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

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

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

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

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

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

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

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

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

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

The R9.4-billion payday

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Trillian, likewise, told us in a written statement:

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

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

It won’t cost you a cent

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

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

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

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

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

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

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

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

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

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

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

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

McKinsey starts to worry

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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The #GuptaLeaks have already revealed how German software multinational SAP turned to the Guptas in their hour of need to clinch a R100-million contract from Transnet.

Now emails and documents show a second German company, Software AG, entered into an apparent kickback agreement with a Gupta-controlled company in an attempt to secure a R180-million contract from Transnet Freight Rail.

In a pattern that is becoming familiar, Software AG agreed to pay Global Softech Solutions (GSS) up to 35% of the value of the contracts it secured with Transnet, the department of correctional services, Mangaung municipality, Sasol and MultiChoice.

The Guptas’ Sahara Systems was in the process of buying into GSS, an IT services company, at the time.

But, as the saying goes, there is no honour amongst thieves.

The #GuptaLeaks also provides evidence that Software AG’s high-powered sales director, Riaaz Jeena, created a second sales commission agreement seemingly to ensure that he too would receive a slice of the pie.

Software AG is one of Europe’s largest software companies – last year it boasted €872-million (R13-billion) in worldwide revenue.

Like SAP, Software AG appeals to have been willing to pay huge amounts of money to a Gupta-controlled company under the guise of “commissions” in the hope of unlocking huge contracts from the state.

In SAP’s case, this meant paying R100-million to CAD House, a small outpost of the Gupta empire that sells 3D printers.

With both SAP and Software AG there is little evidence that the Gupta companies contributed much beyond their political influence.

The Guptas did not respond to requests for comment. Software AG confirmed the partnership with GSS, but denied wrongdoing.

October 2014: The Mangaung deal

In 2014, Software AG was trying to replicate a fantastically lucrative deal it signed with Ekurhuleni – this time with Mangaung municipality in the Free State.

Ironically, it was Lawrence Kandaswami, the now-suspended managing director of SAP South Africa, who first introduced Software AG to GSS in October that year.

Although SAP and Software AG are competitors, Kandaswami appears to have been willing to act as go-between, passing information about the Software AG deal to GSS and the Guptas’ Sahara Systems, which was in the process of buying a 50% stake in GSS.

After receiving Kandaswami’s emails, Sahara’s Santosh Choubey passed them up the chain to Gupta lieutenant Salim Essa with the message: “The same can be replicated exact solution in North West and Limpopo.”

Software AG was close to finalising the Mangaung deal, Kandaswami explained, but was now facing opposition from the municipality’s chief financial officer, who wanted an open tender. (The municipality insists it went no further than an initial presentation.)

The #GuptaLeaks provide no detail of what Essa did with this information, but the #GuptaLeaks reveal that in the months to follow, GSS became Software AG’s chosen partner on a number of potentially lucrative opportunities.

March 2015: Sensational signs of a retro-kickback

Although Sahara Systems would only formally take up its shareholding in GSS by September 2015, minutes of monthly meetings show that by March that year already it was firmly in control of GSS.

On 4 March, Choubey sent GSS’s new budget to Essa and Tony Gupta. It included four Software AG deals with potential revenue just for GSS of R56.9-million by December 2015 and another R54-million by December 2016.

The largest was a R180-million project for Transnet Freight Rail. The Mangaung deal that Software AG was having trouble closing was also on the list.

The commission agreement that Software AG would eventually sign with GSS allowed GSS to claim “referral fees” and “sales assist fees” for helping Software AG identify leads and helping Software AG close these deals.

But it appears someone else was also cutting themselves a slice of the commission payments.

Attached to a 9 March 2015 email sent by Choubey to another Gupta lieutenant, Ashu Chawla, is a draft agreement between GSS and Sensational Signs, a small company in the south of Johannesburg that manufactures steel frames for billboards.

A partnership between a Gupta IT company and a billboard company is odd enough, but the content of the draft agreement is even more suspect.

Dubbed a “Prospect Lead Provider Fee Agreement”, it promised to pay a “finder’s fee” of between 4 and 15% to Sensational Signs for identifying potential software deals or “leads” for GSS.

“In the event that [Sensational Signs] identifies Lead but elects to not actively pursue the sales cycle itself, but rather to refer such Leads to GSS, Sensational Signs shall be eligible to receive a Lead Provider Fee,” the agreement reads.

The obvious question is what kind of leads would Sensational Signs be able to identify for an IT company?

The answer is hidden in the metadata.

Since Sensational Signs was registered in September 2014 Mohamed Mobeen Jeena has been its sole director. He happens to share a surname with Software AG sales director Riaaz Jeena.

It is not clear what their exact relationship is, but records show that at various times the two Jeenas have listed the same unit in a complex in Winchester Hills as their residential address.

Although the draft agreement was between GSS and Sensational Signs, the document properties showthat it was Riaaz Jeena who drew up the document on his Software AG computer.

And although Software AG was not mentioned by name anywhere in the agreement, the wording of the Sensational Signs agreement appears to have been lifted directly from Software AG’s own contracts.

Also, the potential deals listed in the four-page annexure are the same four leads listed in the GSS budget that Software AG was already pursuing: Transnet, Mangaung municipality, Sasol and MultiChoice.

It appears that what Riaaz Jeena was effectively putting in place was a retro-kickback agreement – a scheme designed to make sure that the person paying a kickback gets some of it back for himself or a nominee.

On the Transnet Freight Rail deal, for instance, GSS was potentially agreeing to pay R27-million to Sensational Signs as a “finder’s fee” for supposedly identifying the lead and passing it on to GSS.

