Gupta-linked company 'fabricated agreement' to dodge liquidation

In an application that could ultimately lead to the collapse of the Gupta empire, business practitioners for a Gupta linked-company are accusing another Gupta-linked company of fabricating a "management agreement" in court to avoid being liquidated.

In September, business rescue practitioners - appointed to rescue Tegeta Exploration and Resources - lodged a court application to have the Guptas' Oakbay Investments liquidated. This was because, the business rescue practitioners argue, Oakbay owes Tegeta about R2m in unpaid rent.

Tegeta, along with several other Gupta-linked companies, was placed under business rescue in February.

But in response, Oakbay says it is Tegeta that actually owes it money, and it has attached a copy of an agreement between the parties that Tegeta's business rescue practitioners say is a fabrication.

The going under of Oakbay Investments could effectively sink the other companies owned by the family and their associates. Oakbay is the Gupta family’s holding company, and it is central to the family and its network's empire.

According to court papers, Tegeta’s directors are Ronica Ragavan, Ravindra Nath and Ashu Chawla. Oakbay's directors are Ragavan and Chawla. Because of the business rescue action, Tegeta is effectively being run by business rescue practitioner Kurt Knoop and his associates, and not its directors.

Management agreement

In responding papers filed on November 2, Ragavan, in her capacity as director of Oakbay, says there is a "management agreement" in place between the two companies, whereby Oakbay would provide Tegeta with a number of management services. In terms of this, it is actually Tegeta which owes Oakbay money.

Ragavan alleges that the business rescue practitioners have launched a "frivolous" liquidation application, knowing "full well" that Oakbay is not insolvent. She also says that the applicants know that Tegeta actually owes Oakbay an amount "far exceeding" the amount owed for rent, because of the alleged outstanding management fees.

She attached a copy of this "agreement" in her court papers, but the business rescue practitioners say it is a "fabrication".

In a replying affidavit filed on Monday, Knoop said the management agreement was "recently-manufactured to be presented as a defence (and set-off) against the respondent's admitted debt arising from arrear rentals".

"There is no management agreement and there are no arrear management fees. The allegations in these regards are so far-fetched and improbable that the court is justified in rejecting them on the papers," he says.

Knoop says the issue of the management agreement or an arrangement to set-off the arrear management fees did not arise in response to the business rescue practitioners' demand for the outstanding rental fees. The first mention of the management agreement was mentioned by Oakbay's lawyers in response to the winding up application in September this year, he says.

Knoop also says that the management agreement never came up during any of the business rescue-related activities, including a forensic investigation.

Debt paid

Ragavan also claims that Oakbay paid its debt owed to Tegeta into the latter's attorneys' trust account. But Knoop says this is impossible because Oakbay, along with all the other Oakbay group companies' bank accounts, were closed down. The company therefore had no banking facilities from which payments could be made.

Knoop also says any such management agreement would have had to be approved by Tegeta's board of directors, and there is no evidence that this happened.

"Having thoroughly perused all board records that were made available to the business rescue practitioners, I can confirm that such resolution/approval does not appear from these records," Knoop says.

He also says that when Tegeta went into business rescue, creditors were invited to submit claims. But Oakbay did not submit a claim for fees owed in terms of the supposed management agreement, he says.

It is not clear just how many companies owned by the family or their associates could be affected should Oakbay Investments be liquidated. But it would have an impact on the Gupta family, who are the ultimate owners of the company.

News24 previously reported that Oakbay Investments owns 79.9% of Oakbay Resources and Energy. It also owns what appears to be two coal companies, although little is known about them. Oakbay Resources in turn owns Shiva Uranium, which owns three Gupta mines.

Additional reporting: Kyle Cowan

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