Uncle Sam slaps sanctions on ‘corrupt’ Gupta brothers

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Uncle Sam slaps sanctions on ‘corrupt’ Gupta brothers

FREE TO READ | US announces curbs on the controversial pair and Salim Essa over ‘ill-gotten gains’ in SA

Matthew Savides and Graeme Hosken
Ajay, Atul and Rajesh Gupta, and their associate Salim Essa, are in America's bad books.
Sanctioned Ajay, Atul and Rajesh Gupta, and their associate Salim Essa, are in America's bad books.
Image: Martin Rhodes

Already facing the wrath of the SA public and accused of widespread corruption, the Gupta family has now made a new enemy: the American government.

The United States Treasury announced on Thursday it had put sanctions on brothers Atul, Rajesh and Ajay Gupta – and associate Salim Essa – “for their involvement in corruption in South Africa”.

The US treasury’s under secretary for terrorism and financial intelligence, Sigal Mandelker, was scathing in his description of the brothers’ and Essa’s behaviour.

The Guptas and Essa have used their influence with prominent politicians and parties to line their pockets with ill-gotten gains.
Sigal Mandelker, US treasury

“The Gupta family leveraged its political connections to engage in widespread corruption and bribery, capture government contracts, and misappropriate state assets. Treasury’s designation targets the Guptas’ pay-to-play political patronage, which was orchestrated at the expense of the South African people,” he said.

“The Guptas and Essa have used their influence with prominent politicians and parties to line their pockets with ill-gotten gains. We will continue to exclude from the US financial system those who profit from corruption.”

Responding to a request for comment, Gupta legal representative Rudi Krause said: “We will consider the decision and applicable legal framework and will publish a statement dealing with the issue in due course.”

According to AFP, the sanctions immediately freeze any assets the blacklisted individuals have under US jurisdiction and forbid Americans and US businesses – particularly international banks with US operations – from transacting with them.

The sanctions were placed under the US Global Magnitsky Act which targets large-scale corruption and human rights violations.

According to the US treasury, the action means that:

  • All property and interests in property of the individuals ... and of any entities that are owned, directly or indirectly, 50% or more by them, individually, or with other designated persons, that are in the US or in the possession or control of US persons, are blocked and must be reported to [the Office of Foreign Assets Control];
  • Unless authorised by a general or specific licence issued by OFAC or otherwise exempt, OFAC’s regulations generally prohibit all transactions by US persons or within (or transiting) the US that involve any property or interests in property of designated or otherwise blocked persons; and
  • Any approval, financing, facilitation, or guarantee by a US person, wherever located, of a transaction by a foreign person where the transaction by that foreign person would be prohibited ... if performed by a US person or within the US would be prohibited.

SA justice minister Ronald Lamola, in welcoming the cooperation between the US and SA, said the sanctions had a “direct impact on the financial and private interests of affected individuals”.

“Furthermore, these sanctions will ensure that companies or individuals are prohibited from conducting any business in the USA or with any American company worldwide,” he said.

The US treasury said the sanctions demonstrated the US government’s “unwavering commitment to supporting the rule of law and accountability in South Africa”.

“We support the anti-corruption efforts of South Africa’s independent judiciary, law enforcement agencies, and the ongoing judicial commissions of inquiry.  Moreover, we commend the extraordinary work by South Africa’s civil society activists, investigative journalists, and whistle-blowers, who have exposed the breadth and depth of the Gupta family’s corruption,” the statement said.

Experts told Times Select the types of sanctions put in place could be effective.

Simone Haysom of the Global Initiative Against Transnational Organised Crime, said: “These types of sanctions can be incredibly effective in closing off financial markets and access to finances which individuals need to sustain their impunity.

These actions mean they have no access to any form of US financing at all.
Simone Haysom, Global Initiative Against Transnational Organised Crime

“The US has recently played quite an active role in the fight against crime and corruption in our region. Over time the options for banking for those who have sanctions brought against them are narrowed with any financial institution wanting to plug into the world’s largest economy not able to if they do business with these kinds of individuals.”

Haysom said these actions demonstrated the superior powers of the US to act trans-nationally in the fight against crime.

“These action means they have no access to any form of US financing at all.”

University of Cape Town criminologist Simon Howell said those subjected to the sanctions would find it difficult to obtain and transfer currency, and to move around themselves.

“In terms of doing business, it makes things really difficult, as it is very international these days,” he said.

He added that SA’s Financial Intelligence Centre would have to ensure that the country’s financial institutions and government abided by the prescripts of the sanctions.

HOW US TREASURY DESCRIBED THE GUPTAS AND ESSA

THE GUPTA FAMILY

Ajay, Atul, and Rajesh Gupta immigrated to South Africa in the 1990s, and due in large part to their generous donations to a political party and their reportedly close relationship with former South African President Jacob Zuma, their business interests expanded. The family has been implicated in several corrupt schemes in South Africa, allegedly stealing hundreds of millions of dollars through illegal deals with the South African government, obfuscated by a shadowy network of shell companies and associates linked to the family.

Credible reports of these corruption schemes include the Gupta family offering members of the South African government money or elevated positions within the government, in return for their cooperation with Gupta family business efforts. Public reporting has revealed Gupta family efforts to garner the cooperation of a potential minister of finance by promising millions of dollars in return for the individual’s assistance in removing key members of the South African government who were considered to be stumbling blocks to the Gupta family’s enterprises. 

In another instance of an attempt to obtain the assistance of a member of government through illicit means, Rajesh reportedly promised a cut of a large-scale development project to a provincial minister in return for the minister’s assistance. While making this offer, Rajesh reportedly referred to two other politically powerful individuals present at the meeting as receiving large monthly payments, similar to the one being offered the provincial minister, directly from Rajesh in return for their assistance with a mining project.  

In addition, the Gupta family was overpaid for government contracts and then used a portion of the proceeds of those overpayments to donate money to a South African political party. Further, the family paid money to a South African government official in exchange for the appointment of other government officials friendly to the Gupta family business interests.

As a part of their corrupt business enterprise, South African government officials and business executives discussed ways to capture government contracts and then move the proceeds of those contracts through Gupta-owned businesses.

AJAY GUPTA

Ajay Gupta is being designated for being the leader of an entity that has engaged in, or whose members have engaged in, corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery.

Ajay is the family patriarch who formulated the family’s corrupt business strategies and controlled its finances. 

ATUL GUPTA

Atul Gupta has materially assisted, sponsored, or provided financial, material, technological support for, or goods or services to, or in support of, an entity that has engaged in, or whose members have engaged in, corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery.

Atul is widely known to have overseen the Gupta family’s outreach to corrupt government officials.

RAJESH GUPTA

Rajesh Gupta has materially assisted, sponsored, or provided financial, material, technological support for, or goods or services to or in support of, an entity that has engaged in, or whose members have engaged in, corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery.

Rajesh cultivated important relationships with the sons of powerful South African politicians and led efforts to pursue business and relationships in a South African province where corruption was rampant.  Rajesh attempted to use at least one of those relationships to seek undue influence with additional members of a South African political party.

SALIM ESSA

Salim Essa, a business associate of the Gupta family, has materially assisted, sponsored, or provided financial, material, technological support for, or goods or services to, or in support of, an entity that has engaged in, or whose members have engaged in, corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery.