amaBhungane and Scorpio

It must have been good news for Piyoosh Goyal when the State Bank of India approved his Rs750m (R120m then) loan.

So good that he then sent his agent to a senior banker’s Mumbai home on a Sunday with two expensive watches and a fistful of cash. At least, this is what the Mumbai branch of the Central Bureau of Investigation (CBI) later claimed.

Their anti-corruption investigators had lain in wait, that November 2013, and they arrested Goyal’s alleged agent when he emerged from the banker’s home.

Then they raided the home where they said they found the two watches and the cash. Simultaneously, they raided Goyal’s premises, where they claimed to have found “incriminating documents”.

The investigators laid charges of bribery and collusion against Goyal, his alleged agent and the banker.

Find all you need to know about #GuptaLeaks here

According to Indian journalists, the investigators’ evidence included more than 70 hours of recorded conversations. They also interrogated Goyal’s agent for half a day.

Goyal’s Delhi-based scrap metal company, Worlds Window Impex India, issued a statement the next day denying the allegations.

The bank got two senior staffers to investigate. Within days, they cleared their colleague of wrongdoing.

But the CBI continued to investigate and, in January 2015, it filed a charge sheet with a Mumbai judge, a spokesperson told us.

“The matter is sub judice,” he said, meaning CBI would not comment as the case was still before court.

Goyal’s questionable Indian bank loan was just the tip of an iceberg.

In this article, we reveal that by the time CBI charged Goyal, he and Worlds Window had for four years helped the South African Guptas to move the equivalent of hundreds of millions of rand between China, India, SA and the UAE, using hundreds of suspicious transactions.

Devotee, entrepreneur

Goyal founded Worlds Window in Delhi in the 1990s. He was in his early 20s. Business people described him as a “first generation entrepreneur” and a “young and dynamic businessman”.

He started by importing and trading scrap metal. Then he expanded the group into logistics, manufacturing and – after he met the Guptas in 2010 – coal mining in SA.

In 2008, Britain’s biggest metal recycler, European Metal Recycling (EMR), bought a 49% Worlds Window stake from Goyal and other shareholders. EMR holds the stake to this day, and has regularly injected cash into the business (see story below: #GuptaLeaks: Liverpool company owns 49% of Indian firm implicated in kickback scheme).

EMR told us: “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.”

SEE: The Guptas’ bogus Dubai businesses

Worlds Window has claimed to be one of India’s largest scrap importers; however its financials suggest it was a relatively modest operation.

In the financial year ending in March 2011, the group’s holding company, Worlds Window Impex India, bought scrap worth R1.7bn. This was about 5% of the total Indian imports at the time. It said it sold a little more than this and, after operating costs, was left with R57m.

We note these numbers because, as we shall see, they were small compared to the tide of money then washing between Goyal-linked companies and the Guptas.

Before the CBI bust, Goyal had kept a modest profile. He appeared on podiums and in a few puffy news pieces as the esteemed company executive. Otherwise, he occasionally graced the pages of International Society for Krishna Consciousness newsletters.

The society described him as a donor, “senior devotee” and the “midday meal director” for Sri Sri Radha Parthasarathi Temple’s feeding programme, in south Delhi.

^{Piyoosh Goyal, right.}

He told us that because he had resigned, he could not answer our questions on Worlds Window’s behalf.

Yet, analysts at an Indian credit agency still describe Goyal as Worlds Window’s promoter. His father stayed on after 2013 as “group mentor” and a “key person”, according to its website. And at least 41 Worlds Window companies remain registered to the address Goyal declared on his 2012 tax return.

Goyal gave us limited written comment for this article, and Worlds Window ignored us despite repeated attempts to elicit a response.

However, one man came forward to offer a spirited and detailed defence for them. He did not want to be named, so we shall call him Mr Patel.

Meeting the Zuptas

Mr Patel is a senior figure in Worlds Window.

He said Goyal first met the South African Guptas through a common friend in India in 2010. The Guptas then introduced Goyal to their business partner Duduzane Zuma, the president’s son.

They encouraged Goyal to invest in SA, telling him: “We have lots of mines, and you will not face any problem. We know everybody.”

Worlds Window quickly joined the “Zupta” party, it appeared.

An August 2010 accounting record from the #GuptaLeaks described that someone from Worlds Window spent more than Rs700 000 (about R100 000 then) on “SA… President’s Clothes (Cash)… India”. The Guptas later paid them back. Jacob Zuma had officially visited India two months earlier.

We asked Mr Patel if they had bought clothes for Zuma. He said: “I can remember cloth has been purchased for Zuma and his wife. There is chances payment made by us [sic]. Don’t remember exactly. It was more than eight or 10 sets for each.”

He added: “As I remember, president used Indian cloth in India, so assuming paid by Gupta as we never met president in India [sic].”

Jacob and Duduzane Zuma and the Guptas failed to reply to our questions. South African brother Atul Gupta previously told the BBC the #GuptaLeaks were fake.

That same month in 2010, Goyal and the Guptas did one of their first big deals.

WATCH: Inside the controversial Gupta Free State dairy farm

It was dressed up as Worlds Window investing in two South African coal mines, but it appeared to be a sham, as we previously reported.

In the deal, a subsidiary of Worlds Window Impex India, the group’s flagship, transferred $4.43m (R31.5m then) to the Guptas’ Oakbay Investments in SA.

That was a lot of money for Worlds Window Impex; in fact, it was more than half of its operating profit for that year, so you would expect its subsidiary would have placed a reasonably sure bet.

Apparently not.

Worlds Window had paid for minority shares in two dormant companies that owned two questionable coal prospecting rights in SA – worse, share registers show the Guptas did not transfer the shares to Worlds Window.

Even worse, it appeared that there was no coal and the project was abandoned two years later.

Oakbay got money for nothing.

^{A purported coal deal in 2010, in which Worlds Window gave the Guptas money for nothing and never got it back.}

Our recent report compared this to two nearly identical Gupta deals in which they appeared to launder stolen Transnet and Free State provincial government money back home. It appeared to be a modus operandi.

But Mr Patel denied Worlds Window was party to a sham. He said the R31.5m was “for profitable mining”. He said: “They issued the share to us, but they might have done a fraud [sic].” He sent us a copy of Worlds Window’s purported share certificates.

Worlds Window sent its South African lawyers to investigate the fate of their money – but it only did this a full six years later, after the Gupta scandal blew up in SA. Mr Patel said the group was now considering taking legal action to recover the money.

Flying high

By early 2011, Worlds Window had registered two subsidiary companies here, and Goyal was a regular visitor.

The #GuptaLeaks show how Gupta employees made sure his travels were comfortable. They arranged his luxury airport pickups and Saxonwold meetings with South African Gupta brother Tony.

They hosted Goyal and his wife at their luxury Clifftop Lodge in Welgevonden Game Reserve in Limpopo. A helicopter was to transport the Goyals there, and the Guptas booked them into the lodge’s honeymoon suite, according to the leaks.

In 2011, Gupta staff chartered flights to carry the Gupta and Goyal families from Delhi to watch the Cricket World Cup final in Mumbai. They were joined by the family of a powerful Indian politician who was at the time a cabinet minister.

India beat Sri Lanka by six wickets.

Later that year, Goyal and the Guptas handled some travel arrangements for the politician’s adult son and the son’s wife when the couple visited Cape Town for Christmas and New Year. The Guptas paid for their stay at the luxurious Queen Victoria Hotel at the V&A Waterfront, the #GuptaLeaks show.

READ: Tegeta buyer ‘hid’ Gupta assets before

More recently, Worlds Window transferred ownership of one of its shell companies to the politician – who refused to explain the deal to us (see story below: #amaBhungane: Indian politician’s deal with Gupta partner).

In 2014, when Tony Gupta needed a helicopter for a 250km trip in the western Indian state of Gujarat, he called upon Goyal. Goyal wielded his apparently significant influence there: A senior Gupta staffer emailed him the travel details and Goyal forwarded this to billionaire industrialist Gautam Adani.

Adani and his global industrial group of the same name form a political and financial powerhouse in India. He is reported to be close to Indian Prime Minister Narendra Modi.

Goyal wrote to Adani to vouch for the Gupta staffer: “He is Ajay’s [one of the Guptas] brother can you help pls. Thx nd rgds.”

Adani quickly wrote back: “I don’t have helicopter, but if he require the plane let me know and will provide him… Gautam.”

Not two years later, the Guptas and Adani cobbled together a would-be weapons deal that, as we previously reported, was set up to enrich them at the expense of South African state arms manufacturer Denel.

Down to business

Worlds Window’s apparently pseudo mining investments and Goyal’s South African visits seem to have set the framework for a more lucrative business – money laundry.

Some time back, amaBhungane received an anonymous tipoff implicating Worlds Window and the Guptas in ports corruption in South Africa in 2011.

It said: “ZPMC has been inflating prices of their cranes at the ports, particularly the seven cranes purchased for port of Durban, by more than 15% to accommodate bribes that included many senior Transnet officials.”

ZPMC is the name commonly used by Chinese state-owned crane manufacturer Shanghai Zhenhua Heavy Industries.

Our anonymous tipster described the alleged role of “a representative of the Guptas” who arranged kickbacks through a Worlds Window account in the UAE.

This was Naveen Agrawal, a long-time director of the Worlds Window group. He did not respond to our questions.

We found one chain of correspondence in which a group of people discussed ZPMC’s crane bid. They named a “Naveen” who appeared to advise ZPMC on how to engage with Transnet on another crane tender.

We also found an “agent agreement” – often of a cover for bribes and kickbacks – between ZPMC and a UAE-registered company called JJ Trading. The contract and related documents explain how the cranes were only worth $81m (R570m then), but ZPMC inflated the price to $92m (R650m then) to make room for “commissions and fees” for JJ.

The person who signed on behalf of JJ was not identified.

At about the same time, a senior Gupta staffer emailed Goyal a confidential Transnet document, outlining a separate, upcoming crane tender.

The document metadata indicates it was drafted by an employee in Transnet’s Office of the Chairperson and Group CEO. Then Transnet chief executive Brian Molefe told us he did not know how the Guptas got it. For years, Molefe has been questioned for his proximity to the Guptas.

ZPMC denied it was party to corruption; Transnet said it was investigating, and Goyal did not explain the latter email exchange when we asked.

So, who was JJ Trading, the company that had signed the “agent” agreement with ZPMC? Was it controlled by Worlds Window as the tipoff suggested?

A desert mystery

Ram Ratan Jagati probably did not intend to become the public face of an international money laundromat.

His social media profiles identify him as “manager at JJ Trading”, but no-one answered his or JJ’s phones or emails. We were left to piece together his profile using snippets of information online and in the #GuptaLeaks.

JJ’s website advertises its experience as a trader of scrap metal, rice, beans and other commodities.

Jagati’s social media profiles show him to be balding, moustached, bespectacled and neatly dressed. He appears to live in Sharjah, in the UAE, but states that he comes from Ahmedabad in India.

                                               ^{Ram Ratan Jagati, JJ Trading “manager”.}

JJ is registered in the UAE’s Hamriyah Free Zone, a financial haven that keeps company owners’ identities a strict secret.

Jagati lists at least 41 Worlds Window staffers and directors as his Facebook friends – but emails in the #GuptaLeaks show he was more than just a “friend” to the group, particularly when moving money for the Guptas.

In one email to Jagati, a Worlds Window director said: “Dear Ram Ratan. Please provide [$1m] to Arctos.” The director copied in a Worlds Window administrative employee.

Arctos Trading is one of the two Worlds Window subsidiaries established in SA. It managed a Gupta mine in Mpumalanga.

Jagati replied with proof of a $1m wire transfer from the UAE-registered IMR General Trading to Arctos. He copied two Worlds Window staffers.

Goyal at least part owned IMR, the #GuptaLeaks show. One online UAE business list recorded “ramratanjati@yahoo.com” as IMR’s contact – a misspelling of Jagati’s actual email address. Another listed “admin@worldswindow.cc”.

Jagati’s proof of payment from IMR to Arctos claimed the money was for the “purchase of metal scrap”, but a Worlds Window staffer then forwarded this to a Gupta manager “for your reference”. A trailing email notes that it was “payment for [Bank of Baroda] instalment” – contradicting Jagati.

