Iqbal Sharma, the head of Nulane Investments and accused number four. (Mlungusi Louw/ Volksblad/Gallo Images)
The first state capture trial ended in a discharge for the defendants on Friday, with acting Bloemfontein high court judge Nompumelelo Gusha saying both the police and prosecution had been woefully inept in their handling of the Nulane Investments fraud and money-laundering case.
Gusha granted a section 174 release to Gupta associate Ronica Ragavan and the fugitive family’s Islandsite Investment, two former Free State government officials and the directors of Nulane Investments, former Transnet board member Iqbal Sharma and his brother-in-law Dinesh Patel.
The former head of the provincial departments of agriculture and rural development, Limakatso Moorosi, did not file a section 174 application but was likewise acquitted, with Gusha saying the state had failed to produce a shred of evidence against her.
Section 174 of the Criminal Procedure Act, which provides for discharge of the accused at the close of a trial, states if the court is of the view that “there is no evidence that the accused committed the offence referred to in the charge or any offence of which he may be convicted on the charge, it may return a verdict of not guilty’’.
The judge said it was clear that R24.9 million had flowed from the state’s coffers but regrettably the prosecution had failed to show what happened to the money.
The government had founded its ultimately unsuccessful request for the extradition of Atul and Rajesh Gupta on the charges set out in the Nulane case and those in the Estina matter, in which a further R280 million allegedly flowed to their bank accounts.
The prosecution had alleged that the two brothers were part of a conspiracy to defraud the Free State government and intended to add them to the list of accused if they were surrendered to South Africa.
It relied on the doctrine of common purpose to prove that all the accused colluded to commit fraud and ensure most of the money made its way to a United Arab Emirates Standard Chartered Bank account linked to the Gupta family.
According to the indictment, the provincial agriculture department, in October 2011, received an unsolicited letter from Indian metal wares company, Worlds Window Impex, stating its intent “to participate as a strategic partner in the Project Mohoma Mobung”.
At the time the study was initiated, the state said, the province was in financial dire straits and there was no plan and no funding for such. The letter noted that World Window Impex would require due diligence to be done by a service provider of its preference.
About three weeks later, two contracts worth R24.9 million were signed in Sandton. According to the charge sheet, public finance management rules were broken to appoint Nulane Investments, headed by Sharma, to conduct the requested feasibility study for a dairy farm project.
Nulane outsourced the study to Deloitte, for a fee of R1.5 million, and then Nulane Investment subsequently changed the findings of the study to pinpoint Paras as the most suitable implementing partner for setting up a milk-processing plant in Vrede in the Free State.
The rest of the money was laundered, the state said, with “bewildering rapidity”, through the bank accounts of Islandsite, Pragat, Wone Management, Confident Concepts, Tegeta Resources, Oakbay Investments and Arctos Trading.
In July 2012, R19 million was transferred from Nulane’s Bank of Baroda account into the account of Gateway Limited, a company incorporated in Ras Al-Khaimah in the United Arab Emirates. This Standard Chartered Bank account was controlled by Sanjay Grover, a Dubai-based friend of the Guptas who served as the company’s sole shareholder.
There were concerns from the outset as to whether the state had managed to prepare thoroughly for the case.
Last year, during a pre-trial hearing, Judge Martha Mbhele pointedly asked the prosecution, lead by advocates Peter Serunye and Jacyntha Witbooi, whether they will be ready to proceed to trial in January this year and warned them that the court could not continue child-minding the state.
After this, the National Prosecuting Authority (NPA) briefly engaged private counsel to help prepare the prosecution but did not retain the senior counsel in question to lead argument before court.
The trial began on January 23, after numerous requests for further and better particulars from lawyers for the defence. The state mostly declined, playing its cards close to its chest.
On Friday, the court found that it had failed to prove common purpose to defraud the state.
Gusha noted that the prosecution had not produced evidence as to the identity of the persons who changed the Deloitte report and had failed to counter the doubt the defence had raised about the authenticity of the letter sent to the department, which led to the contract with Nulane.
The lead investigator in the matter conceded in court that he never contacted Worlds Window Impex to establish whether the letter was authentic.
Of the evidence of Simphiwe Mahlangu, a forensic auditor at the national treasury, Gusha said: “The fact is that in the course of his investigations he did not consult with and afford any of the accused an opportunity to be heard.
“His evidence is based on copies of documents he was favoured with. His [evidence] does not take the state anywhere, save only to confirm that the amount of R24 948 240 somehow made its way [out] of the coffers of the department and into the banking accounts of Nulane Investments.”
Gushu commented that the outcome may give “a sense of loss, if not dejection, to the citizenry of the country” but that the state had “regrettably failed to pass even the barest of thresholds”.
The NPA is considering appealing.
‘’We will be reflecting on the judgment with a view to determine legal avenues to explore,” said Andrea Johnson, who leads the NPA’s Investigating Directorate.
“The outcome of this case has no bearing on our ability to prosecute other state capture cases. We remain resolute in our commitment and ability to vigorously prosecute those responsible for state capture and corruption.”
The state has vowed to continue pursuing the extradition of the Gupta brothers, wherever they might be.
Its request for the UAE to surrender them was dismissed by an Emirati court in February but the outcome was only conveyed to the government at Easter, leaving justice minister Ronald Lamola fuming.