The Gupta empire burns a lot of cash. It has to sustain two private jets, houses in at least three countries, a long list of hangers-on pestering the family to buy coal mines and sponsor anniversary golf events, and much else. What happens when it runs out?
The family’s lifestyle is expensive. A single flight from Johannesburg to Dubai in the Guptas’ Bombardier 6000 will cost about R380,000 in fuel and maintenance costs.
Family weddings are multimillion-rand affairs. The cleaning service alone for the Guptas’ R330m Dubai mansion is R30,000 a month.
It now appears that mansion was earmarked for President Jacob Zuma, so should probably be seen as an expense rather than an asset.
The Oberoi Dubai, the five-star hotel of choice for the Guptas to put up everyone from Finance Minister Malusi Gigaba to Transnet chief financial officer Anoj Singh, starts at R4,000 a night.
The presidential suite, preferred by younger Gupta brother Tony, according to leaked e-mails, costs R70,000 a night.
And this is before one even gets to topping up the range of Dubai bank accounts that are alleged to be opened for important people the Guptas want to influence.
It is now becoming clear that the Guptas’ main source of offshore cash is the money they creamed off of Transnet’s purchase of 1,068 locomotives in 2014. The e-mail leaks have revealed that R5.3bn was paid into Dubai accounts by South China Rail, which won a big piece of the tender.
The e-mails show that Gupta associates in Transnet had helped inflate the tender from R39bn to R52bn. But even this massive cash pile does not seem to have lasted more than a couple of years.
When it came to stumping up the R2.15bn of cash they had to pay for Optimum Coal in 2016, the Guptas struggled.
By the April 14 2016 deadline to pay for Optimum, the Guptas were desperate for money.
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Thuli Madonsela’s State of Capture report showed the deposits that were made into the Guptas’ coal-mining company Tegeta in order to fund the Optimum purchase. One of these was R885m from Centaur Mining, a company that had been lent the equivalent of R1.5bn by "an anonymous UAE-based family". This appears to be one of the ways the Guptas got money from Dubai into SA to fund the Optimum purchase.
But they did not have enough. The day before the deadline, Tegeta head Nazeem Howa had met Optimum’s main three banks to plead for a R600m loan. It was after that failed that Eskom hastily arranged a late-night meeting to approve a R660m prepayment for coal from Optimum. That money was paid to Tegeta the very next day, which allowed the company to pay the R2.15bn purchase price a day late.
Atul Gupta has been reported to be one of the richest men in SA because of the value of the one listed entity the Guptas own, Oakbay Resources. But the price its shares trade on the JSE is not realistic.
Only R238 traded per day on average in the past six months. While it listed at R10, that was thanks to a Singaporean associate buying shares at that price before the listing.
According to e-mails, this associate had been lent millions by the Guptas immediately before it bought, which had the effect of forcing the Industrial Development Corporation to convert a loan into a small slice of the business.
It is now trading at R5.80, giving the company a market capitalisation of R4.6bn. Experienced miners who have previously owned the uranium deposit that is the company’s main asset, say it is not worth anything like that.
Accountants seem to agree. In Oakbay Resources’ latest financials, the mine’s value was written down by R1.3bn, leading to a pretax loss of the same amount. Auditors Sizwe-NtsalubaGobodo have also filed a reportable irregularity report with the Independent Regulatory Board for Auditors. This indicates that they found what they believe to be illegal or fraudulent activities by the company’s management.
As it is, the company has needed to borrow to keep going and now owes R411m to Oakbay Investments, the Guptas’ main holding company. The bottom line is that the Guptas have no real assets, outside of those that support their lifestyles.
There may be hundreds of influential people who have put their careers at risk in return for the Guptas’ lucre and becoming part of the patronage machine.
If it suddenly appears to be drying up, the best option for them is to rediscover their zeal for clean public living and unburden themselves of what they know.
The taps are already being closed at the SABC, and Parliament is attempting to do the same at Eskom, which provides the one source of sustainable cash flow to the Guptas in their contracts to buy coal from Tegeta.
The e-mail leaks are surely going to make life a lot more difficult. Without cash, the whole edifice may come crashing down.
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