One of the country’s biggest banks has provided records of a worrying alleged money laundering operation involving various Gupta-linked entities.

Standard Bank picked up on a high volume of large, round-figure transfers of up to R20-million moving in and out of the accounts of a cluster of clients — among them Regiments Capital, the notorious Gupta-linked letterbox company, Homix, and four related entities.

Testifying before the State Capture commission for a second time, the bank’s former group legal counsel Ian Sinton produced a string of bank statements and a spreadsheet showing money flows into those accounts from parastatals including Transnet, Eskom and Denel, going back to 2013 at least.

Large parts of that cash, once in the various Standard Bank accounts, often either immediately or within a day or so, moved back out, among others, to the Gupta-owned Sahara or to settle alleged kickbacks due to Salim Essa and “business consultant” Kuben Moodley.

A bundle of suspicious transaction reports filed to the Financial Intelligence Centre has been handed to the commission for safekeeping pending a formal application before Deputy Chief Justice Raymond Zondo to introduce them in public.

Testifying under subpoena, Sinton said the bank’s analysis of various accounts was triggered by media reports, Absa bank’s decision to terminate its Gupta accounts, and a subsequent investigative report by senior advocate Geoff Budlender into the State Capture links of a then little-known Trillian Capital Partners.

Flagged early on was its client, Regiments Capital, a black advisory firm of choice, he said, to various state-owned entities (SoEs).

When confronted about a series of questionable payments, Regiments said it would investigate and revert.

A meet and greet, a deal and R1-million or so to follow

First, the company asked for a meeting with the bank — this took place around October 2017 — during which Sinton said directors Niven Pillay and Litha Nyhonyha accompanied by the company’s COO, John Rossouw, sought to provide context for the payments.

It went like this: They were approached by Kuben Moodley, a golf buddy who appeared to have magical powers, who told them he could facilitate deals with SoEs in exchange for a small fee of 5%.

But, when they later met Moodley formally for a different deal, they would be introduced to characters now well known in State Capture circles: Gupta kingpin Salim Essa and “McKinsey director” Vikas Sagar.

The meeting ended with Sinton asking that it be put down in writing.

“I basically explained my need to understand the source of the Transnet deposits and the payments to Homix, Chevita and a third company.”

Chevita is seemingly a precursor to Homix, while Moodley’s company, Albatime, allegedly received his 5% cut.

“With regard to payments to the companies, they explained to us that around October 2012, Niven Pillay and Eric Wood had been invited to a meeting in Sandton by Kuben Moodley.”

He would help them to bag government business. This was when they were introduced to Essa and McKinsey’s Sagar, who allegedly told them that McKinsey had worked at Transnet and needed a supplier development partner for 30% of the work.

It was theirs, provided they were willing to pay 30% of their portion of the fees to Essa.

By then, Regiments already had a 5% deal in place with Moodley for his assistance in helping them land public sector contracts, the commission heard.

Sinton said the bank was informed by Regiments that Chevita, and later Homix, were corporate entities that would receive the alleged kickbacks.

Regiments told the bank that it accepted McKinsey’s offer and was then appointed as its supplier development partner for the Transnet work. It turns out Regiments even paid the “introductory share fee” to Essa and Moodley when they pitched for work solo.

But, without their knowledge, Pillay and Nyhonhya told the bank that their one-time partner, Eric Wood, had later allegedly unilaterally pushed Essa’s share of their takings up to 50%, Sinton said.

“I did ask why Regiments agreed to pay a stranger (Essa) whom they had just met.”

This, he said, was explained to him as a fee for having brought them the opportunity to work at Transnet.

Sinton also asked Regiments how the company could afford to give up 50% of its income. The response, he told the commission, was that McKinsey’s rates had been sufficiently padded by more than 400%.

“We were very surprised about the open admission by Regiments,” Sinton testified.

The entire arrangement set off alarm bells and Standard Bank terminated both the Regiments account as well as any then held by the company’s directors.

Sinton confirmed that Homix had held a money market call account with the bank, and that the signatories of the account had provided ID documents and proof of address. Today it is known that the directors of such front companies have vanished without a trace.

