This administrative sleight of hand allowed the Guptas to import and employ foreign labour at the expense of local jobseekers, and conveniently sidestepped the onerous legal red tape meant to protect South African workers from being overlooked in favour of foreign employees.

Chawla was a key Gupta lieutenant and director of the now-bust Sahara Computers (Pty) Ltd (Sahara Computers), as well as its counterpart in India, Sahara Computer and Electronics Limited (SCEL).

Khosla was Chawla’s co-director at SES Technologies, another Indian company belonging to the Guptas. The #GuptaLeaks show how the pair abused their positions as directors to sign off on the dodgy contracts.

• READ: Second phase of Gupta naturalisation inquiry kicks off

Home Affairs

As Parliament’s home affairs committee last week heard officials explain the intricacies of the Gupta family’s dubious early naturalisation, it also emerged that scores of their non-South African employees were working locally using “intra-company transfer visas”.

Department of Home Affairs director general of immigration Jackson McKay told committee members in his written answers that none of the foreign employees employed by ANN7, or any other Gupta company, were working in South Africa using visitor or tourist visas.

Instead, these Indian nationals were issued with “intra-company transfer” permits. McKay told the committee that an earlier raid on the Gupta-owned television station found 31 Indian nationals working for ANN7 under such permits. A further nine were in South Africa using visitor’s permits, but only to attend meetings.

This means at least 40 foreign employees were working at ANN7 alone.

• READ: Home Affairs immigration head denies knowledge of Gupta visa ‘corruption’

In March this year, former ANN7 editor and Gupta-employee-turned-whistleblower Rajesh Sundaram published his book, Indentured: Behind the Scenes at Gupta TV. In it, he tells of his turbulent months working for the Gupta family as they tried to get the fledgling television news station off the ground. He also directly implicates Chawla in circumventing visa requirements.

“I had heard his (Chawla’s) name mentioned for the first time when I was asked to apply for my temporary residence permit under the intra-company transfer process before I left India for South Africa,” Sundaram wrote.

Sundaram tells of how an Indian executive of one of the main shareholders of Infinity Media, ANN7’s holding company, lamented the difficulties in obtaining a work visa for foreigners in South Africa.

“It can take months to get a South African work permit. It is a cumbersome process. We have to advertise the position in South African newspapers and then wait for six months, after which we provide evidence that we have not found a suitable local candidate. Only then can we start the process of getting a work permit. Even so, if there is an official who does not agree, the request for a work permit can still be rejected.”

But they had a plan.

• READ: Exclusive: Ex-editor reveals Jacob Zuma’s role in creating ANN7

“But Ashu-ji (Chawla) is a genius, and he has found a way around it. We will show the visas of people going to work in South Africa as intra-company transfer. Just fill in the visa form, get police and medical clearance and get back to my office. My office will issue papers certifying that you are an employee of Essel Media being transferred to South Africa.”

Later in the book, Sundaram asked the same Indian executive a question that hinted at how the operation worked:

“But all the people I have recruited to be the core team to launch ANN7 have got contracts from Infinity Media [in South Africa] and not Essel Media [in India]. They have never worked for Essel Media. I hope this is not illegal?”

Legal hoops

The Immigration Act, 2002, and its regulations require a South African business seeking to employ a foreign national to first jump through a plethora of legal hoops before the foreign employee can take up work in a local business.

Björn van Niekerk, operations director for Intergate Immigration, told News24 that a local employer needs to consider South African applicants for the position first.

“An employer intending to employ a foreigner is required to confirm that that they have first made a reasonable effort to find, interview and consider South African applicants for the position that is required to be filled. The employer must confirm that:

• they have conducted a diligent search for a suitable South African candidate;
• they were unable to find a suitable South African with the relevant skills, experience, etc.

The lengths to which the employer went to advertise the position nationally, how many South Africans were interviewed, and why the South African candidates interviewed were not considered would all be taken into account.

“These efforts are assessed by the Department of Labour which will offer a recommendation based on whether they consider the need for a foreigner to be employed, over any potential South African, to be justified. The applicant also needs to have their qualifications assessed and evaluated by SAQA (South African Qualifications Authority).”

These requirements are meant to protect South African jobseekers, and to prevent employers from simply shipping in cheap labour from overseas to do jobs local citizens can perform.

But the Gupta family found a way to circumvent these requirements.

