Gupta’s central figure, Ronica Ragavan, and her colleague Ugeshni Govender are in Randburg Magistrates’ Court on Wednesday, facing a total of 11 counts, including fraud, money laundering and violation of local environmental laws. The fate of their sidekick and co-accused, Ravindra Nath, is uncertain. He will be charged in absentia.
The seventh defendant, former deputy general manager Joël Raphela, will also have to answer for charges of fraud, forgery, provision and violation of environmental laws and regulations. Govender will face an additional perjury charge for lying in an affidavit to the National Prosecuting Authority’s Asset Forfeiture Unit.
Around noon Wednesday, reporter Govan Whittles reported from Randburg Magistrates Court that Raphela is “being rushed to hospital” because he is “having difficulty speaking or walking.” He is accused of corruption of 100 million rand involving Optimum and Tegeta.
Happening now: Former Mineral Resources Department CEO Joel Raphela is rushed to hospital after appearing in Randburg Magistrates Court on corruption charges. Raphela has trouble speaking or walking. He is accused of corruption of 100 million rand involving Optimum and Tegeta.
—Govan Whittles (@van1go) May 25, 2022
Optimum and Koornfontein Mines, operated by Ragavan, Govender and Nath, are defendants number three and four.
The defendants, with the exception of Nath, were arrested on Wednesday morning, Independent Directorate spokesman Sindisiwe Seboka said.
The story here is how the Guptas, with a hand from Raphela, plundered the strictly governed rehabilitation trust funds of their Optimum and Koornfontein mines, worth a total of R1.75 billion. The money was not used for the rehabilitation of the mining area, but to cover the operating expenses of the company Gupta Tegeta Exploration and Resources as well as the Optimum and Koornfontein mines.
Under South African law, the holder of a mining right is required to hold rehabilitation funds in ring-fenced trusts. Trust funds are governed by the National Environmental Management Act 107 of 1998 (NEMA) and its regulations. Its sole purpose is to rehabilitate the mining area after the mine closes. Permission from the Department of Mineral Resources is also required before trust funds can be used.
Of course, the Gupta brothers and their bandmates found it impossible to keep their hands off the handsome kitty.
This investigation into this affair was initiated by the former head of ID Hermione Cronjé. His successor, Andrea Johnson, pushed him over the finish line.
Through a series of events leading up to 2015, the companies Gupta Oakbay Investments and Tegeta Exploration and Resources acquired the Optimum and Koornfontein mines in Mpumalanga.
The backstory here is that former owner Glencore found itself in a vice, bleeding money, because Eskom’s chief executive, Brian Molefe, and the Department of Mineral Resources, led by the Minister at the time, Mosebenzi Zwane, in a coordinated movement, increased the pressure, at the request of the Guptas
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That said, of course, with the understanding that Glencore itself doesn’t shy away from crime where it suits them. glencore recently admitted several cases of corruption and manipulation of commodity prices in Nigeria, Cameroon, Côte d’Ivoire, Equatorial Guinea, Brazil and Venezuela. In the Optimum/Koornfontein instance, they were simply dominated by the Guptas, Zwane and Molefe.
With the sale of the Optimum and Koornfontein mines, Tegeta Exploration and Resources also gained control of the mine rehabilitation trusts with a combined value of R1.8 billion.
It was around February 2016.
About three months later, on May 23, 2016, Ragavan, Govender and Nath reportedly began their looting of trust funds to help Gupta businesses stay afloat.
In its indictment, almost to the day six years after the alleged crimes, the NPA highlights two sets of money flows that the prosecution classifies as money laundering, fraud and NEMA violations.
The first one This was when Ragavan and Govender ordered that R7.5 million was to be transferred from the Optimum mine off-limits rehabilitation trust account to the mine’s operating account. An additional R9.5 million was paid into the same account by Tegeta Exploration and Resources. The Optimum Mine then paid Klipbank Mining R26.4 million for underground mining services. Services, according to the NPA, which had nothing to do with the rehabilitation of the Optimum mining area.
