The latest investigations of the Gupta leak emails by amaBhungane and Scorpio have revealed that auditing firm, KPMG, missed major red flags pointing to apparent money laundering at Gupta-owned companies.
The allegations surround deals between the Guptas’ Oakbay Investments and three companies, where the family’s holding company was paid over R500 million through seemingly fake deals, where shares were bought in worthless dormant shelf companies.
The first such transaction was between Oakbay and Indian scrap metal and logistics group, Worlds Window, amaBhungane reported.
According to the investigative media group, the leaked emails revealed that Worlds Window paid Oakbay R32 million as an “advance for subscription of shares”, which between 2010 and 2014 was listed as a current liability – hence, not fulfilled.
The investigation showed that the companies which Worlds Window were buying into were obvious shell companies with some minor coal prospecting rights which were later dropped, making the stakes worthless.
A second “advance for shares” transaction took place in 2014 between Oakbay and Fidelity Enterprise Limited, amaBhungane reported. In this case, Fidelity agreed to pay R350 million for a stake in another dormant Gupta shell company, and had also not received anything for the deal.
Fidelity, it was revealed in earlier investigations relating to the Gupta wedding, also happens to be a Gupta-controlled company, which should have raised flags.
A third “advance for shares” transaction took place in 2013, when a Gupta shelf company, Keriscan, was bought from Oakbay for $17.5 million – with R107 million “advanced” through yet another stake. Again the company remained dormant, and thus worthless. It was bought prior to the deal for R100.
The person who bought Keriscan was one Ashish Gupta – a South African relative of the family, based in the US. He was later replaced as the buyer by yet another Gupta shell company in the UAE, amaBhungane said.
In all three of the newly revealed cases – and including the Gupta wedding saga – KPMG was still the Guptas’ auditor, with the transactions taking place between 2010 and 2015. However, none of these transactions were highlighted by the firm, despite the obvious red flags.
“In short, under KPMG’s nose, the Guptas offshore, sent money to the Guptas in South Africa for value that was not provided. The transaction appeared to hide money laundering,” amaBhungane said.
Responding to amaBhungane’s queries on the transactions, KPMG denied that it facilitated corruption, and that it was still in the process of its investigations. It did not comment on the transactions.
“We have, and will, comply with all our reporting obligations as required by applicable law, regulation and professional standards. If new information is brought to our attention, we will act decisively.
“We strongly reject the assertion that a failure to detect ‘a number of clues’ is evidence that KPMG South Africa facilitated illicit financial flows. Such a conclusion would be an unfair and unfounded allegation against both KPMG South Africa and our employees,” it said.
The Guptas did not respond to queries at all, while Worlds Window said it was planning on suing Oakbay over the transaction, saying it expected a profitable mine from the deal.
You can read the full investigation here.