amaBhungane and Scorpio #GuptaLeaks: Meet the money launderers
The Guptas used an international network of scrap metal dealers to launder hundreds of millions in kickbacks between China, India, the UAE and South Africa. We introduce them. By AMABHUNGANE and SCORPIO.
It must have been good news for Piyoosh Goyal when the State Bank of India approved his Rs750-million (Indian Rupees, then worth R120-million) loan.
So good that he then sent his agent to a senior banker’s Mumbai home on a Sunday with two expensive watches and a fistful of cash. At least, this is what the Mumbai branch of the Central Bureau of Investigation (CBI) later claimed.
The CBI’s anti-corruption investigators had lain in wait, that November 2013, and arrested Goyal’s alleged agent when he emerged from the banker’s home.
Then they raided the home where they said they found the two watches and the cash. Simultaneously, they raided Goyal’s premises, where, they claimed, they found “incriminating documents”.
The investigators laid charges of bribery and collusion against Goyal, his alleged agent and the banker.
According to Indian journalists, the investigators’ evidence included more than 70 hours of recorded conversations. They also interrogated Goyal’s agent for half a day.
Goyal’s Delhi-based scrap metal company, Worlds Window Impex India, issued a statement the next day denying the allegations.
The bank got two senior staffers to investigate. Within days, they cleared their colleague of wrongdoing.
But the CBI continued to investigate and, in January 2015, filed a charge sheet with a Mumbai judge, a spokesman told us.
“The matter is sub judice,” he said, meaning CBI would not comment as the case was still before court.
Goyal’s questionable Indian bank loan was just the tip of an iceberg.
In this article, we reveal that by the time CBI charged Goyal, he and Worlds Window had for four years helped the South African Guptas to move the equivalent of hundreds of millions of rand between China, India, South Africa and the UAE, using hundreds of suspicious transactions.
Goyal founded Worlds Window in Delhi in the 1990s. He was in his early 20s. Business people described him as a “first generation entrepreneur” and a “young and dynamic businessman”.
He started by importing and trading scrap metal. Then he expanded the group into logistics, manufacturing and – after he met the Guptas in 2010 – coal mining in South Africa.
In 2008, Britain’s biggest metal recycler, European Metal Recycling (EMR), bought a 49% Worlds Window stake from Goyal and other shareholders. EMR holds the stake to this day, and has regularly injected cash into the business.
EMR told us: “EMR is disturbed to hear press reports of the alleged involvement of Worlds Windows in money laundering, which we became aware of late last year through #GuptaLeaks. We are currently carefully looking at this investment as a consequence.”
Worlds Window has claimed to be one of India’s largest scrap importers; however, its financials suggest it was a relatively modest operation.
In the financial year ending in March 2011, the group’s holding company, Worlds Window Impex India, bought scrap worth R1.7-billion. This was about 5% of the total Indian imports at the time. It said it sold a little more than this and, after operating costs, was left with R57-million.
We note these numbers because, as we shall see, they were small compared to the tide of money then washing between Goyal-linked companies and the Guptas.
Before the CBI bust, Goyal had kept a modest profile. He appeared on podiums and in a few puffy news pieces as the esteemed company executive. Otherwise, he occasionally graced the pages of International Society for Krishna Consciousness newsletters.
The society described him as a donor, “senior devotee” and the “midday meal director” for Sri Sri Radha Parthasarathi Temple’s feeding programme, in south Delhi.
Photo: Piyoosh Goyal, right.
After the CBI bust, Goyal resigned as Worlds Window chairman and vanished from public view.
He told us that because he had resigned, he could not answer our questions on Worlds Window’s behalf.
Yet, analysts at an Indian credit agency still describe Goyal as Worlds Window’s promoter. His father stayed on after 2013 as “group mentor” and a “key person”, according to its website. And at least 41 Worlds Window companies remain registered to the address Goyal declared on his 2012 tax return.
Goyal gave us limited written comment for this article, and Worlds Window ignored us despite repeated attempts to elicit a response.
However, one man came forward to offer a spirited and detailed defence for them. He did not want to be named, so we shall call him Mr Patel.
Meeting the Zuptas
“Mr Patel” is a senior figure at Worlds Window.