In other words, money had moved but the commercial explanation was a fiction. And the sequence of events reveals Jagati to have been a Worlds Window and Goyal factotum.

^{Another apparently fictional deal, handled by JJ Trading’s manager Jagati for Goyal and Worlds Window, evidencing Jagati’s place in their international network.}

More emails underscored this.

Shortly after Transnet gave ZPMC the crane contract, a #GuptaLeaks accounting document appears to record JJ’s receipt of $969 086 (R8m then). It is described as “Shanghai Zhenhua Heavy Industries”, ZPMC’s full name.

Shortly after this, a Gupta accountant emailed his colleagues instructions on how to distribute a larger sum – $3.3m, apparently including the ZPMC payment – to three Gupta-owned companies in India.

One of the Gupta staffers then sent the email to Jagati and a senior Worlds Window accountant, and JJ promptly wired the funds from its account at HSBC to the three Gupta companies.

JJ and, again, Jagati appeared to answer to Worlds Window.

                     ^{Worlds Window and the Guptas used JJ Trading and Jagati to move kickbacks.}

It wasn’t me

No, answered Goyal. “I am not the director, promoter or even employee of JJ. We [Worlds Window] never received any money either from JJ or Gupta [or] ZPMC.

“I have neither met any officer/executive of ZPMC or Transnet, [and] we were never involved in any Transnet related business so I will be highly obliged if you don’t link my name.”

He added: “For your satisfaction, we may provide you even certificate from chartered accountant that whatever business Worlds Window did with Gupta, it was 100% as per law. Even we declare all investment in our account books or whenever required informed government authorities also [sic].”

For several weeks, he did not come up with the promised accountant’s certificate. Then, in response to final questions last week, he again promised to produce one, supposedly to clear Worlds Window.

He told us: “You are misusing your writing power. With all respect, I have doubt on your intention.”

He later appeared to accuse us of drafting fiction: “Let me appreciate you are good story maker.”

Transnet spending spree

The next year, 2012, the Chinese state-owned locomotive manufacturer China South Rail (CSR) was bidding to sell Transnet 95 new locomotives.

Goyal and the Guptas got involved, #GuptaLeaks emails show.

In January, a CSR deputy director emailed Transnet CEO Molefe and CSR’s vice president. He attached a letter requesting to visit Transnet sites in South Africa.

The CSR deputy director forwarded the email to a Worlds Window group director, Rupesh Bansal.

Bansal forwarded the email to a Worlds Window staffer, commenting in broken English: “Please provide this letter copy along with update on previous email as required by Piyoosh Ji.” Recall that this is Goyal’s first name. “Please suggest him that this is the letter is sent and the points mentioned in letter are practical and to be pursued by CSR.”

The Worlds Window staffer passed the email to Goyal’s assistant, who passed it on to a senior Gupta manager and to Ajay Gupta’s son.

Meanwhile, Molefe responded – politely and appropriately – to CSR. Someone also sent this email to Worlds Window and Goyal’s assistant. She passed it on to the Guptas.

Evidently, Goyal and the Guptas’ mutual interests extended well beyond mining.

Goyal failed to explain when we asked him too.

CRRC Corporation Limited, which absorbed CSR in 2015, has not answered our questions.

We could not reach Bansal for comment.

Kickbacks

In October 2012, Transnet awarded CSR the R2.7bn 95-locomotive contract.

And, as we previously reported, CSR then started kicking 20% of the contract back to JJ and a related company called Century General Trading.

Century General is also registered in a UAE financial secrecy haven. Like JJ, its website claims that it trades scrap metal, grains and beans. And Ramratan Jagati – the JJ “general manager” who takes orders from Worlds Window and spends Goyal’s company’s money – registered its website.

A joint Worlds Window-Gupta accounting document, discussed later, shows CSR made one of its first payments – $6m (R50m then) –  to Century General in December 2012. In the following weeks, JJ and Century General wired at least $2m (R17m then) from their accounts at HSBC in Dubai to the Guptas’ front companies.

Next, Transnet ordered another 100 locomotives from CSR. These ones cost Transnet R4.4bn, and CSR started paying 21% of this to Jagati’s JJ and Century General.

And in 2014, Transnet ordered another 359 locomotives for R18.1bn. CSR started funnelling a further 21% to JJ and Century General.

All in, these non-descript little UAE metal, rice and bean dealers stood to earn a whopping R5.3bn in CSR payments. By comparison, this was more than three times the R1.7bn annual turnover for Worlds Window Impex, at the time.

JJ and Century General were to keep a 15% fee (R795m) on the Chinese kickbacks, the leaks show, way outperforming Worlds Window’s 3% operating margins (R57m) on its scrap metal.

The laundromat appeared to dwarf the Worlds Window front office.

Corporate espionage?

But Mr Patel, the Worlds Window insider, tried to convince us there was nothing out of the ordinary here.

He said of JJ: “They are professional consultant. They are associated with CSR for the last 10 years.

“JJ is not involved with Transnet deal. JJ has nothing to do with Gupta or anybody, and I don’t think you will find any deal between JJ and Gupta.

“CSR used to take help of JJ. They used to take help in Europe, Africa, India, Pak…, everywhere JJ’s consulting for them.”

We thought JJ just traded metal, rice and beans.

Nevertheless, things went awry in South Africa, Mr Patel said: “In South Africa, CSR cancelled their agreement with JJ. They say we cannot go ahead with you in South Africa. In this case JJ did lot of hard work. They have lot of expenditure for CSR, before tender.”

What sort of work?

“They hired eight or 10 guys in South Africa also, and they selected, they interviewed four or five black partners for them.”

How would a UAE scrap metal trader or its non-descript manager Jagati qualify for that job?

“Because CSR used to tell them: ‘Can we hire this consultant?’ Because being a government company, CSR cannot pay any money before tender.

“So, before tender they were required to hire so many people to do the research and consultancy and internal information. So, they hire JJ to finance all this information.

“So they hire people for intelligence. So, how much Bombardier will quote? How much GE [General Electric] will quote? So, even for this type of information, they hire people.”

Bombardier and GE were competing bidders on the Transnet locomotive contracts.

“They [JJ] have some intelligence system, as per my knowledge. Definitely they use someone to spy on somebody. Definitely. As per my knowledge. So many services.”

So many.

It was unfortunate that Mr Patel did not want to be named or explain more clearly the source of his apparent knowledge about JJ, so we asked him if he could get us documents detailing the alleged dispute between JJ and CSR.

He chuckled nervously: “Awww, ha ha ha. Why you want to? I will prefer if you write all Gupta instead of JJ. I would rather not.”

How can we reach JJ?

“Let me check, because I don’t want there to be any harm to JJ. Because I know because of internal story, JJ is in loss because of this deal, because they have been cheated by [CSR].”

“Flying Money”

Intrigued, we dug deep into the #GuptaLeaks to try to understand Worlds Window and the Guptas’ dealings.

We found huge sums of money flowing between the two groups.

Some of it was for legitimate business, as Goyal claimed. For example, Worlds Window subsidiary Arctos formed coal mining partnerships with two Gupta companies and managed their coal mine in Mpumalanga.

But other money flows were suspicious.

For example, we found a spreadsheet in the #GuptaLeaks, titled “Worlds Window”. It was attached to an email from one Gupta executive to her senior colleague. In the email, the executive typed: “Is this what u looking for?” No further context was given.

The spreadsheet is a ledger, recording 251 transactions from January 2010 until February 2013.

It looks a lot like traditional “hawala” bookkeeping.

DOWNLOAD: The Hawala alternative remittance system and its role in money laundering

Hawala is the name for an ancient form of money transfer developed in south Asia. It is still used today, often legitimately, as an alternative to formal banking systems. But because the money is not remitted through formal channels, it is a popular way to launder money.

The Chinese developed a similar system, known as “flying money”.

As a simple example, a man in the UAE wants to pay a woman in South Africa. He gives his money to an Emirati hawala broker, or “hawaladar”.

The Emirati broker will then send a message to a South African broker who will give the money to the woman there, minus a fee.

Both brokers will have many clients remitting money in both directions. Each broker will keep a running balance of how much he owes the other broker. Over time, the brokers will settle the difference.

The Gupta-Worlds Window “hawala” ledger describes a group of Worlds Windows-linked entities in one column. Other columns describe the transactions. Sometimes the explanations are cryptic, and sometimes they are clear. Overall, it appears as if the Worlds Window-linked “brokers” were transacting with Gupta-linked entities to remit money to and from South Africa, India and the UAE.

In some entries, it is easy to see how Gupta companies paid Worlds Windows companies in one country, and on the same day, the Worlds Window companies paid the Guptas the same amount in another country, and vice versa.

Thus, money was effectively “beamed” across borders.

Just like a traditional hawala ledger, this one keeps a dollar balance of how much the Guptas owed Worlds Window.

In total, $74m (R660m then) flowed into the account, and $74m flowed out, settling up the balance over time.

While the ultimate source and destination of the transactions is not always clear, some ZPMC and CSR payments can be traced from the Chinese companies, through JJ and Century General, for remittance to the Guptas in India, the UAE and South Africa.

^{The Worlds Window-Gupta “hawala” transactions, including remittances derived from Transnet contractors.}

A R76m roundabout

A number of transactions over six days in November and December 2011 were noteworthy. The transfers were recorded in the “hawala” ledger and are largely corroborated by other records in the #GuptaLeaks.

On November 30 and December 1, Gupta mining company Westdawn Investments transferred R44m to Worlds Window’s South African subsidiary Arctos. This was broken into four smaller amounts.

Immediately, Arctos transferred R44m to the Guptas’ Tegeta, broken into four differently apportioned amounts.

Tegeta kept R14.1m and immediately transferred R29.9m to the Guptas’ Oakbay Investments, which quickly parked R20m in an account at the Bank of Baroda in Sandton.

^{Over six days, the Guptas suspiciously roundtripped R76m through their group companies, routing all of it through a Worlds Window subsidiary.}

Four days later, Oakbay and a Gupta company described as “Islandsite” transferred R32m to Worlds Window’s Arctos. This was broken into five smaller amounts. Immediately, Arctos passed this on to Idwala Coal, a Gupta company, broken into three amounts.

Idwala immediately passed the R32m on to Oakbay, again broken into three amounts.

All in, the Guptas had routed R76m in a circle, through a number of their own companies, funnelling all of it through Arctos and back to their Tegeta and Oakbay.

The money flows appear to be artificial. We do not know their purpose, but in the process, the Guptas and Arctos employed three techniques common to illicit finance.

“Smurfing”: A money launderer breaks up and moves the money in small amounts to avoid detection.

“Layering”: Money is moved between numerous different accounts to obscure its source and destination.

“Roundtripping”: A series of transactions is made between companies serving to boost their revenues without real commercial benefit.

Middlemen

Gupta and Worlds Window companies often appeared to lend each other money, but the circumstances were suspicious, raising the concern that the loans could have been a fake cover for money movement.

If so, we again do not know the true motivation behind the flows.

In one example in 2013, Oakbay appeared to pay Arctos R86m. But the Guptas’ staff had a problem six months later: Their auditors needed documents to legitimately explain the payment, but there were none.

So, a Gupta executive emailed a Worlds Window manager a loan contract with non-descript terms. She said: “Please sign agreement as we did last year also.”

In at least two other cases, Worlds Window’s South African subsidiaries appeared to lend Gupta companies R16m and about $32.6m (R250m then).

In fact, the Worlds Window’s subsidiaries again appeared to act as unnecessary middlemen.

They channelled loans, originally from Bank of Baroda to the Worlds Window subsidiaries, straight on to the Gupta companies. The Gupta companies in turn repaid 9% interest to the Worlds Window companies, which passed this back to the bank.

In a 2014 email, a senior Gupta manager explained to Tony Gupta that, at times, Piyoosh Goyal had paid them “through [Baroda] loan”.

If so, it is possible Goyal or Worlds Window placed a fixed deposit with Baroda abroad. Baroda in South Africa then lent the money to the Worlds Window subsidiaries, which passed it on to the Guptas.

Indeed, Baroda described the $32.6m as a “loan against fixed deposit”.

If Worlds Window in South Africa failed to repay Baroda the underlying loan amount, the bank could simply claim the fixed deposit. Thus, money would have been moved from abroad to the Guptas under the guise of a loan, and Baroda would have earned itself a 9% fee.