• READ: Rajesh Sundaram: MultiChoice, ANN7 and the president’s stick

Intra-company transfers

By claiming that the applications were for “inter-company transfer visas” instead of “general work visas”, Chawla and his Sahara Computers only needed to show that these employees had been in the service of one of their Indian sister companies for a period of at least six months.

They did this by falsifying and backdating the Indian employment contracts struck with these workers.

The fraud was trivialised because Chawla was also the director of the Indian companies creating the forged records, as well as the South African Sahara Computers that employed them locally. The same occurred between Essel Media and Infinity Media, where the directors of the two companies arranged employment contracts for ANN7 staff from India.

Karan Singh

The documents and emails contained in the #GuptaLeaks shed some light on the logistics of the scheme. Between October 15 and December 15, 2014, 22-year old Karan Singh visited South Africa from his home country of India on the invitation of Sahara Computers and Chawla. He was later joined by his parents and sister: Sunil, Sunita and Vidushi Yadav were also invited by Sahara Computers on tourist visas from December 4 to 10, 2014.

The invitation letter to Singh’s parents claimed that Singh was an intern at Sahara Computers. This is despite a tourist visa prohibiting a foreigner from being employed in the country while issued with such a visa.

During his time in South Africa, Singh also met with Jitendra Tiwari, the human resources professional for Sahara Computers. Tiwari was responsible for the majority of the employment agreements between the foreign employees and Sahara, and the #GuptaLeaks show he was involved with most of the visa applications contained therein. Flight bookings contained in the #GuptaLeaks show that Tiwari accompanied Singh and his family on a flight from Johannesburg to Cape Town and back between December 8 and 10, 2014.

On December 16, 2014, the day after their return to India, Chawla forwarded Singh’s passport to Tiwari, who responded with a draft employment contract between Singh and South African Sahara Computers, appointing him as a “project manager” from January 12, 2015.

Shortly afterwards, Chawla sent an email to Khosla, a fellow director at SES Technologies in India, containing the passport of Singh.

“Please send me an appointment letter in SES for about eight months before as a project manager and I am doing inter-company transfer for him (sic).”

Khosla responded within hours, attaching a backdated appointment letter stating that Singh was appointed as a project manager at SES Technologies. SES Technologies is an Indian company of which Chawla and Khosla were co-directors.

Although the letter was backdated to May 16, 2014, the pair made a mistake. Singh’s commencement date with SES Technologies would only be on July 21, 2014, an error that was picked up on by the South African consulate. They refused Singh his visa on the basis that he had not been employed with SES Technologies for long enough, and on January 11, 2015, Singh wrote to Chawla:

“I will submit [my visa application] tomorrow. They had rejected the application before because the letter [you] had send earlier had date of joining as 21 July 2014, so [they rejected] it as it was not completing 6 months. Will submit it again tomorrow attaching the letter u had again sent me showing 21 May 2014 as the joining date for 6 months in India. Hope the embassy will not complain for the change in date (sic).”

The consulate didn’t complain, and Singh obtained his visa. He landed at OR Tambo International Airport on February 8, 2015. Two days later – on February 10, 2015 – Singh sent Chawla an email containing a scan of his passport and work permit, proudly displaying the words “intra-company transfer permit”.

• READ: ANC, ministers threatened Standard Bank to force it to keep Gupta accounts open, state capture commission hears 

Esheetaa Gupta

A second example originated late in March of 2014. Chawla received an email from Mr Sanjeev Gupta, enclosing his daughter Esheetaa’s resume and payslip for April 2014. Sanjeev Gupta, while unrelated to brothers Tony, Atul and Ajay, was closely connected with the Bank of Baroda’s chief executive officer in South Africa, Murari Lal Sharma. So close, in fact, that Esheetaa Gupta’s resume used Sharma’s mobile number as her South African contact number.

Esheetaa Gupta, an intellectual property lawyer working for a Wipro Technologies in India, was seemingly keen to secure work in South Africa.

On April 4, 2014, Chawla forwarded Esheetaa Gupta’s passport, CV and payslip to his secretary. Later that same day, she scanned and forwarded a bundle of documents signed by Chawla.