Bizarrely, Essa was not a signatory, but the account received large cash transfers from Regiments — in the region of R200-million between April 2014 and December that year.

Sinton testified to bank statements covering that period and highlighted the following transfers by Regiments, among others:

• A R1-million December 2014 transfer to Homix;

• A November transfer to Homix in the amount of R16.5-million;

• R8-million in September.

On 7 August 2014, Transnet paid Regiments R34-million. On the same day, R2-million was transferred to each of the company’s three directors, Pillay, Nyhonyha and Wood.

On August 8 Transnet released another payment of R20-million and, on the same day, Regiments made a R12-million payment to Homix and another R11.1-million three days later.

In total, Regiments paid the company R25-million in August 2014.

Homix also didn’t sit on the cash; the bulk went to another obscure entity called Bapu Trading, Sinton said.

Asked what the bank had made of its analysis of the Homix transfers, Sinton told the commission that the “inference” drawn was that it was “money laundering”.

He detailed further transfers through what were then client accounts, including Cutting Edge Commerce, Medjoule, Global Softech Solutions and Future Tech. An example was a R71-million payment from Eskom to Cutting Edge on 16 May 2016. Cutting Edge, on the same day, transferred payments to Medjoule, Birsaa Projects and Fortime Consultants, all of which have since been shown to be Gupta front companies.

Within days of each other, there were two payments of R10-million each from Cutting Edge to the Gupta-owned Sahara, Sinton said.

Sinton said it appeared the intention of the candid letter was for Regiments to try to persuade the bank that it had had an “innocent” relationship with these parties, that the 35% to 50% payments to Chevita initially and later Homix and Albatime were merely fees due for “introductory share revenue”.

The bank found this explanation implausible and, once it had analysed the various accounts, it opted to fulfil its statutory obligations and terminated the accounts, Sinton said.

The McKinsey factor

Sinton further testified that the bank had asked McKinsey for a meeting, particularly to discuss concerns around its Transnet contracts in view of adverse publicity.

The company said it would investigate and later reverted with a feeble explanation about “a bad mistake”. This was related to McKinsey’s Vikas Sagar having written to Eskom to ask that the power utility pay Trillian directly. By then, Regiments had been shafted as McKinsey’s supplier development partner and Wood, a former director of Regiments, had established Trillian Capital Partners, a boutique financial advisory firm with partner Essa holding a 60% stake.

McKinsey told the bank its investigation — yet to be released in public — had found no wrongdoing, but owned up to the single “bad mistake” having been made by Sagar.

This, the commission’s senior advocate, Vincent Maleka said, was nothing but “commercial camouflage”.

McKinsey at the time consulted Standard Bank. It’s State Capture woes resulted in the premature termination of the contract after the bank opted not to continue with the next phase of the project.

McKinsey released a statement shortly after the Commission adjourned on Tuesday evening.

A McKinsey spokesperson said:

“Mr Sinton’s testimony about McKinsey relies solely on unproven statements previously made by Regiments, in what appears to be part of Regiments’ shifting story to minimise scrutiny of their conduct.

“When allegations regarding McKinsey’s work with state-owned entities first emerged, McKinsey hired two international law firms to conduct an investigation. This investigation, which included more than 115 interviews (including with Vikas Sagar, who is no longer with the firm) and involved the review of more than one million documents, found no evidence to support Regiments’ claim. We found no evidence that McKinsey ever authorised any payments to any third party linked to the Guptas.

“We are committed to co-operating fully with the commission and will in due course submit an affidavit in addition to the extensive documentation we have already shared.

“We have always been clear that we have found no evidence that McKinsey has ever served the Gupta family or their associates and have not found any evidence of our involvement in any corrupt payments. We have also been clear that we stand ready to look at any new information and to assist relevant authorities in getting to the bottom of what happened. We stand by those statements today.

“We commend the commission’s work. It is clear this is a significant inquiry and the way (the) Deputy Chief Justice is conducting proceedings is comprehensive and rigorous.”

The commission resumes on Wednesday with testimony by the business rescue practitioners of Optimum Coal Mine and the former DG of the department of mineral and energy resources, Thibedi Ramontja, who worked under former minister Mosebenzi Zwane. DM