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.
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.
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.
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.
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.