Among these was an employment agreement between Sahara Computers and Esheetaa Gupta, confirming she would be appointed as an “IP analyst” from May 15, 2014. It contained a letter from Sahara Computers to the South African consulate, stating the following:

“This letter serves to confirm that Ms Esheetaa Gupta will be transferred from SES Technologies to Sahara Computers (Pty) Ltd for a period of 24 months. This transfer qualifies as an intra-company transfer since these companies form part of the same global group. Esheetaa Gupta holds a foreign contract of employment with SES Technologies in India.”

It also contained a letter dated April 4, 2014, to the South African consulate (erroneously referred to as an “embassy”) from SES Technologies, the same company used to fabricate the employment contract for Singh. The letter from SES Technologies was also signed by Chawla and contained an exact copy of the paragraph confirming that Esheetaa Gupta was employed by SES Technologies.

These documents were sent to Esheetaa Gupta’s father on the same day. Esheetaa Gupta responded to Chawla on May 8, 2014, requesting additional documents, and in particular she required a “job offer letter from Indian company provided earlier at the time of employment”.

• READ: How the Guptas made money while being unbankable

A comedy of errors and mistakes followed, as Chawla and his secretary compiled the documents requested by Esheetaa Gupta.

The pair could not keep their story straight. Suddenly, the employment confirmation letters and backdated employment offer, previously done on the SES Technologies letterhead, resurfaced sporting SCEL letterheads, Sahara Computer’s sister company in India.

The initial set of documents also claimed that Esheetaa Gupta had started working for SCEL as an IP analyst in 2010, a peculiar oddity considering that her resume claimed that she only began working in the intellectual property field a full year and a half later, in June of 2011. Her resume stated that at the time she was employed as a project trainee at Nucleus Software Exports Limited.

The final backdated employment offer sent to Esheetaa Gupta had a more reasonable commencement date of June 27, 2013, although this still does not explain why Esheetaa Gupta’s resume sent to Chawla in April 2014 does not mention either SES Technologies or SCEL in either her employment history or references.

It also does not explain how she obtained a payslip for April 2014 as an employee of Wipro Technologies, if she was an employee of either SCEL or SES Technologies at the time.

Comment requested

Both Esheetaa Gupta and Karan Singh were sent detailed questions regarding these allegations. They were asked to confirm their employment history with either SES Technologies or SCEL, and the reasons for the subsequent intra company transfers.

Despite follow-up requests, neither Singh nor Gupta have responded to our requests for comment.

Khosla was also requested to provide comment on the evidence contained in the #GuptaLeaks but did not respond to our questions.

Questions were also emailed and sent via WhatsApp to both Chawla and his wife, Harsh Chawla. No response has been forthcoming.

It appears that the company’s management has followed the example set by the controversial Gupta brothers and bolted for India. Mediosa recently made headlines, following revelations that the North West government had paid the medical technology company R30m in advance. Mediosa was also providing similar services in the Free State.

This was before Mediosa conducted any work for either province. “Yesterday we did not get paid and there was no communication whatsoever from management regarding not being paid,” Mediosa employee Noxolo Majola told News24.

“We called the lab and the staff said Dr Vijay Balani has gone back to India. We are now worried that all of them will run away to India and leave us hanging.”

Companies and Intellectual Property Commission (CIPC) records show Mediosa Health is managed by Indian nationals Sundeep Kalsi and Inish Merchant.

Staff claim both are out of the country and have not communicated with staff regarding the payment of their salaries.

Yesterday, the SABC reported that the Kalsi’s personal assistant told them that “Kalsi isn’t here, we clossing(sic)”.

Majola also claims that the head of human resources, Nalika Jugwanth, has been avoiding their calls.

Suman Kar, who is apparently running the business in the absence of Inish Merchant, has also failed to communicate with employees.

Clear relationship

The Gupta Leaks emails show a clear relationship between the Guptas, Mediosa and its directors.

The first semblance of what would become Mediosa is contained in an email from Sunil Sachdeva, sent on May 9, 2015 to Tony Gupta.

Attached to the mail is a PDF titled “Doctors on Wheels” which details plans for a “mobile medical unit” closely resembling Mediosa’s operations.

Anita Roy was the author of the document. Roy followed this up with a document titled “MOU-Free State” on June 2, 2015. Curiously though, the draft agreement was between an Indian company called Cureva Pvt Ltd, and the Free State Department of Health. Sachdeva is a director of Cureva India.

The MOU (memorandum of understanding) contained a clause stating “[Cureva India] requests The State to use its domain expertise in Legal and Regulatory subjects to facilitate the sourcing of the equipment from outside of South Africa and more particularly from India.

