The 355-page ‘State of Capture’ report prepared by the South African watchdog The Public Protector that detailed allegations that Jacob Zuma, South African President, ensured the Gupta family won huge preferential contracts with state companies has also made an observation that an Indian state-owned bank handled the rehabilitation funds in a manner that were in contravention to Section 24P of National Environmental Management Act (NEMA) under South African Law.
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While the report stated that the bank’s relation to the purchase of all shares in Optimum Coal Mine (OCM) by Gupta-owned Tegeta Resources & Energy and the rehabilitation fund will be probed in the next phase of investigation, it clearly stated that the bank was the partner of Tegeta to execute the payment required for purchase of Optimum Coal Holdings/OCM.
The report points that while the Financial Provision Regulations states that any interest earned on the deposit shall first be used to defray bank charges in respect of that account and thereafter accumulate and form part of the financial provision, in neither of the funds held in the bank’s accounts was the interest reinvested for the purposes of capital growth. “The interest is transferred back into the bank’s account and utilised. It seems as if the interest serves as a direct benefit to the bank and not the owner of the invested funds as it would be in terms of a normal capital investment. Tegeta may have contravened section 9(5) of the financial regulations. By not treating the rehabilitations funds in the prescribed manner and for the prescribed purpose, Tegeta is in contravention of section 37A of the Income Tax Act,” the report observed.
Meanwhile, South African President Jacob Zuma on Thursday faced increasing calls to resign after the probe unearthed evidence of alleged corruption at the top of the ANC (African National Congress) government.
The probe released by the Public Protector listed several allegations against Zuma, the Guptas, two cabinet ministers and executives at state-owned firms. It did not reach conclusive findings. The report says that , Deputy Finance Minister Mcebisi Jonas told the investigation that he was taken by Zuma to the Guptas’ home in Johannesburg where Ajay Gupta said he would be appointed finance minister. When Jonas refused, Ajay allegedly offered him 600 million rand ($44 million) and asked if Jonas had a bag to take away 600,000 rand in cash immediately.
The report also unveiled phone evidence that David Van Rooyen, then a little-known Zuma loyalist, was regularly in touch with the Guptas before he was briefly appointed finance minister last year. The Guptas have denied all wrongdoing, and on Thursday welcomed an official inquiry. The three Gupta brothers — Ajay, Atul and Rajesh — who moved to South Africa in the 1990s, have a business empire in South Africa that extends from media to mines.