Multibillion-rand gold VAT scheme – The Rudland Connection

9 Feb 2022

Family interests behind the prospective new owners of Tongaat Hulett appear to be linked to a web of companies suspected of shifting money offshore and which are seemingly entangled in a SARS gold scam investigation. This raises new questions about how a R2-billion bid for the sugar giant is being funded.

Evidence suggests the controversial Rudland family of Zimbabwe, which has made a bid to control Tongaat Hulett, has links to Rappa, the gold refinery targeted by the South African Revenue Service (SARS) for an alleged multibillion-rand gold VAT scam, as revealed by amaBhungane last week.

The evidence, while circumstantial, relates to links between Simon Rudland, his controversial Gold Leaf Tobacco Corporation (GLTC) and Howard Jon Baker, who is, on paper, the major shareholder of Rappa.

Raees Saint, the lawyer simultaneously representing Rudland, Baker and GLTC, told amaBhungane, “Simon Rudland has no interest in the Company [Rappa] and your allegations concerning the ‘holding company’ that ‘controls the refinery’ are entirely incorrect. Any publication of false and/or malicious information in this regard will be strongly challenged.”

He said his clients “will not tolerate any insinuation of any illegal conduct and your reference to same will be dealt with in the appropriate Court of law”.

Although Saint did not explicitly confirm that he also represents Rappa, the company’s chief executive, Gary Bickerton, also referred our questions to him.

See Saint’s full reply here:

220209 AmaBhungane Saint Co...

This circumstantial link between the Rudlands and Rappa might cast new light on the ability of the largely unknown Magister Investments, registered in Mauritius and controlled by Simon Rudland’s brother and long-time business partner Hamish Rudland, to put down R2-billion to buy control of Tongaat.

A lawyer representing Magister told amaBhungane, “Neither Hamish Rudland nor Magister are under any obligation to disclose private company information to you, nor do we nor Hamish Rudland consent to publication by you of any private or confidential information.”

See Magister’s full response here:

220209 AmaBhungane Magister...

Who is behind Rappa?

When a company called Rappa Management was given the green light by the Competition Tribunal to take over the Rappa gold refinery in July 2019, the identity of the beneficial owners of Rappa Management was blacked out.

However, the tribunal did note that of relevance to the competition assessment of the proposed transaction were the activities of a Dubai-based company, Aulion Global Trading DMCC.

This was because, the tribunal said, in South Africa, Aulion procures semi-refined gold bars from (only) Rappa Resources and that Aulion “forms part of the Rappa Management group of companies” that was bidding to take over the South African firm.

In other words, the Dubai company buying gold bars from the refinery and the new company bidding to take over the refinery in South Africa had the same owner.

amaBhungane has since established that at the time of the takeover the declared owner of both Aulion and Rappa Management – and hence the gold refinery under investigation by SARS – was Howard “Howie” Baker.

Who is Howard Baker?

Baker is well known in polocrosse circles, having previously played for Zimbabwe and South Africa. He is also not a new arrival in the second-hand gold industry.

He has little online presence, but was a director between 2013 and 2015 of a company called “Gold Kid Trading”.

Company records seen by amaBhungane show that Baker obtained a 42.5% share in the close corporation in 2013/14 when the company did nearly R1-billion in turnover.

Of interest is that Gold Kid was a significant supplier of gold to Rappa in previous years and one of its founding members, Andries Greyvenstein, was last year convicted for “illegal dealing and illegal possession of unwrought precious metals”, according to a media statement by the Hawks.

Baker, via Aulion and Rappa, is now entangled in allegations concerning the machinery of the colossal gold-based VAT scam currently being battled by SARS behind closed doors, as detailed in an amaBhungane exposé last week.

That alleged scheme revolves around Rappa Resources, a large gold refinery that allegedly buys up tons of illicit gold laundered into the legitimate supply chain – and then exports it to claim enormous VAT refunds.

Rappa has vehemently denied the allegations, maintains SARS is on a witch-hunt and has taken on the tax authority in a series of court applications since SARS stopped paying out its VAT claims.