“[Cureva] also requests the State to streamline the process of manpower entry into the State from India and elsewhere for the duration of the mobile facility, subject to the accreditation and registration of the manpower in India by appropriate authority, and provided that such an entry shall be specific to the contract/agreement with the State.”

Mediosa’s management has links to the Guptas and several Indian-based companies. (Graphic: Jean le Roux.)

Cureva India was literally asking the Free State provincial government to pay it to procure goods, services and employees from India. In July 2015, the Guptas purchased a shelf company called Dinovert (Pty) Ltd.

Roy and Sunil Kumar were initially appointed as the directors of Dinovert.

Dinovert changed its name to Cureva (Pty) Ltd, and eventually to Mediosa Health (Pty) Ltd in late 2017. Roy was so inspired by her role in Mediosa that she penned a blog post on LinkedIn about her experience.

Over time, the directorship of Dinovert changed. Notably though, former Minister of Mineral Resources Mosebenzi Zwane’s special advisor Kubentheran Moodley was appointed as a director from August 25, 2015 until June 12, 2017.

Both Zwane and Moodley have links to the Guptas through the Optimum Coal Mine. At present, Inish Merchant and Sundeep Kalsi are the directors of Mediosa Health.

In early February, Merchant told City Press reporters that “there is no connection at all” between himself, Mediosa and the Gupta family.

READ: Gupta friends in state’s health pie

But the Gupta Leaks contradicts this claim.

On June 15, 2015, Ashu Chawla was requested to provide a visa invitation letter for Merchant’s visit to South Africa.

Chawla cleared this with Tony Gupta, and on June 17, 2015 a letter was sent to the South African High Commission in New Delhi.

Sporting a Sahara Computers logo, it requested the High Commission to issue a business visa for Merchant.

A similar letter dated 4rd (sic) February 2016 is also contained in the Gupta Leaks emails.

Both letters indicated that Merchant would be staying in Saxonwold Drive for the duration of his stay.

Indian companies Dinovert’s sole shareholder was a company called SAS Global Services Limited, a Dubai-based company.

In a previous investigation, News24 reporters were unable to find any physical presence of the company in Dubai.

Staff at the 39-story office block listed as its address had never heard of SAS Global.

READ: Dubai: the Guptas’ city of shells

But Indian company records show Sundeep Kalsi is a director of several companies, including SAS Infrabuild, SAS Servizio, SAS Infotech and SAS Heights.

In the majority of these companies, Sunil Sachdeva, the Cureva India director, is Kalsi’s co-director. Company records also show that Cureva India’s contact email is “sas@sasgroup.in”.

A company called Ramsons Projects ties all of this together. Sachdeva and Kalsi are two of the directors of the company. Ramsons’ 2016/2017 Annual Report listed Roy is a director of the firm, and between Sachdeva’s and his companies, he controls 45% of the shareholding.

Ramsons’ business address is the same as the one used to register the sasgroup.in domain name, used in Cureva India’s email contact.

Goodbye

On Friday, Minister of Health Dr Aaron Motsoaledi called on the North West Premier Supra Mahumapelo to sack the province’s health department head, describing Mediosa as an ATM used to loot from the state.

None of this will reassure the employees of Mediosa that they will be paid.

Management informed staff they would be paid on March 6 at the earliest, but this was before the apparent abscondment of the firm’s management.

Payment troubles have haunted Gupta-linked companies in recent weeks. Staff at the Optimum mine in Mpumalanga downed tools last week after not being paid on time.

The mining company is one of eight companies with ties to the Guptas that initiated business rescue proceedings last week. Staff at The New Age and ANN7 were also paid late this month. Management of the media companies ascribed the delays to a “payment glitch”.

The Guptas sold the media companies to Mzwanele Manyi’s Lodidox last year in a vendor financed arrangement.

The Guptas are well known for their alleged role in state capture in South Africa. But the #GuptaLeaks show how Gupta lieutenants allegedly went about capturing an Indian aviation company.

Heritage Aviation is an Indian aviation company with no apparent direct links to the Guptas or South Africa. The company was formed in 2009, operating mostly chartered pilgrimage and temple tours from a small helipad in the unfortunately named town of Guptkashi.

