Dubai: the Guptas' city of shells

2017-10-27 06:31

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Johannesburg - On the surface, Dubai is one of the world’s great success stories.

Its towering skyscrapers and glaring opulence bear testimony to a desert boom-town that has experienced nearly unrivalled economic growth in the last few decades.

But the shiny office blocks, luxury hotels and colossal shopping malls conceal a decidedly seedier side to the city; a darker character that exhibits all the traits of a modern day tax haven.

According to the Tax Justice Network’s 2015 Financial Secrecy Index, Dubai "stands out above many other jurisdictions in terms of its lack of interest in transparency, and the laxity with which its offshore sector is supervised and regulated".

It also has an "ask-no-questions, see-no-evil" approach to commercial transactions, financial regulation and crimes.

The report also highlighted Dubai’s reputation for attracting "large quantities of criminal and tax evading money from Asia, Africa and further afield".

The story of the globe's illicit cash flows would not be complete without looking at how it relates to South Africa – in particular to the Gupta family.

SEE: The Guptas' bogus Dubai businesses 

There has been much speculation about the amount of rands that travelled across South African borders to the Guptas' new base in Dubai.

The #GuptaLeaks have clearly shown that the Gupta brothers and their close associates have amassed a considerable collection of companies and properties in the United Arab Emirates (UAE).

Find all you need to know about #GuptaLeaks here 

The network of shell companies established by the family was apparently put to good use when they needed to conceal and process the vast fortunes they’d siphoned off from government contracts in South Africa.

Dubai has a well-known reputation as a play place for the rich.

It boasts the world’s tallest building, and its premier shopping mall counts among the largest ever built.

One expat we met described the city as a "Disneyland for adults".

Thanks to this combination of world-class amenities, upmarket shops and a conveniently opaque financial system, Dubai represents a perfect fit for South Africa’s famously profligate Gupta family.

The #GuptaLeaks have helped to unearth staggering details on how the Guptas and their associates moved the dubious proceeds of state tenders in South Africa to their collection of shell companies in and around Dubai.

We travelled to Dubai to see what the Guptas' new base was like. We also hoped to gain a deeper understanding of the mechanics of their network of shell companies.

Shell shocked

Our first stop was a considerable distance out of town. We were looking for a scrap metal dealership inside the Hamriyah Free Zone, a large industrial area located next to a golf course and otherwise surrounded by the desert’s soft, powdery sand.

JJ Trading, or JJT, the first Gupta shell on our list, should have been a thriving business.

Apart from its scrap metal activities, the company received at least R760 million in revenue linked to Transnet port crane and train tenders.

However, the security guards at the boom gate had never heard of JJT and advised us to go into the office.

A sign outside indicated that it was the Hamriyah Free Zone.

We were assured that they would have a list of all the businesses inside the Free Zone.

But JJT was not on any such list.

"I don’t know this company," said the guard behind the desk. "Call them [JJT]," he suggested.

Other than on paper, the company did not appear to exist.

Webster’s New World Finance and Investment Dictionary describes a shell corporation as a "company that has legal status but provides no service or products and has few, if any, assets".

"Shell companies may be set up for illegal purposes, such as tax evasion, or formed in anticipation of attracting funding," according to the dictionary.

We concluded that this definition applied to JJ Trading.

The Hills have eyes

We arrived in Dubai at night and the first thing we saw was the dazzling luminance of a trail of skyscrapers that marched into the distance.

One of these colossal structures stood out among the rest.

It was the Burj Khalifa, the world’s tallest building. Its head-turning height was obvious even at night, with its massive frame etched against the backdrop of a dark horizon. 


The Burj Khalifa tower (left), the world’s tallest building, dominates Dubai’s skyline. The city’s impressive skyscrapers tell a story of unending prosperity. But the shiny office blocks also house extensive networks of shell companies that receive ill-gotten gains from all over the world.(Pieter-Louis Myburgh, News24)

 

As the metro train carried us from the airport into downtown Dubai, the city’s monetary abundance became increasingly visible.

It was as if the emirate’s riches had been poured into its structures.

The city’s developers clearly believe in the adage ‘the bigger the better’, as evidenced by the row of concrete, steel and glass giants that engulfed us as we entered the central business district.

