South Africa's Gupta family used HSBC Holdings PLC bank accounts in Dubai to transfer millions of dollars through companies that have been linked to suspected kickbacks for the sale of Chinese locomotives, according to documents reviewed by The Wall Street Journal.
The documents show money moving among three United Arab Emirates-based firms in January and February 2013 through HSBC accounts while one of the firms was receiving payments from a Chinese rail company with a contract to sell locomotives to a South African state-owned enterprise.
One of the documents, a spreadsheet of bank transactions, shows that the transfers among U.A.E.-based firms were made in dollars and cleared by HSBC in New York.
The spreadsheet and other documents cited in this article were among a trove of emails, bank statements and other documents that appear to have been obtained from Gupta-controlled companies earlier this year. The documents have buttressed longstanding suspicions among many South Africans that the powerful business clan leveraged its connection to President Jacob Zuma and other government officials to amass great personal wealth.
They also underscore the risks for banks of processing potentially illicit money flows.
HSBC said it is determined to keep criminals out of the financial system. It said it "has been reviewing its exposure to the Guptas for some time, and has closed a number of accounts for associated front companies wherever we have found them."
"This is inherently challenging because those who seek to launder money are often extremely sophisticated, hiding behind legitimate companies, layers of front companies, connected parties and individuals that have controlling interests in the subject companies," HSBC said.
South Africa's amaBhungane Centre for Investigative Journalism published documents in June showing the Guptas were involved in arranging the contacts between CSR Zhuzhou Electric Locomotive Co., a subsidiary of China's state-owned CRRC Group, and South African rail-and-port operator Transnet. It said the documents present evidence Gupta family companies received kickbacks of around 20% on three locomotive deals from CSR and other CRRC subsidiaries.
CRRC Group didn't respond to a request for comment.
South African police and prosecutors have said they are investigating allegations of wrongdoing by people and companies with ties to the Guptas, including potential kickbacks from international companies.
The Guptas, who didn't respond to a request for comment for this article, have previously denied wrongdoing. Atul Gupta, who leads the family's businesses, has said without elaboration that "there is no authenticity" to the documents, which have been dubbed #GuptaLeaks in South Africa. Mr. Zuma has also denied wrongdoing.
The possible role of U.K. banks in Gupta-related business was raised in October by Peter Hain, a former cabinet minister and a member of the U.K.'s House of Lords. At the time, the U.K. financial regulator said it had already asked two banks named by Lord Hain, HSBC and Standard Chartered PLC, to review possible Gupta-related business.
Standard Chartered said it shut down some accounts linked to the Guptas in 2014 after an internal investigation.
In a letter sent last week to U.K. Treasury chief Philip Hammond and seen by the Journal, Lord Hain accused HSBC of sanctioning money laundering. He alleged that accounts with U.K.-based HSBC in Dubai and Hong Kong were used for Gupta money transfers out of South Africa. He told Mr. Hammond that some of the transactions had been flagged as suspicious by HSBC staff, but "I am informed that they were told by HSBC UK to ignore it."
HSBC denies that it sanctioned money laundering. HSBC has spent billions of dollars improving its financial crime-fighting systems and hired thousands of compliance staff since paying $1.9 billion in 2012 to settle U.S. allegations of money laundering and sanctions breaches. Under the terms of a five-year deferred prosecution agreement, part of that settlement with the Justice Department, it must raise its standards to an agreed level or face an extension of the agreement, additional conditions or criminal prosecution.
The transactions in the #GuptaLeaks spreadsheet could draw scrutiny from U.S. authorities, since they are listed as having been made in dollars and cleared by HSBC in New York.
The Federal Bureau of Investigation is examining funds involving Gupta-linked businesses that may have traveled through the U.S. financial system, and the role any U.S. companies may have played, according to people familiar with the matter.
The spreadsheet shows a total of $2 million moving from two U.A.E. companies--Century General Trading FZE and JJ Trading FZE--to a third U.A.E. company, Global Corporation LLP, in January and February 2013.
The three companies appeared to be controlled by the Guptas, according to correspondence and financial data in the #GuptaLeaks documents. Century General Trading and JJ Trading didn't respond to calls seeking comment. Global Corporation couldn't be reached for comment.