But the leaked Gupta emails show how its sole director, Rohit Mathur, was duped, browbeaten and eventually strong-armed into giving up control of Heritage to the Guptas.

– See the GuptaLeaks site

A fiddling enterprise

To set the scene, we take a step back. Last year, News24 journalists Pieter-Louis Myburgh and Angelique Serrao attempted to crack open the City of Shells. Tellingly, it was what they didn’t find in Dubai that was of significance: of the six Gupta associated companies linked to Dubai, only one, Griphon Line Trading, had an actual office. And even that office appeared permanently closed.

Dubai is a low-disclosure jurisdiction, which means obtaining official records of company shareholding and directorships is extremely difficult, if not impossible.

One of the shell companies News24 journalists could not find in Dubai was Fidelity Enterprises Ltd. Fidelity was traced, using information in the #GuptaLeaks, to Al Quoz, an industrial district in the western reaches of the city. There the trail went cold among the dusty warehouses: locals had never heard of Fidelity, nor did they have any idea where its business address was.

READ: Dubai: the Guptas’ city of shells

Except for a brief mention in Oakbay Resources and Energy’s pre-listing documentation, no apparent links exist between the businessmen from the rural town of Saharanpur and Fidelity.

Until the #GuptaLeaks.

Fidelity is first mentioned in the #GuptaLeaks in a string of dodgy transactions between Gupta-linked companies starting June 1, 2011. SES Technologies (SES), another Gupta-linked company based in India, transferred US$400 000 to Fidelity, with the payment confirmation sent to Ashu Chawla. Chawla was a director of SES at the time and a known Gupta lieutenant. On February 15, 2018, Chawla appeared in the Bloemfontein Magistrate’s Court on charges relating to the Estina dairy farm, where millions in state funds intended for developing emerging farmers were funnelled to the Guptas.

A relationship between Fidelity and the Guptas could also be witnessed in several other transactions. A US$1m payment was made to Oakbay Investments on March 5, 2014. An unsigned loan agreement was sent to Gupta lieutenant Ronica Ragavan’s JIC Mining email address. In the agreement Fidelity undertook to lend $15m to an as-yet-to-be-identified borrower. It is clear from the #GuptaLeaks that service providers were frequently requested to invoice Fidelity for trips undertaken by the Gupta brothers.

In February 2012, Gupta-owned Sahara Computers paid Fidelity US$1m for “software”. A few days later Sahara paid another US$180 000 into Fidelity’s dollar account, as well as EUR320 000. Considering the exchange rate at the time, Sahara paid Fidelity at least R12.2m in February 2012 alone.

Not bad for a business without an address.

Pre-flight inspection

Fidelity’s lofty aviation aspirations took off in mid-2014. On June 6, 2014, Fidelity sent a letter of interest to Green Lane Capital Corporation. This expressed Fidelity’s interest in purchasing a 2005 Agusta A109E helicopter.

While Fidelity had an aircraft, it still needed an operator in India licensed to use the helicopter over there.

Heritage Aviation, headquartered in India, had previously managed another aircraft on behalf of Sahara Computers. Sahara leased its Beechcraft King Air B300 (bearing registration number VT-ACD) airplane to Indian company Air Charter Services. Heritage was without a licence at the time, and was mainly responsible for the logistical arrangements around the aircraft.

After obtaining its own licence in May 2014, Heritage Aviation’s Mathur requested Ajay Gupta “to kindly give me an opportunity about the lease of aircraft to my company so that I can start the procedure in DGCA (director-general of civil aviation) immediately”. The director-general of civil aviation supplied a no-objection letter to Heritage Aviation on October 9, 2014, giving it the green light to operate.

The problem was simple: Fidelity had the aircraft, but needed an operator in India; Heritage had an operator licence, but needed aircraft to fly. Their solution was to have Fidelity lease its aircraft to Heritage, thereby securing Fidelity an income while allowing Heritage to pocket any profit it made after the cost of the lease was accounted for. Heritage would fly charter services, charging wealthy individuals for the privilege of private flights.

Fidelity was greedy: as a foreign company, Fidelity would be taxed 25% of the lease revenue in terms of Indian tax legislation. Its tax obligations could be reduced to only 10% if the transactions were funnelled through a permanent account number (PAN) member. As Suresh Tuteja, former chief financial officer of Sahara Systems in South Africa, pointed out in correspondence to Chawla, Fidelity either had to apply for a PAN itself, or make use of another entity that was already a PAN member.

