THE GUPTA CLAN AND THE SACKING OF SOUTH AFRICA

On 22 July 2022 / Dossier Laboratory South Africa, Geopolitics, IBI World UK / Leave a comment

A few months ago we wrote about the riots in KwaZulu-Natal, and how these were the way in which former President Zuma and his accomplices (part of the Zulu monarchy, the iNgonyama Trust, the ANC and, above all, local organised crime) were preparing to give South Africa’s democratic balance a final push. This attempt has three premises: impunity for Zuma and his accomplices; sharing the objectives of the Zulu monarchy and organised crime; and the ANC’s inability to get to grips with internal corruption and provide itself with a sensible and shareable political project[1].

This whole operation of power is based on the ability of criminal organisations to provide jobs and prospects for young people, and the ability to satisfy the thirst for money of the iNkhosi, the local tribal chiefs. A capacity that is familiar and available with weapons, smuggled goods to sell, and cash. This money has one main source: the Gupta family, which in this century has made its economic fortune in the shadow of President Zuma and which, until a few weeks ago, was ready to return to rule in the territories from which it was driven out four years ago. But this plan has now, surprisingly, come to a halt.

On 6 June 2022, Rajesh Gupta and Atul Gupta were arrested in Dubai. The two brothers had been fugitives for years, so the news is thought to be fabricated. Dispelling any doubts comes an official note issued by the South African Department of Justice: ‘We confirm that we have received information from law enforcement agencies in the United Arab Emirates (UAE) that fugitives Rajesh and Atul Gupta have been arrested. The arrest is a milestone in the history of the presidency of Cyril Ramaphosa, who owes his election to the scandal created by the criminal alliance between the Indian clan and former president Jacob Zuma.

The two brothers are accused of paying bribes to influence ministerial appointments and using their ties to a compliant Zuma, who ruled South Africa from 2009 to 2018, to win contracts, misappropriate state assets, steer political appointments and embezzle state funds worth at least 57 billion rand ($3.5 billion) – a figure calculated by default, but it is what the police have managed to document[2]. The clan members left the country in 2018, when a judicial commission forced Zuma to resign, and initiated several criminal investigations against them, and fled to the UAE. The arrest came about thanks to the extradition and legal assistance agreements ratified between Abu Dhabi and Pretoria[3]. The extradition request could, however, take a long time[4].

Little criminals grow up

The house in Saharanpur where the Guptas grew up and from where they ran the black market[5]

Shiv Kumar Gupta, the head of the family, runs five emporiums in Saharanpur, a city in the northern Indian state of Uttar Pradesh, one of the most corrupt regions of India, selling government-subsidised basic necessities such as rice and sugar to the poor: in the Indian economy, this type of shop is at the root of commercial crime, because it diverts government emergency supplies to the black market, and then resells them at inflated prices[6]. Shiv is also the owner of Gupta and Company, which specialises in the distribution of steatite powder[7] and the smuggling of computers and spices from Nepal, Madagascar and Zanzibar, which are distributed in India by another company of his, SKG Marketing Ltd. Delhi[8].

The eldest son Ajay, as soon as he came of age, was sent by his father along with his brothers to this very company, training him as an electronics black market manager[9]. Once he was sure that his sons had learnt the trade, Shiv Kumar sent them to Singapore, the home of the illegal electronics market, and Ajay, thanks to his skills, started up a company producing memory cards for computers in Saharanpur, taking advantage of state subsidies: a company that would never produce anything, because he bought the cards on the black market in Singapore, at bargain prices, and let his factory resell them, earning a profit on them, passing them off as local products[10].

In 1993, encouraged by their father, while Nelson Mandela leads the electoral campaign that will lead him to the presidency, the Gupta brothers move to Johannesburg: South Africa is finally opening up to blacks and to the world. The choice is far-sighted – Shiv Kumar is convinced that this land can offer great opportunities, even if it is torn apart by political, religious and racial tensions. But the Gupta brothers, accustomed to wallowing in corruption, feel at home here, and start a shoe business[11].