On the Mangaung deal, the Sensational Signs agreement anticipated that GSS would take a 35 percent (R13.65-million) cut from Software AG while Sensational Signs, though not even in existence when the German multinational made its initial pitch to Mangaung, would be entitled to 10 percent (R3.9-million) supposedly for “finding” the deal.

Detailed questions were emailed to both Riaaz and Mohamed Jeena. Riaaz Jeena was “out of the office” all week and did not answer calls on his cellphone, while Mohamed Jeena terminated the call when told it was from amaBhungane.

May – July 2015: Software AG rolls out the red carpet

By May 2015, as the opportunities rolled in, Software AG and GSS were still formalising their new partnership.

Unlike CAD House, the Gupta-company implicated in the SAP scandal, GSS at least had a track record in the software industry.

“As part of extending the company skill set I attended the training courses … in Software AG learning academy,” GSS’s founder and one-time chief executive Leela Yemineni explained via email. “I started the partnership application with Software AG in November 2013 and company attained partnership in February 2014.”

But a “Power Up Partnership” agreement that was presented to GSS in May that year represented a major step up. In terms of the agreement, GSS would be recognised as a “co-sell” partner.

• Read the draft agreement between Software AG and GSS that would give the Gupta-controlled company a significant chunk of the German company’s software deals.

The Power Up agreement did not detail the percentage that GSS would earn from Software AG, but the Sensational Signs document estimated that GSS’s share would be between 22.5% and 35%.

Software AG sales director Riaaz Jeena now also had an additional connection to GSS – in April, his wife, Fehmeda Alibhai, had started working for Sahara Systems. Minutes show Alibhai was now present in all the GSS monthly meetings where the Software AG deals were discussed.

Although the Power Up agreement between Software AG and GSS was in most respects a standard sales commission agreement, the question is what GSS brought to the party to justify the more than R100-million in commissions it expected to make according to its budget.

The agreement was clear that “Software AG will not accept leads that have already been … identified by Software AG itself.”

In the case of the Mangaung, it is clear that Software AG had identified the deal long before GSS came into the picture.

This was confirmed by Mangaung communications manager Qondile Khedama, who said in an email: “Software AG South Africa … made a presentation to the city’s management team in July 2014.”

The Sensational Signs document also makes it clear that the deals on the list were not new – some were scheduled to be finalised in less than 30 days.

However, in terms of the Power Up agreement GSS could still earn a sales assist fee if it “actively drives [the] majority of the sales cycle with Customer”.

However, most of the customers we approached claimed never to have heard of GSS.

The Sasol deal

Sasol’s group head of media relations, Alex Anderson, said Sasol first approached Software AG in February 2015 and later invited Software AG and three other bidders to submit proposals.

“Sasol was not aware of GSS as an organisation nor of GSS’ involvement and association with Software AG. Sasol did not engage at all with GSS… All engagements … were through Software AG directly,” Anderson said in an email.

Despite both GSS and Sensational Signs being missing in action according to Sasol, the Sensational Signs document shows that GSS, the company controlled by the Guptas, expected to earn R10.5-million from the Sasol contract, R4.2-million of which would flow to Sensational Signs, the billboard company.

Sasol said no contract was awarded in the end.

The MultiChoice deal

Like Sasol, MultiChoice says it had also never heard of GSS or Sensational Signs.

“MultiChoice concluded a contract with Software AG in 2015 for the provision … of a number of IT related services,” general manager of corporate affairs Jackie Rakitla said.

“All payments in terms of the contract are made to Software AG and to no other entity. Global Softech Solutions (GSS) is not mentioned in the above contract. MultiChoice has no relationship with GSS…

MultiChoice is also unaware of any alleged agreement between Software AG and GSS. As far as we can ascertain, none of our employees or authorised representatives have met with GSS or Sensational Signs.”

Yet, according to the Sensational Signs document, GSS expected to earn R4.5-million from Software AG for the contract, of which Sensational Signs would get R1.5-million for “finding” the lead.

• Read the Sensational Signs agreement here.

Unlike Sasol, the MultiChoice deal did actually go ahead and a GSS spreadsheet details how the money appears to have flowed.

On 2 July 2015, Software AG paid R3 805 597 to GSS with the reference “MultiChoice deal”. The following day, GSS made two payments: One of R1.71-million (R1.5-million plus VAT) to Sensational Signs and another of R1.48-million to a company called Forsure Consultants. Both listed as a reference “MultiChoice deal”.

Little is known about Forsure Consultants except that it shares an address in Mayfair and a former director with Homix, the Gupta-linked letterbox company that amaBhungane previously revealed received kickbacks from Neotel and other companies on Transnet contracts.

The #GuptaLeaks spreadsheet also recorded that GSS transferred another R798 000 to Sahara Systems with the reference “MultiChoice deal”.

The Transnet deal

The only instance where GSS seems to have played an active role was at Transnet Freight Rail.

“Transnet received an unsolicited proposal from Software AG and Global [Softech] Solutions for the provision of a demurrage system…” Transnet spokesperson Viwe Tlaleane confirmed.

Transnet bills clients for demurrage fees when a scheduled rail trip cannot go ahead because of delays on the client’s side. The proposed system would help Transnet to increase the amounts it collects.

“At the time, [Transnet] did not have a structured way of determining demurrage fees, and saw the value in having a system that would enable it to ensure effective and optimal use of its rolling stock,” Tlaleane said.

This resulted in Transnet entering a pilot project with Software AG and GSS in 2015.

