that the contract was awarded, one of several Liebherr payments hit the Guptas’ UAE accounts. In the #GuptaLeaks, we identified payments totalling $4.2-million (about R46-million then).

After we published this in July, Liebherr said it was investigating: “We take the allegations very seriously. The business practices described in the article are unacceptable to us. We currently expect the investigation’s results during next week.”

That was 10 weeks ago. Liebherr did not respond to subsequent emails.

359 Chinese locomotives

The next month, March 2014, Transnet announced the big one.

Transnet had chosen four companies to supply the 1 064 electric and diesel locomotives. China South Rail got the biggest chunk: 359 locomotives at about R18-billion.

Against this, CSR was to pay a staggering R3.8-billion to JJ Trading and other Gupta fronts.

On Monday, April 21, 2014, one month after the contract, JJ Trading paid the Guptas 7.3-million Emirati dirham (AED; R20.9-million then) in cash, the #GuptaLeaks show.

On Wednesday, it paid another AED 1.8-million (R5.1-million), this time to one of their Bank of Baroda accounts. Another AED 3.3-million (R9.4-million) followed on Thursday. And so on.

A month later, JJ Trading had already paid the Guptas about R590-million.

Singh’s little secret

On March 20, 2014, just three days after Transnet awarded China South Rail the 359-locomotive contract, the Guptas opened up a shell company in the UAE.

It was called Venus Limited, and it cost the Guptas AED 11 000 (R32 000 then) in administrative fees to open.

Venus was registered in the name of a man who regularly worked for the Guptas. This man, the #GuptaLeaks show, sometimes moved huge amounts of cash into their Dubai accounts for them – a textbook “bagman”, it seems.

Five weeks later, just after the JJ Trading money landed with the Guptas, Singh boarded a plane to Dubai.

There, the Guptas hosted him at the Oberoi hotel where, the #GuptaLeaks have shown, the Gupta brothers regularly looked after South African cabinet ministers, politicians, fixers and officials.

Singh was joined at the Oberoi by brother Tony Gupta and their business partner Salim Essa, travel bookings show. While they were there together, the Gupta “bagman” transferred Venus into Singh’s name.

Where “Confidentiality is King!”

Venus is registered in Ras Al Khaimah, one of the seven emirates of the UAE.

It is notorious – or “popular” – for two reasons: Financial secrecy and tax avoidance.

Online websites that tout Ras Al Khaimah explain “the surprising level of banking privacy” in “RAK”, where “Confidentiality is King!”

According to one: “RAK Offshore sets the bar very high in terms of internal, local, federal and international compliance yet keeping customers’ confidentiality at the heart of the system” (their emphasis).

In other words, should someone send illicit funds to Singh’s new company, no one would know.

Singh declined to explain the company’s purpose.

“Mr A Singh’s” cash

We have seen no financials for Venus and do not know if the Guptas or their associates paid money to it. However, they appear to have given him cash around that time.

On June 6, 2014, Singh jetted off to Dubai for his second Gupta sojourn. There he spent two nights at the Oberoi with Tony Gupta.

One month later, the Guptas booked Singh in for a third stay at the Oberoi, although evidence suggests he may not have made this appointment.

But Singh was back in Dubai on August 29, his travel records show, when Tony Gupta appeared to give him AED 200 000 (R578 000 then) cash.

This is according to the Guptas’ internal accounting records, where a spreadsheet appears to record expenses incurred by Tony Gupta. The entry notes: “Mr A Singh Atlantis”.

It appears “Mr A Singh” was paid at Atlantis, The Palm, an ostentatious resort in Dubai.

This spreadsheet records 97 transactions. They are not listed chronologically, so it is suggestive that immediately below the AED 200 000 paid to “Mr A Singh”, a second record notes that AED 200 000 (R584 000 then) was paid to “AS Global” a few weeks earlier.

Putting aside the possibility that “AS” refers to Singh’s initials, a reliable source told us this company was for Singh’s benefit. We could not independently verify this.

Singh declined to explain these payments.

Dirty fingers?

On November 7, 2014, Singh was back at the Dubai Oberoi to spend two nights. Again, travel booking records suggest Tony Gupta and Essa were there too.

Coincidentally, at that point, the South African telecommunications network company Neotel was trying to clinch a big deal to service Transnet.

According to a report later commissioned by Neotel’s board, the negotiations had been tough. Transnet and Neotel were caught on a few “sticking points”.

These were surmountable, Neotel’s investigators noted, but a month later, Transnet “inexplicably” informed Neotel that negotiations were off.

So Neotel CEO Sunil Joshi sat down with Singh in the seedy, subterranean gloom of SLOW Lounge, Sandton on December 11, 2014.

Describing Joshi’s account, Neotel’s investigators reported that Singh confirmed the deal was off.

“Mr. Joshi was shocked and failed to comprehend how there could have been such a change in attitude from Transnet,” they reported.

Returning to Neotel’s offices, Joshi asked his staff to call up a company called Homix – the same company that Regiments paid R84-million, and who we now know to have been little more than a Gupta money cleaner.

Joshi was already acquainted with Homix because, earlier that year, Neotel paid it a R35-million “success fee” to close a different Transnet contract, the investigators reported.

That evening and twice the following morning, a Neotel manager met with someone from Homix. The two agreed that Neotel would pay Homix 2% of the Transnet contract plus R25-million later.

Like magic, the negotiations were back on track, and the R1.8-billion contract was signed a few days later.

But again?

Two months later, Transnet had Neotel in a bind once more, and again Singh featured.

In February 2015, Neotel and Homix signed a “business consultancy agreement” to finally give effect to the promise to throw Homix its pound of flesh: R36 million, or 2% of the contract.

Neotel took so long to finalise this because, unsurprisingly, its compliance staff were unhappy with the arrangement.

Come February 25, 2015 the company had not yet paid Homix.

That same day, it so happened Singh was back at the Dubai Oberoi for another two-night stay with Tony Gupta.

Coincidentally, on that day, Transnet failed to pay Neotel for its January and February services.

This was on the “express instruction” of Singh himself, Neotel staff told the investigators – and “precisely” because Neotel had not paid Homix.

The logjam was broken when Transnet paid Neotel and Neotel paid Homix in succession – while Singh and Tony Gupta were together in Dubai.

Transnet and Neotel’s relationship evidently improved because, the following month, Transnet ordered CCTV cameras worth R505-million from Neotel.

True to the pattern, Neotel’s subcontractor on the CCTV job then funnelled R15-million to The New Age, then the Guptas’ newspaper company.

