Organs of state poured more than R49bn into criminal enterprises

Paul Holden, co-founder and director of Shadow World Investigations, appeared at the Zondo Commission of Inquiry into allegations of state capture on Monday (May 24) to give evidence on Gupta contracts with state-related entities.

Shadow World Investigations focuses on cases of grand corruption, corporate malfeasance and militarism (co-founder Andrew Feinstein was an ANC MP until his resignation in 2001 when the party refused to properly investigate the arms deal).

Holden gave a stupefying account of billions of rand paid from state-owned entities and other governmental organisations into a complex local laundromat.

From here the “laundered” funds were transferred into further complex offshore arrangements in Hong Kong, China and Dubai. Ultimately, the funds ended up in Gupta-related enterprises.

By tracking thousands of money flows emanating from tainted contracts through many different accounts and bank statements, Holden has garnered evidence to demonstrate that organs of state dropped some R49.1 billion into criminal enterprises.

Some of these funds were recycled and used to purchase SA assets such as Optimum Holdings, and to support the liquidity of the enterprise’s “legitimate” businesses.

Holden also showed how Nkonki Inc was bought with illegitimate funds.

Laundered money

Holden has provided annexures containing relevant schedules as well as annexures showing flows of funds, bank statements and bank transactions.

Every single transaction has been cross-referenced. He has identified all the key elements in more than 200 tables.

Contracts have been deemed to be tainted where, for example, they were entered into without any competitive bidding, contained material irregularities, and were concluded with entities which he referred to as “first level laundries”. This is a company that does not conduct any business activities, or does not conduct any legitimate business.

Tainted contracts

1. Innova and Tsebo

Contracts were awarded to Innova Management Services and Tsebo Business Intelligence by the Free State Department of Agriculture and Rural Development in 2012.

Tsebo was to develop a master and business development plan for the Free State Department of Agriculture and Rural Development, and Innova was combined with the contract. Holden said Innova was not a functioning business.

These entities purported to provide engineering services. Innova management solutions was owned by Chwayita Mabude, but managed by Salim Essa and Ashok Narayan. Mabude was involved in a number of contract approvals for the Guptas; a former Eskom board member, she has previously appeared before the commission on Eskom-related evidence.

The relevant MEC of the Free State Department of Agriculture and Rural Development at the time was Mosebenzi Zwane.

The money paid to Innova and Tsebo was paid to Aerohaven Trading. Aerohaven Trading then returned all the money received to Innova by bank transfer. In November 2013 Innova converted the total amount of R9.8 million into dollars and paid it over to Gateway Enterprises (the Gupta enterprise in Dubai). 

2. Homix

The Free State Department of Economic Development and Tourism paid Innova R6.9 million, and Innova paid 91.5 % of this to Homix.

Zondo asked if Innova and Homix were controlled by the same people. Evidence leader Matthew Chaskalson SC replied that the commission has seen no evidence that Mabude controlled Innova, and that the commission has seen evidence that Essa controlled Homix, and had represented Innova in dealings with the Free State.

3. Regiments

The Regiments Group earned R1.3 billion from Transnet, the Transnet Defined Benefit Pension Fund, SA Airways, SA Express, the Free State Provident Fund, Safcol and Denel.

4. Trillian

The Trillian Group earned R935.3 million from contracts with Eskom, Transnet, the Transnet Defined Benefit Fund, and SA Express.

Read: Regiments and Trillian: Whistleblower joins the dots (Dec 2020)

McKinsey was paid more than R1.8 billion (R1 802 400 000) in regard to contracts with Trillian and Regiments. Eskom paid R1 108 200 000, Transnet paid R688 000 000, and SAA paid R6 200 000.

Read: McKinsey worked with Trillian after learning of Gupta links (Nov 2017)

6. Neotel

Transnet paid R5 582 million to Neotel (the payments were first made to a front company called Chivita, then Homix, Forsure Consultants and finally Medjoul).

7. SAP and PwC Nkonki

Holden also discussed the contracts awarded to SAP Africa and the PwC Nkonki consortium.

8. Cutting Edge/Sahara

Cutting Edge submitted an unsolicited proposal (which is irregular) to Eskom on April 29, 2016 to provide data management and cleaning services to the utility. Eskom paid Cutting Edge R72 million 17 days later on May 16, 2016. Another R24.4 million was paid to Cutting Edge. Holden told the commission that Sahara Holdings had bought 51% of the shareholding in Cutting Edge in 2014.

Holden also calculated that more than R1.2 billion was paid to first-level laundering entities drawn from state funds.

And so Holden continued – payment after payment, contract after contract, table after table.

The final pot of gold always ended up with the Guptas.