Politics

Days of Zondo: State Capture and corruption are the result of unleashing the worst of human instincts

Current Public Enterprises Minister Pravin Gordhan is testifying before the Zondo Commission of Inquiry into State Capture. This is an extract of his statement which deals with the first part of his testimony which he delivered on Monday morning.

This statement is submitted to the Judicial Commission of Inquiry (“commission”) in terms of Rule 6.2 of the Rules of the Commission. It is prepared at the request of the commission’s legal team (as defined in Rule 1.4), following an initial meeting held on 13 August 2018 and subsequent engagements between my legal representative and the commission’s legal team.

In order to assist the commission in its current proceedings, this statement addresses primarily the Commission’s Terms of Reference 1.1 to 1.3. Specifically, this statement sets out the circumstances surrounding my appointment as Minister of Finance on 14 December 2015 and my removal, announced in the early hours of 31 March 2017, by former President Jacob Zuma (“former President Zuma” or “Mr Zuma”). Further events and issues that may be relevant to both the appointment and dismissal are also set out below. The details of each of these events may require further investigation by the commission and, I believe, should be the subject of further evidence by other witnesses before the commission.

This account is based on my recollection, as well as contemporaneous correspondence and media reports, and the recollections of officials, primarily in the National Treasury, which refreshed my memory of some of these events. Relevant documents referred to below will be provided together with this statement.

Political context to statement

I am a life-long activist and member of the African National Congress (“ANC”).

I believe in the principles of the Freedom Charter and in our Constitution. I am committed to contributing to the achievement of constitutional democracy and the establishment of a democratic government guided by the preamble of the Freedom Charter, that: “South Africa belongs to all who live in it, black and white, and that no government can justly claim authority unless it is based on the will of all the people.”

The Preamble of our Constitution commits us to uplift the poor, as do the objectives of the ANC – to eliminate inequalities, promote economic development for the benefit of all and to create a society in which social justice and economic emancipation occur within a far-reaching transformation of our society.

This transformation is multi-dimensional: political, institutional, social, economic and cultural. But transformation and transitions also can unleash the forces of greed, corruption and new means of exploitation.

So participation in government as an ANC cadre is not just a technical or technocratic role, but one aimed at achieving the vision and goals of our leaders, such as Nelson Mandela, Walter Sisulu, Lillian Ngoyi, Bram Fischer and others.

In contrast, State Capture and corruption are consequences of the unleashing of the worst human instincts – self-enrichment, neglect of the higher mission, placing one’s self-interest before the community’s interests.

Reflecting on the period 2009 to 2017 now, it would appear that I was witness to events, some of which are set out below, and it seems an unwitting member of an Executive in the earlier part of this period, which was misled, lied to, manipulated and abused in order to:

  • Benefit a few families and individuals;

  • Release the worst forms of recklessness and corruption;

  • Rob ordinary people of schools, clinics, education;

  • Abuse and decimate key institutions of our democracy: including SARS, the Hawks, NPA, SOEs like Eskom, Denel, Transnet etc.; and

  • Damage the economy, increasing joblessness, forsaking the youth, and increasing the marginalisation of women.

State Capture became a sophisticated scheme or racket that:

    • Advanced false narratives, including racist pejoratives;

    • Used external agencies, like Bell Pottinger, and the services of professional advisers, including management consulting firms, auditors and lawyers, to entrench itself;

    • Marginalised and dismissed honest public servants and replaced them with compromised or incompetent individuals; and

    • Allowed a climate of impunity in respect of crime and corruption.

The ANC at its most recent elective conference in December 2017 noted and resolved as follows:

ANC credibility and integrity: dealing with corruption

Noting:

An increase in corruption, factionalism, dishonesty, and other negative practices that seriously threaten the goals and support of the ANC.

That these practices contradict and damage our mission to serve the people and use the country’s resources to achieve development and transformation.

That corruption robs our people of billions that could be used for their benefit.

That the lack of integrity perceived by the public, has seriously damaged the ANC image, the people’s trust in the ANC, our ability to occupy the moral high ground, and our position as leader of society.

That current leadership structures seem helpless to arrest these practices, either because they lack the means or the will, or are themselves held hostage by them.

At times we do things that are not according to ANC or government policy, or not legal or constitutional, and wait for courts to correct our actions.

Our association with, and the closeness of our leaders to, business people facing allegations of corruption.

That the ANC is endangered to the point of losing credibility in society and power in government.

That our leadership election processes are becoming corrupted by vote buying and gate keeping

That the state investigative and prosecutorial authorities appear to be weakened and affected by factional battles, and unable to perform their functions effectively

Resolves

That the 2015 NGC resolutions plus other existing and new measures are implemented urgently by the NEC and PECs to:

  • Strengthen our understanding of our values, ethics and morality and the demands that the people, the constitution and the rule of laws place on us as the guardians of the state, and its resources

  • Demand that every cadre accused of, or reported to be involved in, corrupt practices accounts to the Integrity Committee immediately or faces DC processes. (Powers of IC under constitutional changes.)

  • Summarily suspend people who fail to give an acceptable explanation or to voluntarily step down, while they face disciplinary, investigative or prosecutorial procedures.

