Following the money: Asset Forfeiture Unit has grounds to seize Optimum Coal Mine, witness Paul Holden tells inquiry

The Gupta family’s acquisition of Optimum Coal Mine was funded by the proceeds of crime, the State Capture Commission was told on Friday.

Paul Holden of Shadow World Investigations unpacked the flows of cash and back-to-back loans behind the deal as part of his final round of testimony before Deputy Chief Justice Raymond Zondo. 

Holden has been testifying on the money flows in the Gupta wave of State Capture across transactions involving state-owned companies like Eskom and Transnet, and deals at various provincial government departments. 

“I believe the evidence will give grounds to the Asset Forfeiture Unit to consider moving an asset seizure against Optimum Coal Mine so it can be returned to the state or Eskom,” Holden said. 

His calculations show that just over R1,8-billion of the R2,084-billion paid into an escrow account for the Optimum deal at the time of the transaction had been derived from criminal funds. 

Optimum Coal was among a string of Gupta companies placed into business rescue in February 2018 – and was funded, in part, through a series of pre-payments that Eskom had made for coal to the Gupta-owned Tegeta Exploration and Resources. 

Eskom, Holden said, may have paid as much as R1,046-billion of that, an amount significantly higher than what investigations initially determined. 

Optimum Coal is the Gupta family’s largest and most significant asset in SA and they continue to battle business rescue practitioners for control thereof. 

The Guptas are no longer in SA and law enforcement has issued warrants for the arrest of two Gupta brothers and their wives in connection with a Free State government deal.  

Holden’s testimony on Friday followed on an earlier appearance during which he provided startling evidence of the Gupta enterprise’s alleged involvement in local and international money laundering networks. 

His testimony covered, in intricate detail, the flow of cash between Eskom, a subsidiary of Trillian Capital Partners, Kuben Moodley’s company, Albatime (described as one of several first-level money laundering vehicles in the Gupta stable) as well as a Bermuda registered company called Centaur Ventures Limited and associate Centaur Mining SA for this controversial transaction. 

The Guptas bought Optimum from commodities giant Glencore in 2015/2016 following political and corporate machinations that had pushed the mine into business rescue. 

Holden testified that the Guptas had repatriated vast sums of alleged criminal money arriving from their State Capture dealings back into SA to expand their business empire.

He listed their acquisition of Optimum Coal among those. 

The deal was done via cash flows originating with Griffin Line, a Gupta-linked company registered in Dubai. Griffin Line provided a $100-million loan to Centaur Ventures Limited, a Bermuda registered company that was at the time 50% owned by Akash Garg, the Indian national who married one of the Gupta daughters at Sun City in 2013.

Garg’s *co-director was international businessman Daniel McGowan who held the balance via Centaur Holdings (a company he owned with Simon Hoyle at the time).

The cash used to fund the deal, the commission heard, was made up of  the various Eskom payments, the  “loan”, via Griffin Line and cash allegedly stolen from the Transnet Second Defined Benefit Fund that had moved through Trillian. 

No silver bullet against corruption 

Holden, in concluding his testimony, provided the commission with a range of recommendations compiled by Shadow World and Open Secrets. These, he said, were aimed at deterring corporations from engaging in such corrupt transactions in future. 

It includes a call for the South African Law Commission to research collective social harm caused by economic crime and State Capture. And, for it to examine who can institute legal action or, specifically who may have legal standing to lodge civil claims on behalf of state owned companies. 

In addition, SARS, as it has done in the case of Regiments Capital, should consider approaching all the companies that made payments to the first-level laundry companies in the Gupta network like Homix or Chivita.

Daily Maverick recently reported on payments made by law firm Dentons shortly after it had landed contracts at Eskom and Denel but the list of companies that paid cash to these entities is a lengthy one. 

Social harm, Holden said, caused by grand corruption and State Capture, erodes the ability of the State to deliver on its Constitutional obligations.

Money diverted from service delivery to pay bribes to criminal enterprises – as in the Transnet locomotive deal that had built in padding to factor in bribe margins for the Gupta enterprise – leads to cost-cutting and here he cited the reduction of the budgets of the Special Investigating Unit and the National Prosecuting Authority as examples of the impact of cost of corruption. DM

This article was amended at 4pm on 29 June, 2021, to reflect accurately the business relationship between McGowan and Garg.