SA seeks extradition; Gupta’s expected to exploit legal loopholes to delay.
Dubai police arrested the Gupta brothers through Interpol four years after they fled South Africa, but it may well take more time before they are extradited.
New Delhi – In a moment of relief for many South Africans, two of the three fugitives, India-born Gupta brothers–Ajay, Atul, and Rajesh–were arrested by Dubai police on an Interpol notice.
According to a Dubai police statement issued on the 7th of June, Atul and Rajesh have been arrested and are in an undisclosed jail in the UAE. However, little else is known about their current situation.
The Gupta brothers fled their multi-million dollar mansion in Johannesburg’s affluent and exclusive Saxonwold neighborhood in 2018, just days after President Jacob Zuma was forced to demit office. Zuma’s resignation came amid public protests against mounting evidence of corruption, especially cases involving the Gupta brothers.
Zuma has been accused of massive corruption and ‘State Capture’ or allowing systemic political corruption in which private business interests have a stranglehold on a state’s decision-making processes to their own advantage.
Dozens of witnesses at the Raymond Zondo commission, the judicial commission that probed the allegations of state capture against president Zuma, have testified to the illicit power the Gupta brothers yielded.
From offering bribes to ministers, threatening to fire them for not taking their orders, and deciding on cabinet portfolios to taking massive kickbacks and illegally profiteering on all major government tenders and deals, the witnesses have provided evidence and testimony to all these charges.
The Gupta brothers are accused of looting the South African state of over $32 billion during the Zuma presidency years. They had shifted base to Dubai since turning fugitive in 2018 and have stubbornly refused to return to South Africa to face the judicial probe into ‘State Capture’ or honor summons from various courts and investigating agencies.
South African investigative journalists, meanwhile, have unearthed evidence on how the brothers were routing their alleged ill-gotten billions from Dubai to safe havens in central Asia and investing in projects in India illegally through their proxies.
Until recently, the brothers were regular visitors to India, holding a massive family wedding in the ecologically sensitive Himalayan meadows in Auli, Uttarakhand.
The brothers flew in hundreds of guests into the area, breaking environmental laws and court orders with impunity, pitching hundreds of luxury tents to house the guests, and leaving tonnes of garbage in the pristine Himalayan site.
So what led to the arrests?
The arrests of two Gupta brothers happened about four years after they fled South Africa. The process seems to be slow.
But the arrests follow an international collaborative tightening against money laundering and terror finance.
The brothers’ choice of the UAE as a destination to flee with their alleged ill-gotten wealth in 2018 is not difficult to understand.
A 2020 report by the Paris-based Financial Action Task Force (FATF), an inter-governmental watchdog on money laundering and terror financing, has the answers.
In the FATF’s 2020 Mutual Evaluation Report, the UAE was found wanting in ensuring “international cooperation delivers appropriate information, financial intelligence, and evidence and facilitates action against criminals and their assets.”
The report pointed out that the UAE did not demonstrate that “legal persons and arrangements are prevented from misuse for money laundering or terrorist financing, and information is available to competent authorities without impediments.”
The 2020 report also mentioned that the UAE failed to show that money laundering offenses “are investigated and offenders are prosecuted and subject to effective, proportionate and dissuasive sanctions.”
In March this year, the FATF placed the UAE on its gray list, with countries like Pakistan and Turkey seeking faster addressing of their concerns by the middle eastern country.
This has dented the UAE’s image as a favored global destination for international trade, finance, and a pivot of the regional economy.
UAE is eager to get out of the FATF’s grey list in subsequent reviews. Experts say in addition to further FATF scrutiny, countries on the ‘grey’ list risk reputational damage, ratings adjustments, trouble obtaining global finance, and higher transaction costs.
Since 2020, the UAE has taken many steps to address the concerns of the FATF. The signing of the extradition treaty with South Africa in 2021 was part of that.
Some financial crimes experts view the arrests of the two Gupta brothers as an attempt by the UAE government to be seen as cracking down on money laundering and international fugitives accused of financial crimes living in the UAE.
The press statement issued by the Dubai police after the arrest of the Gupta brothers has some indications of this.
“The arrest reflects the continuous efforts of the UAE in combating money laundering crimes through local cooperation among the competent authorities, including the Ministry of Justice, the Dubai public prosecutor, the Executive Office to Combat Money Laundering and Terrorist Financing, and the Financial Intelligence Unit, as well as through vital coordination and collaboration with international counterparts.” the statement read.
US, UK sanctions against the Gupta brothers
But the pressure on governments seen to be aiding the Gupta brothers started building in October 2019, with the US Department of Treasury sanctioning the Guptas and one of their associates, accusing them of large-scale corruption and money laundering.
The sanctions block the brothers and any entity they own from accessing the US financial and banking system.
In a statement, Sigal Mandelker, Treasury Under Secretary for Terrorism and Financial Intelligence, said, “The Gupta family leveraged its political connections to engage in widespread corruption and bribery, capture government contracts, and misappropriate state assets. Treasury’s designation targets the Guptas’ pay-to-play political patronage, which was orchestrated at the expense of the South African people. ”
She added, “The Guptas and Essa have used their influence with prominent politicians and parties to line their pockets with ill-gotten gains. We will continue to exclude from the US financial system those who profit from corruption.”
In April 2021, the brothers’ stand was further weakened with the UK government placing them on a list of 22 people sanctioned for their alleged involvement in some of the world’s most serious corruption cases and blocked them from channeling money through banks in the UK or entering the country.
These sanctions were a significant setback for the Gupta brothers’ plans to invest their money in the West. Their plans to form joint venture companies in India, too, were impacted as they became overnight pariahs post the sanctions.
Sanctions by the US and the UK forced them to stay put in the UAE and invest in entities in Central Asia and elsewhere through proxies.
These sanctions put further pressure on the countries, allowing them to operate freely. Indian tax authorities, too, are reportedly investigating the source of millions of dollars they brought to India to construct a temple to honor their father Shiv Kumar Gupta in their home town Saharanpur in Uttar Pradesh province, among other fund transfers.
How long before the Gupta brothers face South African courts?
South Africa’s nodal Ministry of Justice and Correctional Services has confirmed that discussions between various law enforcement agencies in the UAE and South Africa “on the way forward” have started. It has been reported that an extradition request has been moved legally.
However, experts say it could take months before they are extradited to South Africa. For one, the Guptas’ have three courts of appeal in the UAE before a final judicial decision is taken on their extradition by the UAE.
Also, the laws in the UAE allow them to bring in arguments like the averments against them being ‘politically motivated’ or the prospect of ‘inhuman treatment’ as a defense against their extradition.
The National Prosecuting Authority of South Africa has been tight-lipped about its legal strategy for the extradition of the Gupta brothers from the UAE. It has a challenging task, and South African officials admit it will be a long and difficult road ahead.
It will be critical for the National Prosecuting Authority of South Africa to prepare well and present a water-tight case before the UAE courts.
But the FATF pressure on the UAE and sanctions by the US and western states leave little space for the Guptas to maneuver. They may try to delay their date with the South African courts by a few months, but they will have to face them eventually.