We have found no evidence that the underlying loans were repaid to Baroda.

Loans from banks against fixed deposits are used for various legitimate reasons, but they tend to be between related companies, not unrelated parties in different countries.

The technique can also be abused to quietly move money across borders without detection, stymieing money laundering investigators who call this a “loan back”.

                      ^{Worlds Window appeared to use a “loan back” scheme to get money to the Guptas.}

The Guptas used Baroda loan backs to move money in other suspicious circumstances, the #GuptaLeaks show.

For instance, the Guptas at times placed hundreds of millions of rand sourced from JJ and the Transnet kickbacks into fixed-term deposits at Baroda in both Dubai and South Africa. Using these deposits as collateral, Baroda would typically lend 95% of the value of the fixed deposit to another Gupta company.

Without the #GuptaLeaks revealing the connections between the fixed deposit made by Gupta Company A to the loan made by Baroda to another Gupta Company B, it would be difficult for an investigator to follow the money trail from Company A to Company B as there would be no direct transfer.

Baroda’s intermediating the effective transfer between the two appears often to have served to obscure such money flows. Baroda did not respond to our questions.

Fallout

In the end, things did not work out for the Worlds Window launderers.

“Gupta’s have not just cheated South Africans but also cheated Indians,” Goyal told us.

“We went into partnership with the Gupta brothers for mining, and we were cheated by them in the business.”

Regarding one of their coal deals, he said: “After [them] receiving our payment, they have not allowed us to get any proceeds from the mine. We were not allowed to go on the property, and also they threatened us for not to even enter South Africa as they control things in the country [sic].”

He said the Guptas were now “illegally” selling Worlds Window’s coal.

“I have not even visited South Africa since last four years and we are now pursuing legal cases against Guptas.”

Worlds Window laid a criminal charge with the Hawks against a senior Gupta manager who allegedly stole R7.2m from one of its South African accounts in 2015. A Hawks officer confirmed he was investigating the charge.

Goyal told us: “You know very well I am in fighting with Gupta since approximately March/April 2013. But in your story, you are mentioning [payments in] 2014/2015. May I know the reason of that? I assume definitely 2013 is not fitting in your story so you prefer 2015.”

Indeed, records of Goyal’s trips to South Africa cease in the #GuptaLeaks from April 2013. But the leaks also suggest that, until late 2014, the money continued to flow between Oakbay and Arctos and JJ continued to pay into the Guptas’ UAE accounts.

But, nearly three years after the first Transnet kickbacks flowed to JJ’s accounts, HSBC shut down JJ and Century General’s accounts, according to a recent Wall Street Journal article.

HSBC told us: “To the best of our knowledge, HSBC previously exited, is in the process of exiting, or never had a banking relationship with JJ Trading [or] Century General Trading.”

But HSBC’s action seemed to be a minor inconvenience for the Guptas, who rerouted the kickback flow from JJ and Century General in Dubai to the HSBC accounts of a Gupta-related company, Tequesta, in Hong Kong.

By then, CSR had paid JJ and Century R1.6bn of the intended R5.3bn – and the #GuptaLeaks show substantial evidence of this flowing into the Guptas’ offshore accounts.

In a 2015 email, Worlds Window director Rupesh Bansal – the same one who received earlier CSR-Transnet correspondence and passed it on to Goyal – emailed CSR’s vice president. Bansal attached a spreadsheet that consolidated CSR’s payments to JJ and Century General.

The CSR man forwarded this spreadsheet to a Gupta email address.

Last week, Goyal said: “I repeat, Worlds Window neither control JJ nor Century General and never taken even a single penny from anybody on account of supply to Transnet.

“Apart from mining,” he added, “we had no areas of mutual interest with [the Guptas]”.

#GuptaLeaks: Liverpool company owns 49% of Indian firm implicated in kickback scheme

The Guptas used what looks like an international money laundering network to move their wealth. The network reaches back to the UK.

^{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 (scroll up), 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 £2bn 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.

Offshore shell companies

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 R1.6bn in assets linked to the Guptas and firms they did business with. It said it hoped to seize at least R50bn in 17 related cases under investigation.

ALSO READ: 14 Gupta linked companies and individuals to have their assets frozen

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 spokesperson 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 (scroll up).

#amaBhungane: Indian politician’s deal with Gupta partner

The Guptas chartered Cricket World Cup flights and bankrolled a luxury hotel stay for the family of Kapil Sibal.

^{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 (scroll up) 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.

Lacking commercial substance

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.

No Gupta invite

“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.

The Grande Castello deal

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.”

• 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.

In addition, MultiChoice increased its annual payment to ANN7 from R50m to R141m.

The payments came after the family seemingly assisted former communications minister Faith Muthambi in getting President Jacob Zuma to transfer certain broadcasting powers to her, something MultiChoice was lobbying the minister for.

ALSO READ: #GuptaLeaks: How Ajay Gupta was trusted with crafting SA’s global image

Following the transfer of powers, Muthambi controversially pushed through a decision in favour of unencrypted set-top boxes, which benefitted MultiChoice.

Muthambi’s decision flouted her own party’s policy on the issue. The ANC supported encryption – required for pay-TV – to promote competition in the sector.

After a lengthy court battle, the Constitutional Court earlier this year ruled that it was within Muthambi’s right to make policy decisions affecting the broadcasting sector.

MultiChoice however deny that there is any relationship between the policy outcome in its favour and payments made to ANN7. In a statement, the company said: “MultiChoice rejects your insinuations in the strongest possible terms.”

CLICK HERE TO READ THE COMPANY’S FULL RESPONSE

The #GuptaLeaks reveal that: 

– MultiChoice executive Clarissa Mack (who had since resigned) sent policy documents directly to Muthambi, who shared them with Gupta lieutenant Ashu Chawla, setting out proposals for Zuma to transfer broadcasting powers back to Muthambi after he split the communications portfolio into two departments in 2014;

– In September 2015, six months after Muthambi confirmed there would be no encryption, MultiChoice increased its annual payment to the Guptas’ controversial ANN7 channel from R50m to R141m – at a time when the channel had failed to win a significant slice of DStv’s news audience, and whilst the channel received widespread criticism over the quality of its content;

– MultiChoice CEO Imtiaz Patel was once a director of a company with the youngest Gupta brother, Tony, and Zuma’s son Duduzane. Patel says his appointment was done without his permission, and CIPC records show that he resigned from the company on the same day he was appointed.

New ANN7 owner Mzwanele Manyi, who took over the station this year in a vendor-financed deal, said: “The so-called Gupta emails have NOT been authenticated. What if all this is part of a larger plot designed to undermine alternative voices as in ANN7?”

The Guptas did not respond to questions but have previously dismissed the #GuptaLeaks as “not authentic”.

Pay for Play

MultiChoice has been in the news this week for paying the Guptas R50m per annum for ANN7.

The pay-TV giant denied signing a “third channel amendment agreement” which would have taken ANN7’s annual income from MultiChoice to R150m, but neglected to disclose the existence of a “fourth channel amendment agreement”.

This document was unearthed in-between the more than 200 000 emails that have become known as the #GuptaLeaks.

The agreement was signed by MultiChoice’s Glen Marques and Nazeem Howa for Infinity Media Networks, ANN7’s holding company, on September 9, 2015.

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The agreement not only ensured that MultiChoice would fork out R141m a year for ANN7 from April 1, 2016, but also guaranteed the Gupta-controlled company a “once off amount” of R25m.

This had to be paid to Infinity within seven days of the contract being signed, according to the agreement.

Two broadcasting insiders who had previously been involved in MultiChoice’s negotiations with news channels say such a “once off amount” is unheard of in the industry.

“The once-off fee you refer to is a pro rata payment in terms of an amendment agreement. The amendment agreement was entered into in order to assist with improving production quality,” MultiChoice said about the payment.

ALSO READ: #GuptaLeaks: How the family encircled Lynne Brown

MultiChoice also maintains that its fee for ANN7 represented a “fair value” at the time of signing the fourth contract amendment, given the cost of running a 24-hour news channel.

“After several rounds of negotiations over a period of three years, during which we developed an understanding of the channel’s operating costs and the need for improvements in production quality over time, the final fee was set,” says MultiChoice.

MultiChoice admits that it made policy proposals to Muthambi, but the company says the majority of its suggestions were not taken up in later amendments to government legislation.

The company also denies that it was aware that Muthambi was forwarding MultiChoice’s suggestions to the Guptas.

“MultiChoice has absolutely no knowledge of the minister sending our proposals to any other person, and can in no way be held responsible for that,” says the company.

The issue at hand involves a long-running battle over whether government should favour either encrypted or unencrypted set-top boxes for the country’s digital migration process.

Critics of a policy supporting unencrypted set-top boxes argue that would-be rivals of MultiChoice can only compete with the latter’s DStv service if government enforces the roll-out of encrypted devices.

In December 2013, then-communications minister Yunus Carrim published proposed amendments to government’s digital migration policy that opened the door for encrypted set-top boxes.

But Carrim would not have the last say on the matter.

MultiChoice fingerprints in the #GuptaLeaks

After having created the separate departments of communications and telecommunications in May 2014, Zuma issued a presidential proclamation that transferred certain regulatory powers from Muthambi to Siyabonga Cwele, the then-telecommunications minister.

On July 18, 2014, only three days after the proclamation was published in the government gazette, Muthambi sent an email to known Gupta associate Ashu Chawla. She attached the government gazette containing the proclamation.

Minutes later, Muthambi again emailed Chawla, this time attaching a Microsoft Word document titled “Effect of presidential proclamation”. The document was forwarded by Chawla to Tony Gupta on the same day.

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The document’s metadata reveals that its creator was Clarissa Mack, MultiChoice’s then-group executive for regulatory and policy affairs. Mack created the document on July 17, the day before Muthambi forwarded it to Chawla. Mack was also the last person to have modified the file.

Mack wrote that when Zuma created the two departments, there was an “assumption … that broadcasting including digital migration would report to the Minister of Communications”.

“The proclamation published on 15 July 2014 did not give effect to this division,” complained Mack. She also made detailed suggestions with regards to how the relevant decision-making powers should be split between Muthambi’s and Cwele’s departments.

Mack’s letter made it clear that MultiChoice wanted key powers guaranteed by parts of the Electronic Communications Act to be transferred back to Muthambi.

“Broadcasting is regulated by the Electronic Communications Act, 2005 (Act No 36 of 2005). The ability to make broadcasting policy and issue broadcasting policy directions are set out in section 3 of this Act. These powers have been transferred from the Minister of Communications to the Minister of Telecommunications and Postal Services,” Mack stated.

“It is therefore the Minister of Telecommunications and Postal Service [Cwele] who will make policy and issue policy directives to Icasa for broadcasting, including public service broadcasting,” Mack added.

Muthambi lobbies the Guptas

Over the course of the next few months, Muthambi would send Chawla four other documents relating to broadcasting policy. Chawla forwarded most of these to Tony Gupta and Duduzane Zuma, the president’s son.

On July 25, Muthambi sent Chawla a Word document called “proclamtion [sic] new 18 July 2014”.

MultiChoice has admitted that this document was also penned by Mack.

Chawla forwarded the document to Tony Gupta and Duduzane Zuma on the same day. The document stipulated in detail which aspects of the Electronic Communications Act Muthambi wanted to be moved from Cwele back to her.

“These sections must be transferred to the Minister of Communications,” Muthambi wrote to Chawla.

The document specifically focused on the parts of the Act dealing with the Independent Communications Authority of South Africa (Icasa), one of the key government bodies involved in the digital television migration process.

ALSO READ: #GuptaLeaks: How the Guptas paid for Zuma home

Muthambi also sent Chawla a Word document called “Responsibility for Infraco and Sentech” on July 25, adding in her email that “Sentech’s signal distribution must rest with the Ministry of Communications”. Apart from Icasa, Sentech is a key role-player in the digital migration process, whilst Broadband Infraco is a state-owned telecommunications company.

This document was also created by Mack, according to MultiChoice.

Perhaps the most shocking aspect of Muthambi’s communications with Chawla came in the form of a document called “final proclamation 01 August”, sent by the minister to the Gupta associate on the date mentioned in the document’s title.

