Atul Gupta outside the Randburg Magistrate's court in Johannesburg, South Africa on 27 September 2010. Photo by Gallo Images/The Times/Puxley Makgatho

The US Treasury sanctions placed on three Gupta brothers and associate, Salim Essa on Thursday, 10 October will not see the return of approximately R6-billion they are alleged to have said they extracted from South Africa, says Bill Browder who is regarded as the architect of the US’s Global Magnitsky law slapped on the patronage family this week.

“All this does is disrupt a sanctioned individual’s ability to do business. It will continue to be the responsibility of the South African government to pursue the Gupta’s through the courts to get any money back,” Bill Browder told the Daily Maverick in an email interview.

“The moment someone is put on the Magnitsky list, they are automatically on something called the US Treasury OFAC (Office of Foreign Assets Control) sanctions list. The moment anyone is put on the OFAC sanctions list, anyone who has any business with the US is automatically prohibited from doing business with that person. If a bank or company does business with a sanctioned person and violates US Treasury sanctions, they are subject to fines and penalties three times the amount of business. For example, if a bank moves $100-million of cash for a sanctioned individual, they could be sanctioned US$300-million by the US government. Since every bank needs to do business in dollars, it doesn’t matter what the location of the bank is, they won’t do business with sanctioned individual and risk those fines. I’m sure the Guptas are getting this same advice from their lawyers as we speak. Anyone on the Magnitsky list can basically kiss their global financial ambitions goodbye,” said Browder.

Will the UK follow suit on Gupta sanctions?

Following the US decision to sanction the Guptas and Essa, the anti-apartheid activist and Labour Party peer Lord Peter Hain wrote to the British Chancellor of the Exchequer, Sajid Javid, asking him to impose sanctions on the family too.

“Following the recent decision by the US government to impose sanctions on South Africa’s Gupta business family and an associate over their role in a massive corruption and money laundering operation linked to the former President Jacob Zuma, which robbed South African taxpayers of over GPB500 million, I am requesting that the British government urgently does exactly the same,” wrote Hain in a letter on Friday 11 October.

US government explains sanctions decision

“Kleptocrats have ruled with impunity and stolen for decades because of individuals like these,” said Sigal P Mandelker, the US Treasury under-secretary for Terrorism and Financial Intelligence who briefed the media on the imposition of sanctions under the Magnitsky law.

On Friday 11 October, the US applied the same sanctions on the man called Al-Cardinal, South Sudan’s Ashraf Seed Ahmed Hussein Ali who is alleged to have diverted hundreds of millions of US dollars meant for the development of South Sudan. He has ties to the US, United Kingdom and the UAE. Sentry co-founder George Clooney who advocates against corruption and war in South Sudan said: “Al-Cardinal has built a corporate empire on the back of predatory business dealings in South Sudan. He now has business operations from Ethiopia to the United States and owns expensive real estate in places like London and Dubai. These international commercial activities mean that governments around the world have the tools to take action and impose meaningful consequences.”

Mandelker said that groups like those run by the Gupta family and by Al-Cardinal have “the business and financial acumen and (use) political bribery to prop up their patrons”.

The Sentry project which investigates, tracks and helps to prosecute kleptocrats and war criminals published a report on Al-Cardinal this week in which it wrote that “Without concerted pressure from the international community, Al-Cardinal will remain a major enabler of corruption and violence for President Salva Kiir’s government.”

Similarly, the Gupta’s were an enabler of corruption for former President Jacob Zuma’s government.

Gupta’s funnelled money to government officials

Mandelker said the Guptas were sanctioned for “Widespread corruption and bribery – they inflated (the cost of) government contracts and misappropriated state assets. (They are implicated in) stealing hundreds of billions in deals.” She said that they funnelled donations to a political party (she did not name the party) and paid government officials. Mandelker said the US did not routinely provide details of its investigations and while there were no government officials sanctioned in South Africa, it often did so in other actions.

“We have found that going after the money men and their companies in both actions can have a real significant impact because it cuts off their ability to access the financial system. It shows there are real serious costs to engaging in that behaviour. They will quickly find they have difficulty working around the world,” said Manndelker.

The National Prosecuting Authority confirmed to Daily Maverick that it had been apprised of the US action and that it had made requests for mutual legal assistance to Canada, Hong Kong, India, Mauritius, the UAE, Republic of China and the USA. The Guptas are known to have interests in each of these countries and they are said to be resident in the UAE emirate of Dubai. This could suggest that the US sanctions are part of a wider action against the family at the epicentre of the story of state capture in South Africa. DM