Singh’s “girlfriend”

Two unconnected people told us how, during his Transnet days, Singh travelled to Dubai with a “girlfriend” who once worked at Transnet.

We have identified a woman matching this description in the #GuptaLeaks. She is not the same person as Singh’s wife.

The leaks showed this woman was listed to attend a Gupta company year-end party in Sandton with Singh as her “partner”.

Singh, who confirmed knowing her, asked us not to name her because he was concerned about her state of mind. Having spoken to her ourselves, we agreed. She declined to comment on the substantive issues.

The #GuptaLeaks reveal that Sahara Computers employed Singh’s “girlfriend” as a project manager in January 2015.

At Sahara, the woman’s monthly salary was R50 000. This was the seventeenth highest salary of 260 employees, equalling that of her line manager – in spite of an apparently non-descript role.

Other documents in the leaks show that Sahara lent her R400 000 later that year, filling the hole between her bank loan and the price tag on her second house, a R1.36-million property in Midrand.

Such generous treatment was uncharacteristic for Sahara, a usually stingy company. The suggestion is that, for some reason, the Guptas appeared to take a particularly special interest in caring for Singh’s alleged mistress.

In an email found in the leaks, the woman wrote to her line manager on February 25 to tell him: “I will be away from office tomorrow and Friday as Mr T Gupta has requested me to go to Dubai.”

Singh was already in Dubai. When she landed there the next day, her airport pickup, accommodation and meals were charged to his room.

Singh’s total invoice was for AED 18 310 (R60 000 then). Singh was recorded as being from the Gupta company Sahara Computers, and the bill was paid for with a Gupta employee’s credit card.

Feeling loco

There was one more thing about Singh’s February 2015 Dubai trip that raises questions.

His Oberoi stay was extended for three days. During this extra time, the Guptas arranged for one of China South Rail’s vice presidents to join him there, #GuptaLeaks emails show.

At that time CSR was still paying kickbacks to Gupta-linked companies for contracts awarded by Singh’s Transnet.

The confluence of these three people, orchestrated by the Guptas, is notable.

Two weeks later, the CSR vice president, Tony Gupta and Essa, the Guptas’ partner, travelled together on a chartered flight in India.

A few days after this, an email from the CSR vice president was recirculated among senior Gupta personnel. Attached to the email was a spreadsheet that reconciled kickbacks CSR owed and had already paid to JJ Trading on the three Transnet locomotive contracts.

Not long after, Essa and CSR signed a new kickback contract. According to this, the CSR kickbacks would be diverted from JJ Trading to an Essa company in Hong Kong.

Singh declined to explain.

Ructions at Eskom

Not two weeks after Singh returned from that Dubai trip, on March 12, 2015, the Eskom board suspended its CEO, finance director and two other executives.

Eskom’s then chairman said this was to make way for an investigation into Eskom’s poor power generation performance and related problems. He said: “There is nothing sinister happening. This is a fact-finding inquiry … which will last for three months.”

But many viewed the suspensions as a sham to get executives out of the way. Indeed, three of them soon resigned. President Jacob Zuma later apologised to the former CEO.

The upshot, however, was that the way was cleared for the tag team of Brian Molefe and Anoj Singh to take over at the public power utility – where the Guptas and their associates had battled to close coal and financial contracts.

Molefe was seconded to Eskom in March 2015 as acting CEO. Singh moved across, also in an acting role, a little later – but not before another trip to the Dubai Oberoi.

An Eskom briefing?

Singh flew back to Dubai on June 11, 2015. This was his sixth trip to be arranged by the Guptas.

As usual, Tony Gupta was there.

In the circumstances, it seems reasonable to ask: Was Singh there to receive his Eskom briefing?

One month later, Singh was seconded to Eskom – and two days after that, Tony Gupta, Ajay Gupta’s son Kamal, and Jacob Zuma’s son Duduzane were all present at the Oberoi.

The Guptas and Duduzane were about to benefit hugely under the new Eskom regime.

Just two weeks later, Molefe and Ajay Gupta spoke on the phone. This was first of 78 phone interactions between Molefe and the Guptas that were reported on by the former public protector in her “State of Capture” investigation.

“Anoj’s cigarette”

In the closing months of 2015, the Gupta partner Essa founded the financial advisory firm Trillian Capital Partners.

Recall that on at least two of Singh’s trips to the Dubai Oberoi, Essa was booked in alongside him, so the two were likely acquainted.

Earlier, the Guptas had tried to buy Regiments – the company that Transnet enriched through questionable payments on Singh’s watch and which had made dubious payments to Gupta front companies.

But Eric Wood’s partners at Regiments had turned the Guptas away.

So, Wood started moving his affairs to Essa’s new group, Trillian.

The details of Wood’s transfer to Trillian are entangled in controversy. Regiments’s remaining partners have claimed that both Transnet and Eskom paid Trillian for work their company had done.

Among the disputed Transnet payments was R94-million to Trillian that December, for work allegedly done by Regiments.

Even though Singh was at Eskom by then, people close to Transnet described such payments as “the cigarette that Anoj left burning in the ashtray when he left”.

Got a light?

Over at Eskom, with Singh and Molefe in place, Wood and Essa appeared to peel open a new pack of cigarettes.

Eskom and McKinsey signed an agreement in September 2015 to work on an Eskom corporate plan. Regiments worked directly on the plan alongside McKinsey, with the intention that the former would become the latter’s supplier development partner.

It was Singh who allegedly asked Regiments to help prepare Eskom’s corporate plan, according to a recent investigation by Advocate Geoff Budlender, conducted on the Trillian chair’s instruction.

McKinsey said the Regiments supplier development contract was never formalised.

But as Wood began to split away from Regiments to establish Trillian with Essa, McKinsey followed suit. It adopted Trillian as its intended supplier development partner on another big Eskom project, “the turnaround plan”.

Eskom has said Singh was not responsible for later signing a master services agreement for this plan, but one well-placed source said he was responsible for key negotiations.

McKinsey said: “Trillian ultimately failed McKinsey’s due diligence and the consultancy terminated its discussions with Trillian in March 2016.”

Eskom has admitted that it paid Trillian, however.

Wood and his staff, whether as Regiments or Trillian, also appeared to do other work at Eskom under Singh.

For example, senior Eskom staffers told us how, after Singh arrived, he started touting Regiments’ services for various jobs.

Their standard response was: “But we’ve already done that.” Or: “But we can do that ourselves.”

Then, the staffers alleged, Singh went quiet, and they learned indirectly that he had Wood doing jobs behind their backs.

