Big state capture win for NPA, as High Court overturns ruling unfreezing Gupta-linked assets

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Transnet
Transnet
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  • A full bench has overturned a Gauteng High Court ruling that unfroze R1 billion in assets linked to the alleged looting of Transnet by Gupta associates.
  • Judge Maletsatsi Mahalelo had found that then-Investigating Directorate head Hermione Cronje had failed to disclose "material facts" when the NPA applied for the assets to be frozen.
  • The High Court has now found that the earlier court erred in making that ruling – and, crucially, it has confirmed that there are reasonable grounds for believing that the Gupta-linked Regiments directors may be convicted of corruption.

The National Prosecuting Authority (NPA) has scored a major victory in its battle to take on state capture corruption – by overturning a Gauteng High Court ruling that unfroze R1 billion in assets allegedly linked to the looting of Transnet.

On Tuesday morning, a full bench of the Gauteng High Court in Johannesburg ruled in favour of the NPA's challenge to the October 2020 ruling given by Judge Maletsatsi Mahalelo. Mahalelo had found that then-Investigating Directorate head Hermione Cronje's failure to disclose "material facts", when she successfully applied for the freezing of assets belonging to the directors of Regiments Capital, was a basis to overturn that freezing order.

Those Regiments Capital directors – Niven Pillay, Litha Nyhonyha and Eric Wood – are all implicated in massive state capture corruption at Transnet. It is the State's case that Regiments Capital was unlawfully appointed as advisors to Transnet because they paid Salim Essa – a key Gupta family associate – 30% of the fees they were paid by the parastatal.

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Because Transnet then paid Regiments more than R1 billion as an alleged consequence of this corruption, the NPA argues, "they are all liable to be confiscated in due course". Cronje had therefore applied for Pillay, Nyhonyha and Wood's assets to be frozen on the basis that they were the potential proceeds of crime.

According to court papers filed by the NPA, Pillay, Nyhonyha and Wood are expected to face charges for crimes linked to the unlawful advisory services deals Gupta-linked consultancy company Regiments scored with Transnet, primarily in relation to its purchase of 1 064 locomotives.

Eric Wood (Media24, Rapport)

Mahalelo, however, found that Cronje's failure to inform the judge who first granted the State's application for the freezing of Pillay, Nyhonyha and Wood's assets of another Regiments-linked court order, and a settlement agreement concluded between Transnet and Regiments, amounted to a material non-disclosure that would justify the reversal of that order.

The NPA argued that the consequences of Mahalelo's ruling were "grave in circumstances where (the National Director of Public Prosecutions, NDPP) litigates in the public interest, and (the NDPP) had shown that she intends charging the defendants with corruption which, as the Constitutional Court has said… is potentially harmful to our most important constitutional values".

Writing on behalf of the High Court full bench, Judge Raylene Keightley has now found that the High Court had been wrong to reject Cronje's evidence that she was not aware of the settlement agreement when she applied for the freezing of the Regiments directors' assets.

Keightley further pointed out that Pillay, Nyhonyha and Wood had themselves acknowledged that Regiments had actually not paid the settlement amount to Transnet.

She said:

Until such payment was made, the agreement was not relevant to the restraint proceedings. Adv Cronje was under no obligation to investigate and inquire into the Transnet settlement's existence.

"Therefore, we are of the view that the Transnet agreement was not material to the application for a provisional restraint order. Its non-disclosure was not a valid reason to discharge the provisional restraint and the Court a quo erred in finding that it was."

Significantly, when evaluating whether there were reasonable grounds for believing that Pillay, Nyhonyha and Wood may be convicted of a crime (which would justify their assets being permanently seized), Keightley stated: "None of the evidence relied on by the NDPP to found reasonable grounds for believing that the defendants might be convicted on the corruption charges (or indeed any of the other offences) is manifestly false or unreliable. This is underlined by the crucial fact that the defendants have failed to put up any substantial answer to the NDPP's case against the defendants on these offences."

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The State had contended that multiple forensic reports, evidence initially led at the state capture inquiry and witness testimony showed that Pillay, Nyhonyha and Wood committed corruption, money laundering and fraud in relation to both Transnet and the Transnet Second Defined Benefit Fund as "part of the state capture project, and enriched the defendants as well as members of the Gupta family and their associates".

Regiments, Pillay and Nyhonyha paid back R639 million to the Transnet Second Defined Benefit Fund after it launched legal action against them, accusing them, among other things, of siphoning hundreds of millions of rands "misappropriated" from pensioners into a Gupta family bank account used for an Optimum Coal Mine deposit.

The State further maintains that there is clear evidence that Regiments, as well as then-Transnet bosses Anoj Singh and Brian Molefe, were involved in the "unjustified escalation" in the estimated total cost of that deal – from R38.6 billion to R54.6 billion.

The NPA had also asked that the total value of the alleged proceeds of the Regiments corruption be adjusted from R1 billion to R1.6 billion. That too was granted by the full bench.



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