Zondo at your Fingertips
STATE capture amounted to treason: not only did it involve massive theft of national resources, but the deliberate subversion of the South African constitution and the rule of law. We knew a great deal about it from press reports building up to the fortuitous Gupta Leaks of 2015, but it took Judge Raymond Zondo’s commission of inquiry to add detail and provide a stamp of official authenticity. The commission was an extraordinary achievement featuring transparency, openness and respect for civil society, all in short supply in South Africa. And Zondo’s findings are now essential to an understanding of post-liberation South Africa.
His commission sat for over four years and heard from 300 witnesses. The transcript exceeds 75 000 pages, implicating 1 438 individuals and companies. The digitised evidence amounts to a petabyte of data; and the published findings appeared in 19 volumes covering 4 750 pages. Paul Holden, of arms deal fame, an expert on tracing dodgy money and a key witness, reckons that only ‘a handful of professionals and maniacs’ are going to read every volume. So, he has helpfully whittled them down to about 500 pages and imposed upon his contextualised, condensed account an order absent from the commission’s ‘scattergun’ approach to publication. His eight parts cover state institutions, state-owned enterprises (SOEs), Bosasa, the Free State, what Holden terms ‘flashpoints’ (such as the Waterkloof wedding party landing in 2013 and the closure of the Guptas’ bank accounts), specific individuals, the ANC, and money flows.
What Zondo documents is organised crime summed up in that resonant word racketeering; in other words, a conspiracy between businesspeople (the Guptas) and politicians and public servants (the Zumas and many others) to defraud the nation. This was more than a ‘series of hit-and-run con jobs’; a considered project to undermine democracy for economic gain, what some South Africans cynically applaud as radical economic transformation. The Zondo Commission is both record and very loud alarm.
The key to the Gupta/Zuma (Zupta) Enterprise was procurement, but full looting potential required subversion of the institutions that guarded the comprehensive legislation protecting state financial dealings. The means employed were outrageous and depended on collusion from the very top – Number One, President Jacob Zuma – although there were many local number ones as well. National Treasury had already thwarted the illegal nuclear energy deal with Russia and a dodgy arrangement to lease Airbus planes, so the Guptas set about its capture. Nhlanhla Nene was dismissed, paving the way for weekend special and Zupta deployee Des van Rooyen. The markets and a few sane ANC voices ensured that he lasted only four days, but it was a close call that could have seen national disaster.
Unfortunately, it was a rare reprieve and the Revenue Service (SARS) was comprehensively captured. A once world-class department was gutted in order to enable criminals working within the illicit economy. Tom Moyane and Bain oversaw a total collapse of internal governance and integrity. The State Security Agency (SSA), already mired in faction fights, suffered a similar fate and used ‘dodgy dossiers and nonsense reports’ to drive fraudulent operations. Hollowing out key state agencies was the Zupta strategy. Holden points out that the Free State was a laboratory for the Guptas where they first practised the arrogance, threats and bribes that created the Estina/Vrede dairy farm and asbestos scandals; and the complex money laundering that benefited both them and ANC politicians. Estina was simply a front and a channel for looting. Locals who protested were threatened and intimidated.
The chapters on SOEs, which Holden describes as the ‘meat and potatoes’ of state capture, can be read as a series of horror stories. Many of the general details are well-known and tend to be repeated. So, it is instructive to break down the tactics.
Getting rid of honest and productive employees was a start: respect for the rule of law and correct procedure proved fatal to careers. This was at its most devious at SARS where false dossiers and fabricated accusations (the famous rogue unit) were given credence by the gutter end of the national press – the Sunday Times. The result was a culture of bullying and fear that was repeated elsewhere at South African Airways (SAA) and Eskom. The latter ended up in December 2014 with a board comprising a ‘horror show of Gupta goons and puppets’. At Transnet, the site of 72% of Zupta looting, methods were similarly outrageous: Siyabonga Gama, kicked out on three dismissible charges, was simply reinstated and a Gupta dream team put in place. The same was to happen at Eskom. The behaviour of certain ministers and their Saxonwold visiting habits earned them the tag ‘Gupta minister’: Lynne Brown, Malusi Gigaba and Mosebenzi Zwane are excellent examples. And always there was the ubiquitous Duduzane Zuma acting on behalf of his father.
With the right, corruptible people installed, the looting of SOEs began assisted by a collapse of corporate governance standards and concentration of decision-making power over tenders. Holden notes ‘extraordinarily manipulated contracts’ embodying massive kickbacks and nonsensical, grossly inflated pricing. The most egregious example was the purchase of locomotives by Transnet. Spurious confinement, or elimination of competition, assisted corruption. And in close attendance were the facilitators, consultants, advisers and shell companies siphoning off millions for nothing. A Trillian invoice to Eskom for R30 million came from an office with just two people. Holden describes a ‘procedural horror show’ and an ‘orgy of corruption’. Zupta enablers wielded extraordinary power redolent of gangsterism, often referring to Number One.
Two of the most notorious Zupta appointees were Brian Molefe and Anoj Singh at Eskom. The Optimum coal mine purchase from Glencore by Tegeta was based on collusion, misrepresentation and fabrication. To assist the Zuptas, Eskom paid nearly R660 million of taxpayers’ money for unnecessary coal and deliberately subverted the supply chain system. Fraud extended to Tegeta’s delivery of sub-standard coal from Brakfontein based on the falsification of tests. Corruption was often covered up by post-facto lying.