  • We publicly disassociate ourselves from anyone, whether business donor, supporter or member, accused of corruption or reported to be involved in corruption

  • All ANC members and structures should cooperate with the law-enforcement agencies to criminally prosecute anyone guilty of corruption

  • The ANC should respect the Constitution of the country and the rule of law and ensure that we get the best possible legal advice in government to ensure our compliance wherever possible, rather than waiting to defend those who stray.

  • The ANC deployees to Cabinet, especially Finance, Police and Justice, should strengthen the state capacity to successfully investigate and prosecute corruption and account for any failure to do so

  • Secretaries at all levels will be held accountable for any failure to take action or refer matters of corruption or other negative conduct (in terms of ANC code of conduct) to the relevant structures.

  • Within the ANC nomination and election process: Ban all slates and enforce the ANC code of conduct and disciplinary procedures. Investigate and prosecute all cases of vote or support buying, or membership or branch gatekeeping.

  • Implement the NEC resolution on State Capture, including the expeditious establishment of a Judicial Commission of Enquiry.”

Congruent with these resolutions, and with the dictates of my conscience, I provide this statement to the commission in the hope that it assists the commission in its important work to uncover the truth of State Capture, and to ensure that it can never occur again.

I must emphasise that my knowledge and my understanding of State Capture – like that of the rest of the country – evolved over time. What I know now to have been significant events did not appear to be so at the time. The significance and the inter-relationship of such events were revealed progressively and often only in hindsight. Repeated changes to Cabinet, to the Boards of State-Owned Companies, and in the leadership of key institutions and organs of state, often without rational explanation, were done to take control of such institutions. This would be followed by the plunder of resources within those institutions, without the risk of prosecution.

It is in this context that the events I recount, between 2009 and 2017, should be viewed. Further, I hope to assist the commission in some way by “connecting the dots” represented by:

    • Executive appointments and dismissals;

    • Persecution and campaigns of harassment and intimidation;

    • Major public procurement projects; and

    • Commandeering and neutralising key state law enforcement agencies.

A useful conceptual framework for understanding events and the phenomenon of State Capture has been developed by the group of academics who published the Betrayal of Promise report and the recent book, Shadow State: The politics of State Capture. It envisages various groupings that perform different roles in State Capture and patronage networks. Briefly, as explained by these academics (see p 57 of the Betrayal of Promise report), it comprises of:

    • Controllers – strongmen who secure access to and maintain control over resources. They are the “patrons of resources (eg Zuma and the Guptas), sit at the apex and are. . . directly responsible for predation and exploitation”;

    • Elites – who are in networks that can attract resources with controllers, and who establish and maintain patronage networks that facilitate the distribution of benefits;

    • Brokers – who have access to resources that can facilitate the trade of resources;

    • Mobility controllers – who have the ability to control the movement of and access to resources, working closely with brokers; and

    • Dealers – who are responsible for managing and hiding financial transactions and laundering money.

This analytical framework is useful to keep in mind when evaluating the evidence before the commission.

Similarly, the South African Council of Churches, released its Unburdening report in May 2017 which documents the accounts of corruption and State Capture from members and whistle-blowers in their different congregations.

I hope that this statement will assist in exposing some elements of State Capture and of the syndicates and sub-groupings that both engineered this sad period in our history, and benefited enormously at the expense of the well-being of millions of poor, unemployed and underprivileged South Africans.

National Treasury is placed at the centre of the state by our Constitution and by the applicable legal framework that regulates the management of public finances, state procurement, revenue collection, tax administration, protection of the financial and banking system, and forensic analysis and input into decision-making with significant financial and fiscal consequences. For this reason, I believe that the capture of National Treasury was an essential objective of State Capture, along with the weakening of law enforcement and the capture of State Owned Enterprises.

Several key individuals within National Treasury leadership over the past decade displayed admirable determination and commitment to following the law. National Treasury was, however, placed under enormous pressure and was targeted in a vicious, personalised and relentless campaign that played out in the courts, the criminal justice system, through illegitimate intelligence reports, on social media and in some of the media.

The resolve and professionalism displayed by National Treasury officials during a difficult period is to be commended. Their commitment to follow the Constitution, comply fully with the applicable legal and regulatory frameworks, implement sound and sustainable policies and pursue the national interest ensured that there was at least some resistance to the State Capture project.

In my six-and-a-half years as Minister of Finance, I worked with the National Treasury, other institutions and colleagues towards realising the vision of the Constitution, recognising that South Africa needs transformation that opens a path to inclusive economic growth and development. Growth without transformation would only reinforce the inequitable patterns of wealth inherited from the past. Transformation without economic growth would be narrow and unsustainable.

Government’s objective is not merely to transfer ownership of assets or opportunities to contract with the state to a small group of connected individuals: it is to change the structure of the economy. Broad-based transformation should promote growth, mobilise investment, create jobs and empower citizens. It must create new resources to support social change, including assets and livelihoods for the majority, and strengthen South Africa’s constitutional foundations.

This is the vision that was attacked by State Capture, including by those at the highest levels of the executive. DM

Pravin Gordhan's testimony is continuing.

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