In December 2015, Singh introduced Wood to Eskom’s insurers, who were covering a blown boiler, and Wood and his staff apparently advised Eskom on this project.

But some McKinsey staff appeared to feel that Wood and his colleagues were simply along for the ride or an “unwanted piece of baggage”, as one Trillian executive described it to Budlender.

For example, the Trillian executive recounted how, in a meeting, a McKinsey employee said: “Regardless of the [Trillian] resources allocated to projects, Trillian will still get their 30%”, and: “It doesn’t really matter as long as you get your percentage.”

Budlender concluded: “The Eskom contract price included 30% for Trillian, which from those [McKinsey] representatives’ point of view served little purpose other than to provide a substantial financial benefit to Trillian and its shareholders — and presumably to induce Eskom to award the contract to McKinsey”.

McKinsey replied that it took “supplier development and professional standards seriously, and that it would only ever consider entering into a supplier development partnership which would achieve impact and value for its clients, and build local capabilities in parallel”.

“Singh’s got our back”

Budlender also described an encounter between Wood and a Trillian executive, as recounted by her. She had fretted because a McKinsey due diligence concluded that Trillian was too politically exposed because of Essa’s relationship with the Guptas.

Budlender reported: “[She] said that she discussed this with Dr Wood in April 2016. He said that she was not to worry, as he would discuss the matter with Mr Anoj Singh of Eskom. He said that Trillian had responded to an Eskom request for proposals, and Mr Singh would appoint Trillian through that process.

“The obvious question which arises is how [Wood] could be so confident that Eskom would appoint Trillian.”

Eskom has admitted to paying R495-million to Trillian without contracts. We understand the true figure to be nearly R600-million.

Trillian has denied wrongdoing and said it “delivered a high standard of work to its clients”.

Optimum circumstances

Another well-told story, involving Singh and the Guptas, is how, over 2015 and early 2016, Eskom sandwiched Glencore, the owner of Optimum Coal Holdings, between a gigantic fine for poor quality coal and a tough negotiating position on Optimum’s coal prices – all while the Guptas tried to buy Optimum’s mine and related assets.

The former public protector chronicled this in her “State of Capture” report.

She showed how Eskom CEO Molefe and mines minister Mosebenzi Zwane were in close contact with the Guptas while putting the squeeze on Glencore.

Singh showed his hand a few times.

He provided a boost to the Gupta balance sheets when, late in December 2015 – when most of his staffers were on holiday – he arranged a R1.6-billion Eskom guarantee against the Guptas’ future coal supplies.

An insider explained to us that it was not unusual for Eskom to give such guarantees to help establish new mines and therefore secure future coal supplies.

What was questionable in this case (aside from Singh’s close and beneficial relationship with the Guptas), was that Optimum was already up and running. No capital investment was necessary to secure its coal supplies, they said.

Singh reaches out again

In “State of Capture”, the public protector analysed bank records and alleged that Trillian ultimately contributed R235-million towards the Guptas’ Optimum purchase consideration. Trillian denied this, although a recent report suggested a financial regulator has corroborated the public protector’s finding.

Much of Trillian’s money was presumably derived from Eskom and Transnet payments, made under Singh’s watch. But at least one invoice, for R30.6-million, was sent directly to Singh on April 14, 2016 – the same day that the Guptas’ Tegeta Exploration and Resources had to pay R2.1-billion for Optimum.

The Guptas were struggling to come up with the cash, so this payment may have been urgent for them.

The invoice was stamped “paid” on the same day that Singh received it.

At the same time, the Guptas were battling to come up with the last R600-million they needed to close the deal.

The banks would not help, and Eskom’s board tender committee held an eleventh-hour meeting and agreed that Eskom would prepay the Guptas R659-million for coal to be provided in the future.

Singh’s job included making sure the Guptas’ coal was not overpriced. Treasury investigators have complained that it was and that Singh failed to do a proper due-diligence, while accepting gifts from the Guptas in the form of the Oberoi stays.

In a recent report, they said an investigation was needed into whether Singh accepted “gratuities” to improperly influence his decisions.

The Guptas immediately used Eskom’s cash to buy Optimum.

Eskom has countered that the coal was fairly priced, that it was supplied and that Tegeta offered shares as security.

Eskom also said it urgently needed the coal to avert load shedding – yet, just two weeks earlier, public enterprises minister Lynne Brown told parliament: “Load shedding has become a thing of the past… The group chief executive officer, Brian Molefe, has assured me that there is no prognosis for load shedding over the winter months,”

Singh and the “state capture year-end party”

In December and January 2015, the Guptas invited a long list of officials, politicians and fixers to join them at the Oberoi.

Over a few weeks, they were joined by Duduzane Zuma, former finance minister Des van Rooyen (he had been appointed and fired a few days before arriving in Dubai), Free State Premier Ace Magashule’s sons, arms deal and Gupta fixer Fana Hlongwana, then deputy minister of public service and administration Ayanda Dlodlo (Hlongwana paid for himself and Dlodlo), public enterprises minister Lynne Brown’s allegedly powerful personal assistant, Denel chairman Dan Mantsha and Eskom’s group executive for generation, Matshela Koko.

Sars commissioner Tom Moyane also happened to be in town, according to news reports. But this was purely coincidental, he said.

Singh was there too.

Most of the people listed have been linked to benefits that the Guptas and their partners derived from the state.

And given that President Jacob Zuma had just attempted (but failed) to install a Gupta friend to the finance ministry, it is tempting to view the Oberoi gathering as a “state capture year-end party” – albeit with the finance minister glitch.

Singh’s attendance was significant given the events then playing out at Eskom involving Regiments, Trillian and the Optimum coal deal.

“The overlord”

On the morning after Eskom’s results presentation in July this year, Singh appeared on the TV talk showMorning Live.

The host, Peter Ndoro, asked Singh about his relationship with the Guptas and his trips to Dubai.

Singh ducked: “As I indicated yesterday, there is a document that I am currently preparing that will reveal the nature of the trips…”

Ndoro interrupted: “But Anoj, this isn’t brain surgery. You either went or you didn’t. Did you go?”

“No. I mean, yes, I did.”

“Did the Guptas pay for it?”

“No they didn’t.”

“But they didn’t give you any gifts whatsoever?”

“No.”

“So what is your relationship with the Guptas?”

“Well I think it’s like any other South African business person. I know them. I’ve been with them. I’ve met them, by and large as a result of the The New Age breakfasts, so ja.”

“So nothing unusual is going to come up in these emails to suggest that an impropriety or a relationship that is inappropriate between someone who is doing work for Transnet and then the CFO… Because you should have distanced yourself a little bit more once they had contracts with you, right?”

