Since their friendship with South Africa’s current president, Jacob Zuma, began in 2000, companies run by the three Gupta brothers have built connections with board members at state-owned firms with which they do business.
A search of publicly available company records shows the links between Gupta family companies and board members at state firms including the state-owned power producer, Eskom Holdings, which a Gupta-controlled company supplies with coal.
The ruling African National Congress and the state graft ombudsman are investigating whether the Gupta family is exerting undue influence on the state to benefit their mining, engineering, computer and media businesses.
That follows a claim by Deputy Finance Minister Mcebisi Jonas that they had offered him the top spot in the Treasury last year, as well as similar allegations from several other senior ANC officials. In response to Jonas’s allegations ANC Secretary-General Gwede Mantashe warned this month that South Africa may degenerate into a “mafia state.” The Gupta family deny the allegations. Zuma, 73, said he is the only one who makes cabinet appointments.
“Our investor clients are increasingly concerned that commercial outcomes are being manipulated by the politically connected” in South Africa, Anne Fruhauf, vice president at New York-based risk adviser Teneo Intelligence, said in an e-mailed response to questions.
The Gupta family said only one percent of their business is with government and that they are not among the 50 wealthiest families in South Africa. They said they would cooperate with the ANC investigation, according to an e-mailed response to questions.
“Any transaction we do, either with government or the private sector is completed under very clear and strong corporate governance on an arm’s length basis,” the Gupta family said. “We are yet to be provided by anyone of any evidence of wrong doing that goes beyond innuendo and gossip.”
The Gupta families companies have also provided employment for members of Zuma’s family.
Zuma’s son Duduzane, 33, started as a 22-year-old trainee at Guptas’ Sahara Computers and is now a shareholder in several of their companies. One of Zuma’s wives used to work for Gupta-controlled JIC Mining Services, the engineering contractor, while his daughter, Duduzile, was a director at Sahara .
The main opposition party, the Democratic Alliance, and several prominent ANC members have called for Zuma to step down over his connections to the Guptas.
In addition to Eskom the Gupta family companies have done business with a state lender.
Gupta family-controlled Oakbay Resources & Energy borrowed R250 million rand ($17 million) from the Industrial Development Corp., a state development financier, to help buy a uranium and gold mine in April 2010 now held by the Guptas’ Shiva Uranium company.
Wendy Luhabe, who completed an eight-year stint as IDC Chairwoman at the end of September 2009, was a director of two Gupta-controlled companies, one from November 2007 until December 2008 and the other from July 2008 until August 2010. She had no position at Oakbay Resources and Energy, which obtained the loan.
Because the IDC only approved the loan in April 2010, six months after Luhabe left the board, she wasn’t involved in the decision and didn’t need to declare a conflict of interest, the lender said in an e-mailed response to questions.
Luhabe said she was unaware of the loan because it never reached board level on any of the companies on which she served as a director.
“I was a champion of managing any such conflicts,” Luhabe said by phone. “You can’t preclude people from participating in the economy. You just have to manage the conflicts. We were totally transparent.”
Oakbay Resources is now about 3.6 percent owned by the IDC, according to data compiled by Bloomberg, as that loan was converted into equity.
The crown jewel in the Gupta family’s business, Shiva, is co-owned by Oakbay Resources and an investment company controlled by Duduzane Zuma. Shiva also controls the family’s coal business and sells coal to Eskom, which supplies almost all of South Africa’s energy.
Mark Pamensky, a non-executive director at Eskom since December 2014, has been the lead independent non-executive director of Oakbay Resources since September 2014 and a director of Shiva since November 27, which is 74-percent owned by Oakbay. He’s also the chairman of Oakbay Resources’ audit committee. Pamensky is a chartered accountant, according to the Eskom website, which does not disclose his role at Oakbay. Pamensky, 43, declined to comment.
Eskom directors are focused on their “mandate to turn around the company’s financial and operational performance,” spokesman Khulu Phasiwe said by phone.
Shiva’s assets will include the Optimum coal complex that the Gupta family and Duduzane Zuma agreed to buy from Glencore Plc in December, once the government signs off on the acquisition. Optimum and Shiva’s existing Brakfontein operation supply Eskom with coal.
The government may have helped finalise the sale of Optimum to the Gupta family’s business. Mines Minister Mosebenzi Zwane said in a February 8 interview that he flew to Zurich and told Glencore CEO Ivan Glasenberg that selling Optimum would help save jobs.
Days after their meeting, the sale was complete. Zwane said he never favoured any party in the Optimum transaction. The Gupta family’s investment company, Oakbay Investments, said Zwane wasn’t involved in the negotiations, wasn’t consulted and didn’t influence the deal.
A man with whom the the Gupta family does business may have a link with Zwane’s political adviser, Malcolm Mabaso. Mabaso and Salim Essa were both directors in a company called Premium Security and Cleaning Services.
Since 2014, Essa has also been a director and a shareholder of a company called VR Laser Services, which supplies parts to the rail, mining, defence and transportation industries. The Gupta family’s investment vehicle took a stake in VR Laser in January, according to spokesman Gary Naidoo.
Mabaso and the mines ministry said he has no relationship with Essa. Premium Security was never commercially active and he resigned from the company a long time ago, Mabaso said by phone. Company documents disclosing directorships to the Companies and Intellectual Property Commission showed Mabaso as a director as of Thursday.
“Mr Mabaso does not have any interests with any mining companies and as the minister’s political adviser Mr. Mabaso does not deal with administrative responsibilities as these are dealt with by the relevant departmental officials,” the ministry said in an e-mailed response to questions.
Essa was also a co-director in a company known as Gade Oil & Gas with Eskom Chairman Ben Ngubane. Gade is not known to trade with any of the Gupta family-owned businesses. Ngubane didn’t answer a call to his mobile phone or respond to a text message.
“I conduct all my business in a proper and appropriate manner,” Essa said in a text message, declining to comment further.
In an interview with the South African Broadcasting Corporation that was released March 24, Zuma defended his relationship with the Gupta family.
“That family has been close to many people in the country,” Zuma said. “I don’t think that has ever caused a problem. I don’t think you can just take a decision because there are allegations.”