“See attached Proclamation that President must sign,” Muthambi wrote Chawla, who subsequently forwarded it to Tony Gupta.

The proposed proclamation stipulated that control over section 3 of the Electronic Communications Act needed to be transferred back to Muthambi, exactly as Mack had originally pleaded in her letter.

It also included the proposed changes to the Icasa Act that Muthambi had earlier sent to Chawla.

Asked whether Mack had also created this document, MultiChoice said: “As mentioned previously, MultiChoice, like other companies in the sector, regularly engages the industry regulator and government on matters that affect the broadcasting sector. This includes making proposals that may take a specific regulatory or legislative form. Yes, this document was sent to Ms Muthambi. The proposals were inserted in a legislative template we took from previous Proclamations in the Government Gazette. Again, many of our proposals were rejected.”

Muthambi uses her powers

On November 25, Zuma signed proclamation 79 of 2014. With the stroke of a pen, Zuma gave legislative effect to the transfer of some of the powers advocated for in Mack’s documents.

Muthambi wasted little time to make use of her newly-won policy powers. In March 2015, she stunned the broadcasting industry by issuing an amendment to government’s digital migration policy that went directly against her own party’s stance on the matter.

The new set-top boxes would “not have capabilities to encrypt broadcast signals,” declared a clause Muthambi inserted in the amendment.

Only two months before, at the ANC’s January lekgotla, the ruling party stated that it supported Carrim’s December 2013 policy, which had paved the way for encrypted set-top boxes.

In her response to News24, Muthambi admitted that she had received “submissions” from MultiChoice “sent … through Ms Mack”. But Muthambi says that she had “opened the door” for such submissions after the July 2014 proclamation caused “confusion and uncertainty” over which of the two departments would be responsible for broadcasting policy.

“The minister denies having been influenced by any person in the finalisation of the digital migration policy after consideration of all submissions by all interested parties…” Muthambi’s spokesperson said in a statement.

MultiChoice also said that it was one of “several stakeholders” who made submissions to the minister. Neither MultiChoice nor the minister indicated which other parties, apart from MultiChoice, made submissions to her office.

Muthambi also failed to address News24’s detailed queries about the emails she had sent to Chawla.

ANN7’s MultiChoice bonanza

On December 4, 2014, about a week after Zuma transferred the relevant broadcasting policy powers to Muthambi, Howa sent Tony Gupta a draft “third channel amendment agreement” for the deal between MultiChoice and Infinity.

This is the unsigned document that recently surfaced in the media.

The signed “fourth channel amendment agreement”, however, reveals that MultiChoice first agreed to increase the ANN7 fee to R100m per annum, before ultimately settling on an amount of R141m.

But it is the “once off” payment of R25m that has industry insiders most concerned.

“It is unheard of. I haven’t seen any once-off payments [in] any of the agreements with MultiChoice that I’d been privy to,” said one of the industry insiders.

The two sources, along with a third industry expert with direct knowledge of MultiChoice’s agreements with news channels, all agree that even R50m per year would constitute a bad investment for MultiChoice.

“What they pay ANN7 compared to what they get from it [the agreement] makes no commercial sense. It is such a bad channel and its viewership is so low that ANN7 actually needs to pay DStv to be on their platform,” said one of the sources.

Data obtained from the Broadcasting Research Council (BRC) shows that ANN7 secured only 8.93% of DStv’s news audience in 2014, and 10.98% in 2015. Its average daily viewership figures for 2014 and 2015 were 6 215 and 8 157 respectively.

SABC News held news audience shares of 19.90% (2014) and 22.46% (2015) and it drew 12 379 and 15 412 average daily viewers in those two years.

eNCA’s average daily viewership was 29 481 (2014) and 32 265 (2015) and it had a news audience share of 54.28% in 2014 and 52.71% in 2015.

Despite ANN7’s relatively low audience figures, MultiChoice maintains that it believed the fee increases were justified.

“We believe the fee represented fair value at the time, particularly considering that ANN7 was a start-up channel requiring significant initial investment to get off the ground – as opposed to others, who could leverage existing infrastructure and content,” said MultiChoice.

“We deny that there is any relationship between our submission on the proclamation, the channel supply agreement for ANN7, and any fees or increase in fees paid for that channel.”

Asked about his relationship with the Guptas, Patel said he couldn’t remember when he first met the Guptas.

“I did interact with them, in particular between approximately 2007-2010, and our relationship tapered off after that. I can’t recall attending any Gupta social functions after about 2010, except for the wedding in 2013,” said Patel.

• Do you have information for our investigative journalists? Send an email to tips@24.com 

• News24 is published by Media24. Both Media24 and MultiChoice are Naspers companies.

VIEW ALL THE RELATED DOCUMENTS: 

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The Gupta family and some of their associates have established an extensive network of front companies in and around Dubai that has been used to conceal and allegedly launder hundreds of millions of rands in dubious payments linked to government contracts in South Africa.

A News24 investigation has confirmed that at least six Gupta-linked companies registered in the United Arab Emirates (UAE) are shell companies that either list fraudulent addresses or whose business premises are rarely, if ever, manned by actual employees.

At least R760m in payments linked to contracts from South African state-owned companies and government departments were channelled through some of these companies, documents contained in the #GuptaLeaks have shown.

News24 travelled to Dubai to try and establish whether any of these companies at the centre of alleged money laundering linked to state capture actually exist.

– Dubai: The Guptas’ city of shells

Our investigation has confirmed what some South Africans with knowledge of the Guptas’ business dealings have long feared, namely that the Guptas and some of their associates are deliberately flushing alleged ill-gotten gains through their shell companies in the UAE because of the country’s strict financial secrecy laws and favourable tax provisions.

The Transnet millions

One of the companies News24 visited is JJ Trading, which, according to earlier #GuptaLeaks reports, received at least R760m in alleged kickbacks from large Chinese companies contracted to Transnet, South Africa’s state-owned rail and logistics operator.

Unlike most of the other Gupta-linked shells, JJ Trading actually has a website. It describes the company as a trader in “agro products” and scrap metal.

The website also lists an address for JJ Trading in the Hamriyah Free Zone in Sharjah, about 50km north of Dubai. Hamriyah is one of more than thirty free zones, or free-trade zones (FTZs), located in the UAE. These zones allow businesspeople from abroad to establish companies with 100% foreign ownership and also offer attractive tax perks.

However, when News24 visited the Hamriyah Free Zone’s main entrance, the guards on duty told us that no company by the name of JJ Trading has premises there.

The queries we sent to the email address and the cellphone number provided on the company’s website went unanswered.

Milking the Free State

We also tried to locate the offices of Global Corporation, Accurate Investments and Fidelity Enterprises.

These three Gupta shells were used to launder tens of millions of rands in proceeds from the Free State provincial government’s failed Vrede dairy project in order to ultimately help pay for the Guptas’ lavish wedding party at Sun City in 2013, according to an investigation by amaBhungane.

Payments from Accurate Investments to Brookfield Consultants, a US-based company linked to relatives of the Guptas, have also attracted the attention of the Federal Bureau of Investigation (FBI), the Financial Times recently reported.

According to documents in the #GuptaLeaks, Global Corporation and Accurate Investments supposedly share the same address in a building next to a lagoon in the Emirate of Sharjah, Dubai’s neighbouring emirate.

But the address led us to a residential tower, and the guard at the reception informed us that there are no companies operating out of the building.

Fidelity Enterprises, which processed more than R30m of taxpayers’ money milked from the Free State diary project, also turned out to be nothing but a front. Business owners in Al Quoz, an industrial area south of Dubai’s city centre where the company is supposed to be located, told us that Fidelity’s address is incorrect and that they’ve never heard of such a company in the area.

Nobody home…

When we did manage to find an actual office for one of the Gupta shells, Griffin Line General Trading, the door was locked and there was nobody inside.

The company is situated in an office tower in Dubai’s main business district and, if its website is to be believed, trades in rice, spices and other foodstuffs.

But judging by documents in the #GuptaLeaks, Griffin Line has mainly been used to settle some of the Guptas’ accounts with travel agents and hotels.

An office worker from another company on the same floor told us that they sometimes see a woman at Griffin Line. We sent the company queries through a portal on its website, but it went unanswered. The Guptas also did not respond to queries emailed to them.

News24 ultimately spent a week chasing from one Gupta-linked company to the next without encountering a single employee.

For a network of companies that has received nearly a billion rand in revenues linked to public expenditure in South Africa, the Guptas’ UAE-based businesses are eerily deserted.

*News24’s trip to the UAE was made possible by a grant from the Taco Kuiper Fund for Investigative Journalism, administered by Wits Journalism.

On the surface, Dubai is one of the world’s great success stories.

Its towering skyscrapers and glaring opulence bear testimony to a desert boom-town that has experienced nearly unrivalled economic growth in the last few decades.

But the shiny office blocks, luxury hotels and colossal shopping malls conceal a decidedly seedier side to the city; a darker character that exhibits all the traits of a modern day tax haven.

According to the Tax Justice Network’s 2015 Financial Secrecy Index, Dubai “stands out above many other jurisdictions in terms of its lack of interest in transparency, and the laxity with which its offshore sector is supervised and regulated”.

It also has an “ask-no-questions, see-no-evil” approach to commercial transactions, financial regulation and crimes.

The report also highlighted Dubai’s reputation for attracting “large quantities of criminal and tax evading money from Asia, Africa and further afield”.

The story of the globe’s illicit cash flows would not be complete without looking at how it relates to South Africa – in particular to the Gupta family.

SEE: The Guptas’ bogus Dubai businesses 

There has been much speculation about the amount of rands that travelled across South African borders to the Guptas’ new base in Dubai.

The #GuptaLeaks have clearly shown that the Gupta brothers and their close associates have amassed a considerable collection of companies and properties in the United Arab Emirates (UAE).

Find all you need to know about #GuptaLeaks here

The network of shell companies established by the family was apparently put to good use when they needed to conceal and process the vast fortunes they’d siphoned off from government contracts in South Africa.

Dubai has a well-known reputation as a play place for the rich.

It boasts the world’s tallest building, and its premier shopping mall counts among the largest ever built.

One expat we met described the city as a “Disneyland for adults”.

Thanks to this combination of world-class amenities, upmarket shops and a conveniently opaque financial system, Dubai represents a perfect fit for South Africa’s famously profligate Gupta family.

The #GuptaLeaks have helped to unearth staggering details on how the Guptas and their associates moved the dubious proceeds of state tenders in South Africa to their collection of shell companies in and around Dubai.

We travelled to Dubai to see what the Guptas’ new base was like. We also hoped to gain a deeper understanding of the mechanics of their network of shell companies.

Shell shocked

Our first stop was a considerable distance out of town. We were looking for a scrap metal dealership inside the Hamriyah Free Zone, a large industrial area located next to a golf course and otherwise surrounded by the desert’s soft, powdery sand.

JJ Trading, or JJT, the first Gupta shell on our list, should have been a thriving business.

Apart from its scrap metal activities, the company received at least R760 million in revenue linked to Transnet port crane and train tenders.

However, the security guards at the boom gate had never heard of JJT and advised us to go into the office.

A sign outside indicated that it was the Hamriyah Free Zone.

We were assured that they would have a list of all the businesses inside the Free Zone.

But JJT was not on any such list.

“I don’t know this company,” said the guard behind the desk. “Call them [JJT],” he suggested.

Other than on paper, the company did not appear to exist.

Webster’s New World Finance and Investment Dictionary describes a shell corporation as a “company that has legal status but provides no service or products and has few, if any, assets”.

“Shell companies may be set up for illegal purposes, such as tax evasion, or formed in anticipation of attracting funding,” according to the dictionary.

We concluded that this definition applied to JJ Trading.

The Hills have eyes

We arrived in Dubai at night and the first thing we saw was the dazzling luminance of a trail of skyscrapers that marched into the distance.

One of these colossal structures stood out among the rest.

It was the Burj Khalifa, the world’s tallest building. Its head-turning height was obvious even at night, with its massive frame etched against the backdrop of a dark horizon.

As the metro train carried us from the airport into downtown Dubai, the city’s monetary abundance became increasingly visible.

It was as if the emirate’s riches had been poured into its structures.

