R1.5bn ‘lie’ claimed in state capture case

Finance Minister Pravin Gordhan
Finance Minister Pravin Gordhan

An explosive affidavit by Finance Minister Pravin Gordhan appears to have shed light on a lie from his cabinet colleague, Mineral Resources Minister Mozebenzi Zwane’s department.

The affidavit suggests the Department of Mineral Resources withheld information, on two separate occasions, related to its approval of the movement of R1.5-billion in a trust account for the rehabilitation of Gupta-owned Optimum Coal Mine (OCM) to India’s Bank of Baroda.

In July, department spokeswoman Ayanda Shezi dismissed two media inquiries into the status of the trust, as well as whether the funds were safe, several weeks after the department had approved a transfer of the trust and money in it from Standard Bank to the Bank of Baroda.

Gordhan has been summonsed by the National Prosecuting Authority to appear in the Pretoria Regional Court on November 2 in connection with the approval of an early retirement plan for Ivan Pillay, the former deputy commissioner of the SA Revenue Service.

A letter in court papers in a case filed by Gordhan reveals that the department had already approved the transfer to the Bank of Baroda at least three weeks earlier.

Zwane, who has been accused of doing favours for the Gupta family, would have approved the decision.

The letter, from Werksmans Attorneys, acting on behalf of Optimum Coal Mine’s joint business rescue practitioners, to the SA Reserve Bank on June 27 highlighted that the department had approved the transfer on condition the bank was registered in South Africa.

The bank, which has two branches in the country, is registered under “branches of foreign banks” with the Reserve Bank.

Shezi’s denial, in light of the developments, raises critical questions about whether due process was followed as well as whether the approval did not leave the country exposed.

The Guptas have gained notoriety for exploiting their closeness to President Jacob Zuma to gain leverage over government processes and have also been accused of having a hand in the appointment of ministers, a phenomenon referred to as state capture.

Zuma has maintained that his friends have no influence over him.

Gordhan felt sufficiently concerned about the approval to raise it in his affidavit before the court.

“If those funds from the trust were to be spent on anything other than genuine mining rehabilitation, it would expose the fiscus to loss of revenue and also put the burden of mining rehabilitation on the fiscus,” he said.

Gordhan filed the papers in a case in which he has asked the North Gauteng High Court for a declaratory order over whether his department can mediate between South African banks and the Gupta family, after several banks said they would no longer be doing business with Gupta-owned companies.

The trust was one of several Gupta linked entities flagged by the banks for suspicious transactions totalling R6.8-billion, Gordhan said in his affidavit.

This transaction of R1.5-billion could be the transfer of money from the trust, he said.

DA finance spokesman David Maynier called for the Hawks to investigate the transactions.

He said Gordhan had pushed the red button and escalated the dirty war between himself and Zuma’s most important clients, the Guptas.

Yesterday, Shezi said the department did not have enough time to respond to questions seeking clarity.

“The information required is still being gathered. Realistically, a response can be provided [today],” she said.

However, two independent sources close to the transaction confirmed to the Sunday Times in mid-July that the money in the trust had been transferred to the Bank of Boroda.

One said there was R1.75-billion in the rehabilitation account in July, of which R250-million left without anyone knowing.

After that, R1.5-billion was transferred to the Bank of Baroda.

Interestingly, large tranches of the R2.2-billion the Gupta family paid for Optimum in April came from the Bank of Baroda.

This is not the first time Zwane’s actions in matters related to the Guptas have attracted attention.

Earlier, he issued a cabinet statement calling for a judicial inquiry into the banks for closing the Guptas’ accounts, leading to much criticism from opposition parties.

Another Gupta-owned company whose transactions are mentioned in Gordhan’s affidavit is Shiva Uranium mine – of which suspicious transactions this year amounted to justmore than R968-million.

The state-owned Industrial Development Corporation loaned the Guptas the majority of R250-million to buy a 74% stake in the Shiva mine in 2010 for R275-million.

Zuma’s son, Duduzane, has shares in the mine.

Meanwhile, the JSE has said it will “immediately engage with the sponsor of Oakbay Resources and Energy on the allegations, in terms of the listing requirements” to protect investors. – Additional reporting by Katharine Child

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