“The contract is commission based and fees will be determined by revenue generated by Transnet on a percentage that is less than 50%.”

The draft agreement between GSS and Transnet found in the #GuptaLeaks indicates that GSS would receive between 49.5% and 50% of the revenue generated for Transnet: a potential R263-million in total. Software AG would receive a royalty for providing the software.

Although GSS was supposed to be the main partner on the deal, email exchanges show that it was Software AG and Jeena, its sales director, that drew up GSS’s proposal for Transnet.

Although Transnet said the pilot project was ongoing, Software AG’s Cassoojee denied any knowledge of it: “Software AG has not generated revenue from any of the references made in your request … apart from one Private Sector transaction which we cannot disclose… All other Proposals have subsequently expired and we have not entered into any additional agreements with GSS since December 2015.”

The prisoner deal

In addition to the four opportunities already identified in GSS’s budget and the Sensational Signs agreement, emails show Software AG was also pushing for Sahara Systems to submit a bid for a prisoner tracking system.

Software AG appears to have been hoping to sell Software AG’s products and GSS’s services to the department of correctional services (DCS) by using its new partner’s political connections.

“I want you guys to get all the services business more than anything else on this deal… I don’t have an idea on the size of the [software] license deal implications as yet, but the services would be huge on a deal like this!” Software AG partner manager Joanne Foster told Sahara’s Choubey in an email, before adding: “Do you have contacts and leverage @ DCS?”

• Email from Joanne Foster regarding the DCS deal.

Foster ignored requests to comment. AmaBhungane previously reported the contract was awarded to another politically-connected company.

Another kickback?

It is not clear how much flowed from Software AG to GSS as several of the opportunities identified did not materialise. But there is very little evidence that GSS earned its fees by identifying leads or doing the sales legwork.

As with SAP, the Software AG commission agreement comes across as stage-managed to disguise payments to politically-connected people and their companies, in essence an apparent kickback for helping Software AG to secure business.

Software AG South Africa’s Cassoojee responded in writing: “Software AG prospective Partners undergo a stringent verification process that ensures Partners are able to add value to the customer… Software AG is committed to conducting its business fairly, impartially, in an ethical and proper manner, and in compliance with all laws and regulations.”

Cassoojee did not, however, offer any insight into how GSS added value to its customers when three out of four potential customers claimed not to have heard of the company.

We also asked if Software AG sanctioned Jeena’s side deal between GSS and Sensational Signs. Cassoojee did not respond and none of the questions sent to Software AG’s head of corporate communications globally, Byung-Hun Park, went answered since our first email on 26 June.

We also put this allegation to Yemineni. He said via email: “Sincerely I was not involved in sales and finance from mid of 2014. Apologies.” He also said he had formally left the company in 2016.

In May 2016, Sahara Systems sold its 50% stake in GSS to Futureteq, which at the time was owned on paper by Imtiaz Emmamally and Fehmeda Alibhai. Circumstantial and source evidence suggests, however, that Futureteq is effectively controlled by the Guptas.

Either way, this potentially places Alibhai — Jeena’s wife — in prime position to benefit if the Transnet contract goes ahead.

Transnet’s Tlaleane told us: “The trial period is set to expire late this year and [Transnet] will make a decision on whether or not to roll out the project in full.”

For now, however, GSS seems to be keeping a low profile. Its phones went unanswered all week; emails sent to official GSS email addresses bounced back; and a visit to GSS in Rivonia turned up an empty office.

Detailed questions were put to Emmamally, Alibhai and Gupta spokesperson Gary Naidoo, but none responded.

Meanwhile, SAP has confirmed that the international law firm it hired to investigate allegations that it paid kickbacks to the Guptas will also look at a December 2015 bid amaBhungane previously reported on, where SAP planned to subcontracted 60% of an R800-million Transnet software contract to GSS as its “supplier development partner”.

SAP’s Ansohpie Strydom said: “The investigations cover SAP’s entire South African operation, and include a review of all contracts… SAP has committed to sharing the results of the investigations once they have been completed.”

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After Matjila was appointed, Gupta-owned TNA Media scored lucrative deals with the power utility.

On March 22, 2014, Gupta associate Salim Essa circulated Matjila’s CV via mail to Gupta brother Rajesh, better known as Tony, and his nephew Srikant Singhala, son of Atul Gupta.

The CV was then forwarded to an employee of the Guptas’ Sahara Computers and Duduzane Zuma – President Jacob Zuma’s son and a business partner of the Guptas.

At the end of that month Matjila, who had been on the Eskom board since 2011, replaced Brian Dames as CEO in an acting capacity. His short tenure would soon turn into a boon to the Guptas’ TNA Media, publisher of the overtly pro-government newspaper The New Age.

In October 2014, amaBhungane reported that “Matjila allegedly disregarded internal legal advice and approved a budget-busting R43-million New Age business breakfasts sponsorship”.

The business breakfasts, now reportedly being cancelled by the SABC, were regularly broadcast live on the state broadcaster at its expense. They featured prominent political figures, including President Jacob Zuma.

Those widely seen to be in the Zuma camp and close to the Guptas are heavily represented at these events, which have raked in large sponsorships from state-owned entities and which industry experts say are a major money spinner for an otherwise struggling newspaper.

Now, the leaked emails corroborate amaBhungane’s previous report of the exorbitant sums Matjila lavished on the The New Age’s flagship television show, and at a time when the power utility could ill afford it.