The impressive skyline represents an overwhelming abundance of money, an unapologetic display of wealth that lay as far and wide as the glittering lights allowed our eyes to see.

True to their spendthrift ways, Tony Gupta and his two older siblings chose Dubai’s most expensive house in the most exclusive area when they bought their first property in the city in 2015.

Villa L35 in the Emirates Hills estate is the perfect sanctuary for the Guptas, and the family did not mind parting ways with a cool R331m for the property.

In order to get to Emirates Hills, one needs to drive past yet another golf course.

Only those who’ve experienced the city’s formidable heat could fully appreciate the volumes of effort and water that must go into the maintenance of these oasis-like playgrounds.

It was 41 degrees Celsius on the day of our visit to Emirates Hills. According to some of the locals we spoke to, this constituted "cool weather" compared to the summer months.

A boom gate with cameras and security guards confirmed that we had arrived in one of Dubai’s wealthiest suburbs.

Emirates Hills is a sprawling residential development, so we had quite a distance to cover between the entry point and Guptas’ villa.

But the drive was by no means boring, with the view of mansions of every shape and size serving as our entertainment during the car ride.

Even on such a blistering hot day, the Guptas’ house looked cool, thanks to the trees and plants around the villa.

A family crest on the fence showed that this was indeed the Gupta residence.

We wondered what one would encounter if one were to venture beyond the house’s Indian-style arches and the line of lanterns outside, and finally through the impressive wooden door that keeps unwanted visitors at bay.

But we couldn’t hang around for too long. A group of men who looked like security guards were sitting in the garden, and our presence had drawn their attention.

We duly told our taxi driver to move along.

King of the mythical beasts

During the same time that the Guptas started shopping for a house in Dubai, they were also in the market to rent office space.

One of the potential commercial addresses mentioned in the #GuptaLeaks was an office in the financial district.

However, it was on the opposite, slightly run-down side of the highway, away from the glitzy buildings that top companies prefer to occupy.

Listed on a name board at the reception of the Al Moosa Tower was the name of the Gupta-linked company we were looking for: "Griffin Line General Trading".

While the company is said to trade in rice, the leaked emails reveal that the Guptas mainly used its accounts for travel bookings.

There is a paper sign on the glass door, bearing the company’s name. Its emblem is a bird of prey that has its eye in the shape of a "G".

  Somebody had left a message on this Gupta-linked shell company’s sign. (Pieter-Louis Myburgh, News24)

 

The griffin - a mythological half eagle, half lion creature -was thought to be the king of all the beasts.

This obscure shelf company’s name probably speaks volumes about how the Guptas view their position in the business world, we joked.

We knocked on Griffin Line’s door and tried to open it.

But the door was locked, and there was no response to our knocking.

The word "hello" was scribbled in blue on the company’s printed sign.

We obviously weren’t the first people to have come here, only to find an empty office behind a locked door.

As we were about to leave, a woman came out of an office on the opposite side of the floor. We asked her if she knew anyone at Griffin Line.

"Only one lady works there," she said.

"She comes and goes. I don’t know her name."

This description of the scant activity at Griffin Line seemed wholly at odds with the thriving rice business it was made out to be on its website.

Milk and money

One of the key Gupta companies in the UAE is Fidelity Enterprises.

It is registered in Jebel Ali, one of the UAE’s free zones that allow foreign businesses to operate in the country.

Fidelity holds shares in Mabengela Investments, a key shareholder in Infinity Media Networks, which in turn owns ANN7.

It is also one of the Gupta shell companies that saw nearly R32m from the Free State’s failed Vrede dairy project travel through its bank accounts, only to eventually end up with the Guptas’ Oakbay Investments back in South Africa.

WATCH: Inside the controversial Gupta Free State dairy farm

According to documents in the #GuptaLeaks, Fidelity is supposed to be located at "plot no 358 – 615" in Al Quoz, an industrial area just outside Dubai’s city centre.

Our taxi driver sounded confused when we gave him the address. He knew Al Quoz, but he explained that it was a part of town mostly filled with warehouses.

The driver dropped us off at the first warehouse he saw. It was a car workshop.


Fidelity Enterprises, a Gupta-linked shell company that received some of the proceeds of the Free State government’s failed Vrede diary project, is supposed to be located in this industrial area in Dubai. (Pieter-Louis Myburgh, News24)

 

A mechanic with a sweaty brow was working on a red Lamborghini. When we showed the address for Fidelity Enterprises to the woman managing the workshop’s office, she frowned. Addresses there didn’t work that way, she explained.