He said Goyal first met the South African Guptas through a common friend in India in 2010. The Guptas then introduced Goyal to their business partner Duduzane Zuma, the current president’s son.
They encouraged Goyal to invest in South Africa, telling him: “We have lots of mines, and you will not face any problem. We know everybody.”
Worlds Window quickly joined the “Zupta” party, it appeared.
An August 2010 accounting record from the #GuptaLeaks describes that someone from Worlds Window spent more than Rs700,000 (about R100,000 then) on “SA… President’s Clothes (Cash)… India”.
The Guptas later paid them back. Jacob Zuma had officially visited India two months earlier.
We asked “Mr Patel” if they had bought clothes for Zuma. He said: “I can remember cloth has been purchased for Zuma and his wife. There is chances payment made by us. Don't remember exactly. It was more than eight or 10 sets for each.”
He added: “As I remember, president used Indian cloth in India, so assuming paid by Gupta as we never met president in India.”
Jacob and Duduzane Zuma and the Guptas failed to reply to our questions. South African brother Atul Gupta previously told the BBC the #GuptaLeaks were fake.
That same month in 2010, Goyal and the Guptas did one of their first big deals.
It was dressed up as Worlds Window investing in two South African coal mines, but it appeared to be a sham, as we previously reported.
In the deal, a subsidiary of Worlds Window Impex India, the group’s flagship, transferred $4.43-million (R31.5-million then) to the Guptas’ Oakbay Investments in South Africa.
That was a lot of money for Worlds Window Impex; in fact, it was more than half of its operating profit for that year, so you would expect its subsidiary would have placed a reasonably sure bet.
Worlds Window had paid for minority shares in two dormant companies that owned two questionable coal prospecting rights in South Africa – worse, share registers show the Guptas did not transfer the shares to Worlds Window.
Even worse, it appeared that there was no coal and the project was abandoned two years later.
Oakbay got money for nothing.
Image: A purported coal deal in 2010, in which Worlds Window gave the Guptas money for nothing and never got it back.
Our recent report compared this to two nearly identical Gupta deals in which they appeared to launder stolen Transnet and Free State provincial government money back home. It appeared to be a modus operandi.
But “Mr Patel” denied Worlds Window was party to a sham. He said the R31.5-million was “for profitable mining”. He said: “They issued the share to us, but they might have done a fraud.” He sent us a copy of Worlds Window’s purported share certificates.
Worlds Window sent its South African lawyers to investigate the fate of their money – but it only did this a full six years later, after the Gupta scandal blew up in South Africa. “Mr Patel” said the group was now considering taking legal action to recover the money.
By early 2011, Worlds Window had registered two subsidiary companies in South Africa, and Goyal was a regular visitor.
The #GuptaLeaks show how Gupta employees made sure his travels were comfortable. They arranged his luxury airport pick-ups and Saxonwold meetings with South African Gupta brother Tony.
They hosted Goyal and his wife at their luxury Clifftop Lodge in Welgevonden Game Reserve in Limpopo. A helicopter was to transport the Goyals there, and the Guptas booked them into the lodge’s honeymoon suite, according to the leaks.
In 2011, Gupta staff chartered flights to carry the Gupta and Goyal families from Delhi to watch the Cricket World Cup Final in Mumbai. They were joined by the family of a powerful Indian politician who was at the time a cabinet minister.
India beat Sri Lanka by six wickets.
Later that year, Goyal and the Guptas handled some travel arrangements for the politician’s adult son and the son’s wife when the couple visited Cape Town over Christmas and New Year. The Guptas paid for their stay at the luxurious Queen Victoria Hotel at the V&A Waterfront, the #GuptaLeaks show.
More recently, Worlds Window transferred ownership of one of its shell companies to the politician – who refused to explain the deal to us.
In 2014, when Tony Gupta needed a helicopter for a 250km trip in the western Indian state of Gujarat, he called upon Goyal. Goyal wielded his apparently significant influence there: A senior Gupta staffer emailed him the travel details and Goyal forwarded this to billionaire industrialist Gautam Adani.
Adani and his global industrial group of the same name form a political and financial powerhouse in India. He is reported to be close to Indian prime minister Narendra Modi.