Anoj blinked hard, then screwed up his face thoughtfully: “Well if you look at the Transnet environment, I don’t think there was any contracts with Sahara that Transnet had entered into.”

Nobody said there were.

Singh continued: “Maybe on the Eskom side a bit more diligence would have been required. And the emails currently paint a relatively… a picture, and I think that’s the reason for the document being prepared to give perspective in terms of what the actual reality was.”

By then, Singh looked as if he felt a little hot under the collar.

Leaked emails show beyond doubt that Gupta employees arranged seven bookings at the Oberoi for Singh. They received his invoices, haggled over his rates and, in four cases, we have evidence that they paid using company credit cards.

The invoices included Singh’s numerous massages, airport limo pickups, meals and his alleged mistress’s charges, in one instance.

Once, an Oberoi staffer wrote to a Gupta employee: “Please note that with approval of Mr Gupta we also charged the credit card which you provided to us for Mr Singh charges.”

On another occasion, one Gupta employee told another to “please swipe the card for all charges” against Singh’s expenses.

And after another trip, a Gupta employee sent Singh’s Oberoi bill to Tony Gupta who responded: “Ok.”

In response to our long list of written questions, Singh conceded that, “with regard to procurement, the buck does stop with me”.

And: “With the benefit of hindsight and new facts (assuming they are correct) – presented by amaBhungane and other journalists – which I was not aware of at the time, these transactions could look suspicious and may very well be irregular,” he said.

But he thinks journalists are treating him unfairly.

“What has been distressing for me,” he said, “are speculative reports about my role in alleged corruption, concluded through largely speculative reporting written in a pointed way to substantiate the ‘state capture’ narrative. As if to say that I am some overlord that wields a magic pen and blank a cheque book at will.”

We could not have phrased it better.

* This story was edited after publication to correct the circumstances of McKinsey’s relationship with Regiments and Trillian at Eskom and to include extended comment from McKinsey.

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This week, the Guptas announced that they were selling their shares in newspaper The New Age and TV station ANN7.

The family’s businesses have come under much pressure as evidence of corruption and money laundering has mounted. In response, several banks have closed their accounts, apparently making it hard for them to do business.

Their South African empire is under threat.

Ownership changes – real or not – might remove Gupta company names from a banking blacklist.

The buyer of Tegeta’s coal assets is the Swiss company, Charles King SA. It appears simply to be a corporate vehicle for the transaction. Its purported owner is one Amin Alzarooni, according to the Guptas’ Oakbay Investments.

However, we can reveal that Alzarooni previously served as an apparent Gupta front when the family set up a corporate structure in Dubai for Kamal Gupta, Ajay Gupta’s son.

The structure seemed designed to hide the Gupta family’s ownership.

Included in the #GuptaLeaks emails is correspondence between Ronica Ragavan, now the Oakbay acting chief executive; advisors from the Guptas’ former accounting firm KPMG; and a Dubai law firm, King & Spalding. They discussed setting up a “mudaraba” for Kamal, as well as for Varun Gupta, Ajay’s nephew.

In Islamic finance, a mudaraba is a type of contract between an investor and an entrepreneur.

The emails were exchanged at the beginning of July 2015. In them, a King & Spalding lawyer explained that an Emirati shareholder would hold a nominal 51% in the companies, but that the Gupta family’s nominees “will have a share charge and call option over the Emirati shareholder’s shares”.

In terms of United Arab Emirates (UAE) law, a local national, called a sponsor, must hold a 51% share in a local company. A sponsor must be paid a yearly fee which can be negotiated, but the benefit of the share-ownership can be clawed back via a side agreement whereby profit and losses can be shared at a ratio different from the share capital.

In an email, ​the head of KPMG’s tax and legal advisory practice, Muhammed Saloojee, considered whether the Gupta nominees were entitled “to take 99% of all dividends and profits”.

The emails named the Gupta nominees as Soo Young Jeon, in the case of Kamal, and Aashika Singh, in the case of Varun.

They noted that, “Kamal/Varun will have a separate arrangement with Soo Young Jeon/Aashika Singh”, apparently meaning that dividends and profits would to be passed on to them.

Jeon is a former associate of Tony Gupta. She left South Africa to help set up the Guptas’ operation in Dubai.

Singh is an Indian national who was employed by the Guptas’ group of South African companies.

The emails suggested the Dubai structures were designed to create a disconnect between the nominal shareholders and the beneficial owners – Kamal and Varun appear nowhere and the entities avoid South African tax because Jeon and Singh are not South African tax residents.

The emails explained how two special purpose companies would be established in the Dubai International Financial Centre, a financial free zone. These would be used to channel foreign funds to another business in Dubai.

Six weeks after these exchanges, two companies were set up in the free zone.

The first, Special Purpose Company number 1935, was registered as SKG Holdings, with Jeon as a director, together with two place-holder directors from Intertrust, a Dubai company that provides corporate services.

SKG are the initials of the Gupta brothers’ revered father Shiv Kumar Gupta, who founded a spice trading company called SKG Marketing.

The sole shareholder of SKG Holdings is reflected as Amin Jaffar Abdulla Alzarooni, the man who has just bought Tegeta.

The second company that seems to have been set up pursuant to the advice of KPMG, number 1936, was registered as Sinkam Investments, with Aashika Singh and the same Intertrust employees as directors.

In the case of Sinkam, the UAE shareholder was named as Obaid Saeed Obaid Bin Essa Almheiri.

The #GuptaLeaks emails show that both Alzarooni and Almheiri visited South Africa as the guests of the Guptas in October 2015. They both gave their employer as Millennium Real Estate Registration company.

At that time, Optimum was owned by Glencore. But facing pressure from Eskom and loss-making coal contracts, the mine was in business rescue – and the Guptas were preparing to buy it.

Alzarooni and Almheiri were part of a small delegation that included the former director of defense for the UAE, Major General Atiq Juma Ali bin Darwish. They were said to be travelling to South Africa “at the invitation of our business associate, Sahara computers… to explore investment opportunities in the mining sector”.

A Sahara visa application on their behalf requested the South African high commission in Dubai to grant them multiple entry visas, seeing as they would be conducting follow-up visits “every alternate week”.

Sahara assumed responsibility for their lodging and local travel.

Attempts to contact Alzarooni and Almheiri in Dubai were unsuccessful.

KPMG told us that the company “states categorically that we did not provide advice to evade tax. At all times advice was provided within the parameters of the law”.

