Atul Gupta backs claim he did not mastermind alleged Free State fraud

Atul Gupta has backed a submission by former Oakbay CEO Ronica Ragavan defending him against claims of controlling the flow of allegedly illicit funds through a web of companies.

A commissioner of oaths certified his confirmatory affidavit through a video call in July.

Gupta did not disclose his whereabouts.

Business ally Ragavan was a no-show in the Free State regional court on Tuesday where she was set to appear in her capacity as a director of the company Islandsite to face charges of corruption and fraud.

The investigating directorate (ID) of the National Prosecuting Authority (NPA) has linked Islandsite to Nulane, which received almost R25m for a report commissioned by the Free State government in 2011. It preceded the failed Estina dairy project.

ID spokesperson Sindisiwe Seboka said that Islandsite “is owned by the Gupta family” and since Ragavan was absent citing medical reasons a “warrant for her arrest has been issued but stayed by the court”.

Ragavan and six co-accused in the ongoing criminal case, including Iqbal Sharma, are next due in court on October 6. Papers she submitted to the high court two months ago in a related matter suggest Ragavan’s probable defence. 

“The NPA seeks to draw the inference that the fraud alleged to have been committed by Nulane ... was for the ultimate benefit of the shareholders of lslandsite,” she wrote in an answering affidavit, signed on July 15.

Secure assets

Islandsite’s shareholders include Atul Gupta and his younger brother Rajesh “Tony” Gupta. Ragavan tells the high court “no allegation of any act or indeed omission constituting the commission of any crime is alleged against them”.

She insists the state has no winnable case, and the court should dismiss the ID’s bid for a preservation order. The ID wants to secure Islandsite assets pending the outcome of the criminal trial.

Ragavan defends Atul Gupta, insisting he was not, as claimed by the state, a mastermind controlling the flow of illicit funds in a web of companies.

Among her submissions is that, contrary to the ID’s claim that Gupta controlled a group of accounts, the companies’ executives and CFOs — including Ragavan — managed legitimate intercompany loans which the ID has misconstrued as a racket between a group of companies.

“It is incorrect for the NPA to assume ... Atul Gupta was responsible for moving money between the various accounts ... he did not approve any of the transactions relied upon by the NPA in its application and took no part in the day-to-day management of the accounts in the Sahara cash focus account,” she submits.

Ragavan says intercompany loans explain the “tremendous amount of money going in and out of Islandsite’s accounts”. Islandsite was a “central reservoir” disbursing loans and receiving repayments. “Atul Gupta was not responsible for these transfers,” she insists.

Loans repaid

The NPA stands accused of committing a “sleight of hand” in isolating payments between Islandsite and a third company, Pragat, which it alleges acted as an intermediary between Sharma’s business Nulane and the Guptas’ business Islandsite.

“All we were interested in was for Pragat’s loans from lslandsite to be repaid,” she alleges.

Ragavan asserts the state “tries to draw the inference that Pragat was a ‘middleman’ in unlawful transactions between lslandsite and Nulane. However, what the NPA’s version fails to take into account is that there was a pattern of ongoing loans made to Pragat” that preceded the transactions at issue.

“I therefore have no idea why Nulane deposited funds into Pragat’s bank account. Atul Gupta, whose confirmatory affidavit is attached, confirms the same,” she says.

Though a Supreme Court of Appeal (SCA) judge, Malcolm Wallis, likened Islandsite’s bank account to a “washing machine” or “spin-dryer” this does not help the NPA, argues Ragavan, as the SCA’s rulings in cases related to Gupta-linked businesses made no findings on criminality.

batese@businesslive.co.za