Goyal wrote to Adani to vouch for the Gupta staffer: “He is Ajay’s [one of the Guptas] brother can you help pls. Thx nd rgds.”
Adani quickly wrote back: “I don’t have helicopter, but if he require the plane let me know and will provide him... Gautam.”
Not two years later, the Guptas and Adani cobbled together a would-be weapons deal which, as we previously reported, was set up to enrich them at the expense of South African state arms manufacturer Denel.
Down to business
Worlds Window’s apparently pseudo mining investments and Goyal’s South African visits seem to have set the framework for a more lucrative business – money laundering.
Some time back, amaBhungane received an anonymous tip-off implicating Worlds Window and the Guptas in ports corruption in South Africa in 2011.
“ZPMC has been inflating prices of their cranes at the ports, particularly the seven cranes purchased for port of Durban, by more than 15% to accommodate bribes that included many senior Transnet officials.”
ZPMC is the name commonly used by Chinese state-owned crane manufacturer Shanghai Zhenhua Heavy Industries.
Our anonymous tipster described the alleged role of “a representative of the Guptas’” who arranged kickbacks through a Worlds Window account in the UAE.
This was Naveen Agrawal, a long-time director of the Worlds Window group. He did not respond to our questions.
We found one chain of correspondence in which a group of people discussed ZPMC’s crane bid. They named a “Naveen” who appeared to advise ZPMC on how to engage with Transnet on another crane tender.
We also found an “agent agreement” – often of a cover for bribes and kickbacks – between ZPMC and a UAE-registered company called JJ Trading. The contract and related documents explain how the cranes were only worth $81-million (R570-million then), but ZPMC inflated the price to $92-million (R650-million then) to make room for “commissions and fees” for JJ.
The person who signed on behalf of JJ was not identified.
Image: The JJ-ZPMC ‘agent agreement’. If any reader can help us identify the signature, please contact us at firstname.lastname@example.org
About the same time, a senior Gupta staffer emailed Goyal a confidential Transnet document, outlining a separate, upcoming crane tender.
The document metadata indicates it was drafted by an employee in Transnet’s Office of the Chairperson and Group CEO. Then Transnet chief executive Brian Molefe told us he did not know how the Guptas got it. For years, Molefe has been questioned for his proximity to the Guptas.
ZPMC denied it was party to corruption; Transnet said it was investigating, and Goyal did not explain the latter email exchange when we asked.
So, who was JJ Trading, the company that had signed the “agent” agreement with ZPMC? Was it controlled by Worlds Window as the tip-off suggested?
A desert mystery
Ram Ratan Jagati probably did not intend to become the public face of an international money laundromat.
His social media profiles identify him as “manager at JJ Trading”, but no one answered his or JJ’s phones or emails. We were left to piece together his profile using snippets of information online and in the #GuptaLeaks.
JJ’s website advertises its experience as a trader of scrap metal, rice, beans and other commodities.
Jagati’s social media profiles show him to be balding, moustached, bespectacled and neatly dressed. He appears to live in Sharjah, in the UAE, but states that he comes from Ahmedabad in India.
Photo: Ram Ratan Jagati, JJ Trading ‘manager’.
JJ is registered in the UAE’s Hamriyah Free Zone, a financial haven that keeps company owners’ identities a strict secret.
Jagati lists at least 41 Worlds Window staffers and directors as his Facebook friends – but emails in the #GuptaLeaks show he was more than just a “friend” to the group, particularly when moving money for the Guptas.
In one email to Jagati, a Worlds Window director said: “Dear Ram Ratan. Please provide [$1-million] to Arctos.” The director copied in a Worlds Window administrative employee.
Arctos Trading is one of the two Worlds Window subsidiaries established in South Africa. It managed a Gupta mine in Mpumalanga.
Jagati replied with proof of a $1-million wire transfer from the UAE-registered IMR General Trading to Arctos. He copied two Worlds Window staffers.
Goyal at least part-owned IMR, the #GuptaLeaks show. One online UAE business list records “email@example.com” as IMR’s contact – a misspelling of Jagati’s actual email address. Another lists “firstname.lastname@example.org”.
