Former SAA board chair Dudu Myeni. (Photo by Gallo Images/Phill Magakoe)
If there were any doubt that Acting Chief Justice Raymond Zondo would implicate former president Jacob Zuma in state capture, the first part of his report has dispensed with it.
He also found that the ruling party as a whole was complicit or asleep at the post while the scandal played out, and in at least three cases lined its pockets with the proceeds.
Zondo concluded that in the case of the South African Revenue Service (Sars), Zuma was central to the subversion of an entity previously seen globally as a model of efficiency.
The motive for its deliberate demise, following the appointment of Tom Moyane as commissioner in 2014, was simple — to dismantle its ability to enforce compliance on those involved in grand corruption.
Zondo recommended that Moyane face perjury charges for lying to parliament and found that his purge of top officials with integrity was plotted with consulting company Bain & Co, whose local top executive met suspiciously often with Zuma — 17 times in two years.
What transpired at Sars was a prime example of how state capture functioned, and how the ruling party allowed it to, be it there or at Eskom, Transnet or SAA.
“These entities did not drop overnight from the internationally highly regarded entities that they once were to what they subsequently became. The decline happened over a number of years but both the government and the ruling party failed dismally to make any effective interventions to halt the decline,” the Zondo report says. “Either they did not care or they slept on the job or they had no clue what to do.”
In the Free State, under the premiership of Ace Magashule, and the City of Johannesburg, under Geoff Mokhubo, the ruling party pocketed money from companies awarded tenders.
“It is a matter of extreme concern that the evidence given at the commission establishes a link between the corrupt grant of tenders and political party financing. Such a link can represent an existential threat to our democracy,” the report notes.
In the case of Sars, SAA and state support for the Gupta brothers’ The New Age media, Zondo found that each time the evidence pointed to Zuma’s involvement.
What happened under Zuma ally Dudu Myeni’s tenure as SAA board chairperson contributed significantly to the national carrier being placed under business rescue in 2020, according to the report.
Myeni rose from an underperforming SAA board member to rule the airline with her allies on the board, including Yakhe Kwinana, and presided over some of the airline’s most disastrous years. “She proceeded, through a mixture of negligence, incompetence and deliberate corrupt intent, to dismantle governance procedures at SAA, create a climate of fear and intimidation and make a series of operational choices at SAA that saw it decline into a shambolic state,” Zondo said.
Despite Myeni’s “wanton disregard” of standards of governance at SAA, she was retained as its chairperson well beyond the point at which she should have been removed, the report states.
At the commission, former finance minister Nhlanhla Nene testified that he believed his subsequent removal as finance minister a month later was linked to the views he expressed about Myeni. At a 2016 cabinet meeting, Pravin Gordhan, then finance minister, motivated the appointment of Myeni as a non-executive director and chairperson of SAA for a further two years, saying. When asked why he made this recommendation, he said the decision was driven by Zuma.
The commission has recommended that Myeni and Kwinana face prosecution by the National Prosecuting Authority (NPA). SAA Technical’s former head of procurement Nontsasa Memela, former SAA procurement head Lester Peter, JM Aviation director Vuyisile Ndzeku and businessman Daluxolo Peter have also been recommended for prosecution. They each allegedly received kick-backs totalling R28.5-million relating to finalising the Swissport ground handling contract with SAA.
The NPA should also consider prosecuting former Airports Company South Africa (Acsa) treasurer Phetolo Ramosebudi, the commission recommends. Evidence shows that Ramosebudi, who later became SAA treasurer, received kickbacks totalling more than R5-million from Regiments Capital, which in turn extracted more than R50-million in gratuitous payments that were funded by Acsa between 2007 and 2011.
Zondo said Eric Wood and Niven Pillay, partners at Regiments, should also face prosecution. In 2013, with Myeni at the helm of SAA, the McKinsey Regiments consortium was awarded a R12.5-million tender by the airline to assist it with “the unlocking of working capital”. The bid was rigged by Ramosebudi and Regiments, the report states.
Former Sars commissioner Tom Moyane. (Photo by Gallo Images/Papi Morake)
The last part of the 874-page report delves into the weaknesses in public procurement, noting that these predated the decade of state capture investigated by the commission.
“What was noted as far back as 2002 has not changed in its essential character, it has simply got much worse,” Zondo writes. “To use the analogy of the current pandemic, state capture aggressively attacked a system which was already weakened by long standing comorbidities.”
The report says billions were spent on needless contracts with consultants. In the case of Bain & Co, on managing director Vittorio Massone’s own admission in an email to a colleague, the company lacked the experience to assist Sars, but got a contract, twice extended, that allowed Moyane to wreck the agency.
“The only feasible conclusion is that the organisation was deliberately captured and President Zuma and Mr Moyane played critical roles in the capture of Sars and dismantling it in the way it was done during Mr Moyane’s term as commissioner,” Zondo said.
He saluted the courage of whistleblowers such as former Bain employee Athol Williams and former Government Communications and Information Systems (GCIS) head Themba Maseko. The latter stood up to the Guptas, and Zuma, when the family demanded the full state advertising budget be diverted to The New Age.
Ministers, at Zuma’s behest, facilitated contracts for The New Age. One of them was then labour minister Mildred Oliphant, who withdrew her predecessor Membathisi Mdladlana’s dismissal of Mzwanele Manyi, the former director general of labour, to make way for him to become the director general at the GCIS. It allowed him to make the government’s biggest ever monthly payment to The New Age in March 2012, totalling just short of R6-million.
The report also fingers ormer public enterprises minister Lynne Brown as helping syphon millions off state enterprises. Brown, through her relationship with Tony Gupta and his associate, Salim Essa, allowed the family to have a say on the new Eskom board, which ultimately proved to be party to approving and ratifying an irregular contract worth R43-million benefiting The New Age.
Zondo said there were more instances that proved “that the board was not independent and, in many ways, made decisions that advanced the interests of the Guptas about those of Eskom”.
Between 2012 and 2014, Eskom spent close to R60-million in advertising and sponsorship at The New Age, with little gain, its biggest contract amounting to the above-mentioned R43.2-million, which Collin Matjila approved shortly after joining Eskom as the acting chief executive. The contract did not have the termination protection clause that Eskom usually included in such an agreement.
The commission has recommended that the NPA and the Hawks investigate and charge Matjila, former Transnet chief executive Brian Molefe and Tony Gupta with fraud and contravening the Public Finance Management Act.
It said The New Age used public resources of government departments and state-owned enterprises to secure advertising and sponsorships that “defied logic and legal requirements”.
Although many executives and their subordinates were threatened, intimidated and some bribed to cooperate with the capture of the state, Maseko stood firm when the Guptas pressed him to divert R600-million in advertising spend to The New Age and the report accepts that Zuma had a hand in his subsequent sidelining at GCIS.
“The fact that president Zuma was prepared to replace Mr Maseko with Mr Mzwanele Manyi … shows how Mr Zuma operated. Mr Maseko was an excellent civil servant,” Zondo says. “Mr Maseko was one of the few government officials who was willing to stand up to the pressure exerted by the Gupta family.”
The report recommends an overhaul of legislation on public finances, finds that the recently enacted Bill of political party funding falls short and that the criminal justice system needs insulating against political interference.
The NPA needs a “thorough re-appraisal” of its structural weakness, and the country needs an independent investigative entity, it notes.
It is up to a ruling party compromised by state capture to implement such recommendations.
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