With the first 350,000 dollars earned, Atul, who is 25 years old, founded Correct Marketing (which in 1997 already had a turnover of 97 million Rand[12]) which, shortly afterwards, became Sahara Computers (an imitation of a well-known Indian brand) and then Sahara Systems (Pvt) Limited[13], a company with more than 10,000 employees and a turnover of more than 2 billion Rand[14]. The company assembles computers using low-quality parts from the illegal market, making as much profit as possible[15]. Atul himself says he is amazed by South Africa’s lack of bureaucratic controls, especially when compared to those in India[16]. In 2016, Atul is already the seventh richest man in South Africa, with assets of 10.7 billion rand (USD 773.47 million) [17].

The brothers grew rich quickly, and just as quickly gained access to South Africa’s political and economic elite. In 1996 came their friendship with Essop Pahad, an Indian politician in South Africa and supporter of the ANC: he was to be the pick for access to the Palace. Pahad manages to get Ajay appointed to the International Marketing Council of South Africa (IMC) and the board of directors of Proudly South Africa[18]. The Guptas organise social parties in their huge villa in the Saxonwold district, inviting mostly politicians; they sponsor the local cricket team, become celebrities. And, soon, they arrive at the real, big target: Jacob Gedleyihlekisa Zuma.

The “Zupta” gang

Atul Gupta with South African President Jacob Zuma in 2011[19]

The first meeting with the future president took place in 2002: Rajesh, his younger brother, who came to South Africa in 1997, was already a ‘very close friend’ of Zuma’s son Duduzane and involved him in the Guptas’ business[20]. Duduzane joined Sahara Systems in 2005, and in 2007 his twin sister Duduzile became its director[21]. Duduzane would later also hold a management role in Shiva Uranium, a mining company controlled by Oakbay Investmens, founded and financed by the Guptas[22] (from which he would be forced to resign in April 2016 over allegations that he had forced the appointment of mining minister Mosebenzi Zwane) [23].

When Zuma is elected president, the Gupta family begins to permeate every political space. Its leaders are always at Zuma’s side, especially during diplomatic trips, to the point of triggering jealousies among local businessmen[24]. The 2010 trip to India reveals their influence: the delegation consists of several ministers, but the businessmen the president has with him are Ajay and Rajesh Gupta and their partner Duduzane Zuma. Also in 2010, the Guptas paid for the lavish residence of Zuma’s fourth wife, Bongi Ngema-Zuma (employed in the JIC mining services, controlled by the Guptas[25]), to the tune of 4.5 million rand: investigations revealed that the money used was laundered by one of the Guptas’ companies in the United Arab Emirates[26].

In the same year, the Guptas launched New Age, a newspaper that propagandises for the ANC and the president, which in 2013 became the TV channel ANN African News Network, the government’s true megaphone[27]: the Guptas are the main financiers of Jacob Zuma’s election campaigns and use newspapers and TV to clean up his image[28], tarnished by a long trail of crimes and scandals[29]. The Indian brothers, in return, grab everything they can: coal mines, diamonds, gold, uranium and platinum.

In 2011, Ajay Gupta (the elder brother) is chairman of Vusizwe Media[30], while Atul Gupta (the middle brother) is CEO of Sahara Holdings[31], director of Comair (a JSE-listed company that runs British Airways and Kulula-branded airlines in South Africa, of which Atul has 4.7%[32]) and executive chairman of TNA Media (Pty) Ltd. (founded in June 2010, will be charged with corruption of 173 million rand[33], having paid off several ministers between 2011 and 2015[34]), has 16% of Sahara Holdings, 25% of Islandsite and 40% of Oakbay (family holding company[35], at the centre of the fraud scandal for hundreds of millions of rand in 2017[36] and later revealed to be the main hub of the Gupta family’s illicit activities) and the ‘brains’ behind Sahara Holdings[37].

