A tax audit has pried open new details of the money laundering structure used by the crime family to fund the infamous wedding in Sun City with cash from the Estina dairy project. It turns out the wedding was only part of the story.

• SARS has rejected a Gupta company treating the infamous Sun City wedding as a “business expense”.
• As part of a tax audit, SARS also found R105 million in earlier payments via the same company that were allegedly falsely claimed as business expenses.
• The Guptas now face a tax liability of roughly R80 million related to this small part of their local corporate empire.

On 19 August, the South African Revenue Service (SARS) sent two “audit findings” letters to a lawyer representing Linkway Trading, a low-key cog in the Gupta family’s money laundering machinery.
The SARS letters were to inform Linkway that its assessments for income tax and VAT had been massively adjusted for the tax years 2013 to 2016.
SARS alleged that Linkway had effectively underdeclared taxable income by R197.5 million and had reclaimed R24.5 million in VAT it was not eligible for.
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That translates into a tax liability likely in the region of R80 million, excluding interest and penalties.
Linkway’s main claim to fame is being the conduit through which R30 million came into the country from Dubai to pay for the infamous and absurdly lavish Sun City wedding of 2013.
The extravaganza was claimed as a business expense using some creative accounting and the connivance of KMPG audit partner Jacques Wessels, as previously reported by amaBhungane and our #GuptaLeaks partners.
The money was diverted from the Estina dairy project in the Free State before being routed through a Dubai company called Accurate Investments back to Linkway in South Africa.
SARS has now finally taken action against this brazen abuse. The Independent Regulatory Board for Auditors deregistered Wessels last year for his role in the scandal.
Part of SARS’s threatened adjustment to Linkway’s taxable income is that the entirety of the wedding expense will be disallowed as a “business expense” and become taxable.
“It appears that Linkway Trading was merely a conduit or directly and indirectly acting as an agent of Islandsite and the four directors,” SARS notes in one of its letters.
Linkway is a subsidiary of Islandsite Investments 180, the company that also owns the Gupta family’s luxury properties, jet and other assets in South Africa.
The four directors of Islandsite that SARS referred to are two of the Gupta brothers, Rajesh “Tony” and Atul, and their wives, Arti and Chetali.
Beyond Sun City
The infamous wedding is seemingly far from the only use Linkway was put to, the SARS audits reveal.
The company was mostly active in the 2013 and 2014 tax years (1 March 2012 to 28 February 2014). The total amount of cash that moved through its account dwarfed the amount spent on the nuptials.
In the 2013 tax year, the company received deposits of R113.2 million and made payments of R112.6 million, SARS found.
In the 2014 tax year, it received R106.1 million, which includes the money from Dubai for the wedding.
The striking thing about the 2013 year is that almost the entire amount of money that moved through Linkway’s account, R105 million, arrived in a brief 12-day period between 29 June and 10 July 2012.
There is convincing evidence that Linkway lied about what this money was for.
It supposedly consisted of payments made by yet another Gupta company, Confident Concept, for unidentified “goods or services” it was buying from Linkway.
However Linkway was buying the selfsame “goods and services” from Islandsite with a negligible profit margin of 0.33%.
Confident Concept is owned by the four Guptas who own Islandsite.
A set of invoices were produced on the exact same day for both sides of the supposed transactions: i.e. Linkway issued an invoice to Confident Concepts and simultaneously received an invoice from Islandsite. But this was only done some seven months later, in February 2013.
The problem is that Linkway never paid Islandsite anything. The transaction appears to be fictitious.
“Scrutinising of the company bank statements revealed that Linkway Trading (Pty) Ltd had made no payment to lslandsite Investment 180,” SARS noted.
For the taxman this means that the supposed business expense of buying things from Islandsite was “overstated” insofar as it did not exist at all. This R105 million then becomes taxable.
There were also other problems SARS flagged on the taxation front, like the absence of invoices for supposed purchases from Gupta TV channel ANN7.
Given that the same company, Linkway, was the recipient of laundered money mere months later, the R105 million raises an obvious question: why was it moving through a known Gupta money-laundering vehicle in the early days of the family’s state capture adventures?
The dates for the payments into Linkway do not correspond to any of their well-known projects or scandals.
Who pays?
Linkway was given 21 business days to challenge the SARS audit findings, failing which it will be liable for the adjusted tax. That grace period ran out on the 15th of this month and it is unclear whether the company took up the offer.
The process started on 19 November last year, when SARS first asked for information in order to conduct an audit. Linkway cooperated until a further request for information on 17 July. Linkway went quiet, which led to SARS dispatching the letters of findings last month.
It is unclear why the company initially cooperated and then broke off communication. The SARS letters were sent to Linkway attorney Michelle du Preez.
Du Preez confirmed to amaBhungane that she acted for the company, but said she could not answer questions due to taxpayer confidentiality.
If the tax adjustment is confirmed, it remains to be seen how the money might be recovered and not simply add to the billions of rands’ in damage the Guptas wrought on the South African economy.
Linkway is in the process of being deregistered, which means SARS may pursue its directors for the taxes it says are owed.
Even though Rajesh Gupta and other recurrent Gupta executives had previously been directors of Linkway, the only directors during the period covered by the audits were Gupta loyalist Ronica Ragavan and one Kevin Thysse.
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