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The drafting of a provisional indictment against three past and current directors of the Regiments stable of companies is nearly complete, according to the National Prosecuting Authority, meaning one of the state's first attempt to prosecute alleged major beneficiaries of state capture may be a step closer.
In an affidavit filed with the Johannesburg High Court, the head of NPA's investigating directorate, Hermione Cronje, argues that the case against Regiments over alleged fraudulent advisory services for Transnet has been prioritised over others from the state capture era to "prevent dissipation of significant liquid assets".
"The NDPP's case is that the Regiments companies corruptly and fraudulently secured their appointment as advisors, and received remuneration which was inflated,and to which they were not entitled," states the affidavit.
The defendants deny any wrongdoing.
Cronje added that the state has every intention to prosecute Gupta-linked entities and their directors for their involvement in suspect deals at the state-owned freight rail and port operator.
One of the most pressing matters, according to Cronje, relates to the procurement of 1 064 locomotives by Transnet in 2014, which was also investigated at the ongoing state capture inquiry due to its major cost overruns and allegations of corruption. The cost of the contracts for the locomotives, which were meant to upgrade Transnet's ageing fleet, escalated from R38.6 billion to around R54.5 billion.
Transnet's chairperson, Popo Molefe, testified at inquiry in May 2019 that Transnet was in many ways ground zero for state capture. "[Corruption] has very long claws and it has very wide tentacles. It is just spanning the entire landscape of our business," he told the inquiry in May 2019.
Freeze Assets
Cronje's affidavit supports an application by the National Director of Public Prosecutions, Advocate Shamila Batohi, for a restraint order on assets owned by Eric Wood, Niven Pillay and Litha Nyhonyha, as well as Regiments Capital, Regiments Fund Managers and Regiments Securities.
An interim restraint order to the value of R1.1 billion was granted against the defendants last year. The NDPP now wants this raised to R1.68 billion.
A restraint order allows for the freezing of property or assets of a defendant, which may be necessary to meet a confiscation order following a successful prosecution, according to the Prevention of Organised Crime Act.
Regiments has in the past denied any wrongdoing in relation to Transnet. "We have at all times delivered on our mandates and are not aware of anyreasonable complaint about the quality of service provided by Regiments," the company told amaBhungane in August 2018.
In her affidavit, Cronje says the state is treating the matter with urgency, this amid concerns that the NPA has been delayed in its pursuit of state capture prosecutions.
Transnet looting a priority
Cronje said that that after she was appointed investigating director in May 2019, she received status reports on a number of "high profile and complex corruption" matters.
"The investigation at that stage did not appear to me to be sufficiently focused on addressing those most responsible for the large-scale looting from Transnet.
"Moreover, the personnel assigned to investigate the matter were evidently overwhelmed by the scale and complexity of the investigation," she said.
Cronje then authorised an investigation into corruption at the state-owned entity in July 2019.
"A key focus of the investigation is the critical role played by the Regiments companies and their directors in facilitating the extraction of value from Transnet through the advisory services contract.
"The urgency with which this application had to be brought in order to prevent dissipation of significant liquid assets, has resulted in this case being prioritised over others," Cronje said.
This is not the first time that companies in the Regiments stable have been involved in court cases over alleged corruption.
Regiments Capital reached a settlement agreement with a Transnet pension fund after the fund sought to recover fees from Regiments which it irregularly earned. The agreement is valued at over R530 million. In addition, the Fund also purchased 810 228 ordinary shares of Capitec Holdings from Regiments, which resulted in the Fund receiving a benefit in excess of R150 million, Fin24 previously reported.
According to the Cronje's affidavit, Regiments also reached a separate settlement of R180 million with Transnet. This payment is due on either before or on October 2, 2020.