On 4 April 2014, just after Matjila had moved into his new role, an email containing a proposal for renewing and expanding Eskom’s sponsorship of the business breakfasts was sent from Nazeem Howa, the CEO of Gupta-owned Oakbay Investments, to another Gupta employee, Ashu Chawla.

The proposal, dated to the previous month and addressed to Chose Choeu, Eskom’s executive for corporate affairs, reads: “It is with pleasure that we submit the following proposal for the period 1 April 2014 to 31 March 2015 for sponsorship of 12 Business Briefings for a total investment of R14,400,000.00, excluding VAT and agency commission.”

Email correspondence from about a month after the proposal was circulated shows TNA Media’s business development manager Wiedaad Taliep and Eskom’s Choeu arranging a meeting to “discuss the breakfasts logistics and related issues”.

On 6 May, Chose wrote that the “the contract has been signed by our CEO”, referring to the business breakfasts.

That correspondence was then forwarded to Atul Gupta.

The amaBhungane report from later that year stated that “the new contract for R43-million allegedly approved by Matjila commits Eskom to sponsoring roughly one monthly briefing for three years”.

If the R14.4-million cited in the proposed contract were to be extended to three years the figure would be almost identical to the alleged R43-million.

That report alleged that the final contract was especially onerous because it did not contain an exit clause – something that Eskom’s lawyers had allegedly raised with Matjila before he signed off on it.

The deal caused such concern at board level that the chair of its audit and risk subcommittee raised the alarm with Public Enterprises Minister Lynne Brown.

At around the same time as the business breakfast deal was being hammered out, Eskom also entered into a new contract for the bulk buying of copies of The New Age.

Attached to the same email containing the business breakfast proposal was a newspaper subscription agreement between Eskom and TNA Media, effective 1 May, 2014.

The unsigned copy of the agreement committed Eskom to purchase 4,000 daily copies of the The New Age over a period of 36 months. The cost was calculated at the full cover price of R3.50 at 256 publishing days per year, plus 50 cents on each paper for delivery.

The total cost for a year’s subscription: R4,096,000. No discount was offered on the cover price – highly unusual for such a large purchase.

The agreement tied Eskom down by stating that it shall remain “in full force and effect indefinitely” unless either party were to terminate it by “giving to the other Party six months’ written notice of termination”.

The TNA business model relies heavily on government contracts for advertising and subscriptions.

Previous amaBhungane reports, citing data from global market research firm Nielsen, showed that ad-spend from government and state-owned companies has propped up The New Age.

The paper receives a disproportionate share of government ad-spend while the private sector has been largely unwilling to advertise in a paper that does not release comprehensive audits of its circulation figures.

The Guptas’ government-focused business strategy was stated unambiguously in recently leaked emails concerning a plan to take over the Mail & Guardian newspaper.

The emails show that the plan to make the Mail & Guardian profitable was to steer it in the same direction as The New Age – adopt a pro-government editorial position and attract government ad-spend.

According to Nielsen figures, this approach netted The New Age R2.2-million worth of advertising from South African Airways, R3.4-million from the SABC, and R4.5-million from Transnet for the year ending 31 October, 2016.

Fin24 reported in 2015 that SAA had spent R9.4-million to purchase nearly six million copies of the paper.

For Eskom, relations with TNA Media did not begin when Matjila took the helm. The utility has publicly stated that it had dealings with The New Age since 2011, and between 2011 and early 2014 it had spent at least R12-million on 10 business breakfasts.

But Matjila appears to have been particularly eager in dispensing largesse to the Guptas, and this in a year when the cash-strapped state-owned company faced major delays and cost overruns with new power station construction, was on the brink of another load shedding crisis, and was desperate for a bailout after a shortfall of hundreds of billions of rand.

Asked if the volume of Eskom’s expenditure on The New Age could constitute wasteful expenditure, Eskom gave the following generic response: “Regarding the incidence of fruitless and wasteful expenditure in general, Eskom regularly reviews its internal control processes to minimise the risk, and where an incident occurs Management takes appropriate measures to deal with the matter, including disciplinary action and/or criminal or civil action against those involved, as considered appropriate.”

Eskom did not answer detailed questions, including those regarding the role of Matjila. It also did not respond to follow-up questions.

Gupta lawyer and regular spokesperson Gert van der Merwe has refused to comment on #GuptaLeaks claims, saying: “I have no documents or context or instructions. It is inappropriate.”

Gupta Link

Matjila’s link to the Guptas can be traced back to his chequered history as chief executive of Cosatu investment company Kopano ke Matla, where he was implicated in a number of cases of financial mismanagement before resigning in 2014 when he took up his executive position at Eskom.

Under his watch at Kopano ke Matla the Financial Services Board picked up a web of suspicious payments including one of R1.3-million to a company he owned. In response, Matjila told the FSB the payments were “personal commissions”.

Cosatu also commissioned its own forensic report in 2013 in an attempt to get to the bottom of numerous allegations of financial misconduct at its investment arm.

This showed that Matjila had only handed over a summary of the FSB report to Cosatu while he sat on the full report.

The Cosatu report also alleged that Matjila undersold an old Cosatu property by as much as R9.5-million, and paid an inflated price for a new property – R6.3-million more than it was worth.

It found that the task team led by Matjila that negotiated the property transactions was “informally assisted” by Essa, the Gupta associate who sent Matjila’s CV to Tony Gupta. It added that Kopano had previously worked with Essa through Inca Energy, an entity jointly owned by Kopano and Essa.

Chequered Past

Matjila’s tenure at Eskom, first as member of the board’s tender subcommittee and then as acting CEO, was also marked by his involvement in the awarding of a controversial R4-billion contract to replace ageing steam generators at Koeberg nuclear power station.

