The Gupta’s come to Lesotho

The Gupta brothers – Ajay, Atul and Rajesh – were already known in South Africa for their audacious attempts to get control of public enterprises and their suspiciously close friendship and influence over President Jacob Zuma and his family. So when in August 2014 Lesotho Prime Minister Tom Thabane appointed Atul Gupta as an ‘economic investment envoy’ and granted Atul, his associate Salim Essa and a third Gupta associate diplomatic passports, the opposition were enraged and accused Thabane of not following protocol.

When the #GuptaLeaks emails emerged in 2017, there was no way The Gupta brothers – Ajay, Atul and Rajesh – were already known in South Africa for their audacious attempts to get control of public enterprises and their suspiciously close friendship and influence over President Jacob Zuma and his family. So when in August 2014 Lesotho Prime Minister Tom Thabane appointed Atul Gupta as an ‘economic investment envoy’ and granted Atul, his associate Salim Essa and a third Gupta associate diplomatic passports, the opposition were enraged and accused Thabane of not following protocol. When the #GuptaLeaks emails emerged in 2017, there was no way Lesotho could not be implicated. The MNN Centre for Investigative Journalism (MNNCIJ) is an independent, donor-funded, non-profit company established in March 2016. It is an initiative by four seasoned Basotho journalists, Billy Ntaote, Sechaba Mokhethi, Keiso Mohloboli and myself as editor-in-chief. Combined, we have over 35 years working for various national newspapers including Public Eye, Lesotho Times and Sunday Express. We forged a formal working relationship with South Africa’s amaBhungane Centre for Investigative Journalism. During 2017, MNNCIJ communicated with amaBhungane about #GuptaLeaks, but it was only when Lekhetho and Ntaote visited Botswana’s INK Centre for Investigative Journalism in September 2017 and met amaBhungane’s Susan Comrie that the material could be checked for Lesotho references. Two areas came up: the Lesotho Highlands Water Project and the country’s mining sector. Lekhetho, who has vast experience writing about mines in Lesotho, returned to Maseru to dig for more information, while Susan continued to scour the emails. They created an online system to share information.

What emerged was how Prime Minister Thomas Thabane’s government had signed away a diamond mine to a company linked to the Guptas on the eve of the highly contested February 2015 elections. They summarily withdrew the mineral licence of a Canadian company and illegally offered it to the Tequesta Group, whose address was a small flat on the 15th floor of the Hong Kong’s Hillier Commercial Building, surrounded by nail salons and massage parlours. Records from the Hong Kong business registry showed that at the time the sole director was Salim Essa, business partner of the Guptas. At the time Tequesta was little more than a letterbox company with no presence in Lesotho or track record in mining. The #GuptaLeaks showed that the company’s primary business was acting as a conduit for billions of rand in highly questionable sales commissions which flowed from a Chinese rail company to the Gupta family, Essa and the family of President Jacob Zuma. Our investigation showed how Thabane stood to benefit from the deal. The prime minister’s son, Potlako Thabane, told us that Tequesta had approached him to be part of a diamond mining project, although he said he could not remember the name of the mine. Multiple sources, including the younger Thabane, also confirmed that the Guptas also offered to provide funding to the embattled prime minister’s 2014/15 re-election campaign. That the Guptas were interested in the outcome of the election is evident from the #GuptaLeaks. A week before Khasu’s letter arrived, younger brother Tony Gupta commissioned a detailed analysis of each political party’s chances in the looming February 2015 election. The deal appears to have fallen through, but after the story was published the Directorate on Corruption and Economic Offences, the country’s anticorruption body, opened an investigation into Thabane and his son, Potlako.

How family hijacked (and then lost) a Lesotho diamond mine
MNNCIJ, 1 December 2017

On the eve of the highly contested February 2015 elections, Prime Minister Thomas Thabane’s government signed away a diamond mine to a company linked to the Guptas. On 23 October 2014, two identical letters landed on Mining Minister Tlali Khasu’s desk. Khasu was then also deputy leader of All Basotho Convention (ABC) – a political party Thabane leads. Both letters carried the official letterhead of the Ministry of Mining. The letters related to the potentially lucrative but stalled Mothae Diamond Mine. The official who signed both letters on Khasu’s behalf assured the readers that ‘I remain, Yours Sincerely, Tlali Khasu, honourable minister – mining’. The difference was that one brought bad news; the other a lucrative opportunity. The two letters appear to have been the first step of an audacious plan orchestrated by the Guptas and their business partner Salim Essa to seize Mothae with the help of Lesotho’s political elite. Khasu’s first letter was addressed to the local subsidiary of Lucara Diamonds, a Canadian mining company that held the licence to mine at Mothae, just 5 kilometres away from Lesotho’s famous Letšeng mine. Exploration had confirmed that the mine was ‘diamondiferous’, but despite Lucara’s $38 million (R519 million) investment since 2009, the company had failed to develop a viable commercial plan. ‘It has come to my attention that the mine stopped operations in 2012,’ the minister’s letter stated. ‘Subject to the provisions of the Mines and Minerals Act … I intend to cancel the said mineral concession.’ The second letter, entitled ‘Offer of a mining lease at Mothae Mine in Lesotho’, was directed to a small flat on the 15th floor of the Hong Kong’s Hillier Commercial Building, surrounded by nail salons and massage parlours. ‘I am pleased to inform you that the Government of Lesotho is in the process of re-acquiring the mining lease of the abovementioned mine … the mine will be on offer to you as soon as the Government re-acquires it,’ it stated. This second letter was addressed to Tequesta Group, whose humble location hid the company’s powerful backers – records from the Hong Kong business registry show that at the time the sole director was Salim Essa, the charismatic business partner of the Guptas.