On October 16, 2014, Gupta lawyer Martinus van der Merwe, of the firm Van der Merwe and Associates, supplied Chawla with a new lease agreement between Fidelity, Heritage and Islandsite Investments 180. This appears to be an attempt to structure the agreement as per Tuteja’s instructions. Islandsite is a Gupta investment holding company, and owns, among others, the Guptas’ Sahara building in Midrand and the family’s R17m Constantia compound in Cape Town.

READ: The Guptas’ Saxonwold-lite home in Cape Town seems to be heavy on water

The plan was abandoned when it became clear that Islandsite would be in the same position as Fidelity in terms of its tax obligations, and that Heritage had already informed aviation authorities that the aircraft would be leased from Fidelity.

The deal was decidedly global. The seller was in the United States. The buyer, a company in Dubai, managed from South Africa. An operator was waiting in India, eager to take on the helicopter waiting in Rio de Janeiro. The contractual wrangling between Green Lane Capital, various brokers, Fidelity and eventually Heritage was facilitated by the Guptas’ lawyers in South Africa at the time.

Headwinds

Heritage’s Mathur attempted to negotiate better terms for himself and his company in respect of the lease agreement.

His attempts were shut down by Chawla and Tuteja. On November 24, 2014, Tuteja drafted an email to Mathur on behalf of Chawla.

“I am really surprised to receive your mail in which you mentioned that you need below mentioned amendments in the signed agreement which you have already signed and received from FEL (Fidelity). Now once the helicopter is in transit you need the amendment in agreement without any reason for it.”

Fidelity and Heritage finalised the lease agreement on Chawla and Tuteja’s terms on January 20, 2015. Heritage would lease the aircraft for 20 million rupees per annum, payable in quarterly instalments of 5 million rupees. This equated to R3.6m per year, payable in quarterly instalments.

Turbulence

At around the time that Mathur signed the lease agreement for the Agusta helicopter, Chawla and Tuteja were engaging Airbus Helicopters to purchase another two aircraft. On February 21, 2018, Airbus invoiced Fidelity Enterprises for two Airbus AS350 B3e helicopters. The purchase price for the aircraft was just short of R51m and R2.5m was paid to Airbus on February 23, 2015, securing the brace of aircraft.

The legal vetting was once again undertaken by the Guptas’ attorney, Van der Merwe. Mathur’s Heritage Aviation was approached to lease the aircraft, and the deal was finally concluded on March 5, 2015.

On March 7, 2015, Mathur once again attempted to negotiate better terms in respect of the lease agreement between Fidelity and Heritage.

“I don’t want to make any commitment to you which becomes difficult for us to honour. I am also providing first 50 hours as absolutely free of flying charges. Therefore Rs 2.5 Crores (25 million rupees) lease will be too much for my company and so I will sincerely request you agree to my suggestion,” he pleaded.

Chawla and Tuteja pushed ahead remorselessly.

At the same time, Chawla and Tuteja arranged for Heritage to take over the lease of Sahara Computer’s Hawker Beechcraft Beechjet 400XP for another 7.5 million rupees per annum.

The aircraft was transferred from Lanseria’s Execujet (using registration number ZS-POT) to Heritage Aircraft (using registration VT-HBX). Heritage entered into a lease agreement with Sahara Computers at 7.5 million rupees per annum. The transfer was concluded in mid-2015.

The final lease agreements saw Heritage coughing up US$400 000 to lease each of the two B3s, 5 million rupees per year for the Agusta and another 7.5 million rupees per year to lease the Beechcraft. Heritage had been bound to a total annual obligation of almost R25m per year towards the Guptas.

Brace for impact

Between November 2014 and June 2015, Fidelity engaged Heritage with a view to establish a joint venture between the two companies. It made business sense: Fidelity had planes, and Heritage had the licence needed to operate in India the planes it had leased from Fidelity.

From correspondence in the #GuptaLeaks, it is established that Heritage insisted on a 50/50 partnership. Ajay Gupta, Chawla and Tuteja were however pushing Mathur to settle for a 51/49 partnership in their favour, in essence giving them control over Heritage. On April 6, 2015, a final joint venture agreement was sent to Mathur. He appears to grudgingly agree to the 51/49 ownership.

It is unclear if the joint venture went ahead. But on September 12, 2015, Heritage hit turbulence.

