/ 24 April 2017

What was Thabo Mbeki and Essop Pahad’s role in the rise of the Guptas?

There are indications in 'The Republic of Gupta' that the family started nurturing friendships with people in power long before they courted Jacob Zuma.
There are indications in 'The Republic of Gupta' that the family started nurturing friendships with people in power long before they courted Jacob Zuma.

This chapter is from Pieter-Louis Myburgh’s new book, The Republic of Gupta, which details the family’s history in South Africa. The book is published by Penguin Random House South Africa.

Mbeki’s ‘secret’ council
Details about the Guptas’ earliest inroads into South Africa’s political establishment are scarce. The early to mid-1990s was a time of flux and uncertainty, but also one of hope and excitement. As the country came to terms with democracy, the Guptas settled into their new home without drawing too much attention.

Their most obvious and significant political friendship is with Jacob Zuma, whom they claim to have first met in the early 2000s, almost a decade after their arrival in South Africa, though others suggest they met him a few years earlier. Whatever the case, one is left wondering: Did they have any friends in high places before him? There are indications that the Guptas started nurturing friendships with people in power long before they officially courted Zuma.

Essop Pahad, who served as minister in the presidency during the Mbeki administration, is a former business partner of the Guptas who still views himself as a good friend of the family. According to Pahad, he was formally introduced to a young Atul Gupta during a visit to India with Mbeki in 1996, when Mbeki still shared the role of deputy president with former president FW de Klerk. It had been two years since South Africa’s first democratic elections, and the purpose of Mbeki and Pahad’s visit was partly to discuss investment and trade opportunities with India’s business elite.

“There was a group of South African businesspeople who were part of the group, and then somebody came to me and said they wanted to introduce me to a family that has started businesses in South Africa. That was Atul,” Pahad told me in an interview in April 2016.

According to Pahad, the meeting was brief and he “never really saw [Atul] again” until much later. Their second meeting, this time in South Africa, sparked a lasting friendship.

“He talked about his brother Ajay, and then I met with Ajay, and I later met the other brother, Tony [Rajesh], and then we became friends,” explained Pahad.

As the relationship between the minister and the Gupta brothers blossomed into friendship, Pahad grew to respect Ajay’s uncanny talent for arithmetic. “He is, in my view, one of the best number crunchers in South Africa,” Pahad told me. 

“It is all in his head, he can make big calculations in his head.”

Later, in 2006, Ajay’s “good understanding of India, also China and other parts of Asia” prompted Pahad to nominate him for a position on the board of the International Marketing Council of South Africa (IMC), which had been established in 2000 by the Mbeki administration to “create a positive, unified image of South Africa; one that builds pride, promotes investment and tourism, and helps new enterprises and job creation”. It was later rebranded as Brand South Africa.

The IMC’s first chairperson was then foreign affairs minister Nkosazana Dlamini-Zuma, and the organisation’s founding board members included some of South Africa’s foremost leaders from the private and public sectors, such as Naspers’s then managing director Koos Bekker, film producer Anant Singh and Joel Netshitenzhe, the ANC intellectual who headed the GCIS (Government Communication and Information System).

While the Gupta-owned The New Age newspaper incorrectly reported that Ajay had been an IMC board member since the organisation’s inception, he was only appointed in 2006. He has retained his position on the board, but does not appear to take his duties as a board member very seriously. According to the IMC’s annual reports for the 2014–2015 and 2015–2016 financial years, he did not attend even one of the eight board meetings convened in that period. One of the four former IMC board members I spoke to recalled that he had been surprised to learn that Pahad had put Ajay Gupta on the board in the first place: “We were confused as to why an Indian citizen was put on the board of something that would be known as Brand South Africa. And it’s not like Ajay was just a mere board member in the beginning. When he joined the IMC, he was put on the executive committee, meaning he was able to yield more influence within the organisation than an ordinary board member would have been able to.”

Despite this former board member’s reservations regarding Ajay’s appointment to the IMC board, there is no indication that it was done in an underhanded manner. His name, as well as his picture, appears in all of the organisation’s annual reports after 2006, and these are publicly available documents.

But Ajay Gupta’s inclusion during those years in an altogether different and largely unknown council is an entirely different matter.

In March and April 2016, as President Zuma was faced with the fallout from claims that the Guptas were meddling in government decisions, he and his allies thought it prudent to drag Mbeki into the matter, most likely in an attempt to redirect the negative Gupta-related attention onto the previous administration.

