A Manhattan judge granted a secret court order early in August, which gave the Industrial Development Corporation (IDC) access to Gupta financial records which is held at more than a dozen New York banks.
The court order allowed the IDC's lawyers in New York to subpoena 17 banks that were used by the Gupta family. The banks were also used by the Gupta's associates and several connected companies.
The court order could ruffle the Gupta's feathers, as the order gives the IDC the ammunition it needed to win its civil claim. The claim is for a R287 million on a 2010 loan that was handed to the Gupta family in order to purchase Shiva Uranium. The IDC granted a R250 million loan to Oakbay Investments (OIL) to purchase Shiva Uranium in 2010, but when the loan repayment became due and the Gupta's couldn't pay, the loan was restructured.
Oakbay requested that the records the IDC obtain would only be used in the ongoing litigation between the IDC and Oakbay in a South African High Court. The IDC said it wanted the right to approach the court in future if it wanted to use the records elsewhere.
A teleconference with Judge Katherine Polk Failla was held on 22 September and the issues on the records were to be discussed further.
The IDC has already served the subpoenas on the bank accounts. According to the court papers, the IDC was asking for financial records, instructions and wire transfer notes relating to the majority of the Gupta empire's Dubai and SA money boxes.
The stakes for the Gupta's is indeed high as the records that were obtained could put paid to their protestations of innocence over allegations of share price manipulation in the listing of Oakbay. The orders could also show the truth in the allegations that the family round-tripped and laundered government funds from the Estina project and Transnet kickbacks to pay for the whole affair.
The IDC alleged in court papers that they are to believe that laundered funds from Estina were used for the share price manipulation. However, an AmaBhungane investigation showed the purchase of shares in Oakbay was funded with kickbacks from Chinese rail manufacturers.
The litigation between the IDC and Oakbay has gone on since 2017, which led to Oakbay filing for an exception in 2018, however, the court ruled in favour of the IDC in November 2018.
An unopposed motion to compel discovery of documents was placed on the roll by the IDC in October 2019 after Oakbay failed to file responding affidavits on time.
"In discovery in the South African proceeding, the IDC has reviewed documents detailing unlawful conduct with respect to the allegations in the IDC claim, in part, through the improper use of multiple international bank accounts," the IDC stated. The IDC discovered that funds flowed freely between Estina's accounts held in the Bank of Baroda and Standard Bank which was reported to be the money that was paid to Estina by the Free State government for the Vrede Dairy Farm project.
Oakbay Investments received two payments totalling R31 million from Dubai-based Gupta front, Fidelity, in 2013. The Gupta family used Fidelity as part of the money laundering machine to channel funds back into South Africa from Dubai.
"OIL asserts that it received payments from Fidelity relating to an arms-length share sale transaction with it. The IDC believes that the funds evidenced in these two transfers flowed from the Estina accounts, through Gateway and Fidelity, and ultimately into OIL's account as part of a round-tripping money laundering exercise," the IDC stated.
IDC continued stating that "Upon information and belief, the payments from Estina through the UAE entities, and ultimately to OIL, were made in part in US Dollars. The discovery indicates that at least one such payment, made in March 2014, was via a New York Bank."
With the information and the records obtained by IDC, it could prove multiple breaches of securities fraud in both South Africa and the US. "Given the abundance of existing evidence that the South African defendants and those acting on their behalf regularly transacted in US Dollars in scenarios in which criminal activity has been credibly alleged, the New York banks will likely reveal presently unknown evidence of activities that would constitute further breaches of the Loan Restructuring Agreement and, in turn, justify the IDC's decision to terminate the agreement and seek redress in the South African court," the IDC submitted.
Their records could also then be used for prosecutors in South Africa to make a case against the Gupta family.
The affidavit of the IDC's lead counsel, Nazeer Cassim stated that; "For obvious reasons, the defendants have not been forthcoming with documents that incriminate them." IDC would be seeking to subpoena further documents from South African banks, as well as the JSE and the Bank of Baroda.
The Gupta family maintained their innocence in court and denied in court papers that they manipulated the share price of Oakbay.