Baker and Rudland

Three sources who asked not to be named, identified Baker as a friend of Simon Rudland and named Rudland as being a behind-the-scenes player in the Rappa gold business, though they did not provide any evidence of this and as noted, his lawyer has denied any such involvement.

There are circumstantial links, however.

Firstly, Rappa Management, the company (allegedly owned by Baker) that took over the refinery in 2019, has only one director: lawyer Raees Saint, a man inseparable from Simon Rudland’s tobacco business. It was Saint who responded to our questions on behalf of both Baker and Rudland.

Saint is also GLTC’s attorney and spokesperson. He represented the tobacco company when it was still a member of the Free Trade Independent Tobacco Association (Fita), an industry group for smaller cigarette producers.

In 2019 Rudland was shot outside the association’s offices in an apparent assassination attempt.

After Rudland and Fita parted ways in acrimonious fashion, Saint emerged as the chair of a new organisation, the South African Tobacco Organisation (Sato).

Saint’s co-directors in Sato – a Zimbabwean and a Malawian – are both associated with companies that have close business ties with GLTC, suggesting that Sato is GLTC’s proxy. Saint vehemently denies this.

The Baker-Rudland link is further supported by another Baker company in the United Arab Emirates called Paloma Precious. Since 2018 this company has employed Craig Preston who is simultaneously an employee of Pioneer Development Company in Zimbabwe, according to his LinkedIn profile. Pioneer appears to be associated with both Simon and Hamish Rudland, and the latter previously declared his directorship of Pioneer.

What’s more, Preston became a director of Rappa Holdings in February 2020.

This suggests a Rudland employee is also a Baker employee and a director of the gold refinery.

Which brings us back to Aulion in Dubai, the company owned by Baker.

Where there is smoke…

On 15 September 2017, Amanda Gie, the head of forex operations at Sasfin Bank, emailed three top executives at the niche corporate financial services provider.

The subject: “GOLD LEAF TOBACCO CORPORATION PTY LTD”. (GLTC is the controversial producer of “cheapie” cigarettes that is controlled Simon Rudland and his business partner Ebrahim Adamjee.)

“Business is of the opinion that it would be in the best interest of Sasfin Bank to exit the relationship with the client with immediate effect as the bank faces image, financial and serious regulatory repercussions,” Gie wrote to her Sasfin bosses.

The deals threatening Sasfin with “repercussions” involved a network of companies in secrecy jurisdictions like Dubai and Mauritius that billed GLTC in South Africa millions of rands for tobacco, cigarette-making machinery and related materials.

Gie’s concern was that some suppliers looked to Gie like “invoice factories” which generate paperwork showing apparently legitimate transactions to throw banks and regulators off the scent when large amounts of money leave the country.

If true, the purpose of such a scheme would be for GLTC to get money out of South Africa under false pretences.

Among the suppliers Gie flagged, one name stood out: Aulion Global Trading, Baker’s Dubai gold trader, which appears to have issued two invoices to GLTC worth nearly R400-million.

In other words, Baker was suspected by Sasfin of helping Rudland’s company externalise funds.

Meanwhile, in Windhoek…

In 2017 Namibia experienced a bank collapse similar to what happened to VBS Mutual Bank in South Africa. The destruction of the Small and Medium Enterprises Bank (SME) even involved characters from the VBS saga, as we reported here.

Shareholders and executives stole at least R380-million from the tiny lender before the central bank seized control and SME eventually went into liquidation.

Subsequent investigations uncovered what looked like a money laundering network based in Johannesburg through which most of the money was routed.

An alleged R79.8-million of this stolen money flowed into the accounts of Asset Movement and Financial Services (AMFS) in Johannesburg, a company that handled enormous amounts of money daily for a client base including several gold traders accused by SARS of participating in the VAT fraud scheme.

Documents the SME liquidators have filed in the Windhoek High Court show that Howard Baker on several occasions in 2016 sent AMFS emails directing them to pay millions of rands into various accounts.

One of these belonged to Omulunga Capital Investments, registered a mere two weeks before the payments started.

On 27 January it was R7.07-million, on 29 January it was R3.03-million, on 5 February it was R6.06-million and on 20 May another R10-million.