The never-ending tender would drag on for years as Matjila and other political appointees at board and ministerial level appeared to use every opportunity to block the bidder preferred by Eskom’s technical teams.

The tender was originally awarded in 2011, with the lion’s share going to Japanese-American corporation Westinghouse, and a smaller portion of the deal going to its French rival Areva. But it was halted by then public enterprises minister Malusi Gigaba, who claimed that Eskom had not received ministerial approval.

Eskom reopened the tender process in 2012 and the following year Eskom’s technical team reaffirmed its choice of Westinghouse as the preferred bidder. But when its decision was taken to the board’s tender subcommittee, then chaired by Matjila, it stalled again.

Matjila appeared to be creating a parallel tender process by bringing in external consultants who reported to him and contradicted the work of the Eskom technical team and backed Areva.

As the process dragged on into the second half of 2014 Matjila, then acting CEO, and Matshela Koko, acting group executive for technology and commercial, co-signed an unsolicited memo recommending Areva.

Despite Eskom’s technocrats continuing to support the cheaper Westinghouse bid, the tender committee awarded the contract to Areva. After a drawn-out legal challenge by Westinghouse, the Constitutional Court ruled against setting aside the tender award to Areva.

AmaBhungane tried numerous times to contact Matjila on several phone numbers linked to him. He did not answer, nor did he respond to text messages.

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The #GuptaLeaks show:

• The Guptas tried to sell Denel’s intellectual property to India, while watering the state arms company’s stake down by half.
• Acting as middlemen, they took the biggest stake for themselves and cut in a powerful Indian tycoon – close to Prime Minister Narendra Modi – for his “influence”.
• They primed, wined and dined Denel’s then new chairman, Dan Mantsha, who sent them confidential government documents.
  

The Gupta family set themselves up to sell state arms manufacturer Denel’s weapons to India in a deal involving a shady Indian fixer and a powerful tycoon close to prime minister Narendra Modi.

The Guptas arranged to sideline Denel and take the biggest share for themselves even though it was Denel’s proprietary technology that was to be sold.

These details are revealed in the #GuptaLeaks, a trove of electronic data sourced from the heart of the Guptas’ business empire.

In January 2016, Denel announced the formation of Denel Asia, a Hong Kong-based joint venture that it controlled, holding 51%. The rest belonged to a company registered to Gupta lieutenant Salim Essa.

Defending themselves against criticism at the time, Denel and the Guptas claimed that the Gupta family had no interest in the Essa company, VR Laser Asia, and by implication in Denel Asia.

The #GuptaLeaks show they were misleading South Africans. Emails in the trove show Denel officials knew the overriding purpose of setting up Denel Asia was to sell arms to India – targeting more than US$8-billion in deals there – via a second joint venture called Denel India.

In Denel India, Denel’s participation was watered down to just 25%. The Guptas, who brought little to the table besides their political connectivity in South Africa and India, planned to wield a controlling 42% stake – exercised via Essa and their brother-in-law, Anil Gupta.

Anil, a former minister in the Indian state of Uttarakhand, is married to Achla, the Gupta brothers’ sister. The controversial Gupta wedding at Sun City celebrated the marriage of Anil and Achla’s daughter, Vega.

The files contain emails and draft contracts that show that as Denel Asia was being established in Hong Kong, the Guptas were putting together a second-tier company in India called Denel India, in which their Indian brother-in-law would hold a significant stake.

• Read the Denel #GuptaLeaks ​here.

They also show the Guptas had a direct involvement in the establishment of Denel Asia, suggesting Essa was little more than their proxy.

Denel India was to be owned by Denel (25%) and Essa (24%) via Denel Asia, as well as Anil Gupta (18%) and the Indian multinational Adani Enterprises (33%).

Thus, Denel’s participation was to be diluted significantly – and the emails show Denel executives were well aware the company would enjoy only a minority stake in the Indian venture.

Adani was key to the plan, the emails suggest.

Its billionaire founder and chairman, Gautam Adani, is often reported to be close to Modi, the prime minister.

Much like the Guptas and President Jacob Zuma in South Africa, commentators link the rise of Adani’s business empire to the political rise of Modi, starting in the early 2000s when Adani supported Modi when he was politically weak.

In one 2016 email, the CEO of the Gupta-owned VR Laser in South Africa, Pieter van der Merwe, objected to a draft contract in which Adani suggested it use nominee shareholders.

Van der Merwe made Adani’s role clear: “We are entering into an agreement with [Adani] as a result of their name, history and connections. If it means they are going to appoint an affiliate who doesn’t have any know-how or influence, we do not need a partnership.”

Companies in the Adani group have been accused by Indian authorities of money laundering and tax avoidance to the tune of about US$750-million.

Adani did not respond to an emailed request for comment.

But it was another controversial Indian businessman who appeared to introduce the Guptas to Adani: Kolkata businessman Parasmal Lodha.

Indian authorities recently arrested Lodha for money laundering. He was released on bail last week. Lodha is very close to the Guptas, the #Guptaleaks show.

They attend each other’s family weddings and holidays and a senior Gupta manager once used contacts in the department of home affairs to arrange a South African visa for Lodha.

It was Lodha who in 2013 emailed Tony Gupta, asking him to invite Gautam Adani, among “a few friends”, to another Gupta wedding, this time of Anil Gupta’s son.

In 2015, as the Guptas were assembling their partnership with Denel and Adani, Lodha reviewed an Adani Enterprises contract within the Denel India structure and emailed comments to Tony Gupta.