In a letter dated September 11, 2015, addressed to Heritage, Fidelity informed Heritage it was in breach of the lease agreements it signed. Fidelity required Heritage to pay 15 million rupees and US$400 000 in terms of the first and second lease agreements respectively, within three days. Should Heritage fail to pay, Fidelity would terminate the lease agreements and inform the DGCA, resulting in a termination of Heritage’s operating licence. Heritage had to find a way to pay nearly R9m within three days, or lose everything upon cancellation of the leases.

Four days later Tuteja and Naresh Khosla, a former employee of Sahara Computers in India, met with Mathur, and attempted to convince him to hand over his financial control of Heritage to Tuteja. Mathur would only be allowed to keep operational powers.

“Tuteja ji also… threatened in a subtle way that if I don’t agree to his suggestion, bosses will take a decision on closing the operation,” Mathur confided to Chawla later that day. Chawla promptly forwarded the message to Tuteja.

“When we were discussing final points of JV [joint venture] with Ajay Sir around 22 April you were also on the phone line. Ajay Sir told me that I must agree for giving 51% stake to Sahara and in return all management rights will always remain with me. I am very eager to understand why after 1 – 2 months of getting NSOP (operator permit) I am being pressured to give away financial powers. Why there is a drastic change in your stand?” The response and eventual agreement reached with Mathur is not clear.

It was a case of Heritage needing Fidelity’s aircraft more than Fidelity needed Heritage to operate them. While Fidelity could easily lease its aircraft to another operator, Heritage was entirely dependent on Fidelity’s aircraft for its income. Heritage could either agree to the Guptas’ demands, or stand to lose its sole means of generating revenue while still owing millions to Fidelity.

Disarm doors and crosscheck

Less than two months later, Indian company records show Mukul Tekchandani was appointed as a director of Heritage Aviation. Tekchandani is also a director of SES Technologies, a company directed by Chawla’s wife, Harsh.

In the weeks following his appointment, Tekchendani sends weekly financial reports and cash flow statements to Chawla. Mathur’s correspondence dwindles and is limited to operational matters – pilot’s salaries, maintenance expenses and insurance costs for the company.

Mathur is still listed as the contact person for Heritage Aviation. As of February 1, 2018, aviation records show that Heritage sports an additional two Airbus Helicopters EC130 helicopters that have been added to the fleet, as well as the Beechcraft B300 that Mathur used to manage on Sahara’s behalf. This brings the operator’s fleet to a total of five helicopters and two airplanes.

Despite requests for comment, neither Mathur nor Chawla responded. Detailed questions to Van der Merwe and Associates were also not responded to.

It remains unclear exactly how much money the Guptas have allegedly ferreted out of the country. The web of shell companies, opaque shareholding and the Gupta’s use of their lieutenants make tracking down their companies difficult. But if their conduct in Heritage Aviation is anything to go by, millions of state funds could already be locked away in entities without any clear links to the Guptas.

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.
• Scorpio is the Daily Maverick’s new investigative unit. If you’d like to support its work, click here.

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.

• Scorpio is the Daily Maverick’s new investigative unit. If you’d like to support its work, click here.

• 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.

It is Tony who is thought to have the closest relationship with President Jacob Zuma’s son Duduzane, as evidenced by the fact that Tony was the first person who Duduzane phoned after getting into a car crash in 2014. Duduzane and Tony have shared directorships of several companies, including empowerment vehicle Mabengela Investments.

The #Guptaleaks emails suggest that Tony holds some unpleasant racial attitudes, having called security guards “monkeys” and having asked Sun City to confirm that all butlers used at his niece’s wedding would be white.

By 2016, Tony had reportedly already started spending more time in Dubai than South Africa. The family owns a house in the Emirates Hills estate. Tony is married to wife Arti.

The two newspapers had access to a trove of about 650 e-mails sent between the Gupta brothers, their associates and others.

Today Scorpio, the Daily Maverick’s newly launched investigative unit, and amaBhungane, the independent investigative non-profit, start publishing stories from a much, much wider trove: a few hundred gigabytes of information containing between 100,000 and 200,000 unique e-mails and a host of other documents. This we call the #GuptaLeaks.

Why did we not publish before? Why did we let ourselves be “scooped”? The answer is in what we shall call a story of heroes and the misguided.

