- The Investigating Directorate has seized assets of the Guptas and their friends to the value of R520 million.
- The seized assets include luxury properties in Morningside, Saxonwold and Constantia.
- Prosecutors have also issued a red notice for Interpol to arrest the Guptas and extradite them to South Africa to face criminal charges.
The Investigating Directorate (ID) has seized assets worth more than R520 million belonging to the Gupta family, their business associate Iqbal Sharma and his wife, Tarina Patel.
The seizure follows a decision by the Free State High Court in Bloemfontein on Wednesday to grant the ID an order to preserve the assets of Islandsite Investments, Sharma and Patel.
Islandsite owns more than 40% of Oakbay Investments, a corporate structure that owns lucrative shares in several companies, a Gupta mansion in Saxonwold and the family's luxurious home in Constantia, Cape Town.
Patel owns a palatial mansion in Morningside, Johannesburg, which she bought for about R19 million in 2018. The property is complete with Indian-themed interior decor and elephants carved out of marble, and carpets imported from India. The house featured on Top Billing in February 2019.
Sharma was arrested on Wednesday and appeared in the Bloemfontein Magistrate's Court in connection with a R25 million payment his company, Nulane, received from the Free State Department of Agriculture between November 2011 and April 2012. The department had contracted Nulane to conduct a feasibility study to determine the viability of the failed R288 million Estina dairy project in Vrede in the Free State.
Thabethe and Moorosi are former heads of the Free State Department of Agriculture. Dlamini was the department's chief financial officer.
Red notice
On Thursday, the ID has also issued a red notice for Gupta brothers Atul, Ajay and Rajesh. Interpol is expected to circulate the red notice to its member countries.
The ID wants to have them deported back to South Africa to be charged with fraud, corruption and money laundering in connection with the Estina dairy farm project. The Guptas – close friends and associates of former president Jacob Zuma – fled the country in 2018 and are reportedly in the United Arab Emirates.
The application to seize the assets of Islandsite, Sharma and Patel – filed by the ID – showed that after being paid the R25 million, Nulane subcontracted the feasibility study to Deloitte and paid the company R1.5 million.
The ID has alleged in the application that Nulane laundered the rest of the money through a series of bank accounts linked to the Gupta family. A large portion of the funds ended up with Gateway, a Gupta-owned company incorporated in the United Arab Emirates.
In the application, the ID revealed that in 2011 the Free State Department of Agriculture had identified the need for the Estina dairy initiative, initially known as the Mohoma Mobung initiative.
Before then Free State premier Ace Magashule publicly announced the project in February 2012, an Indian company called Worlds Window Impex India Private Limited wrote to the department, offering to partner in the project's development. Worlds Window recommended that Nulane be appointed to conduct the feasibility study.
"Days later, approval for deviation from competitive bidding process was granted, based on a fraudulent misrepresentation that Worlds Window had recommended Nulane, that it knew the quality of their work elsewhere, and that it was impossible to appoint another supplier. Based on the deviation approval, Nulane was appointed at a vastly inflated contract price of R24 984 240 and the contravention of the Public Finance Management Act (sic)," the ID application read.
The purpose of the entire scheme, the ID said, was to "create a vehicle for the extraction of funds for the benefit of the Gupta family (former directors and current sole shareholders of Islandsite)".
Between November 2011 and April 2012, the department paid Nulane R24.9 million, the ID says, adding that the funds in Nulane's account were mingled with back and forth funds from Islandsite and other Gupta-linked companies Pragat and Wone.
"When the funds reached Islandsite, they intermingled with additional funds flowing into that account, and at that point, it became impossible to identify the further flow, destination, or purpose thereof. In this regard, between 8 November 2011 and 6 July 2012, R522 million flowed through the Islandsite Absa account (including the proceeds of fraud on the department)," the ID said.
Islandsite and Pragat's Absa accounts, which received proceeds of the fraud from the department, were part of the Sahara group of linked accounts using an Absa facility called "cash focus".
Fraud and money laundering charges
The linked accounts, the ID has said, included Absa accounts held by Atul and Rajesh and their wives, Chetali and Arti.
The ID said it intended to bring fraud and money laundering charges against the Gupta brothers and their wives, adding that:
In July, several months after the final payment by the department to Nulane, the company paid R19 070 934 from its Bank of Baroda account to an offshore account held by Gateway. Exactly R19 million was routed back to Nulane's Bank of Baroda account from Islandsite, via an intermediary called Pragat, a senior investigator said.
"The explanation given by Nulane for the transfer of funds to Gateway was for services rendered under a subcontract agreement between Nulane and Gateway. The subcontracting agreement was a fraudulent sham: It duplicated the services provided by Nulane to Deloitte Consulting in terms of the latter's subcontracting agreement."
The senior investigator said the evidence seen in its entirety "establishes a fraudulent scheme designed to extract funds from the Free State Department of Agriculture that were earmarked for an agricultural development project, launder the funds and place them at the disposal of companies controlled by or associated with members of the Gupta family".
The Nulane bank account was a front used to launder money for Islandsite's directors, the application stated, adding that the "scheme was a springboard for a higher-value fraud known as Estina, which is the subject of a separate criminal investigation".
The senior ID investigator argued that there were reasonable grounds to believe that Nulane and Sharma may have received the proceeds of unlawful activities, including related criminal activity amounting to R52.9 million. The payments comprised:
- R24 million paid to Nulane by the department;
- R8 million in Nulane's Nedbank account from Islandsite;
- R19 million paid to Nulane's Bank of Baroda account. This amount does not include the monies paid by the Free State Department of Agriculture.
"I submit that Nulane received these proceeds on behalf of and for the benefit of Sharma, who was the controlling mind behind Nulane and directed its actions, by virtue of his position as the sole director and shareholder of Nulane and the sole signatory of the Nulane Nedbank account. Furthermore, I submit that there are reasonable grounds to believe that Islandsite received an amount of R19 million, being the proceeds of fraud paid into the Islandsite Absa account pursuant to the money laundering scheme," the affidavit read.
The ID described Islandsite as a "laundry machine".
"The laundering of the proceeds of the fraud on the department is complete once it enters the Islandsite Absa account because there it is intermingled with in and outflows of R522 382 617. R56 million without any discernible business rationale."