Around the same time, Lodha twice helped to arrange for Gautam Adani to visit South Africa. Lodha did not respond to questions.

The involvement of tainted figures such as Lodha and politically exposed persons such as Adani – along with Essa and the Gupta family – suggest Denel was willing to pursue a recklessly high-risk strategy.

Denel was previously blacklisted from selling arms to India because it had used commissioned agents, a banned practice there.

However, the Denel Asia and Denel India structures circumvented this by including the Guptas – effectively Denel’s agents – within the company structures.

After amaBhungane first wrote about Denel Asia in early 2016, the national treasury confirmed that it viewed the partnership to be illegal.

It said it had not approved the deal under the Public Finance Management Act (PFMA). Denel publicly disagreed and is now suing treasury and the finance minister.

In a court affidavit, former treasury head Lungisa Fuzile said that in its PFMA application, Denel “discusses two potential partners in India: Adani Group and PIPAVAV, both of which are leading Indian conglomerates expanding into the defence industry. It is not clear why these companies were overlooked by [Denel] in their review of the market and what led [Denel] to the conclusion that VR Laser Asia was the most suitable partner.”

The implication seems to be that he too was concerned that the Guptas were simply inserted as agents – although it was via taking a stake in a Denel subsidiary, rather than receiving a fee.

A Denel spokesperson said: “We have been advised that the Hawks are carrying out an investigation on the matters pertaining to the #GuptaLeaks emails. We would rather give space to the Hawks to undertake their investigations on all these matters fully before making any comments.”

Gupta lawyer and regular spokesperson Gert van der Merwe has refused to comment on #GuptaLeaks claims, saying: “I have no documents or context or instructions. It is inappropriate.”

The #Guptaleaks suggest the Guptas pursued an intricate plan to push their Denel project through, involving inside information and the positioning of sympathetic decision-makers, including four-day finance minister Des van Rooyen.

They contain a number of email threads in which intricate details of the Denel Asia joint-venture are discussed between October 2015 and February 2016. Inevitably, these lines of correspondence ended up on Tony Gupta’s or Gupta managers’ desks.

For example, the PFMA required Denel to get permission from the ministers of public enterprises and finance before it can strike up a public-private partnership like Denel Asia, which consisted of state-owned Denel on the one hand, and privately owned VR Laser on the other.

One day after Denel submitted its PFMA application to treasury on 30 October 2015, Denel chairman Dan Mantsha forwarded the confidential document to Ashu Chawla, a senior Gupta executive.

The #GuptaLeaks have already exposed how the Guptas hosted Mantsha on lavish trips to Dubai.

But the timing of his meetings and communications with the family and their factotums adds to the impression he was their cats-paw.

On 24 July 2015, Public Enterprises Minister Lynne Brown announced sweeping changes to Denel’s non-executive board, leaving only Gupta beneficiary Nkopane “Sparks” Motseki in place and removing experienced directors in favour of relative unknowns.

Key among them was Mantsha, appointed as the new chair of Denel, despite that fact he was struck off as an attorney in 2007 and only re-admitted in 2011.

Just days after his appointment, on 3 August, Mantsha forwarded a copy of his outstanding municipal account for R14,238 to Gupta lieutenant Ashu Chawla.

The same account was again forwarded to Mr. Chawla in October. Both were marked “for your urgent attention.”

By 5 August the emails show Mantsha was listed to join Tony Gupta and others on a flight from Johannesburg to Mumbai aboard the Guptas’ private jet ZS-OAK.

It is not clear if he was aboard, but he was booked a room with the family at the ITC hotel in Mumbai for 6 and 7 August and he was listed as a passenger for the subsequent Mumbai-Delhi and Delhi-Johannesburg legs. A few weeks after his return from this jaunt, the new Denel board moved against the existing Denel executive.

On 24 September, the board suspended chief executive Riaz Saloojee, financial director Fikile Mkhontlo, and company secretary Elizabeth Africa. (Since then their supposed disciplinary infractions have all melted away and they have been paid severance packages.)

By 29 September, Chawla was handling the application for a Dubai visa for Mantsha and by the next day the Guptas’ travel agent had booked a business class ticket from Dubai to Johannesburg for him, invoiced to a Gupta company for R33,280.

Mantsha failed to respond to detailed questions about his relationship with the Guptas. But Mantsha was also not the only source the Guptas had providing top-level intelligence on the Denel project.

On 23 November, Public Enterprises Minister Lynne Brown provisionally approved Denel’s negotiations with VR Laser Asia to form Denel Asia. One day later, the emails show, Chawla had a copy of her approval.

A few days later, Denel chairman Mantsha sent the same confidential document to Chawla.

To its PFMA application to Minister Brown, Denel attached a spreadsheet of “opportunities that Denel feels confident will be secured jointly with VR Laser Asia”.

This detailed US$9.3-billion worth of potential weapons deals in the region. Of this, US$8.2-billion would be sourced from India. From November 26 to 29, the Guptas’ chosen Indian partner, Adani, was their guest in South Africa.

Mumbai fixer Lodha was instrumental in the arrangements and the emails show his assistant wrote to an Adani staffer noting: “Meeting with the [South African] President, Ministers and CEOs of mining, power and port has been arrange (sic) on 27th and 28th… Car and necessary security will be arrange (sic) by Mr Gupta.”

By this time the Guptas were already shopping for a new finance minister, according to evidence provided to the public protector, and it seems they wanted the Denel Asia joint venture PFMA application to be on his desk when he landed.

