Days of Zondo: Gordhan on State Capture: ‘Places the interests of your puppet ahead of your people’
Zuma and the State Capture crew just didn’t get budgeting 101. Like kids in a candy store, they cajoled, nagged and later threw hissy fits to get their way. The thing is, their loot wasn’t going to come cheaply – a R1-trillion nuclear deal that would have crippled South Africa for years to come, an inflated R18-billion with Malaysia’s Petronas, and a plan to hand state-owned intellectual property to the Guptas on a silver platter via Denel, meant someone had to push back.
Of course, these were not a bunch of petulant kids. They included former President Jacob Zuma, MP Ben Martins, a Cabinet minister and the chairman of Denel, Daniel Mantsha.
They and a whole lot of others willingly looked the other way as National Treasury fought a dreadfully lonely battle to push back against reckless efforts to blow taxpayers’ money on highly questionable deals.
At 10:22am on Monday, Public Enterprises Minister Pravin Gordhan took the oath to mark the start of his much-anticipated testimony before the Zondo State Capture inquiry.
Outside, a noisy band of EFF supporters were toyi-toying in protest against the Cabinet minister who is widely regarded as the face of the State Capture clean-up.
Gordhan, who has been in Cabinet since 2009, much of that at the helm of National Treasury, began by sketching a detailed account of how government works, revenue collection, and how spending is prioritised to manage the impact of worldwide economic pressure and dwindling resources.
It was almost tragic that the country’s former finance minister had to start his evidence with a broad explainer of what was essentially government finances 101.
But if the former president and his cohort of State Capture enablers had such a hard time reconciling the basics of budgets, perhaps Gordhan felt the whole country needed to be enlightened.
National Treasury, he explained, is the department responsible for maintaining an important balance between the wants and needs of every other department or state-owned entity against available cash.
But, testifying to the last years of the Zuma administration, Gordhan said Treasury, in its quest to balance the books, instead became a target for those with nefarious intentions or intent on destabilising this vital institution.
He referred to earlier testimony by former deputy finance minister, Mcebisi Jonas, about how the Guptas allegedly offered him a R600-million bribe in exchange for getting rid of Treasury’s top tier of managers – Andrew Donaldson, Lungisa Fuzile, Kenneth Brown and Ismail Momoniat, a move that would have gutted the institution of its institutional wisdom, Gordhan said.
Managing the country’s Budget meant saying no, often, and this did not go down well with some out there, with Treasury seen as being “too big for its boots”, Gordhan said.
Treasury became unpopular as it insisted on spending against a credible economic picture and insisting on due process and boundaries around debt levels.
Gordhan unpacked three controversial deals on day one of his testimony:
The nuclear deal was projected to cost the country in the region of R1-trillion. To put that figure into perspective, Gordhan told the Commission that South Africa’s entire expenditure budget for the year 2011/2012 was around R824-billion plus another R154-billion in borrowings.
“So here was one project that will have been equal to our entire expenditure budget for that entire year. We just didn’t have money for a nuke deal.”
Petronas: In this case, Zuma, with the aid of Ben Martins, sought a government guarantee to enable PetroSA to partner with an Angolan firm to buy the retail assets of the Malaysian company in South Africa. However, they wanted to cast aside an insistence from both National Treasury and the Angolans for an independent due diligence to be done on the R18-billion deal. And, said Gordhan, it later turned out that the asking price was about R4-billion over market value. Treasury eventually signed a conditional guarantee but the deal did not proceed – but not before Gordhan allegedly received a call from Zuma, enquiring about the status of the guarantee.
Then, the dodgy deal in which state-owned arms company, Denel, entered into a joint venture with the Gupta-owned VR Laser to establish a foreign registered company. “They said they wanted to exploit Denel’s intellectual property abroad” – with Gupta kingpin, Salim Essa, firmly ensconced as a director.
Today, there is very little doubt that each of these deals was tainted and would have cost the country greatly, had Treasury bent the rules and rubber-stamped them without putting in place the required checks and balances.