Alzarooni’s company, Charles King SA, is according to Oakbay, “a Special Purpose Vehicle acquired by Mr Zarooni to facilitate further investments like Tegeta’s Optimum Coal, Koornfontein and Optimum Coal Terminal acquisition”.

In a follow-up statement, Oakbay said Alzarooni was “a leading businessman in the UAE and a highly respected and active participant in global private equity markets” and “involved with various commodity businesses around the world”.

The company said Alzarooni’s businesses comprise a number of joint ventures with French firms.

These include Arep Ville Abu Dhabi (a joint venture with engineering consultants Arep Group France); Egis Emirates Abu Dhabi (another joint venture with a French engineering group, Egis), Nepteam Middle East (a joint venture with the French shipyard Nepteam); and Gimaex – One Seven, a joint venture with Gimaex International, which produces firefighting equipment.

Oakbay also named Golden Triangle Investment, Jaffar Al Zarooni Real Estate and Triangle Business Connection as part of Alzarooni’s portfolio.

It has been argued that Manyi overpaid massively for the Gupta media assets when he purchased ANN7 and The New Age for R450-million – funded with a loan from the Guptas.

Alzarooni might be getting a very good price at just under R3-billion – as long as Eskom maintains the same sweetheart relationship afforded to the Guptas.

Tegeta has sold its interests in Optimum Coal Mine, Koornfontein Mines and Optimum Coal Terminal. It paid R2.15-billion for these in December 2015, after Optimum, then owned by Glencore, had been forced into business rescue.

It was widely rumoured that they immediately started trying to unload the assets.

In August 2016 Vitol announced it would buy a portion of the assets: the Optimum Coal Terminal’s Richard’s Bay allocation. Vitol never confirmed a price but the price floated was $250-million (R3.3-billion).

In August, Tegeta also secured a new R7-billion coal contract between Koornfontein and Eskom. The rumoured selling price for Koornfontein was R1-billion after this contract was put in place.

At the same time, Tegeta negotiated down a R2-billion penalty that Eskom had imposed on Glencore’s Optimum to just R500-million, hugely boosting the value of the mine.

Charles King’s new entity is most likely to be one of the short-listed bidders for a lucrative new contract for Eskom’s Hendrina power station post-2018 and is an obvious candidate to supply Arnot power station, which desperately needs a supplier.

In other words, Tegeta and Eskom have added significant value to the business, yet they are selling it for not much more than what they paid. On the other hand, with so much public and regulatory scrutiny, these coal contracts might be under threat, which could change the equation significantly.

Oakbay has said the new buyer has committed to including a 30% black partner, but confirmed in an email that they haven’t selected a partner yet.

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Private jets, sprawling mansions and eye-wateringly expensive weddings are lifestyle features associated only with those who possess vast personal wealth.

Yet for three years in a row, 2011, 2012 and 2013, the Gupta brothers appear to have convinced the South African Revenue Service (SARS) that they were taking home less than R1-million in personal income annually.

SARS documents from the #GuptaLeaks email trove show that for 2011 to 2013, Ajay, Atul and Rajesh (Tony) Gupta declared taxable income which rarely exceeded R1-million per year, on which they paid PAYE and nothing further.

In 2011, for instance, Rajesh Gupta declared R965,000 in taxable income, with R315,670 going to PAYE. In 2012, Ajay Gupta declared R935,000, of which R299,196 was taxed. In 2013, Atul Gupta declared R1,087,616, of which R376,186 went to PAYE.

Three years later, Atul Gupta would be placed 7th on the Sunday Times Rich List, named as South Africa’s richest black businessman.

A tax expert who spoke to Scorpio on condition of anonymity said that the relatively small amounts of declared personal income were impossible to square with media reports of the Guptas’ lifestyles.

From at least 2010, the Guptas were attracting media attention for both their close ties to President Jacob Zuma and their apparent taste for the high life.

It is well known, for instance, that the Saxonwold mansion which the Guptas call home in South Africa is a sprawling property: a three-storey building with a kitchen on each floor.

It was previously described by Saxonwold and Parkwood Residents’ Association urban planner Craig Pretorius as “a kind of a large guesthouse – a private hotel… with a cinema and spa”. It also features a helipad and cricket pitch, and has previously been valued at over R16-million.

The 2013 Sun City wedding of the Guptas’ niece Vega, meanwhile, attracted a flurry of headlines for its opulent flavour. A typical report from the Sunday World at the time, for instance, quoted a Sun City insider as saying: “They are spending millions.”

TV programme Top Billing subsequently devoted a full episode to footage from the wedding:

We now know from the #GuptaLeaks emails that much of the cost of the Gupta wedding was classed as a business expense through the Gupta-owned company Linkway Trading.

Evidence from the email trove suggests that it was standard practice for the Guptas’ personal expenses to be funded through their companies. This is in itself highly irregular.

“You are not allowed to put personal expenses through a company, finish en klaar,” the tax expert told Scorpio. “Every expense a company deducts must be shown to be in the production of that company’s income. If it cannot [be shown], then a fringe benefit tax is applicable.”

The expert explained, for instance, that even if a Gupta-owned company were paying the monthly bond on the Saxonwold property, the employees who were benefiting from this system – in this case, the Guptas themselves – would have to pay fringe benefit tax.

There is no evidence of this happening from the Guptas’ tax returns.

Given the volume of highly public information available about the Guptas, red flags should have been raised at SARS about the amounts they were declaring in taxable income. “

SARS gleans its information from the press,” the tax expert said – and there has been no shortage of Gupta-related press in South Africa over the past seven years or so.

Asked by Scorpio if the Guptas were ever subjected to a lifestyle audit by SARS, the revenue service’s spokesperson Sandile Memela responded via email: “In line with the spirit and letter of the tax legislation… SARS cannot divulge specific information and details on the affairs of taxpayers.”

The tax expert explained that what generally happens when SARS “feels like something’s not right”, in terms of a discrepancy between lifestyle and declared income, is that SARS will send the individual in question a request for a basic statement of assets and liabilities.

If that fails to assuage doubts, SARS will proceed with a lifestyle audit, in the course of which one is required to fill out a multipage questionnaire dealing with the minutiae of your income, assets and expenses.

The Prevention and Combating of Corrupt Activities Act, promulgated in 2004, allows for investigation into individuals who appear to own property disproportionate to their income.

It states that such an investigation may be ordered if a person “maintains a standard of living above that which is commensurate with his or her present or past known sources of income or assets”.

In 2012, a SARS compliance programme document stated that it was focusing on high net worth individuals.

“Our preliminary sampling exercise has shown that under-declaration of income is an area of concern, where an individual’s declared income is not consistent with their asset base,” that document stated.

