OUTA calls for bail to be denied to ensure the man accused of being a key money launderer for the Guptas stands trial

Iqbal Sharma is the first Gupta accomplice charged with fraud and money laundering

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07/06/2021 09:51:35

OUTA calls for bail to be denied to ensure the man accused of being a key money launderer for the Guptas stands trial

The NPA’s case against Iqbal Sharma and former Free State officials takes on the earliest known Gupta money laundering scheme, a R25 million deal from the Free State government in 2011 which resulted in 85% of the funds ending up in Gupta accounts. This scheme may have been a practice run for the R280m Estina dairy scam, which followed it.

OUTA regards Sharma as a crucial player in the Gupta group, both in Free State activities and the later looting of Transnet, and thus sees these arrests and prosecutions as a significant step against this criminal empire.

Sharma is expected to apply for bail today. He and the other accused face charges of fraud, money laundering and contravening the Public Finance Management Act. The NPA has already frozen their assets and has indicated it will oppose bail, and OUTA supports this. We regard Sharma as a flight risk as he appears to be a key player in a criminal network which has freely accessed documents from Home Affairs, has access to vast sums of looted state funds, runs sophisticated money laundering schemes and whose apparent co-conspirators have previously fled the country.

“Sharma should not receive bail and his prosecution on this matter should commence as soon as possible. All his assets seized by the AFU should be forfeited to the state to at least get back a small portion of the money that was looted by the Guptas and Salim Essa with his assistance,” said Advocate Stefanie Fick, Head of OUTA's Accountability Division.

The current case

On 2 June 2021, the NPA confirmed the arrest of Sharma along with three former officials of the Free State Department of Agriculture and Rural Development (DARD). It was also reported that the arrest of a fifth suspect is imminent; it is believed that this is Sharma’s brother-in-law, Dinesh Patel. It is alleged that the suspects were the main roleplayers when DARD approved the appointment of Nulane Investments 204 (Pty) Ltd (trading as Nulane Management Services) on a R25m contract without any competitive bidding process. Sharma is the sole director and shareholder of Nulane. The department paid Nulane R25m for a feasibility study which Nulane subcontracted to Deloitte for just R1.5m. The balance of the money found its way through a sophisticated money laundering network to the bank accounts of several Gupta companies.

The history of the relationship between Sharma, the Gupta family, McKinsey and Salim Essa

Sharma, a former director in the Department of Trade and Industry, met the Guptas in the early 2000s at a social function.  Because he could speak Hindi, he quickly became friends with the Guptas who, at the time, were mainly involved with Sahara Computers, which supplied IT equipment to Gauteng’s Department of Education. As the Guptas expanded their business network and political friendships, Sharma introduced his friend and business partner Salim Essa to the Gupta family. Sharma was a close ally of the Guptas and attended several of their religious and social events.

In December 2010, Sharma was appointed as a non-executive director on the board of Transnet by the then Minister of Public Enterprises, Malusi Gigaba. Evidence before the Commission of Inquiry into State Capture was that from 2011 to 2016 Vikas Sakar, a McKinsey partner at the time, met regularly with Sharma and Essa. Many of these meetings took place at key moments in the development of the relationship between McKinsey, Regiments and Trillian with Transnet and Eskom.

During 2011 Sagar and Sharma met regularly.  On several occasions they would meet at Sharma’s business premises at 11 Alice Lane in Sandton. By October 2011, Sharma appears to have been sufficiently confident of his relationship with Sagar to use McKinsey’s name in the context of one the earliest known Gupta schemes to launder public funds through the contract between the Free State DARD and Nulane Investments.

Capturing the Free State

Nulane was controlled by Sharma and operated out of his business premises at 11 Alice Lane in Sandton.  In October 2011, the Free State DARD approved a recommendation that Nulane be appointed to a R25 million contract without a competitive bidding process. The motivation for the recommendation was prepared by Peter Thabethe, the then head of DARD, and now Sharma’s co-accused. Thabethe justified the proposed deviation from normal procurement processes on the basis that the DARD’s proposed foreign strategic partner for the Mohoma Mobung project (a development programme for small-scale farmers in the Free State), Worlds Window Impex India Pvt. Ltd, required the appointment of Nulane as its local partner. In his motivation, Thabethe wrote the following: “The appointment of Nulane Management Services makes it impossible for the Department to follow normal procurement processes due to the fact that it is a condition from the intended Strategic Partner (Worlds Window Impex) that for them to be able to have comfort and confidence in the due diligence and feasibility study, they require us to use the services of Nulane Management Services as they know the quality of work they performed in similar project around the world.”

He said that the budget would be an estimated R25m. The motivation was recommended by the then CFO Seipati Dhlamini and approved by Dr Limakatso Moorosi, the then Accounting Officer of DARD.

On 31 October 2011, DARD and Nulane concluded an agreement which included this clause: “The Contractor [Nulane] may be required to, by virtue of its agreements with various International Consulting Firms such as McKinsey and Deloitte, to subcontract the performance of the whole or any part of the Services.”

Nulane and Deloitte had an established relationship. They submitted a joint bid on a Telkom tender in 2010.  Once the contract with the Free State DARD was signed, Deloitte did the feasibility study, submitted a report and was paid R1.5m by Nulane.

At that stage there was no prior business relationship between Nulane and McKinsey, but Sharma committed himself in writing to having an agreement with McKinsey and he knew that there was an executive – Sagar – who would back him if necessary.

The contract between DARD and Nulane was signed by Thabethe for DARD and by Dinesh Patel in his capacity as the project director for Nulane. It should be noted that Patel was also a former director of Albatime, the company which had a split fee agreement with Regiments on payments received from Transnet.

The Guptas getting their share of the loot

Shortly after the signing of the contract and on 8 November 2011, DARD paid 50% of the contract price – R12.5m – into Nulane’s Nedbank account. After the initial payment, the department made another three payments to Nulane (R4.2m on 22 December 2011, R4m on 30 March 2012 and R4.3m on 19 April 2012).

Of the total amount received by Nulane, R21.3m was paid into the accounts of Gupta entities. The Guptas received at least 85% of the funds paid by the Free State to Nulane Investments.

Although Sharma was the sole director and shareholder of Nulane, the Bank of Baroda account of Nulane was controlled by Gupta functionary Ravindra Nath. The bulk of the funds received were transferred to several companies’ bank accounts but ultimately ended up in the ABSA bank account of Islandsite Investments (Pty) Ltd and in the Standard Chartered bank account of Gateway Limited in the UAE, two companies owned and/or controlled by the Guptas.

It is outrageous that a simple letter of intent by a foreign company – which didn’t commit to any investment but demand that a feasibility study must be done by a company of its choice – was so easily approved within days of receipt of the letter, and a 50% upfront payment made a week after the contract was signed.  It should be noted that the so-called investor – Worlds Window Impex – never invested a single rand in the Free State.

This contract between the Free State DARD and Nulane opened the door for the Estina project, through which an estimated amount of R280m ended up with the Guptas.

Sharma did not stop in the Free State

Sharma went on to play a key role in Transnet, where the Guptas and Essa received billions of rand in kickbacks from the locomotive acquisitions and the advisory contracts between Transnet, McKinsey and Regiments.

He also became a co-director with Essa in several companies and received a R20m “loan” from the Guptas to buy the property from where VR Laser conducted its business. Sharma together with Essa and Ben Ngubane pursued an oil deal in the Central Republic of Africa with all expenses paid by the Guptas.

A voicenote with comment from Advocate Stefanie Fick is here.


Picture: OUTA