The city’s developers clearly believe in the adage ‘the bigger the better’, as evidenced by the row of concrete, steel and glass giants that engulfed us as we entered the central business district.

The impressive skyline represents an overwhelming abundance of money, an unapologetic display of wealth that lay as far and wide as the glittering lights allowed our eyes to see.

True to their spendthrift ways, Tony Gupta and his two older siblings chose Dubai’s most expensive house in the most exclusive area when they bought their first property in the city in 2015.

Villa L35 in the Emirates Hills estate is the perfect sanctuary for the Guptas, and the family did not mind parting ways with a cool R331m for the property.

In order to get to Emirates Hills, one needs to drive past yet another golf course.

Only those who’ve experienced the city’s formidable heat could fully appreciate the volumes of effort and water that must go into the maintenance of these oasis-like playgrounds.

It was 41 degrees Celsius on the day of our visit to Emirates Hills. According to some of the locals we spoke to, this constituted “cool weather” compared to the summer months.

A boom gate with cameras and security guards confirmed that we had arrived in one of Dubai’s wealthiest suburbs.

Emirates Hills is a sprawling residential development, so we had quite a distance to cover between the entry point and Guptas’ villa.

But the drive was by no means boring, with the view of mansions of every shape and size serving as our entertainment during the car ride.

Even on such a blistering hot day, the Guptas’ house looked cool, thanks to the trees and plants around the villa.

A family crest on the fence showed that this was indeed the Gupta residence.

We wondered what one would encounter if one were to venture beyond the house’s Indian-style arches and the line of lanterns outside, and finally through the impressive wooden door that keeps unwanted visitors at bay.

But we couldn’t hang around for too long. A group of men who looked like security guards were sitting in the garden, and our presence had drawn their attention.

We duly told our taxi driver to move along.

King of the mythical beasts

During the same time that the Guptas started shopping for a house in Dubai, they were also in the market to rent office space.

One of the potential commercial addresses mentioned in the #GuptaLeaks was an office in the financial district.

However, it was on the opposite, slightly run-down side of the highway, away from the glitzy buildings that top companies prefer to occupy.

Listed on a name board at the reception of the Al Moosa Tower was the name of the Gupta-linked company we were looking for: “Griffin Line General Trading”.

While the company is said to trade in rice, the leaked emails reveal that the Guptas mainly used its accounts for travel bookings.

There is a paper sign on the glass door, bearing the company’s name. Its emblem is a bird of prey that has its eye in the shape of a “G”.

The griffin – a mythological half eagle, half lion creature -was thought to be the king of all the beasts.

This obscure shelf company’s name probably speaks volumes about how the Guptas view their position in the business world, we joked.

We knocked on Griffin Line’s door and tried to open it.

But the door was locked, and there was no response to our knocking.

The word “hello” was scribbled in blue on the company’s printed sign.

We obviously weren’t the first people to have come here, only to find an empty office behind a locked door.

As we were about to leave, a woman came out of an office on the opposite side of the floor. We asked her if she knew anyone at Griffin Line.

“Only one lady works there,” she said.

“She comes and goes. I don’t know her name.”

This description of the scant activity at Griffin Line seemed wholly at odds with the thriving rice business it was made out to be on its website.

Milk and money

One of the key Gupta companies in the UAE is Fidelity Enterprises.

It is registered in Jebel Ali, one of the UAE’s free zones that allow foreign businesses to operate in the country.

Fidelity holds shares in Mabengela Investments, a key shareholder in Infinity Media Networks, which in turn owns ANN7.

It is also one of the Gupta shell companies that saw nearly R32m from the Free State’s failed Vrede dairy project travel through its bank accounts, only to eventually end up with the Guptas’ Oakbay Investments back in South Africa.

WATCH: Inside the controversial Gupta Free State dairy farm

According to documents in the #GuptaLeaks, Fidelity is supposed to be located at “plot no 358 – 615” in Al Quoz, an industrial area just outside Dubai’s city centre.

Our taxi driver sounded confused when we gave him the address. He knew Al Quoz, but he explained that it was a part of town mostly filled with warehouses.

The driver dropped us off at the first warehouse he saw. It was a car workshop.

A mechanic with a sweaty brow was working on a red Lamborghini. When we showed the address for Fidelity Enterprises to the woman managing the workshop’s office, she frowned. Addresses there didn’t work that way, she explained.

There were no “plot” numbers for the area. We went outside and looked at all the warehouses around us.

The way in which the addresses were formulated bore no resemblance to Fidelity’s supposed address.

Whoever registered Fidelity clearly had no intention for the company to ever be found.

Going global

To get to the next Gupta shell on our list, we needed to travel some 18km to the north of downtown Dubai.

Global Corporation LLC is supposed to be located in a building next to an azure lagoon in Sharjah, one of the UAE’s seven emirates.

Like Fidelity Enterprises, money from the Free State diary project had also been washed through Global Corporation’s bank account.

We asked the security guard at the front desk for Global Corporation.

“This is a residential building. People come here all the time looking for businesses but there are no businesses here.

This is an apartment block. People live here,” he told us. He thought there might be another building somewhere nearby whose name contained the word “lagoon”.

But after asking another taxi driver familiar with the area and searching the internet, we concluded that Global Corporation’s address was a sham.

Sea shells

SAS Global, yet another Gupta shell, is the sole shareholder in a South African company that appears to be benefitting from provincial government tenders in South Africa, as revealed in the #GuptaLeaks.

The company’s address is in the HDS Tower, a 39-storey office block in Dubai’s Jumeirah Lakes area. We asked the building’s security staff for SAS Global and gave them the office number.

“No, you mean GBS Global,” one of the guards insisted. We nodded.

Sure, GBS Global it is. By then, we already knew that the chances of finding a real office were slim.

The first thing we noticed after getting out the lift on the 13th floor was how many empty offices there were.

We found a woman sitting at GBS’ reception desk. It looked like she was the only person there.

A GBS brochure stated that the company offers company incorporation services “in tax efficient offshore jurisdictions around the world”.

The woman had no idea who SAS Global was.

We had now been at the addresses of five Gupta “companies” without encountering an actual office.

Companies behind companies

The culture of secrecy is so tightly woven into Dubai’s corporate fabric that asking even basic questions about companies is frowned upon.

Trying to obtain simple information such as the name of a company’s directors or their contact details proved to be a near-impossible task.

This once again became clear when we went looking for SKG Holdings, a Gupta shell company that supposedly bears the initials of Shiv Kumar Gupta, the Gupta brothers’ late father.

The company’s registered address is in the Al Fattan Currency House, an elegant office block in the Dubai International Financial Centre (DIFC).

The building is a glass affair with spotless, blue-tinted windows.

A small army of window cleaners dangling from ropes had no doubt recently cleaned the structure’s slick exterior, as we’d seen it being done at buildings across Dubai.

However, the Al Fattan Currency House’s physical transparency stood in sharp contrast to the murky nature of the business conducted inside the building.

Once again, our lift opened onto a floor with a number of empty offices.

The address for SKG Holdings led us to a company called Intertrust – a firm that registers and incorporates companies inside the DIFC free zone.

SKG is one of their clients, an Intertrust employee told us.

We explained to her that we were struggling to get hold of SKG’s directors and asked her if she could provide us with any useful details about the company.

“Sorry. It’s an SPC. A Special Purpose Company,” she said.

She was unable to provide us with any further information.

All that glitters…

An expat we spoke to told us that the reason he chose to make Dubai his new home is because one can’t help but look up. You look up to the skyscrapers and the constant blue sky and you become aspirational.

“Of course,” he whispers, “everyone also knows that a large part of the city is built on dirty money from African dictators and Eastern European gangsters. It’s just that nobody talks about it”.

The metro train ride from our hotel back to the airport later afforded us a final view of Dubai’s soaring skyline. Our search for the Guptas’ companies had taken us into some of the glass and steel towers that were now rolling past the carriage’s window.

We couldn’t help but wonder how many of the companies in these buildings were nothing more than empty offices with printed signs stuck on locked doors.

The Guptas’ network of UAE front companies may very well be just one tiny component in an elaborate, glittering city of shells.

News24’s trip to the UAE was made possible by a grant from the Taco Kuiper Fund for Investigative Journalism, administered by Wits Journalism.

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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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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Even the deputy president’s office was fair game. Investigations show they zeroed in on some of the nation’s most sensitively placed staff, including the head of the Presidential Protection Service as well as Zuma’s chief of staff, his private secretary and a chief director in the deputy president’s office.

In certain instances, some of these officials appear to have returned favours, potentially subverting their positions in the Union Buildings for the Guptas’ benefit.

The fact that Saxonwold’s most influential family attempted to recruit people close to the president raises questions about the nature of their relationship with Zuma: were they trying to spy on him? Or were they putting in place a back channel allowing him to communicate with them via trusted intermediaries?

Since the #GuptaLeaks provide mere glimpses of these relationships, only the president, the Gupta brothers and the officials in question know the whole truth. The four officials we feature here have all denied impropriety or said they carried out their duties with professionalism.

One official, however, said she would “be more vigilant and judicious in professional relationships” in future. The Presidency and the Guptas did not respond to detailed questions.

Major-General Muzingaye Mxolisi Dladla: head of Presidential Protection Service (2010-date) and long-time bodyguard to Zuma

As the Scorpions anti-corruption unit were raiding Zuma’s Johannesburg home in August 2005, two vehicles screeched to a halt outside the gates. Out poured several automatic rifle-toting members of the elite Presidential Protection Unit.

A tense armed stand-off ensued between Zuma’s protectors and his would-be prosecutors. Zuma – then a private citizen – was entitled to protection by this elite South African Police Service unit, who guard the country’s current and former presidents and deputy presidents together with their families.

Among the protectors who rushed to Zuma’s side that day was Dladla.

Ever since then, their fortunes have closely tracked one another. Zuma escaped the corruption charges and became president; Dladla rose rapidly through the police ranks to head the Presidential Protection Service, as it is now called. Both are controversial figures.

Zuma’s indiscretions are well known, but Dladla escaped attempted murder charges in 2010 after he was accused of spraying three Uzi submachine gun rounds at an elderly motorist in Durban who got in the way of Zuma’s blue light cavalcade.

Zuma paid tribute to Dladla at a funeral in 2011, thanking him and other members of the so-called Echo Squad for standing by him during his darkest days in politics, including thwarting an alleged assassination attempt when he was deputy president.

The relationship has only grown closer: investigative magazine Noseweek alleged in 2012 that Dladla commanded a secret spy unit within the protection service, tasked with monitoring Zuma’s rivals and ensuring his re-election as ANC president.

It now appears that Zuma’s friends, the Guptas, became equally enamoured of Dladla – and rewarded him for his specialist services.

An early clue of their relationship includes an August 2010 email chain from the #GuptaLeaks showing that a Sahara sister company intended to send Dladla and his then wife, long-serving Presidency official Mogotladi “Mo” Mogano (see below) on a weekend getaway to the Maldives.

Both Dladla and Mogano told us they never travelled to the Maldives, with Mogano confirming that “whilst Sahara did make an offer, my then partner and I did not receive tickets and did not undertake the offered travel”.

However, the emails indicate that Gupta executive Ashu Chawla went as far as requesting a Johannesburg travel agent to “issue and email me the [air] ticket” for the couple, quoted at R9 290 per person on Emirates.

A source, who asked not to be named for their own safety, told us that the Guptas at one stage prepared documents transferring legal ownership to Dladla, but then the property burned down.

A second source in the Presidency independently recalled how a house where Mogano was living with Dladla in 2010-11 had burned down.

Mogano referred our queries about the property to Dladla, who claimed that his company never traded but remained silent on the circumstances in which he appears to have made extensive use of a Gupta-owned property.

What use did the Guptas make of their connections with Dladla? An unsigned 2013 affidavit unearthed in the #GuptaLeaks shows Tony Gupta explaining to the police how he procured VIP blue light escort services for the family’s wedding guests.

The Guptas were in trouble because the black BMW escort vehicles they used had been illegally fitted with blue lights and false number plates.

Gupta’s affidavit, submitted as part of the police investigation into the wedding debacle, makes the astonishing claim that the president’s top bodyguard was responsible for procuring the illegal VIP escort service.