Rajesh (Tony) Gupta (the younger brother) is a director of Mabengela (a company named after the hills overlooking President Zuma’s Nkandla farm, 45% controlled by Duduzane Zuma and 25% by Rajesh “Tony” Gupta[38]), a director of Islandsite Investments and a director of Afripalm Horizons. He also owns 25% of Islandsite (a company that ended up at the centre of a scandal, wrongfully collecting payments for South African visa transactions[39]) and 40% of Oakbay[40]. The Gupta family also penetrates the national defence sector with VR Laser Services, the main supplier to the South African Army and Police[41]. The acquisition takes place amidst blatant impropriety on the part of brothers Tony and Ajay Gupta[42].

Mcebisi Jonas (right) is offered 600 million rands by the Guptas to become finance minister[43]

Now, in Pretoria, the Guptas rule, turning the president’s home province, KwaZulu-Natal, into a kind of secessionist republic, in cahoots with the King of the Zulus, Zwelithini. Through their company Oakbay Resources and Energy (ORE), they decided to buy the Shiva uranium mine, asking for a loan of 250 million rupees from the IDC Industrial Development Corporation and obtaining it immediately[44]. In 2013, instead of repaying the loan, they renegotiated it, raising it to the extraordinary sum of 452 million rupees, offering 3.56% of the company’s shares as collateral: it is unfortunate that ORE has trouble honouring the loan[45], as it is making a loss, so much so that it is excluded (2016) from the Johannesburg Stock Exchange[46].

In December 2011, Transnet Port Terminals launched a tender for the supply of port equipment, which was won by Liebherr Cranes; it was later revealed that Ashu Chawla, a lieutenant of the Guptas and CEO of Sahara Computers, had sent an email to a man who controls the network of Worlds Window Group companies through which the Guptas launder large sums of money from Transnet contracts[47]. Attached to the email is a memorandum, written by Transnet’s executive director of procurement and addressed to the managing director of Transnet Port Terminals, giving a detailed timetable of the various stages of the tender process[48]. It turns out that Liebherr Cranes paid $3.23 million to a Gupta front company based in the United Arab Emirates, Accurate Investments[49]. Transnet appears in another corruption episode: it allowed Neotel – renamed Liquid Intelligent Technologies South Africa – to win million-dollar supply contracts thanks to a bribe of 75.6 million Rand to Homix, which is owned by the Indian family[50].

In 2015, at Eskom, Africa’s largest electricity producer, four executives were suddenly sacked and replaced by men from the Guptas, who thus acquired de facto control of the company[51]. More than 80% of the energy produced by Eskom derives from coal, fuel supplied directly from mines owned by the Guptas through their company Tegeta: investigations reveal that the operation was personally decided by President Zuma[52].. The new executives, incompetent as managers, turn out to be criminal specialists: after years of embezzlement, the company will be forced into continuous supply suspensions due to breakdowns and maintenance operations: in 2021 alone, electricity was interrupted for 1136 hours[53].

To the rescue, McKinsey, a major consultancy firm, is hired, which at the end of 2015 signs a $700 million contract, the largest ever signed in Africa, which turns out to be a mistake: the bribes continue, and the Guptas continue to illegally siphon money from Eskom’s coffers[54]. With its back against the wall, McKinsey decides to return more than 100 million dollars already pocketed[55]. Nonetheless, the Guptas use 2 billion Rands (about 126 million dollars) to buy a mining licence public money[56] that will never be returned[57].

But the criminal chain winds endlessly: (a) Linkway Trading (of the Guptas) is used to divert state funds earmarked for the Vrede dairy project, 30 million rand then spent on a family wedding[58]; (b) $8.21 million, put into the state budget to pay for a contract with German software giant SAP is diverted into the Guptas’ offshore accounts[59]; c) Export Development Canada grants a loan of USD 41 million to the Gupta brothers, 80 per cent of the money needed for the purchase of the Bombardier jet, despite the fact that the Canadian management knows about the legal proceedings against the Guptas[60]; d) China South Rail delivers 600 locomotives for 1.5 billion dollars (later found to be defective) to PRASA (Passenger Rail Agency of South Africa, a subsidiary of Transnet), part of which is returned, with a kick-back, to offshore companies of the Indian family[61]; e) KPMG also ends up under investigation for having helped the Guptas to defraud the State[62]; f) the public relations agency Bell Pottinger is paid by the Guptas and Zuma to steer public opinion in defence of the president[63]; g) the case, still not clarified, of bribes linked to the administration of Jet Airways, paid to politicians for reasons still not clarified, but always on behalf of the Guptas[64].