Jagati’s proof of payment from IMR to Arctos claims the money was for the “purchase of metal scrap”, but a Worlds Window staffer then forwarded this to a Gupta manager “for your reference”. A trailing email notes that it was “payment for [Bank of Baroda] instalment” – contradicting Jagati.
In other words, money had moved but the commercial explanation was a fiction. And the sequence of events reveals Jagati to have been a Worlds Window and Goyal factotum.
Image: Another apparently fictional deal, handled by JJ Trading’s manager Jagati for Goyal and Worlds Window, evidencing Jagati’s place in their international network.
More emails underscored this.
Shortly after Transnet gave ZPMC the crane contract, a #GuptaLeaks accounting document appears to record JJ’s receipt of $969,086 (R8-million then). It is described as “Shanghai Zhenhua Heavy Industries”, ZPMC’s full name.
Shortly after this, a Gupta accountant emailed his colleagues instructions on how to distribute a larger sum – $3.3-million, apparently including the ZPMC payment – to three Gupta-owned companies in India.
One of the Gupta staffers then sent the email to Jagati and a senior Worlds Window accountant, and JJ promptly wired the funds from its account at HSBC to the three Gupta companies.
JJ and, again, Jagati appeared to answer to Worlds Window.
Image: Worlds Window and the Guptas used JJ Trading and Jagati to move kickbacks.
It wasn’t me
No, answered Goyal. “I am not the director, promoter or even employee of JJ. We [Worlds Window] never received any money either from JJ or Gupta [or] ZPMC.
“I have neither met any officer/executive of ZPMC or Transnet, [and] we were never involved in any Transnet related business so I will be highly obliged if you don’t link my name.”
He added: “For your satisfaction, we may provide you even certificate from chartered accountant that whatever business Worlds Window did with Gupta, it was 100% as per law. Even we declare all investment in our account books or whenever required informed government authorities also.”
For several weeks, he did not come up with the promised accountant’s certificate. Then, in response to final questions last week, he again promised to produce one, supposedly to clear Worlds Window.
He told us: “You are misusing your writing power. With all respect, I have doubt on your intention.”
He later appeared to accuse us of drafting fiction: “Let me appreciate you are good story maker.”
Transnet spending spree
The next year, 2012, the Chinese state-owned locomotive manufacturer China South Rail (CSR) was bidding to sell Transnet 95 new locomotives.
Goyal and the Guptas got involved, #GuptaLeaks emails show.
In January, a CSR deputy director emailed Transnet CEO Molefe and CSR’s vice president. He attached a letter requesting that he visit Transnet sites in South Africa.
The CSR deputy director forwarded the email to a Worlds Window group director, Rupesh Bansal.
Bansal forwarded the email to a Worlds Window staffer, commenting in broken English: “Please provide this letter copy along with update on previous email as required by Piyoosh Ji.” Recall that this is Goyal’s first name. “Please suggest him that this is the letter is sent and the points mentioned in letter are practical and to be pursued by CSR.”
The Worlds Window staffer passed the email to Goyal’s assistant, who passed it on to a senior Gupta manager and to Ajay Gupta’s son.
Meanwhile, Molefe responded – politely and appropriately – to CSR. Someone also sent this email to Worlds Window and Goyal’s assistant. She passed it on to the Guptas.
Evidently, Goyal and the Guptas’ mutual interests extended well beyond mining.
Goyal failed to explain when we asked him too.
CRRC Corporation Limited, which absorbed CSR in 2015, has not answered our questions.
We could not reach Bansal for comment.
In October 2012, Transnet awarded CSR the R2.7-billion 95-locomotive contract.
And, as we previously reported, CSR then started kicking 20% of the contract back to JJ and a related company called Century General Trading.
Century General is also registered in a UAE financial secrecy haven. Like JJ, its website claims that it trades scrap metal, grains and beans. And Ramratan Jagati – the JJ “general manager” who takes orders from Worlds Window and spends Goyal’s company’s money – registered its website.
A joint Worlds Window-Gupta accounting document, discussed later, shows CSR made one of its first payments – $6-million (R50-million then) – to Century General in December 2012. In the following weeks, JJ and Century General wired at least $2-million (R17-million then) from their accounts at HSBC in Dubai to the Guptas’ front companies.
