Ugly truth about ‘Gupta company’

Senior counsel Geoff Budlender has exposed a string of lies uncovered during his investigation into Trillian Capital Partners, a company at the heart of state capture allegations.

And he has dared international consulting firm McKinsey & Company to come clean about its secret ties to the “Gupta company”.

This is despite a frustrating six months of “obstruction and obfuscation by Trillian” and an 11th-hour bid to oust its nonexecutive chairperson, Tokyo Sexwale, a move that could have blocked the release of the report.

Sexwale commissioned the investigation after a Sunday Times exposé that suggested Trillian had prior knowledge of President Jacob Zuma’s plan to fire former finance minister Nhlanhla Nene. The probe’s terms of reference included whether there was any truth to state capture claims against Trillian and whether it had any ties to the Gupta family.

On Thursday, Sexwale released Budlender’s 67-page report, which revealed that:

• In the absence of credible alternatives, Budlender believed the version of the Nenegate whistle-blower, a former chief executive in the Trillian stable of companies;
• Although McKinsey had formerly said it had no contract with Trillian, evidence showed it had subcontracted lucrative deals to the company even though it tried to do this at arm’s length by having the company invoice Eskom directly;
• Despite denials by Eskom and Public Enterprises Minister Lynne Brown, invoices stamped “paid” provided by Trillian showed that the power utility had paid the company R266‑million without any sign of tenders; and
• Despite Trillian’s denials, cash transfers from its Bank of Baroda account did seem to go towards the purchase of Optimum Coal Mine.

The Mail & Guardian was not immediately able to obtain comment from all parties named.

Sexwale stepped down on Thursday, having undertaken to do so once the report was released. He was appointed nonexecutive chair in April last year, several months after the Trillian scandal broke in the media.

Facing the media alone, Sexwale said it was important to note that Budlender had limited powers: he could not subpoena witnesses and therefore information on which he had based some “strong conclusions” may still be tested at a later stage.

“Trillian is one dot in a bigger scheme. There are many good people who work in this company but the actions of one shareholder have caused the image of Trillian to be tarnished,” Sexwale said.

The “shareholder” in question unsuccessfully tried to convene a board meeting to axe Sexwale on Thursday.

Sexwale’s reference to Trillian’s majority shareholder, without naming anyone, suggested he was referring to Salim Essa, a Gupta business associate. In his report, Budlender said that, if Sexwale had been removed, the report might not have seen the light of day.

Budlender said he was not able to corroborate some information with Trillian because the company had refused to co-operate. He called for authorities, equipped with subpoena powers, to tackle some of the claims – including those involving McKinsey.

Trillian said it is compiling a comprehensive response to the report as it had not been given an opportunity to comment despite a request for Budlender to delay it.

Trillian will consider all the allegations in the report, “many of which appear to be incorrect”, and then release it’s response.

It said the report makes “serious allegations” against the professional management of Trillian, many of them experienced financial service professionals in South Africa. Mindful that even on Budlender’s own version the investigation is incomplete, it will also consider whether to appoint a further enquiry to complete outstanding work on the report or whether to refer it to a judicial commission of enquiry.

Whistle-blower’s version accepted

Budlender had hoped to access Trillian chief executive Eric Wood’s phone and laptop for emails or diary notes, to verify or contradict the whistle-blower’s claims that Wood had told her of Nene’s impending axing and that the company had planned to cash in on it.

Wood refused Budlender’s request for access to his devices, saying the content would not help in the investigation. Said Budlender: “This is, of course, hardly a matter for him to determine, given that he was one of the subjects of the investigation.”

Although it was not possible for him to make a clear finding about Trillian’s role in the Nene firing saga, Budlender said he had to accept the version of the whistle-blower. One reason was: “The conduct of Trillian management in this inquiry has left me with the impression that what it says cannot be trusted.”

McKinsey letter contradicts its version

McKinsey & Company is an international consulting firm that does work for state-owned companies such as Transnet and Eskom. It had a draft agreement to use Trillian as a supplier development partner, under which McKinsey would channel a percentage of state work to the company. But this fell through when Trillian failed to pass McKinsey’s risk review.

McKinsey told Budlender it did not use Trillian as a subcontractor on any projects. But Budlender found a document that appeared “inconsistent” with McKinsey’s claim. This document, a letter dated February 9 2016, signed by Vikas Sagar, a director of McKinsey & Company Africa, refers to a contract for consulting services “entered into between Eskom and McKinsey Africa … As you know, McKinsey has subcontracted a portion of the services to be performed under the agreement to Trillian.” Sagar then advises Eskom that Trillian is authorised to submit invoices for this work directly to Eskom.

Budlender battled to get an explanation for this letter from McKinsey and, more than two months later, the company said it would be “inappropriate” to provide him with more information. McKinsey has not suggested that the letter apparently signed by its director is not genuine, nor has it provided an explanation for this inconsistency despite repeated requests, the report states.

Budlender questioned the conduct of McKinsey and concluded that the matter requires further investigation by a person or institution that has the “legal powers to compel McKinsey to provide the relevant information”.

Brown’s response ‘false or misleading’

On December 2 2016 Brown, in a written reply to questions in Parliament, stated that “no amount” was paid to Trillian to negotiate a settlement for an insurance claim after a boiler exploded at the Duvha power plant in Mpumalanga. .

Overall, more than a quarter of a billion rand was paid to Trillian Capital Management, a subsidiary of Trillian Capital Partners (TCP). “Yet the minister stated that nothing was paid by Eskom to TCP,” Budlender’s report says.

Trillian gave Budlender a batch of invoices sent to Eskom in April, November and August last year, totalling more than R260‑million.

Of these, two invoices, both dated August 10, for amounts of just over R122‑million and R113‑million, were stamped “paid” just three days later, on August 13. He said it seemed that Trillian did not submit any tenders for the work referred to in these invoices.

Based on this, Budlender found that the information Brown gave Parliament was either “false or seriously misleading”.

As for the company’s Gupta links, Budlender said these were not just about “blood ties”. Trillian is majority-owned by Essa, who failed to co-operate with the investigation, even ignoring pleas from Sexwale.

Trillian and its subsidiaries were listed as having paid R235‑million towards the Optimum Coal bill in the public protector’s State of Capture report last year, something the company has repeatedly denied.

Using Trillian’s own statements from one of its accounts at the Bank of Baroda, Budlender concluded that a R160‑million withdrawal from the account, on the same day that lawyers settled the Guptas’ bill for the coal mine, suggested the company did contribute towards the purchase of Optimum.

“The withdrawal of the money does not appear to fit within any of the categories of transactions for which Trillian asserted the Baroda account was used for.”

His subsequent request for supporting documents, including who the money was paid to, why and who had authorised it, was declined.

He adds: “There is no apparent reason why Trillian, a company owned by South Africans and conducted in South Africa, and which asserts it has no link with the Guptas, would want or need an account with a bank in India.

“Looked at in isolation, one would not attach too much significance to this, but in light of the other ‘evidence’, it is suggestive of a connection between the company and the Guptas.”