South African prosecutors, acting under organized-crime laws, have placed a preservation order on a Canadian-financed Bombardier jet, warning that they could eventually seize it as the proceeds of crime.
In the latest twist in the saga of the much-disputed US$52-million luxury jet, prosecutors have included it in a lengthy list of assets of the Gupta brothers, the business tycoons at the heart of South Africa’s biggest postapartheid corruption scandal.
The federal government’s export agency, Export Development Canada, is already battling in a South African court to recover the airplane after accusing the Guptas of defaulting on the agency’s US$41-million loan. The agency has alleged that the Guptas deliberately hid the airplane and could have used it for criminal activities.
The latest move by South African prosecutors adds another layer of complexity to the legal battles, potentially creating a second claimant for the airplane.
It means that the plane is now involved in two parallel court disputes: the conflict between the Guptas and EDC over control of the jet, and a separate case in which the Guptas are accused of stealing about US$20-million from a government farm project that was meant to help impoverished farmers. To recover the plane, EDC might need to wait until both cases are completed.
In connection with the farm case, prosecutors have obtained a preservation order on dozens of Gupta assets, including the Bombardier jet, a Rolls-Royce, a Lamborghini, a helicopter, several Mercedes-Benz and Porsche cars and dozens of farms and other properties.
The order prevents the Guptas from selling or disposing of the assets while the court case continues. Authorities raided the lavish Gupta villa in an upscale Johannesburg suburb on Monday to begin marking the luxury cars and enforcing the order.
The Bombardier jet, meanwhile, was flown from Dubai to Johannesburg last Friday and was placed in safekeeping at Lanseria Airport after EDC had threatened to pursue a contempt-of-court finding against the Guptas for defying a court ruling to ground the plane.
Phil Taylor, a spokesman for EDC, said the agency is “working with the relevant authorities to resolve the issues surrounding the asset.” Those authorities include South Africa’s national prosecuting authority, which was named in EDC’s court application to ground the airplane earlier this year.
“It is important to remember that, at this point in time, the authorities have provided us with a preservation order only, and have not seized the aircraft,” Mr. Taylor told The Globe and Mail on Tuesday.
The Gupta brothers − Ajay, Atul and Rajesh − were business partners of family members of former president Jacob Zuma for many years and were alleged to have so much political power that they influenced Mr. Zuma’s decisions on cabinet appointments. They were accused of siphoning off huge sums of money from their insider deals with state-owned enterprises, including South Africa’s electricity monopoly and its freight cargo company. The Guptas and Mr. Zuma have denied the allegations.
In an affidavit released this week in connection with the alleged fraud in the farm project, a senior South African prosecutor cited the EDC dispute with the Guptas over the Bombardier jet. The case demonstrates that the Guptas have a “propensity to unlawfully alienate and dissipate property when faced with lawful legal processes and attempts,” the prosecutor said.
Karen Hamilton, a researcher at the Ottawa-based watchdog group Above Ground, said her group was not surprised that the South African prosecutors have placed a preservation order on the EDC-financed airplane. “The case points to the need for more stringent oversight of EDC by the Canadian government,” she said.
“There was ample evidence the Guptas were a serious corruption risk well before EDC approved them for a loan in 2014 – including the risk that they would use the proceeds of crime in their dealings with EDC,” she said.
Geoffrey York