The heroes are whistle-blowers who may be risking their lives to expose the truth, and others who assisted in the process. For now, for their safety, they shall remain unsung.

The misguided are people whom we had trusted and let into the process, but who took a copy and without our knowledge caused a selection to be leaked to the two newspapers last week. Their motive was short-term political gain.

They seem to have thought they could influence the ANC National Executive Committee to recall the president. They failed.

Our approach was different, based on journalistic values. We had the information for some time, but held back in the interests of in-depth inquiry and the safety of the whistle-blowers.

The first consideration was informed by the nature of the information. There was some low-hanging fruit, yes – many examples of which were in the sample that was leaked to the two newspapers.

But much of the data is such that it requires a painstaking assembly of pieces of a very large puzzle, combining what is in the #GuptaLeaks with external information.

The second consideration is Journalism 101. One does not publish before taking all reasonable steps to secure sources who may be in harm’s way. Full stop. Those who caused the sample to be leaked to the two newspapers appear to have put expediency above the whistle-blowers’ safety.

Our plan had been to research thoroughly, for months if needed be, to get a sizeable proportion of the really important stories ready before first publication. That way, should there have been any attempt to stop us after first publication, we could have put it all out at once. That too is Journalism 101.

So why do we start publishing now?

The horse has bolted. The whistle-blowers’ safety no longer lies in delaying publication, but in us declaring the full extent of what is out there. Shutting up the whistle-blowers will not plug the leak because we have all they had.

Coming for us will not help either. It was our plan eventually to place the full #GuptaLeaks on a platform accessible to the wider media for further investigation.

We have now brought that forward and placed the full #GuptaLeaks in the care of an offshore organisation which will load it to a secure platform, from where it will soon be accessible to many bona fide journalists, including the Sunday Times and City Press. We bear them no grudge as they did not know the context.

This information is both too dangerous and too important not to share. Let the people know

• Listen to Sam Sole discuss #GuptaLeaks with Radio 702’s Xolani Gwala.

Editorial clarification

Following the initial publication of this editorial on June 1, 2017, it has transpired that some readers interpreted it as criticism of the Sunday Times and City Press’s handling of the leaks. This was not our intention and we would like to make it clear that our displeasure was limited to those “who caused a selection to be leaked to the two newspapers”.

The “Journalism 101” comments were made to distinguish our journalistic motives from what we regarded as the political motive of, again, those who “caused a selection to be leaked”. We do not question the two newspapers’ call to publish. The facts and context they had before them were very different to what we had before us. Were we in their shoes, we may well have done the same.

We regret any offense and emphasise that we see the Sunday Times and City Press, like bona fide media everywhere, as partners in uncovering this very important story.

A source familiar with the Guptas’ business associates says Essa first became acquainted with Rajesh “Tony” Gupta in 2011. The two soon became fast friends, and before long Essa and the Guptas, along with Duduzane Zuma, were exploring business opportunities together.

Other sources familiar with the Guptas have claimed that Essa acts as a proxy for the controversial family.

Essa, through his company Elgasolve, is the majority shareholder in VR Laser Services, a company that has come under fire over its work with state-owned arms manufacturer Denel. VR Laser’s other shareholders are Tony Gupta and Duduzane Zuma.

Through Elgasolve, Essa also holds a 22% stake in Tegeta Exploration and Resources, the Gupta-owned mining firm that bought the struggling Optimum Coal Mine from multinational Glencore.

In one of the first major #GuptaLeaks exposés, Essa was identified as the main role-player in a racket that could see kickbacks worth billions of rands from Transnet’s R50 billion tender for new locomotives being channeled to the Gupta lieutenant.

Trillian Capital Partners, a company majority-owned by Essa, has been in the spotlight over lucrative transaction advisory work it has performed for Eskom and Transnet.

Unlike his siblings, Ajay does not have South African citizenship, and has been living in the country on the status of a permanent resident since 2003. His brother Atul says Ajay is the brains of the family: “a genius, out-of-the-box thinker”, and that he will “cancel any meeting” to play cards with his ageing mother. It is Ajay who is believed to call the shots in the Guptas’ business empire, and Ajay who has the strongest interest in politics.

He is described on his company website as an “avid sports enthusiast”, and is married to Shivani. He has two sons, Surya and Kamal Singhala Gupta – the latter of whom is involved in Gupta businesses including VR Laser.