The instruction by Baker gives the details of the recipient as Omulunga Capital Investments. All these payments were duly made by AMFS.

Right before starting these payments to Omulunga, Aulion entered the picture.

On 21 January 2016, Aulion had provided Omulunga with an invoice for R64,493,439 for payment to its Dubai bank account.

The invoice was for mining equipment, which suggests Aulion was now ostensibly trading in gold, tobacco and heavy machinery.

Omulunga duly paid Aulion at least R29,820,000 using this invoice repeatedly for several different transactions. The payments matched the payments received from AMFS on Baker’s instruction. They totalled R29.8-million. This suggests this channel could still have been used to move a further R35-million using the single Aulion invoice.

Saint failed to answer specific questions about these trades or what the relationships were between Rudland, GLTC, Baker and Aulion.

He said: “Gold Leaf Tobacco Corporation, a private company, has nothing to do with THL [Tongaat Hulett Limited] or Magister for that matter. Your line of questioning concerning alleged historical business dealings of Gold Leaf Tobacco are [sic] unmerited and unrelated to anything you purport to infer concerning the THL transaction.

“Our clients will not participate nor entertain your fishing expedition as all of the information you request is related to private matters pertaining to different private individuals and private companies.

“We caution you against selective and agenda-driven reporting, our clients will not tolerate any sensationalism written about them through unethical abuse of journalism.”

Chinese wall? Not at all

Ever since the deal that would see Hamish Rudland – via Magister – take control of Tongaat was announced, the two companies have been at pains to distance themselves from Simon Rudland and in particular GLTC.

In a response to questions earlier this year Hamish Rudland said:

“Magister has no involvement or interest in Gold Leaf Tobacco Corporation, nor does Gold Leaf Tobacco Corporation have anything to do with the transaction between Magister and Tongaat.”

There are, however, any number of reasons to doubt that there is really a Chinese wall separating Magister and Hamish Rudland from his brother Simon and the controversial tobacco business.

While Tongaat and Hamish have presented Magister as an accomplished investment vehicle easily able to marshal the R2-billion for the deal, a closer examination of the company and Hamish’s other interests show how “Rudland Inc” is very much a family business.

Long before the deal was announced in December last year the Rudlands had already become the second-largest single shareholder in Tongaat when the Dubai-based company Braemar, which was ostensibly controlled by the brothers’ mother, bought 9.981% of the company worth R120-million at the time.

Leading up to the announcement in December, individuals tied specifically to GLTC and the Rudlands were also buying significant numbers of shares.

Simon Rudland’s partner in GLTC, Ebrahim Adamjee, bought 1.5% of Tongaat’s shares for roughly R10-million in December last year.

Betelgeux Investments, a company founded by his son Aadil, bought another 2%. This was just before Tongaat shareholders were going to vote on the Magister takeover.

Aadil also served for a number of years on the board of Zimre Holdings, in which both brothers still appear to have an interest.

Saint, on behalf of Adamjee, denied “any insinuation of any illegal conduct”.

Magister by itself does not appear to be a substantial investor. Its only visible investment is in a small company called Agriterra which has a total turnover (not cash or profit) of $12-million (roughly R185-million).

A presentation given to major Tongaat shareholders (reported on in an earlier amaBhungane report) to gain their support for the Magister deal presented Magister’s “key investments” as including Agriterra but also a number of Zimbabwean companies.

As far as amaBhungane was able to establish, these have historically been owned by other Rudland family entities, rather than Magister.

The most substantial of these companies are listed and have publicly available financial information.

Using official exchange rates, these companies – Zimre Holdings, CFI Holdings, Unifreight and TSL – have a combined balance sheet of only about R3.1-billion.

Neither Magister nor the Rudlands own all the shares in these companies and they would probably have to give their entire visible Zimbabwean business empire as security to afford the offer being made for Tongaat.

Unless the money comes from elsewhere. DM

The amaBhungane Centre for Investigative Journalism is an independent non-profit organisation. We co-publish our investigations, which are free to access, to news sites like Daily Maverick. For more, visit us on www.amaB.org.

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