In March, as the ANC was bickering internally over the president’s relationship with the Guptas, during two separate ANC meetings Zuma allegedly said that he had been introduced to the Guptas by Pahad and that Ajay Gupta had served on Mbeki’s economic advisory council. According to the Sowetan, Zuma had even gone so far as to say that, unlike Mbeki, he had never appointed any members of the Gupta family to formal government positions.

Amid the growing number of calls for Zuma to step down – driven to a large extent by the revelations about the Guptas – Mpho Masemola, deputy national secretary of the Ex-Political Prisoners Association, came out in strong defence of the president.

“The Gupta family has not come with Jacob Zuma. The Gupta family was introduced to Jacob Zuma by Thabo Mbeki and Essop Pahad,” Masemola claimed in an interview with eNCA. “People are making noises now as if the president has been, you know, clinging to the Gupta family etc. It’s not like that. Why Thabo Mbeki is keeping quiet? Why Essop Pahad is keeping quiet …”

These comments prompted the Thabo Mbeki Foundation to enter the fray on behalf of the former president. In a statement released to the media, the foundation strongly denied Masemola’s claims, adding, apparently for purely academic reasons, that even if Mbeki had introduced the family to Zuma, such an introduction would not have been dubious: “For the record, President Thabo Mbeki did not at any point introduce the Gupta family to President Zuma. Even if it were true that President Mbeki had introduced the Gupta family to President Zuma, unless it is alleged and proven that he did so with an improper motive, he would not be held responsible for whatever may or may not have transpired thereafter between President Zuma and the Gupta family.”

The foundation also took exception to the suggestion that one of the Gupta brothers had served on any organisation associated with Mbeki’s government other than the IMC: “We have also noted reports which claim that a member of the Gupta family served as an economic advisor to President Mbeki. This too is false! No member of the Gupta family ever served in any economic advisory body during the time when President Mbeki served as head of state. It is nevertheless true that Ajay Gupta served on the International Marketing Council board (now Brand South Africa). Mr. Ajay Gupta joined the board of the then IMC by agreement of the board on the recommendation of then minister in the presidency, Essop Pahad, who rightly or wrongly thought that he had the skills, know-ledge and capacity to facilitate the work of the council – not because of his alleged proximity to the president.”

Ajay Gupta and one of his closest associates, however, recall a far more intimate relationship with Mbeki than the former president and his foundation care to admit.

When the press reported in April 2016 that the Guptas had fled South Africa, Nazeem Howa, then chief executive of the Guptas’ Oakbay Investments, told newspapers that Ajay Gupta had been friends with all three of Nelson Mandela’s successors, including Mbeki. Howa also alluded to Ajay’s involvement in a government-linked body during the Mbeki era that had to have been something other than the IMC. “The idea of The New Age had been born in discussions in Mbeki’s advisory council of which … several of today’s corporate and political leaders were also a part,” Howa told City Press.

All of the former IMC board members I spoke to expressly denied that The New Age had ever been discussed at an IMC board meeting.

When Ajay Gupta later appeared on the SABC’s Morning Live Business Briefing, a breakfast show sponsored by The New Age, he said in no uncertain terms that he had been part of some sort of advisory body that regularly met Mbeki, but he seemed unable to remember what it was called.

“First time ever I sit [with members of cabinet] in maybe 10 years before [circa 2006] when the previous president [Mbeki] put a one council [sic], it’s called a president consultative council forum, or something, it was every first Sunday of the month we used to sit in the presidential guest house,” Ajay explained during the live televised event.

He added that “many cabinet ministers” attended these meetings and that billionaires Patrice Motsepe and Tokyo Sexwale were members too. According to Ajay, the group would “all sit together and discuss the country and what best we can do for the country”.

It appeared as if Ajay, in this unscripted account of his relationship with government, had inadvertently divulged information about an advisory body that Mbeki would rather have kept secret. In an attempt to learn more about this “consultative council forum, or something”, I requested clarification from the Thabo Mbeki Foundation and Mukoni Ratshitanga, Mbeki’s spokesperson. Neither of them got back to me.

I was about to condemn the issue to the dusty vault of unsolvable Gupta mysteries when I stumbled on a Mail & Guardian article from 1996 that revealed details about an advisory body set up by Mbeki when he was still deputy president. This body, based on the newspaper’s description, bore striking similarities to whatever it was that Ajay Gupta had spoken about in the Business Briefing programme: “Deputy President Thabo Mbeki has set up a secretive, 24-strong think-tank called the Consultative Council to give him political advice,” wrote Marion Edmunds. The advisers included lawyers, businesspeople and select cabinet ministers, who would meet Mbeki once a month at his official Pretoria residence. The article listed all 24 members – including Essop Pahad, who was identified as the group’s convenor. However, Ajay Gupta’s name was not among them.

