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State capture: Commission of inquiry wanted

Outgoing public protector Thuli Madonsela was scheduled to recommend a full-blown commission of inquiry into state capture before President Jacob Zuma put a spanner in the works with a last-minute application to interdict her report, which was due to be released on Friday.

The Mail & Guardian understands that phase one of her report was ready for release and Madonsela’s office was locked in meetings until late on Thursday to consider a legal response to Zuma’s move.

By law, only the president is authorised to establish a commission of inquiry – which would, in this case, have been into allegations against himself and the Guptas.

Zuma’s court bid came as a surprise because his spokesperson, Bongani Ngqulunga, had earlier said that the president is not “trying to stymie” the report.

All indications are that Madonsela was ready to release the report. As late as Wednesday afternoon she contacted the Gupta family’s lawyer for access to Ajay Gupta, patriarch of the controversial family.

The M&G has also been told that Public Enterprises Minister Lynne Brown and Sports Minister Fikile Mbalula had been asked to make submissions to Madonsela on Thursday. Brown’s office confirmed that a delegation from the public enterprises department delivered a letter to Madonsela.

This came on the back of Ajay Gupta offering Madonsela an unsolicited interview with regard to allegations that his family appeared to have the power to hire and fire Cabinet ministers and board members of state-owned enterprises to score lucrative government deals.

Another allegation Madonsela is focusing on is how two Gupta-aligned “special advisers”, Mohamed Bobat and Ian Whitley, were appointed to the treasury to aid ANC backbencher Des van Rooyen in his new job as finance minister in December 2015. Van Rooyen was plucked from obscurity to replace then finance minister Nhlanhla Nene, only to be replaced by Pravin Gordhan four days later.

The M&G has established that new information regarding Bobat’s and Whitley’s alleged links to the Guptas have landed on Madonsela’s desk in the form of a whistle-blower’s dossier.

Zuma Ramaphosa Gordhan
Jacob Zuma’s (centre) backers have launched a multipronged attack against those who threaten to expose him, in effect ousting him as president and possibly being replaced by Deputy President Cyril Ramaphosa (left). Finance Minister Pravin Gordhan (right) has been charged with fraud. (Madelene Cronjé)

According to a source with intimate knowledge of the dossier’s content, it further relates to questionable deals done between a Gupta-linked company and several parastatals, including Denel, SAA, Eskom, SA Express and Transnet.

The Guptas are “worried”, their lawyer Gert van der Merwe told the M&G earlier.

Despite Madonsela appearing hell-bent on releasing a version of her report to the public before she vacated office on Friday, she curiously did not subpoena any of the Gupta brothers to submit evidence in her investigation.

Van der Merwe warned that if the report is released prematurely, his clients would initiate review procedures that, he said, if successful, would render Madonsela’s report and its findings “useless”.

Said Van der Merwe: “Ajay is in India, attending a religious festival. It is a trip that has been booked long ago and of which Madonsela is fully aware. She emailed me [on Wednesday] … asking Ajay to answer questions by [Thursday morning]. Her preliminary report is said to be released on Friday. I told her office it is impossible to answer her questions adequately in such a short time.

“This report is going to be a mess. It is rushed and will delay justice, inevitably. I’ve now thrown my hands in the air after warning her about imminent legal action if that report is released without my clients being adequately represented.”

Madonsela’s report, billed as an investigation into “state capture”, emanates from a Democratic Alliance request on March 18 to investigate breaches of the executive ethics code by Zuma, allegedly enabling the Guptas to offer ministerial positions on his behalf.

The public protector’s office could not be reached for comment.

Responding to M&G questions before news of interdict broke, Ngqulunga said the president “has not used his position to inappropriately benefit any company, individual or group of persons. Any suggestion to the contrary is malicious and cannot be corroborated by facts.”

Correspondence between Madonsela and Zuma shows that, four days after the DA request, on March 22, she wrote to the president informing him of the investigation and asking for his input.

