Johannesburg - A high court judge is now to oversee the business rescue proceedings of one of the Gupta-owned companies.
Following an order she made late last month, North Gauteng High Court Judge Sulet Potterill has decided that Tegeta Exploration and Resources, as well as the majority of the Gupta-owned companies under administration, will supply coal to Eskom.
“It is in the public interest that these entities are rescued,” she said.
Judge Potterill said the ongoing litigation between the companies and administrators needed to come to an end - not just for the Oakbay Group, but also for reasons of public interest.
Oakbay Investments had approached the court to appoint substitute business rescue practitioners, saying Tegeta’s business rescue practitioners Louis Klopper and Kurt Knoop were highly conflicted, and not independent.
Ronica Ragavan, acting chief executive of the Oakbay Group, had also unsuccessfully applied to the high court to have Klopper and Knoop removed.
In an effort to end the impasse, Judge Potterill decided that Klopper and Knoop are to provide her with six-weekly reports.
The judge also promised to ensure that the business rescue was conducted in a manner that balances the rights and interests of all the relevant stakeholders.
“The objective facts are that the Oakbay Group cannot be divorced from the Guptas; Oakbay does not trade; and the shareholders have fled this country.
“The court should not divorce itself from the fact that the successful rescuing of this group is indeed in the public interest,” Judge Potterill said.
She rejected Oakbay’s claim that Klopper and Knoop were on a mission to vilify the Guptas, did not like the family, and therefore lacked independence.
She found that Ragavan, in her submissions, did not dispute Klopper and Knoop’s assertion that the directors and shareholders of the eight Gupta companies had utilised funds to the detriment of other creditors, or in preference to other creditors.
In their investigations, Klopper and Knoop had questioned net outflows of over R1billion from Optimum Coal Mine (OCM) to Tegeta, and R2.7bn from Koornfontein Mines, which is also under business rescue, between April 2016 and January last year.
They believe that Ragavan’s explanation that the funds were used to pay the salaries of employees at Gupta-owned companies, if true, was irregular and unlawful, and that it was difficult to understand how R1bn and R2.7bn could constitute salaries for an 18-month period.
It was also maintained that Ragavan had failed to disclose the subordination agreement between Tegeta and OCM, which she had signed as a witness, and in which Tegeta stated that it would not recover any loan from OCM while the latter was under business rescue.
“The inescapable inference is that Ragavan did not want this court to have knowledge that the loan agreement between Tegeta and OCM, which is the crux of the removal application, is subject to a subordination agreement,” the judge said.
Oakbay’s lawyer, Gert van der Merwe, had not responded to requests for comment by the publication deadline on Tuesday.