• A joint venture of Alexkor has appointed a company related to Gupta partner Kuben Moodley to sell its diamonds.
  • The company eventually sold R2 billion worth of diamonds – unlicensed.
  • The State Capture Inquiry Commission has issued a long list of recommendations to prosecute the wrongdoers of the state diamond company.

A decade after state-owned diamond company Alexkor became a site of Gupta influence and corruption, the Judicial Commission of Inquiry into State Capture has issued a long list of recommendations to prosecute the perpetrators.

In its report, released on Friday, the commission details how former public enterprises minister Malusi Gigaba appointed a new board of Alexkor – with links to the Gupta family – in 2012. The chairman of the board was Rafique Bagus , who was in close contact with Gupta family associates for years and attended the infamous Gupta wedding in 2013.

During the tenure of the board, Alexkor’s joint venture with the community of Richtersveld appointed a company called Scarlet Sky Investments 60 (SSI) to market and sell all of their diamonds. Gupta partner Kuben Moodley owned the majority of SSI. (Moodley was arrested last year in connection with the alleged money laundering of the proceeds of contracts improperly awarded by Transnet to the Gupta-link and Trillian regiments, as well as the alleged theft of funds from a Transnet pension.)

READ | Gupta ghosts still haunt ‘destroyed’ Alexkor mine

SSI was awarded the contract without having a license to sell diamonds or any background in the diamond industry. The tender committee ignored this. The state capture report revealed that the bid should have been disqualified from the start.

Instead, SSI continued to source R2 billion worth of diamonds from the joint venture, which likely constituted a criminal offense due to its lack of a license, according to the report. In addition, the commission heard evidence that SSI was underpaying the Alexkor joint venture for diamonds and that its selling prices for diamonds were significantly below average market prices.

The commission’s recommendations include that law enforcement should investigate whether the members of the tender committee – Bagus, Duncan Korabie and Roger Paul – perpetrated fraud by misrepresenting SSI’s compliance with the requirements of The call for tenders.

Bagus Paul and Korabie are also to be investigated — and possibly declared delinquent directors — to confirm whether they breached their fiduciary duties.

In addition, the commission wants authorities to investigate whether Bagus, Paul and Korabie acted in defiance of the court – after the Western Cape High Court found in 2014 that they had been unlawfully appointed directors of the partner company of Alexkor in the joint venture.

The commission also wants law enforcement to investigate and possibly prosecute all directors of SSI, as well as its co-owner Daniel Nathan, for “deliberately providing false information” to the South African Diamond and Precious Metals Regulator (SADPMR). Other companies associated with Nathan are also expected to be investigated for breaking the diamond law.

In addition, the commission wants law enforcement to investigate and possibly prosecute Mervyn Carstens, CEO of joint venture Alexkor, and Zarina Kellerman, chief legal officer of Alexkor, for fraud – after they presented to the board that a Appropriate due diligence was carried out prior to contract award to SSI. Carstens and Kellerman were in contact with Gupta associates, the commission heard.

Other recommendations include that SSI directors be investigated over an allegation that more than R5.1 million worth of diamonds went unaccounted for and that the Alexkor joint venture was underpaid by R1.718 million for diamonds.

The commission also wants SADPMR to investigate whether all buyers to whom SSI sold rough diamonds were in possession of the required licenses. Alexkor’s board of directors must investigate all fees paid to Gupta-associated company regiments.

The report also covers Alexkor’s diversification into coal, and the commission found that the whole venture “was a Gupta corporate strategy to position itself to control Alexkor’s coal business, which consisted of IPC, WesCoal and Nungu Mining”.

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