Guptas’ South African empire crumbles in wake of Zuma’s departure

The corporate logo on the deserted plot in a grim industrial park near Johannesburg is broken. At the front, a "To Let" sign hints at a business in decay. A solitary security guard emerges and orders a visitor to leave the premises of Sahara Computers.

The company was once at the heart of the mining-to-media empire established by the Gupta family that has been embroiled in South Africa's biggest political scandal of the democratic era. Now its abandonment epitomises the three Indian-born brothers' dramatic fall since Jacob Zuma lost a power struggle in the ruling African National Congress and was forced to step down as president in February.

A coal mine that was acquired by the family from Glencore, the Swiss-based group, two years ago went into administration last week. According to company records, seven other Gupta-affiliated businesses have also filed for administration – including the company owning Sahara's building, says the Organisation for Undoing Tax Abuse (Outa), a non-governmental organisation that fights corruption.

Even the family's private plane has been caught up in the saga after Canada's export development bank – which funded the Bombardier jet's purchase – went to court to take it back, according to legal documents. ANN7, a television station set up by the family but now owned by a Gupta associate, will not have its broadcasting contract renewed. And India's state-owned Bank of Baroda, the only institution in South Africa that still banked the Guptas, will be leaving the country soon.

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"The political power of the Guptas has been eliminated. They are totally exposed at the moment," says Ben Theron, chief operating officer of Outa. "This empire is imploding at a very rapid rate."

String of scandals

The Guptas rubbed shoulders with the political elite for years after moving from India to South Africa in the early 1990s. But after Zuma took office in 2009, they became associated with a string of scandals as allegations swirled that they used their friendship with the then-president to influence political appointments and win state business.

Duduzane Zuma, the former president's son, had holdings in, and was a director of, several Gupta companies. Police raided the Guptas' mansion in Johannesburg on St Valentine's Day – stunning South Africans almost as much as Zuma's own dramatic resignation later that day.

Several family associates were arrested, but the Gupta brothers were nowhere to be seen. They are believed to have fled the country and headed to Dubai, where they own a mansion, according to leaked emails from a Gupta-linked company.

Police have said Ajay Gupta, eldest of the three brothers, is a "fugitive from justice". On Friday last, police said the Guptas' lawyers had challenged the arrest warrant issued for Ajay. But they declined to confirm whether Duduzane Zuma was also being treated as a suspect in corruption investigations.

The Zumas and Guptas have repeatedly denied any wrongdoing. For years the Indian brothers were considered untouchable as they flaunted their wealth and political connections even as the allegations mounted.

The outcome of the investigations into the family will be an important marker of the anti-corruption battle now being launched by Zuma's successor, Cyril Ramaphosa. His election as ANC leader in December is considered the moment the tide turned against the Guptas. Within weeks, prosecutors made their first move – seizing 200 million rand (€14 million) from a Gupta-linked dairy that allegedly diverted government funds meant for a development project.

Ill-gotten gains

However, there are doubts that South Africa will claw back more than a small fraction of the state funds allegedly stolen by the family and their associates. Financial officials warn that most of the Guptas’ alleged ill-gotten gains have long since been moved abroad or frittered away on luxuries.

“My guess is they have very little cash left in South Africa,” says one official. “I don’t think the net assets that remain [in the country] are very large ... and these things may take years to untangle.”

Theron believes the seizure of the dairy’s assets and Bank of Baroda’s decision to close in South Africa has led to cash drying up inside the Gupta empire, forcing the business closures.

If South African authorities decide to mount an international search for Gupta-tied money, one area of focus is likely to be Dubai. When Atul Gupta filed legal papers to challenge a court order freezing 10 million rand (€700,000) in his bank account this month, his affidavit was signed at the South African consulate in Dubai.

The Guptas allegedly own a large Indian-style mansion in the plush gated community of Emirates Hills, one of the city's most exclusive estates. Julius Malema, leader of the opposition Economic Freedom Fighters, alleged two years ago that Zuma and certain ministers personally delivered bags of cash to the Guptas in Dubai.

Zuma and the ministers denied the allegations.

The UAE’s lack of extradition treaties and the political protection offered by some senior Emiratis means that the well-connected and wealthy use the country as a place to evade justice. However, South African officials and civil society activists believe that international protection will not last for ever.

"It will be very important that our criminal justice system does whatever it can to bring the Guptas back to South Africa," says Gareth Newham, analyst at South Africa's Institute for Security Studies. "In order to rebuild the public trust in [the system ]that was so damaged under the Zuma presidency, this is priority number one." – Copyright The Financial Times Limited 2018