“To date, 467 potential wealthy individuals have been identified where there are discrepancies between their asset base and declared income, and they can expect much closer scrutiny from SARS.”

The Guptas had become a household name in South Africa by 2013. Important questions thus remain about how the brothers were permitted to pay such a relatively low level of tax for multiple years concurrently.

“Tax morality is critical for the country,” SARS’ Memela told Scorpio in a statement. “It is therefore critical for all South Africans to be law-abiding citizens who are seized with ensuring and promoting compliance to the tax laws of the country.”

All South Africans – but not the Guptas?

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At an historic secret ballot of no confidence in the South African Parliament yesterday, the country’s scandal-hit president survived – but by a small majority of 21 as up to 40 of his own ANC MPs rebelled against him.

South Africa is now at yet another crossroads.

At the recent funeral of one of Nelson Mandela’s closest friends and fellow long-time Robben Island detainee, his ex-wife Winnie Madikizela-Mandela (herself an MP) said: “All what we fought for is not what is going on right now … our country is in crisis and anyone who cannot see that is just bluffing themselves.”

At the very spot in Cape Town where Mandela gave his first speech after his long walk to freedom in 1990, thousands of protesters assembled and then marched on Parliament today to demand Zuma’s removal.

This being fractured South Africa, they were joined by large numbers of pro-Zuma supporters.

Meanwhile, roads from the Mandelas’ one-time township home in Soweto into the economic capital Johannesburg were barricaded with rocks and burning tyres from early morning as protesters took action across the province.

Unemployment hit a 14-year high this week as Zuma’s stewardship of a fragile resources-based economy – now officially in recession – bites deep.

A promising national economic blueprint dreamed up at the start of Zuma’s presidency has been abandoned.

The economy of South Africa – a member of the exclusive G20 club of nations — is now growing at half the worst-case scenario rate envisaged by the experts Zuma appointed five years ago.

State-owned companies — the supposed engines of economic growth and job creation in ANC’s economic policy – have stuttered and stalled.

The state electricity utility, the freight and passenger rail companies, the national airline and the arms manufacturer all enjoy near-monopoly status in South Africa, but are increasingly being propped up financially by the government.

To support them, public money is diverted from other urgently needed social programmes – education, health, housing.

It is here – in the beating heart of the country’s economic machine – that a huge corruption scandal threatens to engulf Zuma, his party and perhaps the country.

And it is a scandal that has been exposed by good old fashioned investigative journalism in the face of sinister intimidation and threats of violence.

Over the past several weeks, the terms “state capture” and #Guptaleaks have dominated social media in South Africa, but beyond its borders not much is known.

What are the #GuptaLeaks and ‘state capture’?

The phrase “state capture” has emerged to describe a situation where a business family, the Guptas, enjoying close ties to Zuma, have manoeuvred themselves into a position where they allegedly wield control over state-owned companies and their huge procurement budgets, diverting huge sums into their own pockets and, by extension, Zuma’s family.

The Guptas are a family of Indian immigrants who arrived in South Africa from the early 1990s onwards, apparently spurred by the business promise of a newly democratic, post-apartheid state.

The family is headed by three brothers — Ajay, Atul and Rajesh.

So closely have the Zumas and Guptas become entwined that they are popularly referred to as the Zuptas.

The key connection is Zuma’s son, Duduzane, whom the Gupta brothers took under their wing a decade ago and groomed for a role as a director – and billionaire shareholder – in the family’s business empire.

The Guptas are allegedly able to influence state procurement through the cascading appointment of their cronies, via Zuma-appointed cabinet ministers to key positions on decision-making committees.

In several instances, would-be ministers have reportedly been informed of their cabinet appointments first by the Guptas, before receiving the official call from President Zuma.

All this has been highlighted by one of the biggest leaks in the history of South African journalism.

Earlier this year, investigative journalists obtained an enormous trove of emails and documents from the heart of the Gupta business empire. The subsequent exposés, dubbed the #GuptaLeaks, appear to confirm the state capture hypothesis that journalists have been chipping away at for years.

For example, the latest story from the leaks, published on Tuesday, reveals how the Guptas bankrolled the loan repayments for a house owned by President Zuma’s fourth wife.

They channelled the money in part via Duduzane, dipping into a Dubai-based slush fund set up to receive kickbacks from the successful Chinese winner of a major South African state locomotive tender.

The #GuptaLeaks have lifted the lid on a multinational money laundering machine, dubbed the Dubai Laundromat, into which the Guptas allegedly funnel cash derived from state contracts in South Africa.

How did the Guptas benefit financially?

The cash is derived in two ways: either directly from contracts with state-owned companies won by Gupta-owned businesses; or from “success fees” solicited from international companies wanting to do business with the South African state.

So far, the #GuptaLeaks have exposed how kickbacks were paid or facilitated to the Guptas by foreign companies throughout the world.

They include a Swiss construction company, two German IT giants, a multinational management consultancy, a Chinese state outfit, and a major accounting firm.

• #GuptaLeaks: all the latest on the Gupta-Zuma scandal.

And the Guptas certainly know how to spend their gains.

Having operated somewhat under the radar during the early years of Zuma’s presidency, the Guptas shot to national infamy in 2013 when they persuaded a raft of government departments to bend the law, allowing them to land an airliner of wedding guests from India at a high-security military air base near the capital, Pretoria.

The South African “wedding of the millennium” between a Gupta niece and her Indian fiancé, was designed to showcase the family’s wealth and influence in their adopted home.

Their Indian guests were whisked to the sprawling Sun City leisure complex by a VIP convoy of blue light-fitted vehicles normally reserved for government dignitaries, where they mingled with a who’s who of South African politicians and businessmen.

An inquiry held in response to the public outrage about multiple breaches of national security and protocol heard that “Number One” – an apparent reference to President Zuma – had pulled strings in the Guptas’ favour.

The #GuptaLeaks have subsequently revealed how the Guptas sucked cash out of a state-funded rural development programme and sent it to Dubai, where it briefly washed through the “Laundromat” of Gupta companies before it was used to pay the wedding bills back in South Africa.

Multinational auditing firm KPMG waved the transactions through, turning an apparent blind eye to “related party” transfers, thereby allowing the Guptas to also claim millions in tax-deductible expenses.

KPMG said it “stood by our work done and audit opinions issued”, but its former Africa head attended the wedding and wrote thanking the Guptas gushingly afterwards: “I have never been to an event like that and probably will not because it was an event of the millennium.”