Other #GuptaLeaks documents show that Century General Trading had another lucrative stream of revenue at the time. In October 2012, Chinese rail company CSR signed a 2.69 billion rand ($190 million) deal with South African state-owned Transnet for 95 locomotives. As part of the deal, CSR pledged to pay 20% of its proceeds, or 537.3 million rand, to Century General Trading, according to a table setting out the payments the firms were to receive from the Chinese company.
Transnet said it is investigating the procurement processes for the locomotive deals. Emails from the months preceding the deal show that the Guptas and companies they controlled were involved in arranging the agreement. One email chain from January 2012 shows that CSR directors forwarded a letter to the Transnet chief executive seeking participation in the locomotive tender to several employees and executives at Gupta-owned companies.
The transactions processed via HSBC accounts in early 2013 are part of much-larger money flows due to JJ Trading and Century General Trading in the years to come. One document states that by 2015, the two companies were entitled to 5.27 billion rand in payments from CSR, as the Chinese company went on to win two more tenders with Transnet, for 100 and 359 locomotives, respectively. The funds from the later deals, between 20% and 21% of the total proceeds, had been promised to JJ Trading, according to the document.
It is unclear how payments after February 2013 were processed. The JJ Trading and Century General Trading accounts with HSBC were shut down in 2014.
South African President Jacob Zuma sacked a vocal critic from his cabinet on Tuesday, a move expected to further deepen tensions as an elective conference to the ruling ANC draws near.
In his second reshuffle this year, Zuma dropped Higher Education minister Blade Nzimande, a member of the South African Communist Party, which is a key political ally of the ruling ANC. Zuma also moved State Security Minister David Mahlobo to the energy portfolio, the president’s office announced, reviving debate over controversial and costly plans for nuclear energy.
Nzimande has in recent months been incessantly vocal in calling for Zuma to go.
“The ANC is being stolen in broad daylight,” Nzimande told an anti-graft strike last month which urged Zuma to quit over a series of corruption scandals. The SACP and the country’s largest trade union, COSATU, are long-term political allies with Zuma’s African National Congress (ANC) party.
Both the SACP and COSATU have endorsed Cyril Ramaphosa as the ANC’s new president. Zuma is backing his ex-wife Nkosazana Dlamini-Zuma to succeed him. The ANC is due to elect Zuma’s successor as party leader in December, ahead of general elections in 2019.
South Africa’s Supreme Court of Appeal has dismissed President Jacob Zuma’s and the National Prosecuting Authority’s appeal against an earlier decision by the North Gauteng High Court that a decision to dismiss 783 charges against Zuma in 2009 was irrational. Then, Zuma had claimed that the charges against him were part of a political conspiracy to prevent him from becoming president. But the North Gauteng High Court, in a case brought by the opposition Democratic Alliance, ruled last April that the charges of corruption, money laundering and racketeering against Zuma should be reinstated. The Conversation Africa’s Politics and Society Editor Thabo Leshilo spoke to constitutional expert law Pierre de Vos about the latest decision.
What are the implications of the judgment?
The judgment means that the original decision by the North Gauteng High Court to charge President Zuma stands and – in the absence of another legal move – the National Prosecuting Authority is legally obliged to implement it.
This means Zuma will be prosecuted unless Shaun Abrahams, the national director of public prosecutions, decides again to drop the charges (but on different legal grounds). The judgment also contains scathing criticism of the National Prosecuting Authority and its senior leadership.
It raises questions about the integrity of senior National Prosecuting Authority leaders and of the independence and impartiality of the prosecutions body. The judgment also notes that it was illegal for Zuma’s legal team to obtain and share the intercepted communications – the so called spy tapes – which raises questions about why no one (including Zuma’s lawyer, Roger Hulley) was ever charged for breach of the law.
What happens now?
Zuma’s lawyers will probably make another submission to Abrahams to argue that the charges must be dropped. This may include arguments that too much time has passed since the alleged crimes were committed or that new evidence has come to light that raises questions on whether the NPA has a winnable case against the President.
The Appeals Court left open whether Abrahams has the legal power to review a decision by the National Director of Public Prosecutions or not. If Abrahams does have this power, and if he again drops the charges, it will probably be the end of the matter.