Gupta states: “I requested General Dladla to advise me on road transport security under circumstances explained to him … where guests arrived at Waterkloof Air Force Base and had to travel by car through rural areas to Sun City.”

“I indicated that I would pay for these services without any reservation. I am aware of an initiative within the South African Police Service where members of the public can insist on protection/control services at a prescribed fee.

“General Dladla requested me to furnish him with information and inter alia the flight schedules of the guests,” Gupta states, after which Dladla appears to have taken care of the Guptas’ needs.

“On or about 30 April 2013, I noted certain protection vehicles and members of the SAPS accompanying the group of guests from Waterkloof … to Sun City. I did not find this awkward given the requests mentioned,” says Gupta.

“I expected an invoice from the SAPS for the services rendered … On or about 30 April 2013, I received an invoice from a company called S & M Transport … indicating a request for payment for an amount in excess of R500 000. I did not expect an invoice from S&M Transport and I do not know who S&M Transport is. I further do not know who Salomie Manamela is and I had no arrangement with the aforesaid person to send me an invoice for ‘escort services’.”

Gupta, who was in serious trouble at the time, may have been playing dumb but the identity of S&M Transport and Manamela remains a mystery.

But that was the end of the matter: there is no mention of the company or Dladla’s alleged role in securing its services in the inquiry’s final report.

Responding to our questions, Dladla flatly contradicted Gupta, saying he played no part in “any logistic arrangements either at Sun City or at Waterkloof Air Base”.

However, he confirmed that he “provided an affidavit to SAPS which set out the facts as part of an investigation which was held”. This investigation’s findings have never been made public, but all indications are that both Dladla and Gupta wriggled off the hook.

Like a cat with nine lives – again, mirroring his boss, Zuma – there is one final similarity. Michael Hulley, Zuma’s private legal advisor, prepared Dladla’s responses to our questions.

Denying that he had been captured by the Guptas, or acted to further their interests, Dladla said: “I have performed my duties in relation to President Zuma as a member of SAPS with the discipline and professionalism that it deserves.”

Lakela Kaunda: deputy director-general and head of private office of the president (2009-); chief operating officer in the Presidency (2014-)

Lakela Kaunda is Zuma’s fiercely loyal chief of staff, who has worked beside him in various roles since the mid-1990s.

Emailed diary appointments contained in the #GuptaLeaks show Rajesh “Tony” Gupta accepting a flurry of diary appointments with Kaunda on four occasions between 11 December 2012 and 31 January 2013.

On the fourth occasion Kaunda met Gupta, the email calendar shows a “Bruce” attending – a possible reference to Bruce Koloane, the then chief director of state protocol.

Kaunda’s own meetings with Gupta shortly before this raise questions about her role in the Waterkloof landing debacle.

Koloane was subsequently forced to resign for her role in facilitating the Gupta wedding plane landing at Waterkloof air base, and several military officers who approved the landing later testified they believed instructions had emanated from “Number One” – a codename for Zuma.

Kaunda does not dispute the meetings with Gupta, only that Koloane was not present.

He could not be contacted to verify this. Kaunda also denied playing a role in facilitating the Guptas’ aircraft landing needs, saying, “I actually discovered about the wedding landing at Waterkloof when Radio 702 broke the story on the day of the landing itself. I was totally unaware of it before then.”

Be this as it may, the Guptas were keen at this point to do business with Kaunda. Between the third and fourth successive meetings, as scheduled in Gupta’s email calendar, Kaunda ceded her 100% share in Ntomb’nkulu Investments CC to her son, Siphesihle.

She then forwarded confirmation of the new shareholding to Gupta on 23 January, stating that “we will use this vehicle”.

Asked why she had ceded her shares to her son, and for what activity would Ntomb’nkulu be a “vehicle”, Kaunda repeated the explanation she had given to the Sunday Times in June: “I initially thought of closing down the company as I was not using it, but then felt it would be cost effective to keep as it already existed and we had paid for the establishment. I then decided to cede it to my son,” she said.

“When they [the Guptas] said they wanted to offer a business opportunity and asked if I had a company that could be utilised, I then sent that email about Ntomb’nkulu … the offer of going into business with the family was declined and the matter was never pursued.”

At the time, Islandsite 255’s joint directors were Tony Gupta and Zuma’s son, Duduzane. Islandsite 255 is Gupta-controlled Oakbay Resources and Energy’s BEE partner in Shiva Uranium.

In response, Kaunda said: “It is the first time actually that I hear of that cession of the shares or that resolution. Ntomb’nkulu Investments does not own shares in any company whatsoever.”

Dixie Investments, the company meant to cede the shares to Ntomb’nkulu, retained its stake. For now, at least, the public will have to take Kaunda’s denials on trust.

Delsey Sithole: private secretary in the private office of the president (2009-2012); director: events and protocol in the Presidency (2012 to date)

Zuma’s private secretary coordinates both his official and private diaries, and so knows what the president is doing when his formal duties are over for the day.

It is a unique special position of trust and responsibility, which entails liaising with the president’s security detail after hours to ensure he is safe.

The president’s private secretary is also a regular traveller as part of the president’s delegation on overseas trips. The woman Zuma entrusted with the task at the outset of his Presidency, Delsey Sithole, was very soon in the Guptas’ crosshairs.

Financial reconciliation records from the #GuptaLeaks indicate that Sithole received cash amounts totalling R8 310.78 from a Gupta company in June 2009, just a month after Zuma became president.

It is not known what the payment was for, and Sithole did not provide any clarification in her response to our detailed questions.

Fast-forward a year, Gupta brother Rajesh invited Sithole and her teenage son to watch the opening match of the 2010 FIFA World Cup.

A spreadsheet contained in the #GuptaLeaks shows that Sithole found herself amidst illustrious company in the luxurious Sahara suite in the iconic Soccer City calabash. Her inclusion hints at the development of a special relationship with the Guptas.

The family’s other guests for the match included India’s wealthiest businessman Mukesh Ambani and his family, as well as one of Zuma’s wives, his son Edward, and some of Zuma’s most trusted spies – the head of police crime intelligence, Richard Mdluli and his sidekick Nkosana “Killer” Ximba.

Sithole did not dispute her presence that day, telling us that, “I received many offers of hospitality from various companies during the 2010 FIFA World Cup.”

Fast-forward another two years, to early May 2013, and Sithole publicly displayed her loyalty to the Guptas. Despite the outpouring of public anger about the family’s brazen takeover of Waterkloof military air base to land a planeload of overseas wedding guests, Sithole crowed on her Facebook page: “Its [sic] good to be at Sun City. Some people are being tjatjarag [over-excited]. I am enjoying the wedding.”

By this stage, Sithole had been removed from her position as private secretary and redeployed to head the events and protocol division in the Presidency.

A source in the Presidency recalled a “security incident” involving Zuma’s diary that had occurred in 2011, after which Sithole was moved.

Details about the incident, including a rumour that the Guptas had accessed confidential details about Zuma’s diary via Sithole, could not be independently verified.

Sithole did not respond to the allegation specifically, but said: “In my previous capacity as private secretary, I interacted with various stakeholders on a number of occasions, involving various activities and my interaction with the Gupta family was in that capacity. Such interaction never promoted any unethical activity.”

She added that her move to protocol and events happened at her request, for “career growth and advancement” reasons.

But even after she moved out of Zuma’s private office, the #GuptaLeaks suggest that Sithole and Tony Gupta retained ties. For example, in September 2012, Sithole sent him the guest list for a Jacob Zuma Foundation fundraising dinner. The list includes a number of prominent Nigerian businessmen with investments in South Africa.

How Sithole obtained this it is unclear, as are her motives for disclosing it. Was she moonlighting on social events for Zuma’s private foundation and leaking intelligence to the Guptas about Zuma’s would-be private benefactors?

Sithole did not provide any answers.

The #GuptaLeaks emails show Tony Gupta accepting a diary appointment with one “Delicy Sithole” at Sahara’s Midrand offices in January 2013. Notably, this meeting was scheduled around the time of a flurry of meetings between Gupta and Kaunda (Sithole’s former boss in Zuma’s private office).

Sithole did not dispute that the meeting took place as scheduled.

A few days after this meeting, Sithole sent Chawla a CV for one Phatse Justice Piitso – a former SACP provincial secretary in Limpopo and South African ambassador to Cuba between 2009 and 2011 – requesting that Chawla “please forward to Tony”.

Again, Sithole is silent on the purpose of her email. As for Piitso, he was – or was soon to be – Sithole’s husband. Sithole told us that she sent the CV “in good faith to a stakeholder and acquaintance [Gupta] and there was never an encouragement of untoward expectations”.

Piitso said that he has sent his CV to many people, but denied that he got “any employment from the Gupta family or anything else from Mr Tony Gupta”. However, Piitso has cropped up recently as a pro-Gupta commentator.

In 2016, Bell Pottinger spin doctor Victoria Geoghegan shared Piitso’s name with a MoneyWeb journalist, as part of a list of “people who had agreed to talk on economic apartheid”.

The Guptas had hired the London-based PR firm on a monthly £100 000-plus (R1.5m-plus) contract, aimed at distracting public attention from the family’s murky business dealings.

Other pro-Gupta commentators and luminaries on the Bell Pottinger list included Andile Mngxitama, Ben Ngubane, Kebby Maphatsoe, Tshepo Kgadima and Lindiwe Zulu.

Earlier in 2017, Piitso also penned an eloquent defence of Brian Molefe, who had been exposed by the public protector as one of the Guptas’ accomplices in the nexus of state capture.

Piitso lavished praise on the former Eskom chief executive – then on his way to Parliament as an MP – calling him “one of the finest young leaders our movement has ever produced”.

In language that has become synonymous with pro-Gupta lobby, Piitso urged Molefe to “take forward the revolutionary programme of the second phase of our transition for radical transformation”.

Piitso ignored our question about his inclusion in the Bell Pottinger list, but said: “The revolutionary concept of white monopoly capital is not an invention of the Gupta family. It is a concept which seeks to define the development of monopoly imperialism and its characteristic features within the South African realities.

Throughout my life, I have written so many views about this important theoretical question and I will continue to do so.”

Piitso added that he did not seek compensation for his written work from any media houses.

Mogotladi “Mo” Mogano: assistant private secretary to the president (pre-2009); chief director in office of the deputy president (post-2009)

Mogano has worked in the Presidency for more than a decade, initially as assistant private secretary to Thabo Mbeki.

When Kgalema Motlanthe became president in September 2008, he inherited her services.

After Zuma succeeded Motlanthe, Mogano moved to the deputy president’s office with him, where she remains under Cyril Ramaphosa.

Because she has been ensconced in the office of Zuma’s main political rivals down the years, whilst married to one of Zuma’s most trusted bodyguards, Mogano’s relationship with the Guptas is worth highlighting. (See Muzingaye Mxolisi Dladla, above.)

Mogano can be linked to the Guptas since at least February 2009, when company registration records show that she became a co-director with Tony Gupta and Zuma’s son Duduzane in Karibu Hospitality.

The company became dormant in 2011 and was deregistered in 2013. Mogano said “nothing came of the venture,” adding that “I resigned before any business could be conducted or any trading could take place.”

We have already seen that a Sahara sister company booked return flights to the Maldives in 2010 for Mogano and her then-husband, the head of the Presidential Protection Service Muzingaye Mxolisi Dladla. Both have denied receiving the gift.

The couple also appears to have lived for a while in a Gupta-owned property, about which Mogano referred our query to Dladla, who in turn ignored it.

A source in the Presidency told us several years ago that Mogano had also “flirted with” a job offer from the Guptas, a tip-off that appears to be borne out by a June 2011 email from the #GuptaLeaks in which Mogano sends her “comprehensive resume” to Tony Gupta.

What job Mogano was applying for remains a mystery – she told us “there was no outcome” and she remains gainfully employed in the Presidency.

Mogano confirmed her attendance, with a friend, after her husband dropped out. She added that she had declared the hospitality as a gift in her annual declaration of interests. Mogano now appears keen to dissociate herself from the Guptas and Dladla, from whom she says she separated three years ago.

She concedes: “With concerns of state capture and as valid as they are, I do accept that such associations can raise doubts about one’s professionalism and loyalty to the public service code of conduct.”

But she argued that she joined the Presidency “with the full desire to serve the country and not personalities” and had maintained her top security clearance throughout her decade in service.

