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Gupta money laundering cobweb

Complex operation spanning multiple entities.
The Zondo Commission heard that the Guptas made use of criminal enterprises to move funds abroad. Image: Shutterstock

Paul Holden of Shadow World Investigations appeared before the Zondo Commission of Inquiry into allegations of state capture on Tuesday to continue with his testimony.

His previous testimonies resulted in a flurry of submissions in response to the Rule 3.3 notices that had been sent to persons implicated by him.

Holden said that in general he did not believe that any of the Rule 3.3 responses would make him change his mind that the contracts, or some aspect of the contracts, were tainted by state capture. Even though there are some challenges to his evidence he is of the view that this does not undermine the thrust of his evidence

Previously Holden dealt with contracts tainted by state capture, the aggregate amount by which the Gupta enterprise benefitted through those contracts, and the amount of money paid by the state to first-level laundry entities.

Holden, with the use of diagrams and tables, demystified a complex web of money laundering operations spanning multiple entities set up to receive moneys paid by corrupt state contractors, and pay these into the various layers of money laundering structures.

First-level laundries

Holden refreshed the commission as to what first-level laundries are, and what they do.

The Gupta enterprise over a number of years made use of vehicles that received payments from contractors tainted by state capture. The state would make multiple payments to these first-level laundries, which were designated by the Gupta Enterprise, and from there payments would be made into a much more complex and detailed local laundromat, which would connect into a vast extended international laundromat.

Holden had identified 15 first-level laundry entities, including Albertyn, Chevita Trading, Forsure Consultants, Fortime Consultants, Homex, Medjoul, Birsaa Projects, Maher Strategy, Pactrade, Matson, Jacksha, Jacob Commerce and Birtusa.

Laundromats

Holden explained that a laundromat is a system of collective entities, which receives funds from Gupta-connected entities or first-level laundry vehicles, and effectively washes or launders these funds by passing them through many accounts, before paying them into the next level of laundromats.

Holden had identified four local laundromats, which he labelled: the Chevita network, the Homex network, the Forsure Hastauf network, and the complex Spider’s Web.

Holden explained that there was a certain patternicity (the use of patterns to create meaningless noise) in the way these structures operated.

He explained that at the top level you would have first-level structures that received funds from state contractors. From there, the funds are paid into an “intermediary account for a higher level laundry vehicle”. The funds are paid into the intermediary account by multiple first-level laundries, which are aggregated into that account, from which the funds are sent into a money laundering network. These funds may also be paid into another entity that receives multiple funds and mixes them.

Where Shadow World has managed to trace the funds flowing into an end point, the funds generally end up offshore, through what Holden refers to as an onshore/offshore bridge. This is a company that receives and aggregates funds from a laundry network, and then makes payments abroad to an extended overseas network.

When first-level entities are replaced, the new entities will in turn use new onshore/offshore bridges to move the funds abroad. Holden gave as an example Homex, which was terminated when it tried to directly move funds offshore instead of to its local domestic level laundromat, and received the attention of the South African Reserve Bank.

The Hong Kong/China network

The vast majority of the laundered funds end up in what Holden calls the Hong Kong/China network, which he addressed in some detail in his evidence given on Regiments Asia and Tequesta in relation to Transnet.

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The essence of the complex Hong Kong/China network comprising hundreds of different companies registered in Hong Kong and China, which receives funds from state capture and multiple other sources, is to pay over these funds to an intended recipient. The majority of these funds ended up in Gupta-controlled entities.

Holden emphasised that in many instances the Gupta enterprise was making use of pre-existing independent criminal networks. “These are entities that existed previously and prior to the Gupta Enterprise.”

Holden had submitted further schedules to the commission reflecting tables of payments that had been made by state contractors into local laundries, and which had been traced moving through the onshore/offshore bridge, and through the complex laundromats into Gupta-controlled companies.

Holden had also identified the kickbacks paid to Regiments Asia and Tequesta (Salim Essa-controlled entities) in regard to the various locomotive contracts for Transnet.

Organised crime

Holden testified that the Gupta enterprise made use of heinous criminal enterprises to move funds abroad, and employed people involved in organised crime and gang-related activities.

Evidence leader Matthew Chaskalson asked Holden to comment on the incident of six identical payments that had been made by the Saamed Bullion Group to six different individuals, which ended up in the Hong Hong/China laundromat.

Chaskalson noted that “there appears to be something more sinister going on”.

Holden said he had to firmly emphasise that these individuals had no knowledge of these payments, and that the “know your customer” records show that a fake signature had been signed on all the bank accounts by the same individual. Their identities had been stolen and used to open the bank accounts.

Holden’s testimony will resume on Thursday.

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COMMENTS   17

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Holden deserves a medal for his fearless and persistent sleuthing. To uncover this web of Gupta intriqus and the many layers of corrupt premeditated behaviour must have caused him many a sleepless night! I salute you sir!

This never-ending, go-nowhere, commission of attendance, giving out funds (public as usual) into the retiring pockets of the servants of this endlessly corrupted racist state of pseudo democratic gangsterism has no credibility, not anywhere within the sector of even a partially functional brain.