It appears to the NPA that Ragavan and Govender were trying to hide where the money came from, mistaking it for other cash flows, and then using it to pay a service provider — an act of money laundering, according to the Public minister. Using rehabilitation funds without a thumbs-up from mineral resources is also a violation of NEMA rules and regulations, the NPA asserts.
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Two years later, in an affidavit dated April 4, 2018, Govender attempted to explain the flow of money to the NPA’s Asset Forfeiture Unit, saying, “The money was needed for rescue practitioners companies, which then operated the Optimum coal mine (and did so until August 2016), to make payment to the rehabilitation contractor for the rehabilitation work carried out at the mine.
The NPA calls it a bluff, saying no rehabilitation work has been done, business rescue practitioners have asked for no money and Govender is lying. So, they slapped her with an additional charge of perjury.
The second relates to the Koornfontein mine. By early 2016, South Africans were already widely aware of the Guptas’ undue influence over former President Jacob Zuma. The buzz of anger in the ANC became audible and civil society began picketing the streets.
This public pressure along with the fact that the Gupta empire was now too vast and large to slip through all the cracks of governance, caused several financial institutions and banks to end their relationship with the family.
Making lemonade from lemons, Tegeta, as the new owner of the Koornfontein mine, informed the Department of Mineral Resources that the big four banks were in the process of closing their accounts and for this reason the trust funds had to be moved. The ministry agreed, provided that the legislation is respected.
So it turns out that R280 million of rehabilitation trust funds were transferred to the Bank of Baroda, to an account held by the Koornfontein Rehabilitation Trust.
On May 4, 2016, Tegeta sent a letter to the department, signed by Nath, requesting permission to use Koornfontein rehabilitation trust funds for mine rehabilitation.
Joel Raphela, deputy chief executive of the department, gave his signed endorsement and attached a list of conditions. A similar letter, also signed by Raphela, was delivered to the Bank of Baroda where the funds were held. But, the NPA argues, the letter only stated that the department is “granting approval in principle to access funds held in the Koornfontein Rehabilitation Trust account”. None of the terms stated at Tegeta were communicated to the Bank of Baroda.
A month after this exchange of letters, Govender wrote to the Bank of Baroda, saying they wanted to register a loan facility of R150 million against the deposit of R250 million in the trust account. The letter states: “Ms. Ronica Ragavan, in her capacity as director of the Company, is authorized to do whatever is necessary to give effect to this resolution (sic)”.
The NPA’s three problems with this deal are:
- Ragavan was not a trustee of the trust fund and had, in fact, no authority over the trust funds;
- the rules for trust funds are that they must be segregated and unencumbered, so lending was therefore not permitted; and
- the funds were again not used for the rehabilitation of the Koornfontein mine area.
The ‘loan’ then began to travel: R100 million in trust funds were transferred between at least three different bank accounts held at Bank of Baroda before being transferred to Tegeta’s account held at State Bank of India . From there, four payments totaling R97.8 million were made to Klipbank Mining, Coalcor Mining and another to an account held at Bank of Baroda, ultimately to an account held by Tegeta. Initial money from the rehabilitation trust fund in Tegeta was also disbursed to three service providers.
None of the above is related to the rehabilitation of Koornfontein, but it looks very much like money laundering, argues the NPA.
Raphela faces charges of fraud, violation of NEMA and its regulations as well as forgery and utterance, the NPA indictment states. Raphela committed an act of fraud, forgery and dissemination, he claims, when he wrote a letter authorizing the use of Koornfontein Rehabilitation Trust funds without any access conditions.
The trust fund is safe.
Zwane had not intervened, which the Organization Undoing Tax Abuse (Outa) did.
Outa first obtained a court order to freeze the Bank of Baroda’s rehabilitation funds, then reached a settlement where the money was removed from the Guptas’ reach and reallocated under the supervision of the Minerals Department. One of the effects is that this action will prevent the Gupta Acolytes from using the rehabilitation trust to pay their mounting legal costs.
None of the banks’ Gupta enablers, including the Bank of Baroda which was fined by the South African Reserve Bank for its role in the saga, have been added to the current list of prosecutions. No more than Mosebenzi Zwane, then Minister of Mineral Resources. DM
This story was updated at 1:45 p.m. May 25, 2022 to include court developments.