How the Guptas stripped Optimum of R3bn

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How the Guptas stripped Optimum of R3bn

Business rescue team finds a mine in chaotic disrepair, with barely a cent in its bank account

Journalist

Over two years the Gupta family, through its network of companies, “stripped” its largest mining asset of at least R3-billion in cash from profits, with the money allegedly being spirited out of the country almost as soon as it was paid.
According to business rescue practitioners there is “no evidence” that roughly R3-billion in profits were recapitalised back into the mine, while essential mining equipment  fell into disrepair and critical protective clothing for mineworkers ran out. 
Joint business rescue practitioner (BRP) Louis Klopper revealed to Times Select that when he was appointed to oversee the business rescue of eight Gupta companies in February, he arrived to find that Optimum had little to no funds in its bank account.According to Klopper the mine itself is in such disrepair, it would cost roughly R400-million to get it fully operational again. This includes fixing machinery and mining equipment.
The Sunday Times revealed this weekend how Gupta-owned Tegeta had failed to meet coal supply targets to Eskom nearly every month since the Gupta family bought the mine.
This is despite the power utility granting the Gupta company relaxation on coal supply volumes for a total of 12 months after the mine claimed it was struggling to produce the required quantities.
The mine did however export more than four million tons of coal from April 2016, at an estimated value of R4-billion.
“The sales are there, but where is the cash?” Klopper asked, adding that auditors working for the BRPs were looking into the missing funds.
But a source close to the business rescue process told Times Select that business rescuers were finding it hard to determine how the funds were taken out of the country because the Optimum funds were channelled via companies in the Gupta empire that are not under business rescue.Eskom has to date not penalised the mine for the undersupply which led to a coal crisis at seven Eskom power stations as senior managers and power station managers scrambled to divert coal from other stockpiles to cover Optimum’s short supply.
Five people, including senior manager in primary energy at Eskom Ayanda Nteta , three power station managers and Hendrina’s stockpile manager have been suspended in the wake of the coal crisis. 
Times Select has learnt from court papers filed in the Pretoria High Court by Bermuda-based Centaur Ventures Limited against the business rescue practitioners of Optimum that the mine was paid R2.3-billion between October 2016 and March 2017 for 1.9 million tons of coal by Centaur.According to the papers, Optimum only supplied 1.1 million tons of the coal prepaid for by Centaur – which has resulted in the firm seeking to have a claim of R760-million recognised by the court.
Internal Optimum documents reveal that since April 2016 the mine has exported at least four million tons of coal, including the coal Centaur claims it bought. It also under-supplied Eskom by at least two million tons of coal.
According to documents in the court papers, Centaur paid on average R1,075 per ton.Centaur Ventures Ltd is 50% owned by Akash Garg Jahajgarhi, the man who married the Guptas’ niece Vega at the now infamous and lavish 2013 Sun City wedding.
Times Select has ascertained from the Gupta e-mails that Jahajgarhi has a Centaur Ventures e-mail address and was in discussions with another Centaur director, Daniel McGowan, about other business projects in New Delhi and Dubai since at least 2014.
McGowan argues in his affidavit filed in court that allegations by the BRP’s that Centaur Ventures was “under the same control” as the Gupta-owned mine are false.
Klopper explained that when he was appointed in February this year he found a multibillion-rand coal mine with next to no funds in its bank account.
More than 2,000 mineworkers at Optimum went on strike for nearly a month after they were not paid their February salaries – a result of the last remaining bank available to the Gupta family, Bank of Baroda, limiting services it provided to the family’s companies.The Sunday Times reported in March that  severe cost-cutting at the mines included not buying stationery, telling staff to drink less milk and sourcing “pirate” parts to fix essential earth-moving equipment.
At Optimum, machinery had been stripped to fix other broken equipment, a supervisor revealed.
“The machinery inside the mine is f***ed up. We have zero compared to when we started. They stripped a lot of it,” a production supervisor who has been at Optimum for 15 years and did not want to be identified for fear of victimisation, told the newspaper.
 “I only had three rear dumpers instead of 13. We had six trucks instead of 13, two loaders instead of four and two or three excavators. The other machines are stripped to fix the others, ” the supervisor said. 
“We don’t even have ballpoint pens, for crying out loud. You have to buy it yourself. Safety equipment like overalls, it’s been two weeks, we don’t have any of it. No hard hats or boots.”

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