Although Brown at public enterprises had given provisional approval, the law required the finance minister to approve the joint venture too.

The #Guptaleaks show that on 7 December, Chawla emailed a copy of Brown’s in-principle approval and briefing document directly to the finance minister’s personal assistant.

On that day, the minister was still Nhlanhla Nene, but three days later, on 10 December, it was Des van Rooyen.

The very next day Denel submitted its formal PFMA application for Denel Asia to the new finance minister, according to an affidavit delivered in the high court dispute between Denel and treasury over the establishment of the Hong Kong joint venture.

Van Rooyen was removed on 13 December before he could approve Denel Asia – and the status of the joint venture has been in dispute ever since. That didn’t stop the Guptas from trying to forge ahead.

After Van Rooyen’s sacking, Mantsha joined a procession of influential figures in a pilgrimage to the Oberoi hotel in Dubai and an audience with the Guptas at their new R325-million pad.

Invoices from the #Guptaleaks show he stayed at the Oberoi between 3 and 6 January 2016 at the expense of the Guptas’ Sahara Computers and was chauffeured to their home at L35 Emirates Hills.

Mantsha failed to respond to questions about the purpose of the visit, but presumably it was to regroup.

During this time VR Laser SA chief executive Van der Merwe, Tony Gupta and others continued to exchange thoughts on draft contracts with Adani Enterprises, the emails show.

In one instance, Van der Merwe forwarded to Tony Gupta a chain of correspondence between himself and Denel officials in which they debated whether or not Denel India, the Denel Asia joint venture with Adani, was separately subject to the PFMA.

He said Denel and VR Laser had previously agreed that when Denel applied to the ministers of finance and public enterprises for consent, their planned new Indian company should be disclosed so “as to play open cards with what the parties intend to do”.

And to Tony Gupta, Van der Merwe complained: “They are missing the point and the reason why we entered into this transaction. In the private sector, time is of the essence. This is the basis on which we have decided to invest in a funding facility.”

In a February 2016 email to colleagues – after they received questions from amaBhungane – VR Laser CEO Van der Merwe explained that the SA VR Laser was going to loan Denel Asia R20-million a year for five years to cover certain costs.

The terms of this loan have never been explained, but it is clear from the #GuptaLeaks and court records that the plan was for Denel Asia to repay it.

On 5 February 2016 amaBhungane broke the story of the Guptas’ involvement in Denel Asia and treasury began issuing the first of a series of statements questioning the legality of the joint venture.

Denel appeared undaunted.

On 24 February Denel’s acting chief executive Zwelakhe Ntshepe signed a board memorandum recording Denel’s approval to negotiate the formation of Denel India, in which Denel Asia would have 49% and Adani Enterprises 51%.

Two days later he jetted off on another Gupta jet, ZS-AKG, bound for the Indian city of Goa, which was hosting the 2016 Defexpo, a defence trade show. Denel’s exhibition stand was confidently hosted under the banner of “Denel Asia” – a company that barely existed but promised a turn-over of billions.

Now those dreams are shattered.

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Now we can show how taxpayers were bled via a controversial dairy project. The evidence shows:

• R84-million was sucked to a Gupta offshore company after the Free State government paid R114-million to a contractor.
• Mosebenzi Zwane went on a Gupta-sponsored India jaunt after the provincial agriculture department, where he was MEC, approved the project.

The #GuptaLeaks have unravelled four years worth of denials by the Gupta spin machine over the family’s involvement in the controversial dairy project at Vrede in the Free State.

The project got embroiled in controversy when it emerged in 2013 that the provincial government gave an unknown company, Estina (Pty) Ltd, free argricultural land and promised it hundreds of millions in funding, without a tender.

There were signs of Gupta involvement, but the family denied any connection save for a R138,000 consulting contract.

That, as it turns out, was a multimillion rand lie. Dozens of e-mails, invoices and other documents show the family had significant control over the scheme – and sucked some R84-million to a company they controlled in the United Arab Emirates (UAE).

The #GuptaLeaks also bolster evidence that provincial politicians were “captured” by the Guptas – including Mosebenzi Zwane, now South Africa’s mineral resources minister.

Zwane, then Free State MEC for agriculture, drove the provincial government to adopt the project in June 2012. In October that year, the Guptas took him and his gospel choir on an all-expenses-paid Indian tour.

amaBhungane revealed in 2013 how the provincial government had gifted Estina, whose sole director was an IT salesman with no farming experience, a free 99-year lease to a 4,400-hectare farm outside Vrede, Zwane’s home town.

It also promised Estina R114-million a year for three years to set up a farming operation and dairy, whose supposed purpose was to empower locals and boost provincial agriculture.

amaBhungane established at the time that Estina had an address also used by Gupta companies and that Kamal Vasram, its sole director, had ties to the Guptas.

Vasram repeated the Gupta line that the controversial family was not involved, telling amaBhungane at the time: “I wish to categorically state that they are not involved in any manner in this project.”

The #GuptaLeaks offer a different take: The Gupta brothers and a number of senior Gupta employees were involved in matters as diverse as recruiting staff for Estina from India; getting them work permits; approving a contract worker’s salary, and being approached for advice regarding an employee’s dismissal.

They also applied for a bank loan for Estina, while Gupta company Sahara hosted Estina’s accounting software.

Following the money

By the time Estina was kicked off the project in 2014 following a national Treasury probe and amaBhungane’s exposure of dead cows being dumped in a ditch, the provincial government had paid Estina about R184-million in taxpayers’ money.

