The cash-strapped‚ Gupta-owned Oakbay Resources & Energy’s woes have escalated with news that is to be sued by the Industrial Development Corporation (IDC) is suing it following its failure to meet a demand for the payment of R293m by Thursday.

The allegations‚ investigated by the Financial Services Board‚ were that a Singaporean entity funded by the Gupta family bought shares in Oakbay just prior to its listing in order to boost the share price.

IDC divisional executive for transaction support and post-investment Gert Gouws confirmed on Thursday evening that the money had not been paid by the deadline set and that legal action would proceed.

No comment was forthcoming from Oakbay Resources‚ but according to reports it had no cash to pay the claim. In June it announced that its cash supply had dwindled from R225m to R2.7m.

Economic development minister Ebrahim Patel said in a statement that on the basis of legal advice the IDC board had rescinded‚ alternatively cancelling‚ the loan restructuring agreement between itself‚ Oakbay Resources and other entities in the Oakbay group on the grounds of “various misrepresentations and breaches of warranties”.

In terms of this loan restructuring agreement the IDC acquired shares in Oakbay Resources following its listing in late 2014.

The IDC has tendered the return of its shares in Oakbay Resources and demanded repayment of the outstanding capital and interest due to it‚ totalling about R293m. The IDC agreed in 2010 to lend the Oakbay group R250m at a real after-tax internal rate of return of 10%. Oakbay used the money to buy the Shiva Uranium mine.

When Oakbay listed on the JSE in November 2014‚ the IDC’s interest claim‚ which at that stage was about R256m‚ was converted into equity in Oakbay Resources (3.56%) at the listing price of R10 per share less a 10% discount. Oakbay Resources delisted from the JSE earlier in 2017 — when the share price was at about R5.80 — leaving the IDC with shares it could not sell.

The IDC reportedly lost R90m on the delisting.

Earlier in November‚ Bloomberg reported — on the basis of leaked e-mails — that the Guptas had loaned $1-million from bank accounts in Dubai to Unlimited Electronics & Computers (UEC) in Singapore prior to the Oakbay Resources listing.

UEC transferred $928 146 to Oakbay Resources on the basis of a contract entitling UEC to 18.5-million Oakbay shares (2.31%) at R10 a share.

Oakbay employee Ronica Ragavan told UEC director Kamran Gani by e-mail the day before Oakbay listed to instruct brokers to sell 10 000 shares for R10.05 each and another 10 000 shares for R10.08 before December 5.

The 20 000 shares that traded on the Oakbay listing set the share price at R10.08‚ giving the company a market value of more than R8bn. This price determined how much equity would be needed to pay off the IDC loan.

Following the allegations‚ the IDC appointed a legal team led by advocate Geoff Budlender SC to advise it and on the basis of this advice decided to rescind‚ alternatively cancel‚ the restructuring agreement.

Most of the original capital sum of the loan has been repaid. There is R37.5m of the original capital sum outstanding‚ which in terms of the loan restructuring agreement has to be repaid by March 2018. This is included in the claimed amount.

The minister said that information relevant to the alleged share price manipulation had become available through media investigations into allegations of corruption and state capture.

"The media has helped to provide South Africans and our public institutions with information about wrong-doing and we should appreciate that role‚" he said.

"We have to take allegations of fraud very seriously and pursue the recovery of public monies vigorously and using all legally available means to do so. Commercial dishonesty is not a victimless crime. It imposes an enormous cost on the economy‚ redirects resources from creating jobs for unemployed citizens and undermines confidence in governance and in the economy.”