But while they were blocked, the deals are also examples of the co-ordinated machinations that were at play as corruption escalated into State Capture.
“We now know that the Denel Board was captured,” Gordhan said.
The behaviour of the then chairman of the Board justifies the conclusion that there was “serious collaboration” with the Guptas in progress, Gordhan said.
A day after Denel submitted a notification of their plan to National Treasury, Mantsha forwarded the confidential document to the Guptas.
Then, later, after Gordhan’s predecessor, Lynne Brown, provisionally approved the partnership, Mantsha allegedly sent that in principle approval to the Guptas’ email man, Ashu Chawla, who then forwarded it to Nhlanhla Nene (then still finance minister).
The deal was not approved by Nene, who was fired by Zuma weeks later.
The same application landed on the desk of Des van Rooyen, who held the post of finance minister for four days.
Corruption, Gordhan said, has been around for a long time – he referred to references about the impact thereof in his Medium Term Budget Speech as far back as 2009 and 2010.
During those speeches, he told Parliament that government will insist on value for money for the billions it spends and emphasised that this was compromised when contracts were given to people unable to do the job.
This, he said, meant non-delivery of text books, and houses being built with no roofs.
Corruption comes at a price but takes place in pockets that can be investigated, whereas State Capture is a much more organised form of corruption, one that crept up on South Africans and some in government, who battled to see the extent of it through the haze until they started putting the pieces of the puzzle together in 2014.
And that was a mere part of it as many of the unwitting parties in government only came to fully appreciate the scale of State Capture when the #GuptaLeaks surfaced in 2017, Gordhan told the Commission.
Before then, he said, there were isolated incidents which, while they raised red flags, did not serve to illustrate the bigger picture in its more organised form.
What might have been seen initially as fragmented corrupt activity was not viewed as State Capture at first. But an accumulation of evidence would only later suggest something more sinister than mere pockets of corruption, Gordhan testified.
Around 2014/2015, there was a sudden spike in incidents of fronting. Changes to the management structures of Boards and executive teams at state-owned companies that began in 2009/2010 had become more pronounced.
This includes entities under the departments of public enterprises, Transnet, national Treasury, energy, communications and mineral resources.
By the time the pressure for an unaffordable nuclear deal came around, it became clear that this was no longer an individual act of corruption but a wider set of intentions and schemes, Gordhan said.
Reading from his statement to the Commission, Gordhan, a longtime activist and a member of the ANC, said the country’s Constitution commits government to uplift the poor, and drive economic, political, social or cultural transformation for all.
“But transformation in transition can also unleash the forces of greed. State Capture and corruption are consequences of the worst.
“It requires that one places one’s own interest or that of one’s puppet before that of one’s community,” Gordhan said.
And, it released the worst forms of recklessness and corruption; it robbed people of schools and education, wreaked havoc with state-owned enterprises and equally, impacted severely on the country’s tax agency, SARS, and the Hawks and the National Prosecuting Authority, Gordhan said.
He detailed how a lengthy process to appoint a new SARS commissioner had come undone when he was moved to the Department of Co-operative Governance and Traditional Affairs after the 2014 elections.
After sifting through 120 applicants and preparing a short-list, all that fell by the wayside as Zuma appointed the controversial Tom Moyane – an appointment that would trigger a set of damaging changes, ruined reputations and the ousting of senior SARS officials.
Zuma’s appointment of Moyane, Gordhan said, is an illustration of the extraordinary interest that was taken in some of the appointments made.
Gordhan earlier conceded having been witness to some of the overall corrosion of government as an unwitting member of the Executive which was misled, lied to, manipulated and abused in order to benefit a few families and individuals.
His testimony resumes on Tuesday.
Former SARS Commissioner Tom Moynane has notified the Commission of an intention to apply to cross-examine Gordhan should it become necessary. So too has former National Director of Public Prosecutions, Shaun Abrahams. DM