State approved Guptas’ raid on mine rehab fund

It took barely 24 hours for the Department of Mineral Resources to sign off on Tegeta Exploration and Resources’ request to raid a R280m mine rehabilitation fund.

On Wednesday, former public protector Thuli Madonsela issued her State of Capture report, in which she revealed that two mine rehabilitation trusts, worth R1.75bn combined, appeared to have been mismanaged under the control of Tegeta and the Bank of Baroda.

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

However, new documents seen by amaBhungane confirm that Tegeta attempted a brazen raid of the Koornfontein rehabilitation trust and, in an unprecedented move, the department gave the Gupta-owned mine permission to access Koornfontein’s R280m rehabilitation fund.

Mining companies are legally required to set aside funds to pay for the cost of environmental rehabilitation which can only be accessed when the mine closes. 

It is a precaution to prevent tax-payers from being saddled with the cost of the clean-up.


this is not the first time Tegeta tried to access its newly acquired mine rehabilitation funds


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

Koornfontein is a working mine with no apparent urgent need to conduct rehabilitation.

“There is no provision in law that allows for a withdrawal of funds, prior to mine closure, from a rehabilitation trust fund. Funds are to be used for rehabilitation at or after closure only,” explains Melissa Fourie, the attorney for the Centre for Environmental Rights.

The May 4 letter, a copy of which was also sent to Mineral Resources Minister Mosebenzi Zwane, cites the closure of the Guptas’ bank accounts as the reason for their urgent need to start rehabilitation work on the mine.

The letter states: “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 [Department of Mineral Resources] grants it approval to use the above-mentioned funds for mining rehabilitation purposes.”

On May 5, Joel Raphela, the then deputy director-general of mineral regulation, granted the request “in principle”.

Raphela’s letter clearly contradicts the department’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 department to access Optimum or Koornfontein’s rehabilitation funds.

This was not the first time Tegeta tried to access its newly acquired mine rehabilitation funds. 

The State of Capture report refers to a letter sent 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, written by the attorneys of the business rescue practitioners of Optimum Coal Mine, warned that Ragavan had “no authority to transact on behalf of the trust” as she was not a trustee and further cautioned that any attempt to do so could be deemed a criminal offence.

Having failed to access the R1.47bn in the Optimum Mine Rehabilitation Trust, Tegeta seemingly turned its attention to Koornfontein’s R280m 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 [Department of Mineral Resources] at all, and [the Department of Mineral Resources’s] ‘approval’ does not require proof of consent of the trustees,” Fourie notes.


At one point more than R1bn appeared to be missing


It’s not clear whether Tegeta took advantage of the department’s approval and accessed Koornfontein’s rehabilitation trust — R280m was transferred under the fund’s name to the Bank of Baroda on May 24, less than the R292m the department said was in the fund.

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

It is not clear whether Koornfontein’s rehabilitation funds have been preserved. 

The report found similar transactions with regard to Optimum’s R1.47bn rehabilitation fund, with money being constantly moved between accounts. At one point in September, more than R1bn appeared to be missing.

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

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 department referred amaBhungane to its press statement of October 22 in which it stated that no permission was granted to Tegeta to use rehabilitation funds.


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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