That begs the question: What is the use of all the onerous legislation like FICA, KYC, anti-money laundering, prevention of the financing of terrorist activities, and politically important persons when the highly-connected state capturer can abuse this sophisticated and highly regulated banking system to bleed the country dry right under our noses?

It is clear that all these laws and regulations actually support, and do not prevent criminal activity. The legislation is intended to frustrate honest people and to create a veneer of control. The party that appoints the regulators is the same party that abuses the system.

Acts like these caused popular uprisings that led to the overthrow of many kings and governments in the past. In our case, the average ANC supporter has no idea what is going on. It is like the previous president stated on live TV when asked about Nkandla: “people who vote for the ANC are not smart people. They do not read”. He also said in parliament that “corruption is a European concept”.

To catch small people like us, the Normal Joe. Everyone else gets to escape to Dubai. We are the ones who have to carry the stone of the regime and they all get to laugh at us

Hi Sensei, we seem to live on the same page, meaning, I seldom disagree with you. Greetings and salutations.
Yesterday I posted a question regarding the latest scam of the brothers duping “investors” out of R54B. I asked where the fools get the money from to “invest” in these scams, surely if they were smart enough to make the money they should be smart enough to spot a scam. Later it hit me, this was probably an ANC operation.

Gives us a “good” feeling when we do our Tax papers every year right?

We slave away every day, behave ourselves and smarten up so as to save some money for retirement, but then realize that we have been very stupid all along.

I’m spending my money now and living, because have realized that I cannot win by investing in SA.

Has Mr. Zuma been sued for the December 2015 market manipulation? No

The banking rules need to stop issuing fines to shareholders and rather put the bankers in overalls.

Fascinating. Old man Gupta must be really proud of his three sons.

would be very interesting to find out if the wealth of the gupta family (with family in the usa)was made in other countries than rsa in the same way / fashion it was done in sa – if so, it looks more like organised looting under the camouflage of actual business

It is yet another reminder that there are TWO ENTIRELY DIFFERENT INTERPRETATIONS OF “S.A. LAW”. One interpretation applies to the ordinary citizens of S.A., the other interpretation is applied when the wealthy and the politicos are involved. Hence Old Zupta, his acolytes (the RETties) and his chummies (the Guptas) can simply carry on “ducking and diving” in the knowledge that they can ignore the law in the knowledge that court judgments are purely academic with no follow up/sanction.

You cannot put a price on transformation.

”If there’s one thing above all a vulture can’t stand, it’s a glass eye”

Frank McKinney (1868-1930)

Our ”glass-eyed bankers” should go and tell the Zondo commission what went wrong – they made a mockery of the very system (and the plethora of laws!), that they had to adhere and comply to – their actions redefined and ignored ”money-laundering”!

My main concern with regards to the billions that were stolen (that is physically transferred offshore) by the Guptas and their cronies are the local banks that vetted these transactions, and the SARB’s ”Surveillance” department that didn’t pick it up and or ”authorised” these payments.
We must never forget that every single cent that comes into SA and leaves SA is reported to the ”Surveillance” department.
Hence, all these transfers were done electronically by banks and it provided an easy way to move money illegally across the world.

Methinks, the SA Authorised banks, therefore, assisted the Guptas in two main ways, by allowing bank accounts to be opened and by so doing granting them access to the international banking network.

I have worked in International banking for a lifetime – every single cent that leaves the country has to land on a ”queue” and vetted before it can leave (be paid). The swift system won’t allow any ”un-authorised” payments – if it is released from the system (queue) – authority was granted!

SA has got a ”first world” financial system, but they effectively granted an open door to their international network through depositing money into local accounts. For local and international banks to claim they have no responsibility is frankly disingenuous and they should be held accountable for the consequences of accounts that have money that is smuggled.

The banks concerned did not stop it and they are culpable, in my view, to state capture, corruption and looting. If we really want the ”money laundered” back, we should start putting claims in against every single local and international bank that facilitated these transfers!

This is an accurate summary. Regular fiat systems used , lots of insiders got brown envelopes. So much for the vilifying of bitcoin. Once a money( fiat) whore ,only the fee needs to be negotiated.there must have been an army of beneficiaries

Under the old ”Colonists” – even with severe exchange control regulations – billions left the country illegally – brown envelopes in those days was like a Y2K dream.

How did they manage to illegally end up with the billions in offshore bank accounts? With massive ”over and under Invoicing” – the electronic banking systems in those days were still a ”pipe dream” as well!

Oh this is serious, proves the point .Guptas used bitcoin to move there wealth across the waters!! Like Incinatus , Buys et al predicted so accurately. Well done guys. Oh , I only read the headlines. This was a fiat shambles , using regular transfers and then use a multitude of regular company structures to hide the ex ZAR , now dollars . Perhaps re-look bitcoin n there would have been a clear blockchain trail. Lol!

Time to admit that CIPC is just a layer of red tape, an impediment to doing business and no check upon crime.

The registry of companies can be merged into SARS’s database with no loss of functionality or security. Just saving a few million per year on parasitic leeches.

“Experience hath shewn, that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny.” – Thomas Jefferson

End of comments.

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