Next, Transnet ordered another 100 locomotives from CSR. These ones cost Transnet R4.4-billion, and CSR started paying 21% of this to Jagati’s JJ and Century General.
And in 2014, Transnet ordered another 359 locomotives for R18.1-billion. CSR started funnelling a further 21% to JJ and Century General.
All in, these nondescript little UAE metal, rice and bean dealers stood to earn a massive R5.3-billion in CSR payments. By comparison, this was more than three times the R1.7-billion annual turnover for Worlds Window Impex, at the time.
JJ and Century General were to keep a 15% fee (R795-million) on the Chinese kickbacks, the leaks show, way outperforming Worlds Window’s 3% operating margins (R57-million) on its scrap metal.
The laundromat appeared to dwarf the Worlds Window front office.
But “Mr Patel”, the Worlds Window insider, tried to convince us there was nothing out of the ordinary here.
He said of JJ: “They are professional consultant. They are associated with CSR for the last 10 years.
“JJ is not involved with Transnet deal. JJ has nothing to do with Gupta or anybody, and I don’t think you will find any deal between JJ and Gupta.
“CSR used to take help of JJ. They used to take help in Europe, Africa, India, Pak…, everywhere JJ’s consulting for them.”
And we thought JJ just traded metal, rice and beans.
Nevertheless, things went awry in South Africa, “Mr Patel” said: “In South Africa, CSR cancelled their agreement with JJ. They say we cannot go ahead with you in South Africa. In this case JJ did lot of hard work. They have lot of expenditure for CSR, before tender.”
What sort of work?
“They hired eight or 10 guys in South Africa also, and they selected, they interviewed four or five black partners for them.”
How would a UAE scrap metal trader or its nondescript manager Jagati qualify for that job?
“Because CSR used to tell them: ‘Can we hire this consultant?’ Because being a government company, CSR cannot pay any money before tender.
“So, before tender they were required to hire so many people to do the research and consultancy and internal information. So, they hire JJ to finance all this information.
“So they hire people for intelligence. So, how much Bombardier will quote? How much GE [General Electric] will quote? So, even for this type of information, they hire people.”
Bombardier and GE were competing bidders on the Transnet locomotive contracts.
“They [JJ] have some intelligence system, as per my knowledge. Definitely they use someone to spy on somebody. Definitely. As per my knowledge. So many services.”
It was unfortunate that “Mr Patel” did not want to be named or explain more clearly the source of his apparent knowledge about JJ, so we asked him if he could get us documents detailing the alleged dispute between JJ and CSR.
He chuckled nervously: “Awww, ha ha ha. Why you want to? I will prefer if you write all Gupta instead of JJ. I would rather not.”
How can we reach JJ?
“Let me check, because I don’t want there to be any harm to JJ. Because I know because of internal story, JJ is in loss because of this deal, because they have been cheated by [CSR].”
Intrigued, we dug deep into the #GuptaLeaks to try to understand Worlds Window and the Guptas’ dealings.
We found huge sums of money flowing between the two groups.
Some of it was for legitimate business, as Goyal claimed. For example, Worlds Window subsidiary Arctos formed coal mining partnerships with two Gupta companies and managed their coal mine in Mpumalanga.
But other money flows were suspicious.
For example, we found a spreadsheet in the #GuptaLeaks, titled “Worlds Window”. It was attached to an email from one Gupta executive to her senior colleague. In the email, the executive typed: “Is this what u looking for?” No further context was given.
The spreadsheet is a ledger, recording 251 transactions from January 2010 until February 2013:
It looks a lot like traditional “hawala” bookkeeping.
Hawala is the name for an ancient form of money transfer developed in south Asia. It is still used today, often legitimately, as an alternative to formal banking systems. But because the money is not remitted through formal channels, it is a popular way to launder money.
The Chinese developed a similar system, known as “flying money”.
As a simple example, a man in the UAE wants to pay a woman in South Africa. He gives his money to an Emirati hawala broker, or “hawaladar”.
The Emirati broker will then send a message to a South African broker who will give the money to the woman there, minus a fee.