There were no "plot" numbers for the area. We went outside and looked at all the warehouses around us.

The way in which the addresses were formulated bore no resemblance to Fidelity’s supposed address.

Whoever registered Fidelity clearly had no intention for the company to ever be found.

Going global

To get to the next Gupta shell on our list, we needed to travel some 18km to the north of downtown Dubai.

Global Corporation LLC is supposed to be located in a building next to an azure lagoon in Sharjah, one of the UAE’s seven emirates.

Like Fidelity Enterprises, money from the Free State diary project had also been washed through Global Corporation’s bank account.

We asked the security guard at the front desk for Global Corporation.

"This is a residential building. People come here all the time looking for businesses but there are no businesses here.

This is an apartment block. People live here," he told us. He thought there might be another building somewhere nearby whose name contained the word "lagoon".

But after asking another taxi driver familiar with the area and searching the internet, we concluded that Global Corporation’s address was a sham.

Sea shells

SAS Global, yet another Gupta shell, is the sole shareholder in a South African company that appears to be benefitting from provincial government tenders in South Africa, as revealed in the #GuptaLeaks.

The company’s address is in the HDS Tower, a 39-storey office block in Dubai’s Jumeirah Lakes area. We asked the building’s security staff for SAS Global and gave them the office number.

"No, you mean GBS Global," one of the guards insisted. We nodded.

Sure, GBS Global it is. By then, we already knew that the chances of finding a real office were slim.

The first thing we noticed after getting out the lift on the 13th floor was how many empty offices there were.

We found a woman sitting at GBS’ reception desk. It looked like she was the only person there.

A GBS brochure stated that the company offers company incorporation services "in tax efficient offshore jurisdictions around the world".

The woman had no idea who SAS Global was.

We had now been at the addresses of five Gupta "companies" without encountering an actual office.

Companies behind companies

The culture of secrecy is so tightly woven into Dubai’s corporate fabric that asking even basic questions about companies is frowned upon.

Trying to obtain simple information such as the name of a company’s directors or their contact details proved to be a near-impossible task.

This once again became clear when we went looking for SKG Holdings, a Gupta shell company that supposedly bears the initials of Shiv Kumar Gupta, the Gupta brothers’ late father.

The company’s registered address is in the Al Fattan Currency House, an elegant office block in the Dubai International Financial Centre (DIFC).

The building is a glass affair with spotless, blue-tinted windows.

A small army of window cleaners dangling from ropes had no doubt recently cleaned the structure’s slick exterior, as we’d seen it being done at buildings across Dubai.

However, the Al Fattan Currency House’s physical transparency stood in sharp contrast to the murky nature of the business conducted inside the building.

Once again, our lift opened onto a floor with a number of empty offices.

The address for SKG Holdings led us to a company called Intertrust - a firm that registers and incorporates companies inside the DIFC free zone.

SKG is one of their clients, an Intertrust employee told us.

We explained to her that we were struggling to get hold of SKG’s directors and asked her if she could provide us with any useful details about the company.

"Sorry. It’s an SPC. A Special Purpose Company," she said.

She was unable to provide us with any further information.

All that glitters…

An expat we spoke to told us that the reason he chose to make Dubai his new home is because one can’t help but look up. You look up to the skyscrapers and the constant blue sky and you become aspirational.

"Of course," he whispers, "everyone also knows that a large part of the city is built on dirty money from African dictators and Eastern European gangsters. It’s just that nobody talks about it".

The metro train ride from our hotel back to the airport later afforded us a final view of Dubai’s soaring skyline. Our search for the Guptas’ companies had taken us into some of the glass and steel towers that were now rolling past the carriage’s window.

We couldn’t help but wonder how many of the companies in these buildings were nothing more than empty offices with printed signs stuck on locked doors.

The Guptas’ network of UAE front companies may very well be just one tiny component in an elaborate, glittering city of shells.

News24’s trip to the UAE was made possible by a grant from the Taco Kuiper Fund for Investigative Journalism, administered by Wits Journalism.

Do you have information for our investigative journalists? Send an email to tips@24.com


Read more on:    gupta  |  dubai

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