17 June 2024 | 10:17 AM

State approved Guptas’ raid on mine rehab fund

Key Takeaways

It took barely 24 hours for the department of mineral resources (DMR) to sign off on Tegeta Exploration and Resources’ request to raid a R280-million mine rehabilitation fund.

Former Public Protector Thuli Madonsela’s State of Capture report, revealed that two mine rehabilitation trusts, worth a combined R1,75-million, appear to have been mismanaged under the control of Tegeta and the Bank of Baroda.

Tegeta has repeatedly denied allegations that it has tried to access ring-fenced funds in the mine rehabilitation trusts of its two newly-acquired mines, Optimum Coal Mine and Koornfontein.

However, new documents seen by amaBhungane not only confirm that Tegeta, owned by the Guptas, Duduzani Zuma and partners, attempted a brazen raid of the Koornfontein rehabilitation trust, and that in an unprecedented move, the DMR gave the Gupta-owned mine permission to access Koornfontein’s R280-million rehabilitation fund.

Mining companies are legally required to set aside funds to pay for the cost of environmental rehabilitation, so that tax-payers are not burdened with the cost of the clean-up.

Documents show that on May 4, Tegeta wrote to the DMR requesting permission to access the funds of the Koornfontein Rehabilitation Trust for “mining rehabilitation purposes”.

From the context it is clear that Tegeta’s request was to use the funds for “concurrent” rehabilitation. However, mining legislation allows rehabilitation trust funds to be used for rehabilitation at or after the closure of a mine only.

  • Read the the correspondence and documents here.

“There is no provision in law that allows for a withdrawal of funds, prior to mine closure, from a Rehabilitation Trust Fund set up under the Mineral and Petroleum Resources Development Act (MPRDA) or the National Environmental Management Act (Nema), whether for concurrent rehabilitation or any other purpose.

Funds are to be used for rehabilitation at or after closure only,” explains Melissa Fourie, executive director for the Centre for Environmental Rights (CER).

The May 4 letter, a copy of which appears to have also been copied to Minister Mosebenzi Zwane, cited the closure of the Guptas’ bank accounts as the reason for their urgent and inexplicable need to start rehabilitation work on the mine.

It stated: “The current situation with our group and the big 4 Banks… has led to a critical situation hampering our ability to keep the business and its related jobs afloat. As a result, [Tegeta] hereby requests that the DMR grants it approval to use the above mentioned funds for mining rehabilitation purposes.”

The letter signed by Tegeta CEO Ravindra Nath, committed Tegeta to an audit of the rehabilitation requirement and to “refill the void” within 90 days.

“All the ‘audits’ and ‘reviews’ of the financial provision offered by Tegeta are largely obligations Koornfontein already has under law,” Fourie points out.

“The crux of the request is that Tegeta is requesting DMR to approve an interest-free loan from the Koornfontein Trust Fund to Tegeta, repayable on 90 days’ notice.”

Tegeta warned it had no authority to transact on trust’s behalf

The following day, on May 5, Joel Raphela, the then-deputy director general of mineral regulation, seemingly granted their request “in principle”.

Raphela’s letter contradicted the DMR’s written responses sent to amaBhungane in September, in which spokesperson Ayanda Shezi denied that Tegeta had requested permission, or been granted permission by the DMR, to access Optimum or Koornfontein’s rehabilitation funds.

Shezi refused to comment on the correspondence between Tegeta and Raphela but instead referred amaBhungane to its press statement of October 22 in which it stated that no permission was sought or granted to Tegeta to use rehabilitation funds.

This is not the first time Tegeta tried to access their newly-acquired mine rehabilitation funds.

The State of Capture report refers to a letter sent by the attorneys of the business rescue practitioners of Optimum Coal Mine to Tegeta on April 24, alleging that Tegeta director Ronica Ragavan had previously “attempted to transact with Standard Bank with regards to the [Optimum] environmental trust”.

The letter warned that Ragavan had “no authority to transact on behalf of the trust” as she was not a trustee, and warned that any attempt to do so could be deemed a criminal offence.

Having failed to access the R1.47 billion in the Optimum Mine Rehabilitation Trust, Tegeta seemingly turned its attention to Koornfontein’s R280 million rehabilitation fund.

“Despite the fact that the Koornfontein Trust Fund is under separate control by its trustees, the trustees of that trust seem not to have played a part in the request to the DMR at all, and DMR’s “approval” does not require proof of consent of the trustees,” Fourie notes.

“Any purported “approval” given by the DMR is not lawful, no matter how many “conditions” are attached to such approval.”

The Gupta company has welcomed a judicial inquiry to “clear its name”

It’s not clear whether Tegeta has taken advantage of the DMR’s approval and accessed Koornfontein’s rehabilitation trust: R280 million was transferred under the funds’ name to the Bank of Baroda on May 24, slightly less than the R292 million that the DMR stated was in the fund.

Since being transferred to the Bank of Baroda, the Public Protector’s report noted that “the balance in the… account fluctuated drastically”.

As a result of the funds not being ring-fenced it is not clear whether Koornfontein’s rehabilitation funds have been preserved.

The Public Protector’s report found similar transactions with regards to Optimum’s R1.47 billion rehabilitation fund, and that at one point in September, over R1 billion appeared to be missing from the fund.

Oakbay Investments released a statement from the Bank of Baroda showing that as of October 5, Optimum Mine Rehabilitation Trust’s R1.47 billion had been replaced in various Bank of Baroda accounts.

“The law… makes it clear that such funds are meant to be sacrosanct. If there are not enough funds in the rehabilitation fund [and] if that right holder cannot pay that claim… there is no way to fund rehabilitation – with only the State able to step in,” Fourie said.

Oakbay Resources, the owner of Tegeta, said on Thursday the company welcomed a judicial inquiry to clear its name and that it would not comment further at this time.

  • The story was updated after publication to include a link to emails from the #GuptaLeaks.

The amaBhungane Centre for Investigative Journalism produced this story. Like it? Be an amaB supporter and help us do more. Know more? Send us
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Susan Comrie and Ankit Paliwal, Input Editor at IANS in India

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