The ‘Zondo’ Commission

Chief Justice Raymond Mnyamezeli Mlungisi Zondo, author of a massive investigation into corruption in South Africa[65]

All this does not happen without citizens getting angry, and sooner or later comes the proverbial straw that breaks the camel’s back: an Airbus A330-200, chartered to Indian Jet Airways, lands at the maximum-security military airbase in Waterkloof, Pretoria; on board are some 300 guests at the wedding of Vega Gupta, 23, daughter of Achala, the only sister of the three brothers[66]. The state pays to avoid the waiting time for landing and baggage clearance at the international airport, but breaks all national security rules, and without any official authorisation[67]. Guests are escorted militarily to Sun City (the Guptas’ famous casino in the north-west hillside of the capital) where the ceremony takes place, and city traffic is blocked for hours to allow guests to arrive quickly and comfortably[68].

The opposition parties, exasperated by the continuous abuses, obtain the establishment of a commission to investigate political corruption in South Africa[69]. On 14 October 2016, a 355-page report was published[70], showing considerable evidence of the Gupta family’s influence on the state, from the attempted bribery of Mcebisi Jonas (whom the Guptas offered 600 million rands to persuade him to take over as finance minister[71]) to the sudden dismissal of Finance Minister Nhlanhla Nene, who was replaced by the unknown and unprepared Des van Rooyen, a friend of the Guptas[72]. The report brings to light the close ties between President Zuma and the Guptas[73]. Among the evidence are some 200,000 emails exchanged by the Guptas with their associates, employees and political friends, provided to the South African newspaper Daily Maverick by the investigative organisation amaBhungane[74], which then became public knowledge: this is the beginning of the #GuptaLeaks[75].

Judge Thuli Madonesel’s final recommendations leave no escape for the president: he must appoint a commission of enquiry[76], and force everyone to testify publicly[77]. Zuma cannot escape this obligation, even though he will try to annul the report, as he puts it, ‘to safeguard the integrity of the country’[78]. However, the request is rejected and the Pretoria High Court orders him to appoint the commission, which takes office on 9 January 2018[79]. On 14 February, Hawks, agents of the South African Directorate of Criminal Investigation, raided the Guptas’ residence, searched it and arrested three people whose identities were not revealed[80]. It was later revealed that the Gupta brothers, the target of the raid, had escaped capture[81]. For Jacob Zuma, the situation becomes heavy and, partly because of the crossfire within the ANC itself, he announces his resignation in February 2018, replaced by Vice-President Cyril Ramaphosa, the new leader of the ANC[82].

2018 is the year in which the circle tightens around the Guptas: Zuma resigns, the judiciary investigates, the banks abandon the family: KPMG, Sasfin, Absa, FNB and Nedbank no longer want anything to do with them[83]. In a hurry, the brothers try to sell their properties – but their assets are now frozen[84]. They flee to Dubai, where, over the years, they have transferred the proceeds of their business[85]. One of their companies, JJ Ttrading, received at least 760 million rupees in bribes from large Chinese companies[86]. Dubai is also the home of Global Corporation, Accurate Investments and Fidelity Enterprises, three companies used by the Guptas to launder 30 million rands from the bankruptcy of Vrede Farm, which was used to pay for the Guptas’ lavish wedding party in 2013[87]. However, the three companies exist only on paper[88], like Griffin Line General Trading: the office is just a closed door, behind which there is no one[89].