Both brokers will have many clients remitting money in both directions. Each broker will keep a running balance of how much he owes the other broker. Over time, the brokers will settle the difference.
The Gupta-Worlds Window “hawala” ledger describes a group of Worlds Windows-linked entities in one column. Other columns describe the transactions. Sometimes the explanations are cryptic, and sometimes they are clear. Overall, it appears as if the Worlds Window-linked “brokers” were transacting with Gupta-linked entities to remit money to and from South Africa, India and the UAE.
In some entries, it is easy to see how Gupta companies paid Worlds Windows companies in one country, and on the same day the Worlds Window companies paid the Guptas the same amount in another country, and vice versa.
Thus, money was effectively “beamed” across borders.
Just like a traditional hawala ledger, this one keeps a dollar balance of how much the Guptas owed Worlds Window.
In total, $74-million (R660-million then) flowed into the account, and $74-million flowed out, settling up the balance over time.
While the ultimate source and destination of the transactions is not always clear, some ZPMC and CSR payments can be traced from the Chinese companies, through JJ and Century General, for remittance to the Guptas in India, the UAE and South Africa.
Image: The Worlds Window-Gupta ‘hawala’ transactions, including remittances derived from Transnet contractors.
A R76-million roundabout
A number of transactions over six days in November and December 2011 were noteworthy. The transfers were recorded in the “hawala” ledger and are largely corroborated by other records in the #GuptaLeaks.
On November 30 and December 1, Gupta mining company Westdawn Investments transferred R44-million to Worlds Window’s South African subsidiary Arctos. This was broken into four smaller amounts.
Immediately, Arctos transferred R44-million to the Guptas’ Tegeta, broken into four differently apportioned amounts.
Tegeta kept R14.1-million and immediately transferred R29.9-million to the Guptas’ Oakbay Investments, which quickly parked R20-million in an account at the Bank of Baroda in Sandton.
Image: Over six days, the Guptas suspiciously round-tripped R76-million through their group companies, routing all of it through a Worlds Window subsidiary.
Four days later, Oakbay and a Gupta company described as “Islandsite” transferred R32-million to Worlds Window’s Arctos. This was broken into five smaller amounts. Immediately, Arctos passed this on to Idwala Coal, a Gupta company, broken into three amounts.
Idwala immediately passed the R32-million on to Oakbay, again broken into three amounts.
All in, the Guptas had routed R76-million in a circle, through a number of their own companies, funnelling all of it through Arctos and back to their Tegeta and Oakbay.
The money flows appear to be artificial. We do not know their purpose, but in the process, the Guptas and Arctos employed three techniques common to illicit finance:
- “Smurfing”: A money launderer breaks up and moves the money in small amounts to avoid detection.
- “Layering”: Money is moved between numerous different accounts to obscure its source and destination.
- “Round-tripping”: A series of transactions is made between companies serving to boost their revenues without real commercial benefit.
Gupta and Worlds Window companies often appeared to lend each other money, but the circumstances were suspicious, raising the concern that the loans could have been a fake cover for money movement.
If so, we again do not know the true motivation behind the flows.
In one example in 2013, Oakbay appeared to pay Arctos R86-million. But the Guptas’ staff had a problem six months later: Their auditors needed documents to explain the payment legitimately, but there were none.
So, a Gupta executive emailed a Worlds Window manager a loan contract with nondescript terms. She said: “Please sign agreement as we did last year also.”
In at least two other cases, Worlds Window’s South African subsidiaries appeared to lend Gupta companies R16-million and about $32.6-million (R250-million then).
In fact, the Worlds Window’s subsidiaries again appeared to act as unnecessary middlemen.
They channelled loans, originally from Bank of Baroda to the Worlds Window subsidiaries, straight on to the Gupta companies. The Gupta companies in turn repaid 9% interest to the Worlds Window companies, which passed this back to the bank.
In a 2014 email, a senior Gupta manager explained to Tony Gupta that, at times, Piyoosh Goyal had paid them “through [Baroda] loan”.
If so, it is possible Goyal or Worlds Window placed a fixed deposit with Baroda abroad. Baroda in South Africa then lent the money to the Worlds