Dudu Myeni at SAA behaved so outrageously – ‘full on nuts’ in Holden’s opinion – that she was eventually declared a delinquent director, but not before she had served the Zupta cause through five years of dysfunction and corruption, ‘every regulation in the book being violated’. Debt management was assigned to BNP Capital, which turned out to lack the necessary licence. (Similarly, at Alexkor a contractor had no diamond licence.) The 30% set-aside rule was misapplied to channel funds inappropriately and subvert existing contracts. As board chair Myeni interfered in operational matters. She reputedly smeared staff she did not like by concocting false whistleblower reports from internet cafes.
In order to legitimise their behaviour, the Zuptas established a media empire with a newspaper, insultingly named New Age, and a TV station ANN7. Zuma took an operational interest in the latter that amounted to an abuse of his position. And there is evidence that the hold over Home Affairs meant that the visa system was abused. A series of business breakfasts held at the SABC – ‘execrable and unctuous interviews’ with ANC politicians ‒ was sponsored by state agencies that gained nothing in return. The extraction of 100 hours of untraceable archival footage, part of the national heritage, from the SABC at minimal cost added another dimension to looting.
New Age was never audited but the Guptas demanded from Themba Maseko, director-general of the Government Communication and Information Service (GCIS), access to all government advertising. When Maseko explained that budgets were devolved, he was arrogantly told to change the system. Who was running the government? Maseko lost his job to Mzwanele Manyi, the epitome of the Zupta acolyte.
When upright people like Popo Molefe, chair of the Passenger Rail Agency (PRASA) board from 2014 to 2017, managed to kick down the state capture door and challenge corruption they were smeared and vilified. Yet Lucky Montana’s stint as PRASA’s CEO was infamous for purchase of unusable locomotives (they were too tall) and payments to yet another dodgy outfit, Swifambo. When, in 2015 and 2016, banks exercised their legal duty faced by evidence of suspicious activity and refused to do any further business with the Guptas they were met by threats and insults from the ANC and government.
The Watson family’s Bosasa was a tender machine using fraud and illegality as a business model. It was the private sector corruption flagship, its history reading like a mafia story, complete with godfather Gavin. Its operations were almost comically old-fashioned: money laundering through liquor stores, walk-in vaults stacked with cash and a little black book. Bosasa made mega profits from government catering and security deals based on contracts (and their renewal) authored by itself. The evasion of justice was enabled by suborning NPA officials (Nomgcobo Jiba and Lawrence Mrwebi) and parliamentarians (Cedric Frolick and Vincent Smith), with a few parties thrown for Number One.
Reading these accounts, state capture seems too tame a term: gangsterism feels more appropriate. And none of it could have happened without collusion. PwC was SAA’s auditor, but when the Auditor-General’s office put in its own team it found that 121 of 140 contracts were irregular or non-compliant, totalling R6.6 billion. Zondo laconically described this as ‘baffling’ but other less polite descriptions would equally apply. Bain and McKinsey are other transnational names that deserve infamy. The Zupta Enterprise concocted a system of money laundering that resembles an international series of washing machines, many of them located in Hong Kong. The machines, which overlapped with those that involved organised violent crime, were in turn part of a carousel ending back in South Africa. Dirty money was repatriated to create yet more loot (the Optimum coal deal was partly funded in this way). The banks cannot be absolved, although whether this was due to collusion, lack of diligence or systemic failure is arguable.
Above all, state capture was a process that can be traced back to the arms deal of the 1990s and some of the same individuals were involved. It was a deliberate political project, which is why a year after completion the Zondo Commission has seen no significant consequences. And South Africa was in fact captured before the arms deal given the ANC’s policy of cadre deployment, a classic Leninist approach to blend party and state seamlessly. Cyril Ramaphosa’s claim that the deployment committee had no minutes for years, although that fits its unlawfulness and unconstitutionality, suggests that information was illegally withheld from the committee.
There is scant indication that Zondo’s recommendations will ever be acted upon. The reason for this is simple: if the commission’s findings were taken to their logical conclusion the ANC would be destroyed. As a liberation movement wedded to antiquated rhetoric and living in a distant past, the ANC values survival and basic unity far beyond the needs of the nation. Its parliamentarians are loyal deployees without conscience or memory of their oath of office. And to take Zondo’s recommendations further to dismantle the Leninist state would require expertise and courage that is at a premium in the public service, especially given the level of political violence now commonplace.
Holden put the monetary value of Gupta corruption at a minimum of R15.5 billion. To this must be added the damage done by institutional hollowing out. This was the deliberate choice of the so-called ruling party. The methods included disregard for the rule of law and standards of corporate governance; theft and fraud; lying and fabrication; bullying and intimidation; and smearing and vilification of honest and decent people many of them hounded out of their jobs. This hollowing out of civic morality was perhaps the most reprehensible, and dangerous, outcome of all.
South Africa remains captured, the results seen everywhere even in the most mundane of contexts.
Book review by Christopher Merrett, reproduced from his web page, From the Thornveld