After financial embezzlement in South Africa, the Gupta Brothers are now seeking new pastures for investments.



New Delhi: The Dubai-based Gupta brothers, originally from Shaharanpur in Uttar Pradesh, are in the dock, three months after they showcased their grandiose homecoming with a mountaintop wedding and planned investments in India, including one with the Baba Ramdev-led Patanjali group.

This time, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned the controversial and allegedly dubious Non Resident Indian brothers along with a South African for their role in corruption in South Africa. The OFAC has also pushed the Global Magnitsky Human Rights Accountability Act and designated Ajay Gupta, Atul Gupta, Rajesh Gupta, and one Salim Essa for their involvement in corrupt schemes with government officials and employees in state-owned enterprises across South Africa for their own personal gain, a charge repeatedly levelled against the brothers. The ruling may not impact the brothers and their partner immediately, ostensibly because it prevents them from acquiring any property, or investing in any property designated within the United States. But what is troublesome for the NRI family is that all US citizens cannot officially deal with the brothers and do business. “In short, it means the US market will be out of bounds for the Guptas, so will be a large part of Europe and Canada which normally acts similarly,” a senior official told this reporter in Delhi.

As per a note from Washington, the US thanked the South African government for pushing out the family from the African nation and thanked a number of South African civil society activists, whistleblowers, and investigative journalists—the list also includes an Indian editor and author Rajesh Sundaram (currently stationed in New Delhi).

What is interesting is that the brothers have not reacted, they have remained silent. Repeated calls to the brothers by this reporter went unanswered.

So what are the brothers doing? Hounded out of South Africa over charges of violating laws and financial embezzlement, the infamous Gupta Brothers of India are now seeking new pastures for investments. The Saharanpur-based brothers, currently holed up in Dubai, have started a healthcare venture in India with Baba Ramdev’s Patanjali group and planned a mega university in Uzbekistan. And this is happening even as the brothers have filed for insolvency in South Africa.

The brothers, it is reliably learnt, are trying hard to regain their public stature. They were once very powerful in South Africa, a status they no longer enjoy. They have shifted their base to Dubai and—it is rumoured—are trying hard to buy peace in India, where they recently hosted a lavish wedding on a mountaintop in Uttarakhand. They have a deal with the Patanjali group to sell ayurvedic products in the countryside in special vans. The brothers intend getting into the education sector by building a world class university in Uzbekistan’s capital city, Tashkent.

The brothers have acquired some stability, and also an air of finality with some politicians in India, a far cry from the days when Ajay, Atul and Rajesh “Tony” Gupta used a private plane to travel across the continents. Those were bizarre times. In normal cases, aircraft can easily be traced through various sites like FlightAware but this one was difficult because the fugitive brothers reportedly changed the settings of their business jet they purchased with a $41-million loan from Export Development Canada, the government-owned export-import bank. There is a catch in this deal as well. The brothers reportedly paid EDC only $14 million, and still owe the bank $27million.

Investigators across the world once suspected that the brothers used the aircraft to evade arrest. But last year, the brothers landed in Delhi and called a handful of reporters to the expansive Maurya Sheraton where they booked a conference hall to narrate their side of the story, actually saying they were victims of South Africa’s political situation because their friend, Jacob Zuma, was no longer the South African President.

But the brothers did not talk about their dealings with Indian banks, and their unpaid dues. Three state-owned banks are now under probe for their dealings with the Gupta brothers, whose late night parties across the world were state-of-art events. The country’s largest lender, the Mumbai-based State Bank of India (SBI), Bank of India (BoI) and the Ahmedabad-based Bank of Baroda (BoB), the country’s third-largest, are under heat from investigative agencies for handling a significant portion of the cash that the agencies claim the brothers laundered to undisclosed destinations. Worse, BoB eventually had to shut down its South African operations in 2014, taking a hit (read loss) of Rs 120 crore, while it is immediately not known how much cash the Guptas reportedly laundered through Gateway Limited, a Dubai-based shell company. BoI has told the Reserve Bank of India that it loaned Rs 23 crore to Confident Concepts and Islandsite Investments, two Gupta companies that have now filed for insolvency. BoI CEO Dinabandhu Mohapatra is on record saying the bank had 100% collateral against the loans, but investigators fear such recovery will take time because the loans will have to be classified as non-performing asset (NPA) and set aside funds as provisions. A mail to Rajnish Kumar, SBI chairman, remained unanswered.

“This is just the tip of the iceberg. The Guptas have messed up a lot of things in South Africa and in India,” claimed a senior government official in Delhi.

In India, the brothers are being probed by the Income Tax and Enforcement Directorate. In faraway Johannesburg, Pretoria, Cape Town and Durban, they are under the scanner for alleged influence-peddling and dubious deals. The brothers have been accused by the South African opposition and anti-corruption campaigners for allegedly exploiting their close alliance with former President Zuma, to unduly influence government affairs and win big state contracts for their family businesses. Zuma’s successor and South Africa’s new President Cyril Ramaphosa has—justifiably—cracked down on corruption in the country, naming the brothers among the biggest offenders. South Africa’s main commercial banks have cut all ties with the Guptas, citing risk to their reputation.