If the charges are not dropped, the NPA will proceed with the prosecution, at which point Zuma’s lawyers will almost certainly approach the court to ask for a permanent stay of prosecution. It is not practically possible for Zuma to appeal to the Constitutional Court as his lawyers already conceded before the Supreme Court of Appeal that the decision to drop the charges was invalid.
What are Zuma’s options?
As the Supreme Court of Appeal points out in its judgment, Zuma and his lawyers have done everything in their power to prevent a situation where the president would have his day in court and would have to answer to the charges levelled against him.
This is why the president and his lawyers will continue to try to stop the prosecution by submitting new arguments to the National Prosecuting Authority on why the charges should be dropped. And, if that does not work, to try and convince the court that his prosecution must be stopped permanently because for some or other reason he could not receive a fair trial.
Can a sitting president be put on trial? Does South Africa have a precedent for it?
South Africa’s sitting president can be charged. There is no provision in the country’s constitution – or in ordinary legislation – that stands in the way of this happening.
The South African parliament could pass a law that changes this and protects a sitting president from criminal liability. But this wouldn’t get very far as such a law would be unconstitutional. It would be breach of the Rule of Law as developed by the South African Constitutional Court and it would also be in breach of section 9(1) of the Constitution which states that:
Everyone is equal before the law and has the right to equal protection and benefit of the law.
No sitting president has ever been charged with a criminal offence in South Africa. President Nelson Mandela was required to testify in a civil (as opposed to a criminal) case, after which the Constitutional Court imposed limits on when a sitting president would be required to testify in a civil case.
It would be unprecedented for a sitting president to face criminal charges and be prosecuted.
South Africa's President Jacob Zuma must face charges of corruption, fraud, racketeering and money laundering, the Supreme Court of Appeal has ruled. It agreed with a lower court ruling last year that prosecutors could bring back 783 counts of corruption relating to a 1999 arms deal.
The charges had been set aside eight years ago, enabling Mr Zuma to become president. The president has always maintained his innocence.
The president now expected South Africa's National Prosecuting Authority (NPA) to consider representations from his legal team before making a decision about whether to prosecute him, it added.
The charges relate to Mr Zuma's relationship with a businessman, Shabir Shaik, who was tried and found guilty in 2005 of soliciting bribes from a French arms company "for the benefit of Zuma". Mr Zuma and other government officials have been accused of taking kickbacks from the purchase of fighter jets, patrol boats and other arms.
Charges were first brought against Mr Zuma in 2005 but dropped by prosecutors in 2009. Last year, the High Court in the capital, Pretoria, ruled in a case brought by the opposition Democratic Alliance that he should face the charges. Mr Zuma went on to lodge a challenge with the Supreme Court of Appeal.
It is the corruption case that will not go away. President Zuma has battled for years to avoid going on trial for 783 counts of corruption, linked to a politically charged bribery scandal that stretches back to the 1990s.
The case against him was dropped in controversial circumstances in 2009, when the security services produced recordings of phone conversations that apparently show there was "political meddling" by prosecutors.
Weeks later, Mr Zuma became president of the country.
But the so-called "spy tapes" have never been made public, and opposition parties have fought in the courts to have the corruption charges reinstated. After this appeals court ruling, that could now happen - in theory.
In practice, many believe South Africa's NPA is unlikely to proceed, at least not without further delays. Mr Zuma's presidential term ends in 2019, when he will not be eligible to stand in another election having already served two terms in office.
His eventful presidency has seen him survive eight votes of no-confidence, making him the most colourful and controversial president South Africa has had since white-minority rule ended in 1994.
President Jacob Zuma said South Africa and Zimbabwe must implement their 2009 agreement aimed at cutting the massive delays characteristic with the Beitbridge border post by having a one-stop border post at the busy international gateway.
“I wish to underscore the strategic significance of a one-stop border post at the Beitbridge border. This border post is the busiest border post on the continent. Much of our goods and services go through it. We cannot afford to continue to have unnecessary delays at that border,” Zuma said while addressing the second session of the neighbouring countries’ Bi-National Commission (BNC) in Pretoria.