The scope of Madonsela’s investigation involves:

  • Revelations by Deputy Finance Minister Mcebisi Jonas and former ANC MP Vytjie Mentor (who chaired the portfolio committee on public enterprises) that they were offered Cabinet positions by the Guptas. Both have publicly confirmed that they had rejected the offers. Mentor had previously said Zuma was on the property when the Guptas allegedly offered her a Cabinet post;
  • An unresolved issue around claims that Mbalula had told confidants that he first learned of his appointment as sports minister when he received a call from a member of the Gupta family. Mbalula has repeatedly denied this publicly;
  • Whether the Guptas knew beforehand that Van Rooyen be appointed as minister of finance on December 9 2015 when Nene was controversially axed.
  • The ‘special advisers’

    Allegations against Van Rooyen’s “special advisers” have been aired in a titanic court battle between two fund managers, Regiments Capital and Trillian Capital Partners.

    Regiments owners Litha Nhyonyha and Magandheran Pillay are locked in a bitter battle to protect their company’s interests from the clutches of a former partner whom they describe as nothing short of a Gupta mole. The pair claim that Eric Wood, who cofounded the company with them, allegedly diverted millions of rands in lucrative Transnet deals to his new company before they split up.

    They have brought a delinquency application against Wood, who they claimed had leaked secret company information to third parties including his new business partner, Salim Essa, a Gupta associate. Papers were filed at the high court in Johannesburg this week.

    Court papers contain startling allegations of how Wood, a director of Trillian Capital Partners – a company in which Essa owns a 60% stake – hatched a back-door plan to score off Regiments’ Transnet contracts.

    Wood has denied any wrongdoing and has confirmed that he will oppose this application.

    In court papers, Nhyonyha and Pillay say they had refused an offer by the Guptas to buy a majority stake in their company last year.

    The next thing they knew, Wood, after joining Essa in the new company, was writing speeches for Van Rooyen after he was moved to the co-operative governance ministry.

    Court papers allege that:

    • Van Rooyen required Wood’s input in his first-ever speech as a minister on December 14, a day after he was removed as minister of finance;
    • Feedback from a meeting with the minister of rural development and land reform, Gugile Nkwinti, found its way to Wood through Bobat on December 12 2015, who sent Wood “an apparent PowerPoint presentation”; and
    • A reporting line appeared to exist between Van Rooyen and his “special advisers” through Wood, who would then keep Essa in the loop on government business.

    Van Rooyen, citing the “sub judice” rule, declined to comment on the Regiments claims and said he would not comment on Madonsela’s investigation until it was concluded.

    But in a subsequent email, Van Rooyen’s office said: “Mr Bobat had known Dr Wood for 15 years in the investment banking industry. The advisors occasionally defer to academics and industry leaders as a sounding board on matters which may require same. Having regard to the fact that Dr Wood was doing a doctorate on the economic climate of South Africa and is one of the pioneers of treasury structured products, the advisors probably wanted to test a few facts with Dr Wood which were to be incorporated in the Minister’s speech. The Minister has no connection with Mr Wood or Trillian Capital”.

    Regiments only became aware of Bobat being appointed as Van Rooyen’s adviser through the media.

    Court papers state that, when the media questioned Bobat about his appointment, the questions were forwarded to Wood who, six minutes later, sent them to Essa.

    Wood is challenging the application to have him declared a delinquent director and said he has a similar application pending against his former partners.

    Meanwhile, Zuma has made demands of his own before he will respond to Madonsela’s request for information on “evidence implicating him”.

    The presidency issued a statement earlier this week, before the interdict was issued, urging Madonsela not to release her report until such time as she has complied with his requests, which include questioning witnesses in the case.

    The public protector’s probe centres largely on Zuma’s relationship with the Guptas and whether he has done anything to favour their business dealings. The interdict application is scheduled to be heard at the Pretoria high court on Tuesday.

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    Pauli van Wyk
    Pauli van Wyk is a Scorpio investigative journalist. She writes about the justice cluster, state-owned companies, state politics and the inescapable collision course they're on. Pauli cut her teeth at Media24. She became a journo at Beeld, was trained by the amaBhungane Centre for Investigative Journalism and joined Mail & Guardian's investigative team before becoming a member of Scorpio.
    Jessica Bezuidenhout
    Jessica Bezuidenhout joined the Mail & Guardian as an investigative reporter in March 2016 after 20 years at the Sunday Times working on news and investigations. She has been the joint winner of several local and international journalism awards, including Nat Nakasa, Mondi, Vodacom regional journalist of the year and Misa, and runner-up for the 2003 Natali Prize.

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