South Africa

Blow for NPA in bid to freeze Gupta-linked company’s R1.1bn assets

Johannesburg – The National Prosecuting Authority (NPA) was prevented from freezing assets valued at R1.1 billion of the Gupta-linked Regiments Capital in the Gauteng High Court in Johannesburg on Monday.

The head of the NPA’s investigating directorate, advocate Hermione Cronje, said the repercussions of the judgment are significant.

’’Not only will the restrained assets be returned to the defendants, but it sets a high bar for disclosure in restraint applications in the future,“ said Cronje.

In November 2019, a provisional restraint order was granted against the Regiments companies, its directors, Mr Pillay and Mr Nyhonyha, and its erstwhile director, Dr Wood, and their respective family trusts and other entities which held assets on their behalf valued at R1.1 billion.

“It is alleged that during their directorship in the Regiments companies they committed the offences of corruption, fraud and money laundering in relation to Transnet,” court papers read.

The State also alleges that Regiments Capital unlawfully received contracts from Transnet, either directly or indirectly, as a subcontractor to McKinsey.

The NDPP claimed that the offences were part of the state capture project aimed at enriching the defendants, the Gupta family and their associates.

Regiments Capital denied the allegations and claimed there was no wrongdoing on their part. The company also argued there was no basis for the NPA to obtain a confiscation order against them.

’’The basis for the Gauteng High Court’s decision finding is that when the National Director of Public Prosecution Shamila Batohi applied for the restraint order, the deponent, advocate Hermione Cronje, should have brought two documents to the court’s attention: an order taken by agreement in the same division on 26 September, 2019 between various Regiments companies, their directors and Dr Wood as to how Regiments’ and its subsidiaries’ assets should be dealt with; and a settlement agreement between Transnet SOC Ltd and Regiments,“ the NPA said.

’’In respect of both documents, the NDPP had submitted that they were not relevant to the question of whether a restraint order ought to be granted, namely whether offences may have been committed from which the defendants derived a benefit and whether an equivalent amount of their realisable assets ought to be restrained.

’’The September order did not prevent the defendants from dissipating their realisable assets, so long as they worked in consort; and the defendants had not paid Transnet the settlement amount.

’’In respect of the Transnet settlement, Advocate Cronje also explained that she only became aware of the settlement agreement after the founding papers were signed, and she brought the settlement agreement to the court’s attention once she became aware of it.

’’The court nevertheless held that these documents were material and ought to have been disclosed.''

Commenting on the judgment’s repercussions for disclosure in restraint applications in the future, Cronje said: ’’When launching applications for provisional restraint orders, the NDPP's deponent is forced to make a call which documents are material and should be put before a court.

’’In the present case, the founding papers were already in excess of 1 400 pages. Where the net for materiality is cast too widely, there is a real danger of overwhelming the duty judge, who has mere days to consider the application.’’

The NDPP is considering whether to appeal today’s judgment.

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