NEWS

Gupta Mine Secures R150m Using Environmental Rehab Fund

The move is unlawful, and could destroy the environment around the mine.

15/09/2017 08:03 SAST | Updated 15/09/2017 08:03 SAST
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Atul Gupta Photo by Kevin Sutherland/ Sunday Times/Gallo Images/Getty Images

A News24 exclusive investigation revealed on Friday morning that a coal mine owned by the Gupta family used the mine's environmental rehabilitation fund as a security deposit for a R150m loan.

This move, writes journalist Pieter-Louis Myburgh, isn't only unlawful, but also jeopardises the mine's ability to restore any environmental damage in and around the colliery.

News24 has obtained a document that details how the Gupta-owned Koornfontein coal mine in 2016 secured a R150m loan from the Bank of Baroda by means of offering R170m held in the mine's rehabilitation trust as surety for the loan.

According to experts, the loan constituted a transgression of the environmental laws and regulations that prescribe how mining companies should manage the funds earmarked for restoring the environment once their mining operations close down.

This new information on Koornfontein's rehabilitation fund is contained in a letter filed in the ongoing court case between the Bank of Baroda and several Gupta-owned companies over the bank's intention to close the Guptas' bank accounts.

The new details also come in the wake of earlier indications that the Guptas' Tegeta Exploration and Resources, which owns the Koornfontein and Optimum coal mines, intended to access money in at least one of the mines' rehabilitation funds with the consent of the department of mineral resources (DMR).

The Mineral and Petroleum Resources Development Act (MPRDA) and the National Environmental Management Act (Nema) dictate that the funds in mines' rehabilitation trusts cannot be used for purposes other than managing the environmental damage caused by mining activities.

A letter sent by the Bank of Baroda to Koornfontein Mines on 23 August 2016 confirms that Koornfontein secured a loan of R150m in June 2016 by providing the R170m held in the Koornfontein Rehabilitation Trust as security.

The letter was sent by Sanjiv Gupta (no relation to the Gupta family), the chief executive of the Bank of Baroda's South African arm, to remind Koornfontein about the latter's repayment obligations for the loan.

"We understand that a detailed discussion took place on 26.07.2016 [26 July 2016] with officials of our Bank's corporate office at Mumbai with regard to adjusting the loan availed by you against fixed deposits with us, details are here under," the Bank of Baroda official wrote to Koornfontein Mines.

The "fixed deposit" he referred to was the R170m held in the Koornfontein Rehabilitation Trust, as shown by the letter.

The Bank of Baroda seemed somewhat anxious for the loan to be settled by the Guptas' mine, as suggested in the letter.

"In the meeting, it was assured that the loan against the above FDR [Fixed Deposit Rate] will be gradually liquidated and fully settled by 30.09.2016 [30 September 2016]," the bank wrote to Koornfontein.

"We request that you ensure that the loan against the above FDR is repaid fully by 30.09.2016. In the event of failure to repay the above loan... it is notified that the above loan will be adjusted and liquidated by prematurely paying the said FDR as also mentioned in form LDOC 16(A) executed by you," reads the letter.

The Bank of Baroda letter also suggests that apart from raising bank credit on the back of Koornfontein's rehabilitation fund, Tegeta had also gone through with earlier plans to get its hands on the rehabilitation money itself.

An earlier report by amaBhungane revealed that in May 2016, Tegeta had sought permission from the DMR to access the rehabilitation fund.