29/05/2018 06:16 SAST | Updated 29/05/2018 06:17 SAST

NPA: Gupta Asset Forfeiture Ruling Is 'A Serious Setback'

The NPA says Monday's ruling, which overturned a preservation order against the Guptas, is a blow to the fight against organised crime.

Atul Gupta (R) attends Randburg Magistrate's court on September 27, 2010 in Johannesburg.
Gallo Images via Getty Images
Atul Gupta (R) attends Randburg Magistrate's court on September 27, 2010 in Johannesburg.

The National Prosecuting Authority (NPA) says Judge Phillip Loubser's ruling on Monday, unfreezing around R250-million worth of Gupta assets is a "serious setback" and a "serious blow to the fight against organised crime", according to TimesLive. The Guptas had appealed a preservation order obtained by the state against their assets, in connection with the criminal case against them.

The state alleges that a hundred black emerging farmers were promised five cows each as part of the empowerments scheme. The tender to run the project was awarded to Estina, which ultimately turned out to be Gupta-linked.

But the farmers allegedly never received their cows or supports, and the money allegedly landed up in the Gupta's bank accounts overseas.

But on Monday, Loubser, of the High Court in Bloemfontein, overturned the preservation order, citing problems in the state's case against the Guptas.

The NPA's Luvuyo Mfaku told TimesLive on Monday that the state was "very surprised" at Loubser's ruling, which he said was a blow to the fight against organised crime.

"We never expected this kind of ruling. It is a serious blow to the fight against organised crime‚ because asset forfeiture processes exist to ensure that those implicated in such organised crime do not benefit financially.

"We will study the judgment‚ before we consider our legal options in response to it. But this is a serious setback‚" he reportedly said.

Loubser reportedly said there was no reasonable basis on which the Guptas and their associates could be convicted, at this stage. And so there is no reasonable basis to attach their assets, either.

Loubser reportedly said the state's case "shows many shortcomings at this point".

Eight people appeared in court in February in connection with the case, following raids of various Gupta properties and businesses. According to News24, they are Estina director Kamal Vasram, former directors at the Guptas' holding company Oakbay - Varun Gupta, Ronica Ragavan, Nazeem Howa and Ashu Chawla - and Free State officials Peter Thabethe, Sylvia Dlamini and Takisi Masiteng.

The ruling casts doubt on the NPA's case against the Gupta's, more broadly, the Daily Maverick reported.

Loubser reportedly explained on Monday, "There must be reasonable grounds for believing that the defendant may be convicted, that the court may find that the defendant benefited from the unlawful activities, and that the court may therefore make the exercise of a confiscation order."

The real weakness in the state's case against the Gupta's so far appears to be in its analysis of the flow of funds between Estina and the Guptas.

According to Daily Maverick, the state alleges that the Free State department of agriculture paid a total of R144-million to the Gupta's Estina bank account between April 2013 and July 2014.

There were reportedly two further payments in May 2015 and May 2016. There were allegedly then eight payments, totalling R110-million, from the Estina account to a Bank of Baroda account. The money then wound up in the Gupta's Oakbay account.

So Oakbay was allegedly receiving the funds from the dairy farm project, according to the state.

But the Bank of Baroda account is reportedly a pool account which is used by 750 clients, and "is therefore not a reflection of the flow of funds of specific clients," Loubser reportedly said.

He reportedly added that to draw conclusions from the flow of funds in and out of the pool account would be "inaccurate, misleading and unreliable".

A legal expert, Advocate Deon Pool told News24 that the state's first mistake was to go public with its preservation order application.

"A preservation order, by nature, is done in chambers and it is supposed to be a secret," he reportedly said, adding that the state did not learn from its mistakes when its first restraint order against Gupta assets was overturned in court.

In March, the High Court in Bloemfontein reportedly overturned a preservation order obtained against Atul Gupta and Gupta accounts worth R10-million were unfrozen.

He reportedly said it was worrying that the state's case was not watertight.

"One would expect that the matter that carries such high profile would at least be considered along the lines of, 'do we at least have enough?'.

"One would think that [National Prosecuting Authority head] Shaun Abrahams would at least read affidavits and ensure that [it is] watertight and not challenged. The bottom line is that is it concerning that the judge said this is incompetence."

But Mfaku told News24 that the state's loss in court on Monday was not a reflection of its criminal case.

"Look, when you take a matter to court, you expect to be challenged, and this one was no different, and what you must recall is that we still have a preservation order that is standing for assets worth more than R140-million," Mfaku said.

"The information that was included in our application was based purely on the charge sheet. When it comes to the criminal case, we are on track. They [the accused] are not acquitted and will still appear in a criminal court, and we have got evidence that we believe that our chances of success are very reasonable."