On the second Wednesday in December, weapons company Denel called a meeting with representatives of the government, which owns it, the department of public enterprises and the treasury.
Denel urgently wanted to create a joint venture in Asia by partnering with a little-known company with no track record that was associated with the Gupta family. Denel needed treasury approval for the deal, which had been more than a month in coming, hence the meeting.
We do not know exactly how the meeting went, but the way Denel described it in a statement this week makes it sound like a somewhat curt affair.
It had “raised concerns with regard to national treasury’s silence” on the matter, Denel said, and had “stressed the urgency” of its plan to join up with VR Laser Asia, a letterbox company in Hong Kong of a close Gupta associate, Salim Essa.
But we do know what followed. Later that Wednesday night, President Jacob Zuma issued a statement. “I have decided to remove Nhlanhla Nene as minister of finance,” Zuma said.
There is nothing to suggest that Zuma’s short-lived appointment of Des van Rooyen as finance minister that night had anything to do with the Denel meeting.
The presidency, the ANC and various officials have insisted that there is, likewise, no link between the criminal investigation of Van Rooyen’s successor, Pravin Gordhan, and other recent events.
But, as more and more information emerges from state-owned enterprises, through leaks, comments and court cases, the coincidences in timing continue to pile up.
And they start piling up at an increasing rate after mid-2015, when long-laid plans to combat corruption and to ensure that the state gets value for its money started to take effect.
From the beginning of June 2015, the treasury later said, the office of its chief procurement officer started examining all government tenders worth more than R10-million.
That is, tenders at all levels of government and at the top 17 municipalities, as well as at state-owned enterprises.
The centralisation of state procurement is formal policy often punted by Zuma in his State of the Nation addresses. But its aggressive implementation, and implications, evidently caught many departments and organisations by surprise.
In November, a month before Nene’s removal, the treasury prescribed rules on the “planning, design and execution of infrastructure projects” that are “aimed at ensuring that any infrastructure acquired or to be acquired provides value for money” — and that these projects can be audited.
Those rules and their ilk will, or already do, affect everything from the proposed massive build of nuclear power stations to the steel that can be used to build locomotives.
Even as the treasury was issuing those rules, the chairperson of the Passenger Rail Agency (Prasa), Popo Molefe, was meeting a supplier to the agency who, Molefe now claims in an affidavit before the high court, explained how “the movement” (the ANC) wanted a kickback — to be routed through a Zuma associate — from a major Prasa contract.
The ANC has denied that it ever solicited or received this money.
In December, in a flurry of activity, Denel’s troubles with the treasury came to a head, Zuma removed Nene and then quickly also removed Van Rooyen to replace him with Gordhan, who would not have much of a honeymoon.
In January, documents show, the police’s Hawks investigative unit returned with post-holiday vigour to an investigation opened in May 2015 into the so-called rogue intelligence unit at the South African Revenue Service (Sars). That unit operated while Gordhan headed Sars.
The Hawks’s work culminated in a list of pointed questions, hinting at criminal culpability, which they sent to Gordhan just days before his February budget speech.
That speech, drafts of which were even then circulating in top government circles, included some blunt promises.
“Centrally negotiated contracts will be mandatory with effect from April 2016,” Gordhan told Parliament.
That was optimistic, but April was indeed a busy month. On April 11, Eskom agreed to pay Tegeta, co-owned by the Gupta family and Zuma’s son Duduzane, an estimated
R587-million for coal in advance. Months later, Eskom’s head of generation, Matshela Koko, first denied that this was done when confronted by investigative television programme Carte Blanche, then admitted it when shown a document that he had signed.
The next day, on April 12, as it happened, the treasury’s chief procurement officer sent Eskom a damning draft report about the power utility’s previous dealings with Tegeta and demanded evidence to prove, among other things, that Eskom had not paid Tegeta for coal that was of too poor a quality to burn in its power stations.
In recent months, it has emerged that questionable, dubious and very expensive deals were also being done at other parastatals now under the treasury’s watch.
In March, SAA appointed BnP Capital, a firm that later turned out not to have a valid financial services licence, to provide it with R256-million worth of debt-restructuring services.
The deal has since been cancelled.
And in February, Trillian Capital Partners, a company of mysterious ownership but with Essa as sole director, invoiced Transnet for R11.4-million for “financial structuring advisory services”. By the end of June, it had submitted claims totalling R74-million, the investigative unit amaBhungane later reported. While these transactions were being done, the barriers to them were growing. In May, the treasury issued instructions demanding the use of its central supplier database for just about any transaction not concluded in petty cash.
Even in cases of “emergency procurement”, it said — which Eskom claimed in the case of Tegeta — such deals had to be registered on the database within less than a week.
Almost simultaneously came first rumours, then reports, that Gordhan would be arrested shortly.
Other than a short break around the time of the local government elections, the pattern continued: as the treasury tightened up rules on the spending of taxpayer money, and fine-tuned the instruments to monitor it, Gordhan became the target of more rumours and suggestions.
In August, the Cabinet radically reinterpreted a 2013 review to mean that Zuma should have “line of sight on strategic decisions and interventions” at the state-owned enterprises.
And, this week, the treasury issued a statement alluding to its duty to review all state transactions.
“It is treasury’s view that a company or entity that is doing business with government and has nothing to hide should be transparent and welcome reviews of its dealings with the state,” it said.
“Members of the public also deserve to know how public finances are spent. It should, therefore, concern all South Africans that there are efforts to block and undermine the reviews.”