Meanwhile, the leaks have also unearthed a letter, drafted by the Guptas on President Zuma’s behalf, in which they ask the Abu Dhabi crown prince to consider granting Zuma and his family residency in the country. While Zuma denied wishing to make the emirate a “second home” it has been confirmed that Duduzane obtained residency.

Suspicions that the Guptas have been preparing a Dubai bolthole for Zuma were enhanced by media reports, based on the leaks, that the Guptas had acquired a £19-million mansion in an exclusive Dubai neighbourhood intended for Zuma’s use. The property is just a few doors down from a pad owned by Zimbabwe dictator Robert Mugabe.

Zuma’s spokesperson said he owned no property outside South Africa.

Paralysis of the proud ANC

Throughout these, and many other scandals throughout the Zuma presidency, the once-proud African National Congress (ANC) party has stood paralysed, unable or unwilling to confront the Zupta state capture phenomenon.

With many of its officials allegedly “captured” by the Guptas, the ANC’s inaction is perhaps unsurprising.

The social cost has been enormous – not least in the fraying of race relations which Mandela’s ANC worked so hard to build.

As the public outcry against the Guptas reached a crescendo last year, UK public relations firm Bell Pottinger – founded by Margaret Thatcher’s former PR guru Lord Tim Bell – stepped into the breach to spin for the Guptas on a £100,000-a-month contract.

So, despite the mountain of dirty laundry already in the public domain about the Guptas relationship with Zuma, the firm accepted a brief – partly in consultation with Zuma’s son Duduzane – to run a counter-campaign blaming white-owned businesses for perpetuating “economic apartheid” in South Africa.

Somehow, it was “white monopoly capital” standing in the way of genuinely aspirant black businessmen – like the immigrant Gupta family – from fulfilling their full economic potential in the country.

Bell Pottinger now stands accused of stoking racial tension in the country, aimed at its white population in general and at the media in particular.

Intimidation of journalists

A pop-up movement called Black First Land First has subsequently targeted editors and journalists at the forefront of exposing the Guptas’ dealings.

At one point, Bell Pottinger gave feedback about a prospective article proposed by the movement’s leader. The PR firm also scripted speeches subsequently delivered by ANC politicians at political rallies.

For the past eighteen months, an army of fake Twitter bots and one-man blogs have spewed a torrent of racially-charged invective into public discourse around the Guptas and Zuma.

Although such tactics have not been conclusively shown to be the brainchild of Bell Pottinger, a public outcry forced them to drop the Guptas last year.

Last month Bell Pottinger’s CEO James Henderson initially offered “a full, unequivocal and absolute apology”.

He then told the BBC in an interview last week: “At worst, we were very naive in what we got involved with, but there was, at any point, no intention to create the impact that is claimed we created.”

But the atmosphere in South Africa remains poisonous. Black First Land First recently barricaded an editor in his home, scrawling graffiti on his garage door, and assaulting a colleague.

Ignoring a subsequent court order barring them from intimidating journalists, the same group hijacked a public event hosted by investigative journalists to explain the #GuptaLeaks, manhandling a journalist to the ground.

A judge ruled earlier on Tuesday that the movement was in contempt of court, and handed its leader a three-month jail sentence, suspended on condition that they did not breach the order again.

For his part, Zuma will seek to direct the appointment of his successor to protect him and his family from future prosecution when his term as president ends in 2019.

But if he does one day face trial, expect the #GuptaLeaks to feature strongly as evidence.

*Finance Uncovered (@FinUncovered) is an associate of the #GuptaLeaks investigative team. This article first appeared in The Independent (UK).

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On 9 February 2016, Bell Pottinger sent Gupta lieutenant Santosh Choubey a document entitled “Master Q&A”, a menu of ready-made answers for the media.

In response to the question “Did the Guptas help President Jacob Zuma’s wife, Bongi Ngema-Zuma, pay off her R3.8-million home loan?” Bell Pottinger wrote, “No. This story is completely false. The Gupta family has not assisted Bongi Ngema-Zuma in any way.”

As South Africans have come to expect from Bell Pottinger’s now infamous disinformation campaign, the story, however, was completely true.

Bank records, accounting records and budgets show the Guptas and Duduzane Zuma paying as much as R3.4-million of the bond on the property, after making what appears to be an initial down payment of R1.15-million – giving a total of over R4.5-million.

The younger Zuma’s role in routing these payments suggests he was not in business with the Guptas “on his own accord”, as his father has claimed, but at least partly as a bagman for the Zuma family.

Equally damning, the money trail suggests the president’s wife – and by extension Zuma himself – benefited from the proceeds of corruption laundered from Dubai.

The presidency, Ngema-Zuma and the Guptas did not reply to questions sent late last week.

A gift with a view

Set on the exclusive Waterkloof Ridge that overlooks Pretoria and the Union Buildings, the property was bought for R5.24-million in April 2010 and became Ngema-Zuma’s home.

A person with first-hand knowledge said that the president personally inspected the sprawling property before the purchase. A neighbour said he had been known to visit regularly.

Deeds office records of the transfer identified the Sinqumo Trust as the buyer, and Ngema-Zuma as its trustee.

Named after the president and Ngema-Zuma’s young son, Sinqumo, the trust is more opaque than most. Public lists on the department of justice website, which usually shows trustees and other basic detail, omit the Sinqumo Trust altogether.

In response to earlier amaBhungane attempts to inspect the trust records, the master of the high court in Pretoria, where the records should be kept, maintained they could not be found.

In the absence of the records it is not known whether the president is a trustee alongside Ngema-Zuma or has rights to the trust assets. But even if he has no formal connection to the trust, he arguably benefits given that the property is home to his wife and son.

Six years of denial

R3.84-million of the R5.24-million purchase price was bond financed by Bank of Baroda, the Guptas’ favourite lender.

Given the provenance of the bond, amaBhungane asked a Gupta spokesperson in 2011 whether the family had helped Ngema-Zuma to buy the property by paying the purchase price, facilitating financing or helping repay the bond. He said: “The answer to all your questions is no.”

When amaBhungane confronted the Guptas with additional evidence of their links to the bond in 2012, one of their senior executives dismissed it as “irrelevant” and “absolute rubbish”.

The #GuptaLeaks show that the bond was serviced by the Guptas and Duduzane Zuma generally at a rate of R65,000 a month from the outset.

They also show that on 18 August 2010, the day after the deeds office effected the transfer to the Sinqumo Trust, R1.15-million was paid into Sinqumo’s current account. This is consistent with it being a down payment; the bulk of the difference between the purchase price and the bond amount.

