Gupta-Linked Companies Convicted In R107.5m Mine Rehabilitation Fraud Case
Two company directors and three mining companies linked to the Gupta family have been convicted of fraud and money laundering involving R107.5 million intended for the rehabilitation of two coal mines in Mpumalanga.
The South Gauteng High Court in Johannesburg convicted Ronica Ragavan, Pushapaveni Ugeshni Govender, Optimum Coal Mine (Pty) Ltd, Koornfontein Mines (Pty) Ltd and Tegeta Exploration and Resources (Pty) Ltd on two counts of fraud and two counts of money laundering.
Judge Mudunwazi Makamu found the accused guilty in connection with the diversion of R7.5 million from the Optimum Mine Rehabilitation Trust and R100 million from the Koornfontein Rehabilitation Trust.
According to Investigating Directorate Against Corruption (IDAC) spokesperson Henry Mamothame, the State argued that money reserved for repairing environmental damage caused by mining operations at the Optimum and Koornfontein coal mines was unlawfully redirected to pay mining contractors and other third parties.
The convictions were welcomed by National Director of Public Prosecutions Advocate Andy Mothibi and IDAC acting investigating director Advocate Ntuthuzelo Vanara.
R7.5m Diverted From Optimum Rehabilitation Trust
Evidence presented during the trial showed that R7.5 million was transferred from the Optimum Mine Rehabilitation Trust’s Standard Bank account into an Optimum Coal Mine account on May 23, 2016.
The State established that Ragavan and Govender had signed a letter requesting the transfer. The bank was allegedly given the impression that the transaction had been authorised and that the money would be used for rehabilitation work.
However, the funds were subsequently used for other purposes.
On the same day, the R7.5 million was combined with R9.5 million from Tegeta and formed part of a R26.4 million payment to mining contractor Klipbank Mining for underground mining work carried out in April 2016.
Although rehabilitation work was later undertaken using the funds, the R7.5 million was never repaid to the trust.
R100m Loan Linked To Koornfontein Trust
The second set of convictions concerned a R100 million loan obtained through a facility secured against money held in the Koornfontein Rehabilitation Trust.
Ragavan, Govender, Koornfontein Mines and Tegeta were convicted of fraud and money laundering relating to this transaction.
The court heard that approximately R280 million held by the trust was transferred from First National Bank to the Bank of Baroda in May 2016.
On May 5, 2016, the then Department of Mineral Resources granted Tegeta approval in principle to use the trust funds for concurrent rehabilitation. The approval was subject to three conditions, which were absent from the version of the letter submitted to the Bank of Baroda.
On June 6, 2016, R170 million belonging to the trust was placed in a fixed deposit and pledged as security for a R150 million loan facility granted to Koornfontein Mines.
The bank had received written assurances that the loan would be used exclusively for mine rehabilitation. It subsequently disbursed R100 million on June 13, 2016.
Within two days, the money had moved through the accounts of Koornfontein Mines and Tegeta before reaching a Tegeta account at the State Bank of India.
Of the R100 million, R67.8 million was paid to mining contractors Klipbank Mining and Coalcor Mining.
A further R30 million was transferred back to the Bank of Baroda and paid to other companies, including Koornfontein Mines and Optimum Coal Mine.
The State established that none of the R100 million was used for rehabilitation and that no rehabilitation work was carried out at Koornfontein.
Meanwhile, the R170 million held in the trust remained pledged to the bank as security for a year, exposing the funds to potential risk.
Gupta-Linked Companies Acquired Mines From Glencore
The court heard that Tegeta acquired Optimum Coal Mine and Koornfontein Mines from Glencore, with the sale taking effect on April 8, 2016.
The acquisition also placed the two companies’ rehabilitation trusts under the control of the new owners.
As of February 1, 2016, the Optimum Mine Rehabilitation Trust held approximately R1.44 billion, while the Koornfontein Rehabilitation Trust contained about R278.5 million.
The State argued that the accused had acted contrary to regulations requiring mining rights holders to maintain sufficient financial provisions to rehabilitate land affected by mining activities.
The National Environmental Management Act 107 of 1998 and its associated financial provision regulations govern the provision of funds for environmental rehabilitation.
At the time of the offences, Ragavan was a director of Koornfontein Mines and Tegeta. Govender was a director of Optimum Coal Mine and became a trustee of both rehabilitation trusts on April 26, 2016.
All five convicted accused had pleaded not guilty.
However, Maleatlana Joel Raphela, the former deputy director-general of the then Department of Mineral Resources, was acquitted of all charges against him.
Sentencing Set For December
The matter has been postponed to December 1, 2026, for sentencing proceedings.
The court extended Ragavan and Govender’s bail until the case is finalised.
Welcoming the convictions, Mothibi highlighted the importance of rehabilitation trusts in protecting communities from the environmental consequences of mining.
He commended the prosecution and investigation teams for securing the convictions and reiterated the National Prosecuting Authority’s commitment to combating corruption.
Mothibi said rehabilitation funds were essential to ensuring that communities were not left to bear the costs of environmental damage caused by mining operations.