Handing over a list of reported suspicious transactions by the Gupta family and its companies was a clerical and not an administrative action, the high court in Johannesburg said this week, in what could be a crippling blow for Optimum Coal’s bid to rescue its reputedly damaged reputation.
The ruling was made in a preliminary skirmish in a case by Optimum Coal to review what it considered an unlawful action by the Financial Intelligence Centre (FIC) — giving former finance minister Pravin Gordhan a certificate listing 72 suspicious transactions reported to the centre.
Administrative decisions can be reviewed and set aside by a court, but a clerical recording of facts (such as the one by the FIC) may not have the kind of effect on people’s rights that would require a court to get involved.
Gordhan annexed the FIC certificate to his failed application asking the high court to declare that he had no power to intervene in the relationship between the Gupta family and their bankers, so putting it in the public domain.
There it “attracted media attention, implying that [Optimum] had been involved in dodgy or suspicious transactions”, the Eskom supplier told the court in a heads of argument by its counsel, Mike Hellens.
But, on Wednesday, Judge Margie Victor dismissed that interlocutory application with costs.
“On a proper application of the law to the facts in this case, it becomes abundantly clear that the director [of the FIC] in issuing the certificate … was really involved in a clerical task at that stage,” said Victor. It did not amount to an administrative action, nor was there anything “irrational in that act that brings this matter under the purview of review under the principle of legality”, she said.
The FIC had argued that the certificate it had issued was similar to a tax clearance certificate issued by the South African Revenue Service — a simple reflection of facts.
“No right has been violated by certifying the fact that Optimum is the subject of several STRs [suspicious transaction reports] filed by persons with a suspicion that its transactions were unlawful with the FIC,” wrote the centre’s advocate, Michelle le Roux, in the FIC’s heads of argument.
“That is simply a fact. Optimum has engaged in transactions that gave rise to such suspicions. It cannot dispute this reality.”
If Optimum felt maligned, it should have targeted the people “with intimate knowledge” of its finances who thought they were seeing transactions that could include the proceeds of crime, the FIC said.
The centre “merely received those reports and confirmed that fact in a certificate”.
Victor said that, although Optimum was taking action because of the reputational harm it said it suffered when the certificate was published, the Guptas’ Oakbay group had already made public statements about their bank accounts being closed because of suspicious transactions.
She also said the legislation in terms of which the FIC operates provides for it to issue certificates to be used in court cases, which is exactly what Gordhan had asked for.
The certificate provided by the FIC listed 72 transactions, totalling about R6.8‑billion over four years, which had been reported to it in terms of rules intended to combat money laundering and financing terrorism.
The certificate listed only the date, assigned reference number, value and the “subjects reported”. Those included the “Optimum Mine Rehabilitation Trust”. The ring-fenced fund was intended to undo the damage caused by mining after operations end. The value of the trust transaction was recorded at R1.34‑billion.
Information obtained from leaked emails, among other sources, have suggested that mine rehabilitation funds were used to fund the Gupta family and its associates in their purchase of the Optimum mines.
Interlocutory applications are not usually open to appeal but can be appealed if their effect is final — such as ending any chance of a successful review application. Should Optimum contend it cannot proceed with its main application because of Wednesday’s decision, that decision could be open to appeal.