Help Desk -
9958816305, 9810335381

Ghosts of the Guptas still haunt Optimum coal mine - Report

Coal News - Published on Wed, 10 Oct 2018

Image Source: The Citizen
Moneyweb reported that last week the Pretoria High Court dismissed an attempt by a Swiss-based company, Charles King SA, to stop the sale of the Tegeta-owned assets now under business rescue. This was the 44th case against the business rescue practitioners involved in salvaging the wreckage of the Gupta’s Tegeta business empire. Tegeta owns Optimum Coal Mine, a share in the Richards Bay Coal Terminal and Koornfontein Mines. There are suspicions that in 2017, the Guptas, recognising that they had reached the end of their state capture rope, put in place agreements that would allow them to buy the companies back for a song, or at least direct their disposal.

Charles King SA had a written agreement signed in 2017 to purchase Tegeta for ZAR 2.9 billion, with a down-payment of ZAR R66.7 million. Tegeta’s assets are probably worth 50%-100% more than this. That in itself has raised questions over the authenticity of the share sale agreement, and who was behind it. Why would the Guptas sell their prize assets at below market price?

The down-payment was made on October 22, 2017, but was ZAR 2.3 million short. When business rescue practitioners started looking into this payment, they discovered several anomalies. The very next day after receiving payment from Charles King, the money was withdrawn from the Tegeta bank account and used to pay salaries at Tegeta, Optimum and other Gupta companies. This is highly suspicious, as normal procedure in such a transaction would involve paying the deposit into a trust account pending settlement of the full purchase price and transfer of the shares. The Guptas used this money to fund operating expenses.

The question is: who or what is Charles King? In papers before the high court, the company gives a Swiss address, and the deponent to the founding affidavit, Amin Al-Zarooni, describes himself as a businessman and chairman of Charles King, which is a subsidiary of Milu Limited, a private company registered in Abu Dhabi. Al-Zarooni is also a shareholder of and director in Milu.

Al-Zarooni’s founding affidavit sets out his case against Tegeta. There was a share sale agreement concluded on August 22, 2017, whereby Charles King SA was to purchase Tegeta’s total shareholding in the three subsidiaries mentioned above. The agreement required Charles King to pay a deposit of R66.7 million (US$5 million) into Tegeta’s Bank of India account before October 22, 2017. An amount of R64.4 million was paid, leaving a shortfall of R2.3 million, which Al-Zarooni says was the result of currency fluctuations. He authorised payment of the shortfall amount, but it was rejected by the bank “for reasons unknown”.

The then directors of Tegeta waived the shortfall amount, agreeing to add it to the final balance outstanding upon transfer of the shares. On this basis, Charles King was not in breach of the share sale agreement, claimed Al-Zarooni.

The agreement was promptly cancelled by business rescue practitioners who took over Tegeta and seven other Gupta companies in February this year after their banking facilities were closed down (which made it impossible for the companies to continue trading). The rescue practitioners wanted to see evidence that Charles King had obtained Reserve Bank approval for the share purchase.

Among the reasons given for the cancellation of the share sale agreement was the fact that several suspensive conditions in the agreement had not been fulfilled – such as failure to secure permission for the transaction from the minister of mineral resources, the so-called Section 11 consent required in terms of the Mineral and Petroleum Resources Development Act.

Nor had Richards Bay Coal Terminal Company given authority for the sale of shares to Charles King. Eskom was also required to sign off on the transaction, and no indication was given that Charles King would comply with the 30% BEE shareholding requirements. The Competition Commission’s signature was also required before the deal could proceed.

Al-Zarooni blamed the business rescue practitioners for failing to secure the Section 11 permissions, but presented no evidence to support this claim, said Kurt Knoop, one of the business rescue practitioners, in his replying affidavit.

Source :

Posted By : Rabi Wangkhem on Wed, 10 Oct 2018
Related News from Coal segment