The #GuptaLeaks open a window on what happened to a large chunk of that money, supporting the impression that the Guptas not only controlled Estina, but were the primary beneficiaries.

Zwane’s successor as agriculture MEC, Mamiki Qabathe, answered questions in the provincial legislature in November 2013, saying that by then a total of R114-million – tranches of R30-million and R84-million – had been transferred to Estina.

Spreadsheets in the #GuptaLeaks show a total of $8.35-million – equal to the R84-million second tranche at the exchange rate then – hitting the account of a company called Gateway Ltd in August and September 2013.

Gateway is is registered in Ras al-Khaima, one of seven emirates making up the UAE and a highly secretive offshore company jurisdiction.

Gateway appears to be little more than a Gupta front; it is among a number of UAE companies administered by a man who, the #GuptaLeaks show, is a Gupta subordinate.

Part of the R84-million appears to have gone to an engineering firm in Saharanpur, the Guptas’ home town in India.

It went like this: Star Engineering, based in Saharanpur, sent a letter to Ajay Gupta in 2012, thanking him for meeting and “taking interest in our line of production of super quality dairy equipments”.

In September 2013, Gateway, the Gupta UAE company, invoiced Estina for a milk pasteurising plant at US$3.45-million (about R34-million then). A little over a week later a similar amount from Estina hit Gateway’s account.

Further correspondence shows that Gateway ordered the plant from Star Engineering in Saharanpur. A representative from the firm asked for questions to be emailed, but had not replied by the time of publication.

And so, it appears that of the R84-million remitted to the UAE, R34-million was for actual dairy equipment – although how much was paid to Star Engineering and how much Gateway kept as a mark-up remains to be seen.

What happened to the remaining R50-million Estina remitted to Gateway is not clear.

Although there was some construction at the farm and some cows were bought, the full use of the remaining R100-million from the total R184-million that the province paid Estina also remains unclear.

On visits to Vrede at the time, amaBhungane did not encounter development suggested by that level of expenditure.

Who pays the piper

Further evidence of the Guptas’ control over the project is revealed by #GuptaLeaks information about some Gupta firms’ relationship with Vasram, Estina’s director.

During the Estina saga, there were ongoing large orders from the Guptas’ Sahara Computers for IT equipment from Toshiba, represented by Vasram. E-mails also listed apparent transfers totalling millions of rand from Gupta companies to Vasram.

Separately Vasram, using his Estina e-mail address, invoiced Gupta company Linkway Trading monthly for “services rendered”. Linkway is the company the Guptas acknowledged had done “consulting” on the dairy project in its early stages.

Vasram’s invoices, initially at R11,000 a month, started in May 2011, when Estina was negotiating the project with Zwane’s Free State agriculture department, and continued until at least August 2012.

In early 2013 there were two more invoices from Vasram to Linkway, for amounts of around R50,000 each.

These invoices suggest that the Gupta consulting company paid Vasram fees for the Estina work – again upending his and the Guptas’ insistence that Estina was his business and not theirs.

The #GuptaLeaks also give a view on the family’s extensive political connectivity in the Free State. A June 2014 document titled “Indian delegation” described a Gupta employee – one of those involved in the Estina project – as “adviser to Free State Premier”Ace Magashule.

Magashule’s son, meanwhile, was on the Gupta payroll – see The ‘Gift’ that keeps on giving.

As for Zwane’s October 2012 India trip, e-mails and associated records show bookings for 24 or more travellers, including Zwane, at Oberoi hotels in different parts of India.

At one point, “M Zwan <zwanemail@gmail.com>” personally sent a list detailing which members of the party should share rooms and who should get their own. Tour programmes circulated included visits to the Taj Mahal and the “Kingdom of Dreams”, as well as “Mr Gupta house for dinner”.

In 2013, amaBhungane received information that Zwane was on the trip; that Gupta newspaper The New Age had sponsored caps and T-shirts, and that members from the Umsingizane gospel choir and officials from the Free State’s agriculture department were part of the group.

Umsingizane was apparently the brainchild of Zwane, who used it to develop and promote gospel musicians. His agriculture department subsequently adopted the choir.

Responses

Vasram and Zwane did not respond to queries from amaBhungane.

Magashule’s spokesperson issued a statement saying he “has noted the so-called email communications…“The Free State provincial government has noted that the relevant authorities, including the Directorate of Priority Crime Investigations (Hawks), have embarked on investigations which are intended to test the validity and authenticity of such e-mails.

“Until such investigations are concluded, the premier and the Free State provincial government shall not respond to enquiries relating to the sources, content or allegations emanating from these ‘leaked’ e-mails.”

Gupta lawyer Gert van der Merwe also responded in general terms, saying in a phone call that it would be “inappropriate” to comment on claims about his clients: “I will be more than just a cowboy to respond because I have no documents or context or instructions. It is inappropriate.”

Van der Merwe said: “One finds oneself in an unfortunate position, to answer on the record on the documents when people can’t say where they got the documents. It is unreasonable even in this day and age to answer to documents held in secrecy.”

He added that he had advised his clients to obtain the leaked e-mails – and that they had on Saturday “mounted an effort to get hold of them”.

In a scheme so audacious and lucrative that it puts the notorious arms deal to shame, they:

• Entered kickback agreements totalling R5.3-billion with the Chinese manufacturer that became Transnet’s favourite locomotive supplier;
• Influenced procurement processes through their associates at Transnet;
• Are pocketing R10-million from each R50-million locomotive that Transnet is buying.
  

This story presents the most direct evidence yet of the Guptas and their associates amassing fortunes offshore by tolling contracts at state-owned entities they control.