Trustees of mine rehabilitation funds accused of ‘fraud’ and ‘theft’
Nearly R2bn earmarked for rehabilitation of collieries owned by the Gupta family’s Tegeta are to be transferred from Bank of Baroda to Nedbank
The National Prosecuting Authority (NPA) has calmed fears in the mining sector of the whereabouts of the nearly R2bn — earmarked for rehabilitation of the Optimum and Koornfontein collieries owned and operated by the Gupta family’s Tegeta Resources — by securing a transfer of the funds to Nedbank. It has also made damning findings against the trustees of the rehabilitation funds.
In what could be a sign of prosecutions to come, the NPA’s Motlalekhotso Molelle, head of operations in the Asset Forfeiture Unit, accused the trustees of the Optimum Mine Rehabilitation Trust Fund and the Koornfontein Mine Rehabilitation Trust Fund of "theft" and "fraud" and of using the money in a way that violated the Income Tax Act, the Mineral and Petroleum Resources Development Act and the National Environmental Management Act.
The trust funds held R1.46bn and R280m, respectively. The funds will be removed from the Bank of Baroda — the only bank that would deal with the Guptas after SA’s major commercial banks declined to do business with them or their companies — to Nedbank, the holder of Baroda accounts, according to a court ruling on March 8.
Judge Rabie ordered that Baroda give the NPA and the director-general of the Department of Mineral Resources copies of all agreements and documentation in the determination of interest rates for the two trust funds, which by law have to be ringfenced and used only for rehabilitation when a mine is at the end of its life.
Baroda must also give a full transactional history of the accounts, which the NPA, using documentation presented by the public protector in the State of Capture report and the Organisation Undoing Tax Abuse, showed irregular movements of funds out of the accounts.
Baroda must also present all documentation related to instructions around the movement and use of the funds. The order would be served on the Bank of Baroda and the Optimum fund’s trustees in care of Pushpaveni Govender as both a trustee and director of the colliery and as the trustee of the Koornfontein fund. Ronica Ragavan, as the sole director of Koornfontein, would also be handed the notice. They can all oppose the order within 14 days of receiving the notice.
The funds in the seven Baroda accounts linked to the two collieries have been preserved under an order sought by the national director of public prosecutions in terms of the Prevention of Organised Crime Act and that office will seek an order from the high court in 90 days to forfeit the funds to the state.
One of the most interesting annexures to the NPA’s application was an e-mail from deputy registrar of banks in the South African Reserve Bank, Denzel Bostander, to other officials in the bank, including deputy governor Kuben Naidoo on December 13 2017.
Bostander said he had met Anthony Jha, the acting CEO of Bank of Baroda’s Johannesburg branch, in October 2017 and had received "feedback" that the R1.469bn and R280m of the two mines’ trust funds were held in the bank and that they were unencumbered and were not used as collateral.
The Koornfontein fund had, however, at one point been used as surety against a R150m loan from Baroda, of which R100m had been utilised. The Baroda team had insisted the loan be repaid and Jha had said it was, Bostander said.