On the exclusive Emirates Hill, the Guptas live in a luxurious villa (also frequented by Duduzane Zuma[90]) of 40,800 square metres, bought in 2015 for 445 million rupees: according to a City Press report, it was at that time the most expensive villa in the Emirates[91]. Everyone knows where they live, but Dubai is a good protective shield. Pretoria sends the UAE extradition requests, but these are ignored[92]. In June 2018, procedures for judicial reciprocity agreements begin, which are signed in April 2021, by which time the Guptas are also in danger in Dubai[93]. On 2 June 2021, South Africa asked Interpol to have Atul Gupta, Rajesh Gupta and their wives Chetali and Arti arrested[94]. A few hours later, Atul and Rajesh are handcuffed by the police. Of their brother Ajay nothing is known. Their extradition is far from simple, the proceedings could take years[95].

The judge heading the commission of enquiry is Chief Justice Raymond Mnyamezeli Mlungisi Zondo[96], assisted by five commissioners[97]. The investigation concludes, after four years, in June 2022: more than 300 witnesses are heard and thousands of documents are examined. A report divided into six parts, totalling 8,655,530 pages[98], is produced, laying bare the entire criminal system that permeated the institutions during the Zuma government and involving almost 1,500 people[99].

The truth about State corruption

The Gupta brothers’ lavish $3.4 million[100] residence in Randburg (Johannesburg)[101]

Zuma has managed to organise a sprawling system, which bends every level of decision-making, political and administrative, to his will, and goes so far as to pilot the entire legislative process. All this has been able to happen with the support of the ANC: whoever does not obey Zuma loses everything[102]. The president knows how to make the most of the concentration of power in his hands, due to the fact that, in South Africa, the president is also head of government. The complicity of the Gupta family was then a key ingredient in the success of the project: Unscrupulous hitmen, skilled and efficient at infiltrating everywhere, their money-laundering machine made use of at least 14 companies (Homix, Maher Strategy, Medjoul, Albatime, Birsaa Projects, Fortime Consultants, Forsure Consultants, Matson Capital, Pactrade, Shacob Commerce, Jacsha, Chivita Trading, Block Mania and Ismer) and produced billions of dollars, stolen from the state and used to manipulate its political and economic life[103].

How this came about is explained by the mistakes made in good faith by Nelson Mandela and the ANC at the end of apartheid, when they tried to create a new state that would harmonise white wealth and black despair, but in a situation of general immaturity and collective ignorance that led to corruption and generalised violence. Things have since deteriorated: in South Africa, 10% of the population owns about 80% of the wealth, while 60% owns only 7%[104]. This is one of the main breeding grounds for medieval-style potentates, which the state, due to endemic weakness, is unable to punish.

Zuma appeared only once before the Commission of Inquiry, then said he had lost faith in the judiciary, guilty, in his eyes, of waging a political war against him. Raymond Zondo asked to be held in contempt of court: in July 2021, the judges of the Constitutional Court, presided over by Vice-President Sisi Khampepe, sentenced him to 15 months in prison and an obligation to appear within five days: the charges related to his disobeying the court order to testify in committee and his continuous attacks in an attempt to undermine the judicial authority[105]. Result: a crowd of supporters gathered outside his residence to prevent his removal[106].

Zuma entered the prison in Estcourt (KwaZulu-Natal) on 8 July 2021, triggering protests, which quickly escalated into violent riots and looting, lasting more than a week and costing the lives of 337 people[107]. At the centre of the violence is the Indian community (two-thirds of South Africa’s 1.4 million inhabitants of Indian origin live in KwaZulu-Natal), targeted because they are accused of being connected to the Guptas[108]. After a few days, the former president was transferred to a hospital outside the region for unspecified medical reasons[109]. On 5 September he was granted probation, and on 15 December the court, stating that probation for health reasons was granted illegally, ordered that Zuma ‘be returned to the custody of the Department of Correctional Services to serve the remainder of his prison sentence’[110]. Zuma’s lawyers obtained consent to appeal: he is now serving the remainder of his sentence at his home in Nklandla[111]. In June this year, Zuma even announced that he would sue Raymond Zondo[112].