The Gupta family and Zuma have denied the allegations.

In 2018, Income Tax conducted raids in Saharanpur—a sleepy town that was once the home to the Guptas—Dehradun, New Delhi and Gurgaon. The family has real estate properties and offices in these cities. Thanks to the raids, the brothers stopped the construction of a multi-crore temple of Lord Shiva in Saharanpur. The temple, funded by the brothers, is the mainstay of the investigations because authorities are keen to block the passage of “illicit money” earned by the brothers outside into India.

Interestingly, one of the brothers, Ajay, was in Dehradun, when Zuma resigned on 14 February 2018. A week later, he, along with a few family members, flew to an undisclosed location in a private aircraft. No one knows why the family members were provided security by Uttarakhand’s ruling Bharatiya Janata Party government.

The brothers, who were once very powerful in South Africa, often flew lawmakers from all political parties to their home in South Africa for parties and safaris. Guests were mandatorily told by the Guptas to pray at a temple of Lord Shiva inside their sprawling mansion in the Johannesburg home before entering their living room. Public anger erupted in 2013 when, during a family wedding, Guptas ferried 217 foreign guests to South Africa and the flight landed at Waterkloof Air Force base, outside Pretoria. The airport is a military facility normally used for receiving heads of state. It appeared that Zuma had tacitly approved the decision, which breached air force, customs and immigration rules.

Investigators have also found the brothers’ links with former cricket tycoon and IPL creator Lalit Modi. It was at their backing that Lalit Modi shifted the world’s richest cricket tournament to South Africa in 2009. It was at that tournament, two Indian businessmen, Ness Wadia and Mohit Burman, were beaten up by private security guards of the Guptas over an altercation during a match. The Guptas, who alleged that the Indians misbehaved with one of their family members, almost pushed the two behind bars. Eventually, the matter was resolved amicably.

Encouraged by Lalit Modi, the brothers even acquired some cricket stadiums under their brand Sahara, which once sold cheap laptops at less than $200 a decade ago. The Sahara brand, named after their hometown of Saharanpur, collapsed after the Lucknow-based Sahara conglomerate developed cold feet over its business tie-ups with the Guptas.

But now, the law is slowly catching up with the brothers with large number of their scandals unfolding across South Africa.

This week, German software maker SAP found compliance breaches and “indications of misconduct” in $50 million worth public sector deals in South Africa involving the Guptas.

SAP admitted paying over $9 million to intermediary companies controlled by the Guptas. However, the company said there was no evidence of direct payments to South African government officials. SAP said it had tightened up its compliance and anti-corruption procedures, including banning sales commissions on public sector contracts in countries with poor graft ratings, including South Africa. “The investigation has confirmed that even strong compliance systems are vulnerable and therefore, require eternal vigilance,” SAP board member Adaire Fox-Martin had then stated. “While we cannot turn back the clock, we can promise to do better.”

Guptas’ prominent role in Zuma’s presidency was highlighted when elite crime busters raided the family’s Johannesburg mansion. The brothers, led by Atul, arrived in South Africa in 1993 as white-minority apartheid rule crumbled, a year before Nelson Mandela won the country’s first democratic elections. And as South Africa opened up for foreign investment, the Guptas—previously small-scale businessmen in India—built a sprawling empire involved in computers, mining, media, technology and engineering. The brothers wanted the media to be on their (read Zuma’s) side. The New Age, an ardently pro-Zuma newspaper, was launched in 2010, and the 24-hour news channel ANN7 took to the airwaves in 2013 with a similar editorial slant. But the channel ran into trouble after journalists hired from India returned home with unpaid salaries and tales of mental torture. Zuma’s son Duduzane, was a director of the Gupta-owned Sahara Computers, and was involved with several of the family’s other companies. Zuma’s third wife Bongi Ngema and one of his daughters have also been in the employ of the Guptas.

The first charge against Guptas happened when former Deputy Finance Minister Mcebisi Jonas claimed in March 2015 that the Guptas had offered him the post of Finance Minister, in return for obeying the family’s instructions—for which he would allegedly be paid $50 million. Almost immediately, ANC lawmaker David van Rooyen was found having visited the Guptas’ home the night before his brief appointment as Finance Minister on 9 December 2015.

But troubles started when South Africa’s ethics watchdog, the Public Protector, published a damning report in October 2016, finding that the state-owned electricity monopoly had awarded a huge coal order to a then-Gupta linked business at well above market prices. The report also alleged that former mining minister Mosebenzi Zwane “traveled to Switzerland with the Guptas to help them seal a deal” to buy a struggling coal mine.

Now, all banks in South Africa have withdrawn their facilities to the Gupta family, complicating the payment of salaries to staff and the day-to-day running of a complex, cash-intensive business empire. BoB, thought to be the last major bank to continue its relationship with the Guptas in South Africa, eventually withdrew from South Africa, effectively ending its association with the controversial family. But the bank faces the prospect of a judge-led inquiry into their business dealings, as recommended by the public protector’s report. There were also reports that the Guptas allegedly siphoned millions of dollars from a black-empowerment agriculture project.

The cases are still on, even as the Guptas plan their new projects in India and Central Asia with their usual “who-cares” attitude.