According to the M&G, Pahad had “reluctantly confirmed’ the group’s existence and did not seem to want his fellow council members to discuss the issue with the press. “It is a set number of people and I don’t think that they should speak to you about it,” he told the newspaper.

Seeing as Ajay Gupta had placed it on record that he had been part of a “consultative forum” that sounded very much like the one Pahad had convened, I decided to go back and ask the former minister for clarity on the issue. He admitted that Ajay had indeed become a member of the Consultative Council at a later stage, most probably around 2005.

Pahad also confirmed that the group’s existence was never meant to be public knowledge, although he does not like it being referred to as “secret”. It seems that the M&G article caused some consternation in the group. Pahad blames a certain lawyer who had been a member of the council for leaking the information to the newspaper. “We asked the lawyer, ‘What are you doing?’ This was supposed to be a confidential group, not a secret group, and people agreed to join because it was not going to go public,” Pahad told me.

There was no sinister motive behind the attempt to keep the Consultative Council’s activities under wraps, Pahad insisted. According to him, the convenors wanted the group’s members to be honest and frank in their monthly discussions. It was believed that to cultivate such an atmosphere of candour, the members would need assurance that the meetings would remain confidential.

“We didn’t make anything public because we wanted people to speak freely, but it wasn’t a secret organisation,” argued Pahad. “I mean, we were meeting at the presidential guest house. I don’t know how you can keep anything secret there because you have to give the security people the names of everyone going in there and your car’s number plate is written down. It wasn’t like we were meeting in the middle of the night surreptitiously.”

The Consultative Council was set up to allow Mbeki’s government to source ideas and suggestions from people who were “influential in their own areas of work”, explained Pahad. Although there was no expectation that the issues raised at the meetings would affect official government policy- or decision-making, the group seemed to have at least some degree of influence.

“The council’s members would raise certain issues, and if we [the cabinet members in the group] thought these issues were worth raising [in government], we would do so in the appropriate forums,” Pahad told me.

As with his role in the IMC, it was Ajay Gupta’s knowledge of the East that secured him a seat on the Consultative Council. “We needed to expand our horizons just a bit. We thought we’d bring in Ajay because he has a good understanding of India, and of how they do things in India and in other parts of Asia,” Pahad explained. “[We thought] he could give an opinion that could help us broaden our own understanding of what was happening in India and in other parts of the world.”

While Pahad told the M&G in 1996 that it was Mbeki who convened the Consultative Council meetings, he now maintains that Mbeki never attended the actual meetings but instead only “popped in” towards the end “so that people could feel confident that what they had said was going to be said to him [and] also just to meet him”. Pahad was also dismissive – almost zealously so – of any suggestion that the Guptas, and Ajay in particular, had been close to Mbeki.

“It is not true that Mbeki had put Ajay Gupta on the IMC board or in the Consultative Council. That was me; it had nothing to do with Mbeki. Ajay Gupta never knew Mbeki. To the extent that he met Mbeki it would have been if and when Mbeki would sometimes come to our consultative meetings,” Pahad maintained during our discussion.

This was my second interview with Pahad. During the first, in April 2016, he curiously failed to mention Ajay’s inclusion in the Consultative Council. In fact, he did not mention the council at all. At the time, Pahad insisted that Mbeki would only have met the Guptas “if there was a function and I had invited Ajay and then, like everybody else, they would go and shake hands with him, and take photos like everybody does at these things”.

But all indications are that the Guptas enjoyed a relationship with Mbeki that involved more than mere chit-chat at the odd public event.

Apart from Ajay’s inclusion in Mbeki’s Consultative Council, there is a final clue that suggests the Guptas were nearly as familiar with Mbeki as they later became with Zuma. In July 2008, the investigative magazine Noseweek ran an article on a failed attempt by the Guptas to become involved in an oil deal in Angola.

According to the article, former Gupta associate Jagdish Parekh told one of the Guptas’ would-be partners in the deal that Mbeki regularly had breakfast with the family at their home in Cape Town. The claim appears to have been an attempt to convince the Angolans of the Guptas’ political connections back in South Africa.

One can only speculate as to why Mbeki and his friends seem so desperate to bury any notion that the former president was close to the Guptas. Perhaps the truth about the Consultative Council and those alleged meetings in Cape Town is simply too compromising for a former president known for his attempts to “correct” the chapters in our history that cast him in a bad light.