A deeply sick leadership

A glimpse of the Guptas’ sumptuous villa in Dubai: inside, furniture from the Tsars, gold inlays, Michael Jackson’s own sofa and a Rolls-Royce Twilight in the garage[113]

The strategy has changed. The arrest of the Gupta brothers is the only positive sign in a country in disarray, the last vestige of a possible semblance of legality. What is certain, however, is that it is now clear that Zuma is no longer safe from new criminal prosecutions, so the Gupta clan and its accomplices have opted for Duduzane, the former president’s son who, for years now, has been a Gupta manager – while his father, suddenly catapulted to the head of the entire organisation, tries to save its assets and the freedom of individual leaders[114]. The system has been working for years: indiscriminate violence, blackmail, robberies and assassinations against the management of the most important companies. The arrest of the Guptas is not enough, now sensible and resolute political steps must follow.

In the last month, especially in KwaZulu-Natal, there have been repeated thefts of trucks carrying minerals (zinc chloride, copper, coal, fuel oil) and unexplained massacres in bars or community centres – and the state is completely powerless in the face of this. South Africa is paying a heavy price: infrastructure destroyed, supply chains disrupted, food security threatened, racial tensions once again skyrocketing and international investments blocked[115].

The ANC, instead of addressing the country’s serious problems, is futilely trying to resolve the issue of internal leadership, because Zuma’s friends are still powerful, and President Ramaphosa’s are few and far between. The only decision taken – to prohibit the sale of alcohol and cigarettes – has, in six months of implementation, led to a gigantic growth in smuggling and has strengthened criminal organisations[116]. In April 2022, catastrophic floods caused 448 deaths and over 40,000 homeless, and the government did nothing[117].

Local leaders continue to steal: Zandile Gumede, KwaZulu-Natal’s provincial MP since 2020, is accused of fraud, corruption, money laundering and racketeering stemming from a Rand 300 million waste tender in Durban, but despite the charges she was elected to the leadership of eThekwini County and retains her power within the ANC[118]. The most serious thing is that there are currently no forces, of any kind, opposing the implosion of the South African state. The rest of the world is busy with other problems, and the Commonwealth, which generally acts as a balancer, is suffering from the internal crisis even within Britain. Thirty years after the end of apartheid, South Africa is in danger of sliding into anarchy and the boundless brutality of popular anger, frustration and despair. And it is by no means certain that the vicissitudes of the Gupta family will end there.

[1] COSÌ IL SUDAFRICA COSTRUISCE IL SUO AL CAPONE | IBI World Italia ; IL KWAZULU-NATAL, ULTIMA GRANDE MONARCHIA NERA | IBI World Italia ; COSÌ JACOB ZUMA PREPARA UNA GUERRA CIVILE | IBI World Italia

[2] https://www.dailymaverick.co.za/article/2021-06-28-part-two-how-much-the-gupta-enterprise-earned/

[3] https://www.moj.gov.ae/en/media-center/news/7/6/2022/uae-arrests-rajesh-gupta-and-atul-gupta-in-response-to-international-request.aspx

[4] https://ewn.co.za/2022/06/07/state-has-engaged-some-of-sa-s-top-legal-experts-to-expedite-gupta-extradition

[5] https://www.vanityfair.com/news/2019/03/how-the-gupta-brothers-hijacked-south-africa-corruption-bribes

[6] https://mawazowritingafrica.com/south-africa/from-saharanpur-to-saxonwold-the-incredible-journey-of-the-gupta-family/

[7] https://www.indiatoday.in/fyi/story/gupta-brothers-jacob-zuma-south-africa-saharanpur-business-15834-2016-06-23

[8] https://mawazowritingafrica.com/south-africa/from-saharanpur-to-saxonwold-the-incredible-journey-of-the-gupta-family/

[9] https://www.vanityfair.com/news/2019/03/how-the-gupta-brothers-hijacked-south-africa-corruption-bribes

[10] https://www.vanityfair.com/news/2019/03/how-the-gupta-brothers-hijacked-south-africa-corruption-bribes

[11] https://www.enca.com/news/rise-and-fall-gupta-empire

[12] https://www.firstpost.com/world/explained-the-many-crimes-of-south-africas-wealthy-gupta-brothers-arrested-in-the-uae-jacob-zuma-10768981.html