The R1.15-million in turn came from Gupta company Islandsite Investments via Pragat Investments, which at the time was involved in a scandal over the attempted hijacking of iron ore mining rights at Sishen.

Although Pragat was nominally owned and controlled by then Gupta executive Jagdish Parekh, #GuptaLeaks records suggest it was financially integrated with the Guptas’ Oakbay group. Parekh did not answer questions before going to press.

Duduzane, the businessman bagman

When President Zuma appeared in Parliament in June this year, he was pressed by DA leader Mmusi Maimane on Duduzane’s relationship with the Guptas.

Zuma painted his son as an ordinary citizen who was legally entitled to go into business, like anyone else. Duduzane, he said, was “involved in business on his own accord” and that “whoever he does business with, is his own business”.

The #GuptaLeaks evidence strongly suggests that Zuma’s statement was untrue. Whatever business the younger Zuma may have done on his own accord, he also was an apparent conduit for Gupta money to benefit the Zuma family.

Mabengela Investments, a company named after the hills overlooking President Zuma’s Nkandla homestead, is majority owned and controlled by Duduzane Zuma and Rajesh “Tony” Gupta.

Records show that Gupta money was routed through Mabengela to pay the Waterkloof Ridge bond.

So, for example, the same R65,000 amounts that ended up as the first three instalments in September, October and November 2010, can be seen from accounting records to have flowed to Mabengela from Islandsite Investments and Oakbay Investments, both Gupta companies.

Mabengela income statement and budget records show R1.65-million flowing and budgeted to flow from it to the Sinqumo Trust during the 2012/13 and 2013/14 financial years.

Transfer instructions submitted to Absa, as well bank records, show that these “investments”, as they were called, were used to pay monthly installments of R65,000 on the bond during those two years.

In some months, Mabengela directly transferred R65,000 to Sinqumo Trust’s Bank of Baroda accounts. In others, Mabengela transferred the same amount of R65,000 to “D Zuma”, “DZ – BOB” and “DZ”, in apparent reference to Duduzane Zuma.

Trains, cranes and kickbacks

Apart from the monthly bond repayments, Mabengela also paid a R535,000 lump sum to Sinqumo on 2 September 2013.

Of this, nearly a third seems to trace back to offshore Gupta accounts stocked with kickbacks from Transnet contracts.

It would be a serious indictment if bribes were laundered to a sitting president’s wife.

We exposed the alleged Transnet kickbacks in June and July. These included R1.4-billion received from locomotive manufacturer China South Rail (CSR) and at least R55-million from Swiss crane manufacturer Liebherr.

A contract between CSR and a Gupta-related company made it clear the CSR payments were commissions in return for Transnet locomotive contracts. Similarly, payments from Liebherr flowed contemporaneously with Transnet crane contracts.

Gupta accounting records then show the funds flowing into and through their offshore network.

Sitting in the middle was the Guptas’ US relative Ashish Gupta.

In 2013, he was just 26 years old with no apparent business profile. Yet, he somehow had over R100-million at his disposal, which he transferred to Oakbay Investment in a handful of tranches between 30 August and 6 September.

Purportedly, the money was Ashish Gupta’s “advance” contribution for a mining partnership, but there is scant evidence that his money was used for this.

The payments landed in Oakbay’s State Bank of India account. Typically, the cash was immediately disbursed across a number of Gupta company accounts using multiple back-to-back transfers.

Among these, Oakbay paid R150,000 to Mabengela on 2 September 2013. Immediately after receiving the funds, Mabengela transferred R535,000 to Sinqumo’s account at Baroda.

Ten months later, Ashish Gupta’s R100-million was reimbursed by Accurate Investments. Accurate is a Gupta front company in the United Arab Emirates, which by then had received much of the CSR and Liebherr money.

CSR and Ashish Gupta have not responded to emailed questions. Liebherr has said it is investigating the allegations.

The facilitator

While the Guptas repeatedly lied to South Africa about their funding the purchase, there was one entity which was well aware of the true nature of the arrangement and which also had a legal obligation to report suspicious transactions: Bank of Baroda.

Baroda had Ngema-Zuma swear a statement entitled “Information Required by the Bank to Comply with the Financial Intelligence Centre Act”, as part of the process to obtain the bond.

Ngema-Zuma declared that “the source of income/funds to finance the purchase of the property by [Sinqumo] is the following: – own funds and Bank loans”.

Even if Baroda – the Guptas’ long-standing banker – was not at that moment privy to the real source of Ngema-Zuma’s funds, it quickly should have been.

Records suggest the source of the funds was no mystery to Baroda. Regularly, as funds from Mabengela reached Sinqumo’s current account at Baroda, they were immediately used to pay Sinqumo’s bond instalments.

Baroda did not reply to questions.

A curious omission in Zuma’s financial disclosures

Zuma’s history of relying on others to support his family is well known.

His loans from arms-deal convict Schabir Shaik and Durban businessman Vivien Reddy are prime examples.

Zuma disclosed in the public section of his 2009 Cabinet interest declaration that a businessperson provided a luxury home for the use of another of his wives in Durban for free, even though some family benefits may be declared in a confidential section.

Yet, Zuma’s 2014 Cabinet declaration is conspicuously silent regarding Ngema-Zuma’s receipt of Gupta cash. Under “gifts/sponsorships – immediate family”, Zuma indicated under her name: “Nothing to declare.”

In the public section of his 2016 declaration – by which time the Waterkloof Ridge bond was presumably fully paid as it had a five-year term – Zuma declared the “use” of properties on the Durban beachfront and in Forest Town, Johannesburg.

He also declared two books he received – Mastering negative impulsive thoughts and Ethics in decision-making.

A party fit for a criminal enterprise

While countless questions about Zuma’s relationship with the Guptas remain, the #GuptaLeaks do, at the very least, shed light on their relationship with Ngema-Zuma.

In addition to the bond payments, Ngema-Zuma was also employed by the Guptas’ JIC Mining Services for a while as of 2010.

In 2011, JIC chief executive Jacques le Roux told amaBhungane that Ngema-Zuma “contributes in an important way towards JIC’s corporate goals and has the respect and admiration of all her colleagues”.

AmaBhungane and Scorpio can now report that Ngema-Zuma’s last official act at JIC (at least as revealed in the #GuptaLeaks) was to co-ordinate the company’s year-end party in 2011.

In retrospect, South Africans might consider the theme chosen for the evening particularly apt.

On 17 November 2011, Ngema-Zuma addressed an email to her colleagues, requesting that they RSVP.

Ngema-Zuma further noted: “Dress Code for the event is themed ‘MAFIA’.”

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