“I have not allowed my association with elements of the Gupta family enterprise to influence my work adversely or unethically, but have also learnt from recent events to be more vigilant and judicious in professional relationships,” she said.

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But the Guptas’ repeated use of US dollars to move their kickbacks around the globe, along with previously hidden ties to US companies, may render the Hawks’ efforts (or lack thereof) irrelevant.

Under American anti-bribery and anti-money laundering laws, one link to the United States could expose all members of any broader conspiracy to the jurisdiction of American courts.

In addition to personal US criminal liability, ill-gotten gains are also at risk.

The US Department of Justice’s Kleptocracy Asset Recovery Initiative recently seized billions of dollars of assets – including bank accounts, real estate, art, jewelry, aircraft and yachts – located around the world.

When announcing the latest such seizure last Friday – stemming from contracts corruptly obtained by bribing Nigeria’s former oil minister – a senior official at the US Department of Justice remarked: “Corrupt foreign officials and business executives should make no mistake: if illicit funds are within the reach of the United States, we will seek to forfeit them and to return them to the victims from whom they were stolen.”

US-listed companies

The Guptas’ dealings with software giant SAP potentially provides US authorities with a clear means of getting their foot in the door.

Although headquartered in Germany, SAP’s stock trades on the New York Stock Exchange, thus making the company subject to various US laws, including the Foreign Corrupt Practices Act (FCPA).

Last week, amaBhungane and Scorpio revealed that SAP paid R100-million to Gupta-linked CAD House.

By the end of the week, SAP had replaced its executive team in South Africa and had launched both internal and external investigations, the latter being led by US law firm Baker McKenzie.

To receive maximum credit for cooperating – thereby potentially reducing recommended fines by half – companies are expected to thoroughly investigate and self-report FCPA violations to US authorities.

To be eligible for any such credit, companies are further required to hand over “all relevant facts about individuals involved in corporate misconduct” to the US Department of Justice.

US Dollar and Gmail snares

Forthcoming instalments of the #GuptaLeaks will further detail the Guptas’ frequent transactions in US dollars – the Guptas’ currency of choice of when moving hundreds of millions of dollars to and from its Dubai bank accounts.

For instance, the #GuptaLeaks reveal that much of cash sloshing through the Dubai accounts are the proceeds of so-called “consulting” contracts such as the China South Rail-Transnet contract previously detailed by amaBhungane.

The #GuptaLeaks also reveal that communications related to the CSR kickbacks were carried out using US-based email providers.

Major US law firm, White & Case, explained how such US-dollar transactions and even emails can put someone within the very long reach of US laws, including anti-bribery laws.

“Many US laws — including the Foreign Corrupt Practices Act in certain circumstances and various antifraud statutes — may establish jurisdiction over a crime whenever it involves the use of any ‘means or instrumentality of interstate or foreign commerce’.

“The term is broadly defined by US authorities and may cover any communication or movement that crosses state or international borders, including wire transfers, emails, phone calls, mail and travel.

“Given the reach of US commerce, from free email servers to correspondent banks that clear US dollars for non-US based banks, such a broad definition can significantly increase the reach of US law.”

Beyond transferring many millions of dollars through US-based correspondent banks, the Guptas, their associates and many political figures linked to them frequently used US-based email providers, such as Gmail, Yahoo and Hotmail.

These US-based email accounts were used to communicate on a wide variety of topics including the Sun City wedding expenses, the near-daily US dollar movements to and from Dubai, as well as to make arrangements with parties in the United States who received funds from the Guptas’ accounts in Dubai.

US money laundering Laws

Regarding US anti-money laundering laws, White & Case notes: “US law makes it a criminal offense to engage in or attempt to engage in a financial transaction involving funds that are known to be the proceeds of certain unlawful activities, or to engage in a financial transaction that provides funds for the commission of a crime (such as terrorist financing or sending a bribe payment).

“This offense is called ‘money laundering,’ and non-US corporations and foreign nationals may be subject to prosecution under US federal anti-money laundering statutes if they are involved in the transfer or attempted transfer of illegally obtained funds or funds used to further criminal activity.”

The Guptas’ forwarding their ill-gotten gains to a US-incorporated company could potentially run afoul of such laws.

AmaBhungane and Scorpio revealed that over US$1-million paid by Swiss crane manufacturer Liebherr ultimately ended up in a US company, Brookfield Consulting, owned by apparent US-citizen relatives of the Guptas.

• Read #GuptaLeaks: More multinationals ensnared in Transnet kickback web 

Roughly another US$9-million – apparently originating with China South Rail’s “consulting” contract – was also wired to Brookfield in the United States.

Conspiracy Charges

Individuals comfortably sitting in South Africa or Dubai might be unaware of the US legal risks created by the actions of merely one member of a broader conspiracy.

White & Case further explains that one link to the United States could expose all members of any broader conspiracy. “Conspiracy law may subject non-US companies or individuals who have not committed an act within the United States to US criminal jurisdiction.

“If the United States can establish jurisdiction over a single conspirator, it may have jurisdiction over all conspirators, whether companies or individuals, wherever they may be found.”

Asset Forfeiture

US officials have described the FCPA and the Kleptocracy Asset Recovery Initiative as “two sides of the same anti-corruption coin.”

Former US Attorney General Loretta Lynch explained: “Since it was established in 2010, the Kleptocracy Asset Recovery Initiative has been an effective tool in our ongoing efforts to curb high-level public corruption around the world. As we move forward, the Department of Justice will remain committed to using all the resources at its disposal to ensure that government funds go to their lawful purposes; that stolen assets are returned to state coffers; and that corrupt officials are held fully accountable for abusing their positions.”

Over the past few years alone, the US has seized many billions of dollars of ill-gotten cash and assets.

Two of the largest seizures – totaling US$2.5-billion to date – involve far-reaching, complex corruption in Uzbekistan and Malaysia.

In Uzbekistan, the daughter of the former president received over US$800-million from telecom companies. US authorities seized US$850-million sitting in accounts in Switzerland, Belgium, Ireland and Luxembourg.

The mere fact that these funds were moved in US dollars – and thus transmitted through the US – was sufficient to seek their forfeiture.

The US Department of Justice noted that the president’s daughter’s “associates laundered the corruption proceeds through accounts held in Latvia, the United Kingdom, Hong Kong, Ireland, Belgium, Luxembourg and Switzerland. The illicit funds were transmitted through financial institutions in the United States before they were deposited into accounts in these countries, thereby subjecting them to US jurisdiction.”

Last month, the US announced the latest in a series of seizures related to Malaysia’s 1MDB scandal – bringing the total grabbed by US authorities in that case alone to $1.7-billion.

The US Department of Justice’s characterization of the Malaysian scheme undoubtedly rings true for many South Africans:

“Today’s complaints reveal another chapter of this multi-year, multi-billion-dollar fraud scheme, bringing the total identified stolen proceeds to $4.5 billion. This money financed the lavish lifestyles of the alleged co-conspirators at the expense and detriment of the Malaysian people. We are unwavering in our commitment to ensure the United States is not a safe haven for corrupt individuals and kleptocrats to hide their ill-gotten wealth or money, and that recovered assets be returned to the victims from which they were taken.”

“These cases involve billions of dollars that should have been used to help the people of Malaysia, but instead was used by a small number of individuals to fuel their astonishing greed.”

“The misappropriation of 1MDB funds was accomplished with an extravagant web of lies and bogus transactions that were brought to light by the dedicated attorneys and law enforcement agents who continue to work on this matter. We simply will not allow the United States to be a place where corrupt individuals can expect to hide assets and lavishly spend money that should be used for the benefit of citizens of other nations.”

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Bank and accounting records show that two heavy equipment manufacturers – Swiss-based Liebherr-International AG and China’s Shanghai Zhenhua Heavy Industries Limited – funnelled *more than R100-million* to the Guptas, as Transnet awarded them contracts to supply cranes to South African ports.

This brings to seven the number of large, mostly respected companies, known to have secretly paid Gupta fronts in connection with Transnet contracts.

A forgotten tipoff

Four years ago, an anonymous tipster told amaBhungane that Transnet crane suppliers were paying off the Guptas to get their contracts.

The tipster said: “The cranes that are being supplied to the ports from [Shanghai Zhenhua] are with Guptas. Ask Liebherr. While they were the preferred supplier, they were approached by Guptas to do a deal who then referred them to their local [black economic empowerment] partners, who in turn spoke to [then Public Enterprises Minister] Malusi Gigaba. By then Guptas had done a deal with [Shanghai Zhenhua].”

Days before the tipoff, Gigaba and then Transnet CEO Brian Molefe had stood side-by-side, grinning behind a giant red ribbon, which Gigaba cut in presentation of seven new Shanghai Zhenhua cranes for South Africa.

On the day, Molefe told reporters the tender was “transparent”.

Molefe later moved to Eskom, which he recently left in disgrace after evidence emerged that he courted the Guptas while Eskom and Transnet closed allegedly dirty deals for the Guptas.

On Saturday, Transnet spokeswoman Viwe Tlaleane said: “The company is conducting its own internal enquiry and will investigate all allegations made. Where appropriate, it will enlist the services of independent experts, depending on the required expertise”.

Liebherr executive Dieter Schmid said: “I can assure you that Liebherr has never had an ‘extensive and direct relationship with the Guptas for years’ as alleged in your e-mail.” But he said the company was “still putting the pieces together” and needed more time.

Shanghai Zhenhua did not respond to questions.

Paying to play

As was claimed by amaBhungane’s tipster, Liebherr’s Gupta payments were indeed preceded by roughly R55-million from the Chinese. In September 2011, Transnet announced that Shanghai Zhenhua would build, deliver and commission seven tandem-lift ship-to-shore cranes for the container terminal at Durban harbour.

According to Transnet documents obtained by amaBhungane, it would pay Shanghai Zhenhua $92-million (about R1.2-billion today) for the job.

Three months later, money started to flow to the Guptas.

Shanghai Zhenhua paid the first tranche of US$969 086 (R12.6-million) that December. According to the Guptas’ accounting records, it went to a United Arab Emirates-registered company called JJ Trading.

JJ Trading has also featured prominently in another Transnet kickback scheme. The #GuptaLeaks reveal China South Rail entered into a “consulting” agreement with JJ Trading, related to Transnet’s 2013 locomotive tender, and paid JJ Trading over US$107-million (R1.4-billion).

• Read the Transnet-related #GuptaLeaks here.

For every tranche of cash received from Shanghai Zhenhua, JJ Trading transferred exactly 4% to a person called “David”, sometimes as cash. The rest flowed to Gupta front companies in the UAE and South Africa.

For example, at the end of January 2013, Shanghai Zhenhua paid US$1.2-million (R15.6-million) to JJ Trading.

Within days, JJ Trading paid US$743 815 (R9.7-million) to Global Corporation LLC’s National Bank of Abu Dhabi account. Global is beneficially a Gupta company. JJ Trading paid another US$256 130 (R3.3-million) to Global’s US Dollar account at Standard Chartered.

In all, Shanghai Zhenhua paid at least US$4.2-million (R54.6-milion) to JJ Trading over 14 months, of which 15% stayed with JJ, 4% was paid to “David”, and the rest went on to the Guptas.

The records also reveal how a confidential Transnet document, related to the subsequent tender for 22 cranes that Liebherr won, had been leaked to the Guptas. It is not clear how, but a top Gupta executive then emailed the document to an Indian national associated with JJ Trading.

Déjà vu

This is not the first time Liebherr has popped up on amaBhungane’s radar.

Last October, amaBhungane linked Liebherr to another apparent Transnet kickback scheme.

AmaBhungane’s investigation revealed that in March 2015, Burlington – a subsidiary of advisory firm Regiments Capital – signed a R5-million contract with Liebherr-Africa to provide it with “market feasibility studies” in relation to the supply of cranes to Transnet.

Liebherr made a R2-million down payment to Burlington, which paid exactly 90% straight on to a Gupta front, Homix.

At the time, Liebherr told amaBhungane that Homix was unknown to it.

It is now clear that Liebherr’s R2-million laundered to Homix was just the tip of the iceberg. The #GuptaLeaks reveal that the family received roughly *$4.2-million (R55-million)* from Liebherr over the course of a year and a half.