with no presence in Lesotho or track record in mining. The #GuptaLeaks showed that the company’s primary business was acting as a conduit for billions of rands in highly questionable sales commissions which flowed from a Chinese rail company to the Gupta family, Essa and even the family of president Jacob Zuma. Just two months earlier, in August 2014, Thabane had appointed Atul Gupta as a special advisor and had granted him, Essa and a third Gupta associate diplomatic passports. When confronted he reportedly told journalists that Zuma had recommended the Guptas … Thabane was in a precarious political position. In June 2014, he had suspended parliament in order to prevent a vote of no confidence, and in August had been forced to flee the country to avoid an attempted coup. But by October 2014, Thabane was back, thanks to the intervention of the South African Development Community led by South Africa’s deputy president Cyril Ramaphosa, but had been forced to call a snap election. In such a fraught situation, why would Thabane and his mines’ minister – besieged by political rivals – take the risk of offering a lucrative diamond mine to the controversial Guptas? Investigations by MNN Centre for Investigative Journalism (MNNCIJ) and amaBhungane showed that Thabane stood to benefit from the deal. The prime minister’s son, Potlako Thabane, told us (MNNCIJ) late last year (2017) that Tequesta approached him to be part of a diamond mining project, although he said he could not remember the name of the mine. ‘I’m a businessman and a politician as well – people come to me with proposals,’ he said. ‘If memory serves me right they tried to register a local company but that never really took off … I think we wanted to be partners, but it never happened.’ Multiple sources, including the younger Thabane, also confirmed that the Guptas also offered to provide funding to the embattled prime minister’s re-election campaign.

‘We wanted (the Guptas) to, we made arrangements for them to provide funding. But then they suddenly lost interest. They never provided a cent,’ Potlako Thabane said. Two sources told the story slightly differently. One, a wellplaced source close to Thabane, said that the Guptas had provided some funding for Thabane’s election, but failed to deliver on the full amount promised. Another, a senior government official, said the Guptas provided as much as M10 million (R10 million) to Thabane’s election campaign. Questions sent to the prime minister’s office had not been answered. That the Guptas were interested in the outcome of the election is evident from the #GuptaLeaks. A week before Khasu’s letter arrived, younger brother Tony Gupta commissioned a detailed analysis of each political party’s chances in the looming February 2015 election. The nine-page report, compiled by a data specialist working for the Guptas, provided a minute breakdown of expected voter turnouts, district-by-district voting patterns, and the probability of Thabane’s ABC holding onto power.

Thabane could scrape a narrow victory, according to the analysis, but only if ABC teamed up with its estranged coalition partner, the Lesotho Congress for Democracy (LCD) led by then deputy prime minister Mothetjoa Metsing. In December 2014, two months after Khasu’s letter to Lucara, the Canadian miner announced it would voluntarily relinquish its rights to the Mothae diamond mine. In terms of section 41 of Lesotho’s mining legislation, Lucara would have 12 months to find a buyer for its 70 percent stake in Mothae. If it failed to find a buyer, the rights would revert back to the government. Leaked documents from the ministry of mining indicate that as soon as the shareholder’s agreement was signed, Khasu put his signature on a coveted 10-year mining lease (number 0013/ ML/2015), gifting Mothae diamond mine to Tequesta Group Lesotho. The lease would become effective immediately. ‘You are asking me about things that happened when I was a minister long time ago … I can’t remember anything,’ Khasu told us recently.

There were three problems with what Khasu had just done: Firstly, the Mothae mining right unquestionably still belonged to Canada’s Lucara. Although the company had agreed to relinquish its rights in December 2014, the company still had 11 months to find a buyer before the state could assign the licence to someone else. Secondly, the job of assessing applications for new mining rights is carried out by Lesotho’s mining board. A June 2016 memo from the mining board to the minister makes it clear it was never consulted. And thirdly, a draft of the licence found in the #GuptaLeaks suggest that the deal Tequesta offered would have left the country with little more than diamond dust: a sales tax of between four and eight percent and rental of $87,000 per year, only payable once the company showed a profit.

It is not clear whether this offer was improved before the deal was signed – sources have only been able to locate the first page of the lease signed by Khasu. The official documents that normally accompany a mining lease, spelling out the terms of the agreement, have not been found. When we spoke to Potlako Thabane, we asked him why the Guptas had, in his words ‘suddenly lost interest’ in funding the prime minister’s re-election campaign. His explanation: ‘They wanted a mine. The mine they were targeting they couldn’t get. I think that’s why. After that all communication stopped’ …