“It is therefore important and urgent that we start in earnest the process of establishing a one-stop border post. Our two countries took a decision to do so as far back as 2009. In this regard, we direct the relevant ministers and officials to move with speed and report progress at the next BNC [to be hosted in Harare next year].”
After a closed door meeting between the delegations of the two countries, a joint communique read out by South Africa’s International Relations and Cooperation Minister Maite Nkoana-Mashabane at the conclusion of the BNC said resolved to speed up the development of legal framework for the one-stop border post.
“Having noted the developments on the one-stop border post (OSBP) at Beitbridge, they [the two heads of state] welcomed the establishment of a joint technical committee whose mandate, among other things, will be to develop the necessary legal framework for the project. The two heads of state reaffirmed the strategic importance of the OSBP and directed the relevant ministers to fast-track its operationalisation,” she said.
On Monday, of Zimbabwe’s Foreign Affairs Minister Simbarashe Mumbengegwi, also said the two governments should wrap up issues which have long been on their agenda, particularly the establishment of a one-stop Beitbridge border post.
“Our two countries stand to benefit immensely from the smooth movement of people and goods through the Beitbridge-Musina border post. A one-stop at the busiest border post in the African continent will bring harmonised processes, improved infrastructure and smiles to many of our compatriots and others who regularly traverse through this border. It will produce impacts that will extend beyond our two countries and region,” said Mumbengegwi.
“The establishment of the one-stop border post at Beitbridge-Musina is an urgent issue that needs our dedicated attention.”
South Africa and Zimbabwe have good bilateral political, economic and social relations underpinned by strong historical ties dating back many years. The two countries do not only share strong historical relations but also economic cooperation. Zimbabwe is one of South Africa’s top five trading partners on the continent, with trade statistics showing annual growth.
In 2016, South Africa’s exports to Zimbabwe amounted to approximately R29.3-billion.
There are over 120 South African companies doing business in Zimbabwe in various sectors including mining, aviation, tourism, banking sector, the property sector, the retail sector, construction sector, and the fast food sector and many more.
At the BNC hosted at the Sefako M. Makgatho Presidential Guesthouse in Pretoria on Tuesday, Zuma was supported by several ministers including Nkoana-Mashabane, Defence and Military Veterans Minister Nosiviwe Mapisa-Nkqakula, Trade and Industry Minister Dr. Rob Davies, Labour Minister Mildred Oliphant, Minister of Telecommunications and Postal Services Siyabonga Cwele, and Transport Minister Joseph Maswanganyi.
Visiting Zimbabwean President Robert Mugabe, who co-chaired the BNC with Zuma, was accompanied by his officials including Mumbengegwi, Defence Minister Sydney Sekeramayi, Health and Child Care Minister David Parirenyatwa, Home Affairs Minister Ignatius Chombo and the country’s Public Service, Labour and Social Welfare Minister Prisca Mupfumira.
Source: African News Agency
Weaknesses at KPMG South Africa are not systemic and reforms are underway to address mistakes made in work it carried out for business friends of President Jacob Zuma, the firm's new local chief executive told parliament on Thursday.
KPMG sacked a number of South African executives last month after it found work undertaken for firms owned by the Gupta family - a trio of Indian-born businessmen with close ties to Zuma - "fell considerably short" of its standards.
South Africa's Jacob Zuma, will preside over the launch of the African Regional Centre of the New Development Bank (NDB) on 17 August 2017. The President will be joined by the President of the NDB, Mr Kundapur Vaman Kamath, cabinet ministers, NDB executives and other dignitaries.
BRICS countries signed the Agreement establishing the New Development Bank at the Sixth BRICS Summit in July 2014 in Brazil, and the Seventh BRICS Summit marked the entry into force of the Agreement on the New Development Bank. The NDB headquarters were officially opened in Shanghai, China in February 2016.
Another key resolution taken at the Summit was to establish regional offices that would perform the important function of identifying and preparing proposals for viable projects that the Bank could fund in the respective regions.
The first of its kind would be set up in Johannesburg, South Africa. The launch of the African Regional Centre will showcase the NDB's service offering, highlighting the Bank's potential role in the area of infrastructure and sustainable development in emerging and developing countries.