Bank records show that in July 2013 Liebherr paid US$905 000 (R11.8-million) to another of the Guptas’ UAE front companies, Accurate Investments.

If Accurate sounds familiar, that is because the Guptas also used it to launder the Free State government’s money to pay for their niece’s notorious Sun City wedding.

On 17 February 2014 – the same day that Liebherr announced it had scored the 22-crane Transnet contract – Liebherr paid Accurate another US$202 008 (R2.6-million).

Liebherr’s cash lands in the US

Although the South African Revenue Service, Hawks and National Prosecuting Authority remain unmoved by the #GuptaLeaks revelations, the shadow of US regulators potentially looms large .

• Read “The Almighty Dollar”

A significant portion of Liebherr’s cash transferred to Accurate was quickly passed along to relatives of the Guptas in the US.

In May 2014, Liebherr made three more payments to Accurate totalling US$1 105 368 (R14.4-million).

On 28 May 2014, two days after Liebherr’s last wire hit Accurate’s account, Accurate bundled Liebherr’s money with other funds and wired it all to Brookfield Consultants Inc in the US.

According to its website, Brookfield specialises in healthcare consulting.

Records obtained by amaBhungane show that Brookfield, incorporated in Texas, is managed by Ashish and Amol Gupta. In correspondence Ashish and Amol Gupta refer to Rajesh “Tony” Gupta as “Respected Tony Uncle”.

Documents contained in the #GuptaLeaks reveal that Ashish and Amol Gupta were respectively 27 and 23 years old at the time Accurate transferred Liebherr’s cash to Brookfield’s account at JPMorgan Chase Bank in New York.

Neither Ashish nor Amol Gupta, nor their father Ramesh, who provided Tony Gupta with Brookfield’s bank account information, responded to any of amaBhungane’s attempts to contact them.

The ever-expanding feeding trough

We have seen no specific evidence of Transnet rigging the crane tenders to favour Liebherr and Shanghai Zhenhua.

However, the payments to offshore Gupta fronts and contemporaneous contract awards trace a Transnet tender pattern that is now well known. Liebherr and Shanghai Zhenhua bring the number of Transnet contractors who have paid the Guptas or partnered with their companies to seven.

SAP: Last week, amaBhungane and Scorpio revealed that German software multinational SAP paid R100-million to Gupta-linked CAD House.

Despite strident denials of wrongdoing from SAP’s local managing director following these revelations, SAP’s international headquarters quickly suspended four South African executives and announced it had hired US law firm Baker McKenzie to investigate.

China South Rail: Last month, amaBhungane and Scorpio exposed a R5.3-billion kickback contract between China South Rail (CSR) and a Gupta company in Hong Kong, after CSR won contracts worth roughly R25-billion to supply Transnet with locomotives.

The contract and other #GuptaLeaks accounting records describe how CSR initially paid JJ Trading and a related Dubai company $124-million (more than R1.6-billion) kickbacks for these contracts. The funds were passed on to Gupta companies.

Recall that Shanghai Zhenhua also paid JJ Trading before the money flowed to the Guptas. In light of the CSR kickback documents, it is possible that similar agreements underlie Shanghai Zhenhua and Liebherr’s crane contracts.

McKinsey: Last year, amaBhungane reported how global consultancy McKinsey won Transnet contracts that were gradually ceded to Regiments Capital and the Gupta-linked group Trillian, which marched off with Transnet contracts worth at least R484-million. Regiments in turn paid R84-million to the Gupta front Homix.

A recent investigation by Advocate Geoff Budlender exposed how McKinsey partnered with Trillian, in a “sham” contract that would milk Eskom.

Neotel: In 2015, amaBhungane exposed how telecoms firm Neotel paid tens of millions of rands in “commissions” to Homix to clinch deals worth more than R2-billion from Transnet.

T-Systems: Questions have also been raised about German IT company T-Systems’ contracts with Transnet and Eskom. T-Systems’ supplier development partner Sechaba Computer Services also paidHomix.

Former Transnet CEO Brian Molefe and CFO Anoj Singh were in charge through most of this. They moved together to Eskom in 2015, where more questionable Gupta deals have been publicly identified.

The investigations multiply

This week, Transnet was the latest company to promise an investigation.

Spokeswoman Viwe Tlaleane told amaBhungane: “Transnet notes recent reports based on leaked emails.

“Some of these reports cast aspersions on the integrity of the company’s governance processes, especially relating to procurement. Transnet views good governance and the integrity of its processes seriously. In this regard, we have put in place various measures to safeguard this integrity. Any breach or allegation of breach is viewed in a serious light.

“Transnet did not make any payments to third parties and has no knowledge of the alleged transactions. Part of the company’s investigation entails approaching suppliers for their perspective on the allegations.

“Should any actionable facts arise, remedial action will be taken.”

KPMG see no evil – Part 2KPMG see no evil – Part 2

For the second time, the #GuptaLeaks show what look like kickbacks flowing into a Gupta company audited by KPMG.

AmaBhungane recently reported how, in the 2014 financial year, public money meant for a community dairy in the Free State was circulated offshore before being channelled through Accurate Investments in Dubai to Linkway in South Africa.

Both companies are Gupta-owned, and KPMG audited Linkway at the time.

The Guptas used some of dairy money to pay for their now notorious Sun City wedding, which KPMG allowed them to write off as a business expense.

To justify this tax write-off, KPMG later claimed that, based on facts known to it, Accurate was not a Gupta company but was “related to” the father of the Sun City bride.

AmaBhungane has yet to discover anything among the millions of pages of documents contained in the #GuptaLeaks to support this.

Crane manufacturer Liebherr’s cash followed the same trail.

Liebherr sent the money to Accurate in Dubai, where it was quickly bundled with other funds flowing through the Guptas’ Dubai bank accounts and, in part, laundered to South Africa.

In one instance – on 25 February 2014 – Accurate wired money to the Guptas’ Linkway Trading [link 140227 Email Linkway Consultancy Payment to Accurate.pdf] purportedly for “consulting” services.

KPMG did not respond to amaBhungane’s questions about Accurate’s popping up yet again in Linkway’s accounts.

In sum – during the financial year ending 28 February 2014 – funds originating from at least two government entities, the Free State and Transnet, were laundered via Accurate in the UAE to Linkway on KPMG’s watch.

KPMG previously said: “We stand by our audit opinion issued.”

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• 

Rather than being an independent watchdog, KPMG’s dealings with the Guptas leave the impression that the auditor was the family’s lapdog.

Regarding the Sun City nuptials, KPMG Africa’s top executive Moses Kgosana gushed to Atul Gupta, “My wife and I were privileged to attend and enjoyed every moment and every occasion. I have never been to an event like that and probably will not because it was an event of the millennium.”

In response to our enquiries, KPMG stated that it was “satisfied that at no stage was [its] independence impaired.”

But due to confidentiality constraints, it said, “we cannot respond to your questions and request that you direct the same to our former client”. It cut ties with the Guptas last year.

The Guptas did not answer our questions.

Further email correspondence shows that KPMG, as Linkway’s auditors, were well aware of many of the key details surrounding the “event of the millennium,” and had been for years. For instance, KPMG possessed the four-page itemised invoice of wedding expenses the Guptas’ Linkway sent to the Guptas’ Accurate Investments in Dubai.

Despite the fact that both Linkway and Accurate are beneficially owned by the Guptas, Linkway’s financial statements, audited by KPMG, do not consider Accurate to be a related party.

The importance of a technical accounting term, such as “related party”, may be unclear to many.

 Read

• • Moses Kgosana’s email to Atul Gupta here
  • KPMG email chain: Linkway and wedding expenses here
  • Linkway Financial Statements here
  • Plus amaBhungane’s questions to KPMG, and their response
    

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Auditors’ heightened scrutiny of related-party transactions is designed to prevent self-dealing on non-market terms – an effect of which can be to artificially manipulate income to evade taxes.

For example, to do just that, a company could sell a R1-million Mercedes to its shareholder for R100 000. The R900 000 “loss” from this sale could be offset against the company’s income, thereby artificially lowering the company’s taxable income by an equivalent amount.

If the car sale were to a bona fide third party, perhaps the loss could be explained by other factors – a fire sale driven by a company’s desperation to raise cash, for example.Such a transaction with a related party, however, should raise an auditor’s antennae and invite further examination.

In the case of Linkway and the wedding expenses, the one Gupta company, Linkway Trading, “paid” for the wedding expenses; then was “reimbursed” by the supposedly unrelated Accurate Investments. KPMG offered no explanation in Linkway’s audited financials why a supposedly unrelated third-party in Dubai would pick up the Guptas’ R30m wedding bill – or why a wedding was a bona fide business expense, for that matter.

The net effect of this accounting sleight-of-hand is that not only was the wedding effectively paid for from funds diverted from the Free State government’s coffers; but the Guptas paid no income tax on this windfall. This income was offset against Linkway’s expenses, resulting in Linkway’s receiving zero taxable income from its Free State windfall.

It is also unclear why KPMG allowed this income to be offset against Linkway’s wedding-related “business” expenses considering the objections of a junior auditor at KPMG.

In an email to Jacques Wessels, the KPMG audit partner responsible for Linkway’s financial statements, the junior auditor remarked: “We are of the opinion that these [wedding-related] costs are most probably not in the production of Linkway’s income.”

In other words, the junior auditor doubted that the Gupta niece’s wedding had anything to do with Linkway’s ostensible business, thus begging the question why the wedding was accounted for as a business expense in the first place.

The junior auditor’s objections, however, appear to have fallen on deaf ears.

Notably, the junior auditor was not among the high-ranking KPMG delegation at the Sun City wedding, which included KPMG’s then-chief executive Kgosana, as well as Wessels.

Wessels later certified that “the financial statements present fairly, in all material respects, the financial position of Linkway”.

KPMG said this week: “We stand by our work done and audit opinions issued.”

KPMG’s position notwithstanding, perhaps South African taxpayers will be the ultimate judges in deciding the fairness of Linkway’s paying only R55 799 in taxes despite receiving R30-million of the Free State government’s cash via Dubai.

The standard corporate income tax rate assessed by the South African Revenue Service, as noted in Linkway’s financials, is 28%. Hypothetically, a R30-million profit should have attracted R8.4-million in tax.

One party involved in the wedding cash flows between South Africa and Dubai, Standard Chartered, admitted this week that it terminated its relationship with Gupta front companies shortly after these transfers were made, noting: “We are not able to comment on the details of client transactions but confirm that these accounts were closed by us by early 2014.”

Read

• • • KPMG’s email to Oakbay’s Ronica Ragavan here
    • AmaBhungane’s follow-up questions to KPMG here
    • KPMG’s second response to amaBhungane here
      

      ---

The bank continued, “Standard Chartered takes its responsibility to combat financial crime very seriously and is fully committed to doing business in accordance with local and international regulatory and legal requirements.”

Additional correspondence penned by KPMG’s Kgosana and Wessels raises further questions about KPMG’s relationship with the Guptas long after alarm bells had sounded at Standard Chartered.

In one such email also copied to Wessels, chief executive Kgosana sought Atul Gupta’s advice on dealing with media “miscommunication” and took the opportunity to back the Guptas’ denials of wrongdoing.

“I am aware of how you and Ajay have suffered miscommunication on other platform [ Daily Maverick] accused of wrong doing that you knew nothing about and it is with these knowledge that I seek your views and advice,” Kgosana remarked.

In the wake of revelations in March 2016 that the Guptas had offered ministerial posts to three ANC MPs, KPMG apparently again sought to sound out the family’s media strategy, writing to Oakbay chief executive Ronica Ragavan: “The past week has been a blood bath and does not bode well.

“Not sure if there is a response or strategy to the current media spike around 3 different ministers/deputy ministers or ex MP’s who have made statements that Family offered them jobs.

“One also linked the offer to a financial favour.

“Not sure if the family will be called to ANC or Parliament to discuss/explain??”

In response to our queries, KPMG insisted that “Wessels, at that time wanted to know whether the client was going to respond to the allegations in the media and what the response was going to be. It was certainly not to solicit PR advice or to seek to share a media strategy as alluded to in your mail.”

It is unclear from KPMG’s response whether such communications between KPMG and its independent audit clients are commonplace.

• 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.