State paid R49bn to Gupta entities in dodgy deals, researcher testifies

State entities paid more than R49-billion on contracts tainted by state capture with companies linked to the Gupta family, forensic researcher Paul Holden on Monday testified before the Zondo commission

Predictably, Transnet and Eskom account for the lion’s share of the payments with many deals valued in the billions, but Holden also provided insight into how money flowed from the Free State provincial government to the Gupta brothers’ business interests in Dubai from about 2012 to 2014.

According to Holden, of London-based Shadow World Investigations, the scam started in 2012 when the Free State provincial agriculture department awarded an engineering contract to a company called Tsebo Business Intelligence in a flagrantly irregular manner, since two other entities had scored higher in the bidding process.

Holden said that thereafter flowed a series of payments, mostly in instalments of millions of rands, to a company called Innova, which Holden said seemed to be run by key Gupta associates Salim Essa and Ashok Narayan.

Innova in turn paid the money to a company called Aerohaven, which played a similar role in the Estina dairy scandal in the Free State, from where it flowed to another Gupta enterprise, Gateway Limited.

“A total amount of R8.9-million was paid to Aerohaven Trading, which is obviously a well-known Gupta enterprise, by Innova and that happened in the course of three separate transfers and the first was on 15 August 2012, where R5-million was transferred from Innova to Aerohaven Trading,” Holden said.

Further payments followed in the next months, likewise derived from funds paid by the provincial department to Tsebo.

“Aerohaven was paid R8.9-million drawn from funds paid to it by Tsebo Intelligence services,” he said.

“On 15 November 2013, Aerohaven returned that amount of R8.9-million and paid it into Innova’s account by means of bank transfer. That payment then joined and intermingled with a deposit made by Tsebo into Innova’s account of R1.052-million … to increase the balance to just under R10-million, of which Innova transferred an amount of R9.756-million to Gateway Limited.”

Holden then described a similar chain of events involving the Free State department of economic affairs in 2014.

This time, Innova was directly contracted by the department for business engineering services and Essa was directly involved in the negotiations, Holden said, indicating that he had attached an unsigned copy of the contract to his written evidence. 

The aim of the R6.9-million contract was to help the department develop business efficiencies. “But to be honest they seemed to be a series of unrelated efficiencies,” Holden quipped.

A series of payments from the department to Innova were almost entirely paid over to Homix, the Guptas’ shelf company in Dubai. In one instance, Innova transferred some R2.6-million to Homix on the exact day that it received the sum from the department, Holden said.

In total, 89% of the money that the department paid to Innova was forwarded to Homix.

“I am just digesting,” commission chairman Deputy Chief Justice Raymond Zondo commented. “So Innova and Homix were basically controlled by the same people?”

Evidence leader Matthew Chaskalson replied that the common denominator was Essa.

On the provincial government’s side, the common factor in the two contracts is that Mosebenzi Zwane was the MEC in the relevant department at the time.

Zwane earlier this month told the commission that he had no knowledge of irregularities on his watch, except some time after the fact. He maintained that the Estina project was one of best ever devised to assist the people of the province, it just went awry in the implementation.

He went on to become mineral resources minister and is still the chairman of Parliament’s portfolio committee on home affairs.

Holden’s testimony continues. 

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