Public Enterprises Minister Pravin Gordhan has urged the commission of inquiry into state capture to ‘connect the dots’, saying it should look into the departments of energy, mineral resources, communications, cooperative governance and traditional affairs about the changes that have occurred there and why.
The commission — chaired by Deputy Chief Justice Raymond Zondo — was told by Gordhan how state capture is a systematic racket, where corruption is an “ever present threat… it is a cancer”.
In his testimony, Gordhan stressed that what had appeared to be isolated incidents, such as the removal of former public enterprises minister Barbara Hogan from her position in 2010, was part of a bigger campaign of corruption.
Detailing the hierarchy of state capture from the controllers, the Gupta family, elites and government ministers, Gordhan explained how South Africans are looking at this threat as something the governing party must solve. As of the ANC’s 54th national conference at Nasrec last year, the party had resolved to handle corruption from disciplining cadres to dissociating itself from entities accused with corruption.
According to Gordhan, protecting fiscal sovereignty is as important as protecting the constitutional right to democracy.
With reference to the duties of a finance minister in a set of notes by former minister Trevor Manuel, Gordhan proceeded to explain how the minister and the ministry functions.
He explained that based on the governing party’s manifesto, money is allocated in the budget to departments, provinces and local government.
There is only a finite amount, Gordhan said, as the finance ministry has to balance its income, expenses and debts. He likened the work of the treasury to that of the chief financial officer of a corporation, with the president in the position of chief executive officer.
When asked about how money could be waylaid through state capture, Gordhan said that “fronting” has become a popular scheme. Using South African Airways Technical— a subsidiary of SAA and Africa’s biggest maintenance and repair organisation — as an example, Gordhan explained how instead of it sourcing its parts from a regular contributor, it uses a third party “that is not even involved in the manufacture of parts”. This, he explains, often leads to a premium of 50%.
Gordhan and the Transnet job
Gordhan has served in several roles in the Cabinet following his appointment as commissioner of the South African Revenue Service (Sars). In 2009, Gordhan applied for the position of Transnet head, but was informed by the ANC that he should “hang on”.
During last week’s sitting of the commission, former public enterprises minister Barbara Hogan said when he was president, Jacob Zuma had involved himself in the appointments in state-owned enterprises.
She told the commission how Zuma began meddling in the appointment of board members and executives of state-owned enterprises shortly after his election in 2009.
According to Hogan, Zuma attempted to “strong-arm” the Transnet board into appointing Siyabonga Gama as its chief executive in 2009, despite having been eliminated as a candidate after it emerged there had been allegations of misconduct against him regarding procurement irregularities.
Gama would replace Maria Ramos — who is now the chief executive of Absa.
Hogan had said that the candidate the Transnet board had put forward is the current chief executive of Telkom Sipho Maseko.
Gordhan was later appointed finance minister. He would then be reshuffled to the department of cooperative governance and traditional affairs. When the rand took a nosedive following the reshuffling of then finance minister Nhlanhla Nene with Des Van Rooyen as his replacement in December 2015, Gordhan was reassigned to the position of minister of finance.
He told the commission that he had suggested several other names for the position over him, as he had not wanted to go back to the finance ministry. Gordhan would later be fired by Zuma.
“I actually suggested two other names of people who would be very appropriate for the position, given their experience. One was Mr Jonas who has already appeared before you,” said Gordhan.
Gordhan remained a member of Parliament between April 2017 to early 2018 when he was appointed minister of public enterprises following President Cyril Ramaphosa’s inauguration.
Applications to cross-examine
Advocate Dali Mpofu, representing former Sars commissioner Tom Moyane, and counsel for former National Prosecuting Authority head Shaun Abrahams, have reserved the right to cross-examine Gordhan at a later stage.
Both Moyane and Abrahams received word that their names were mentioned in Gordhan’s 69-page statement.
Over the weekend, allegations were made that Advocate Paul Pretorius — who led Gordhan’s testimony — was too close to the minister and should recuse himself from leading his testimony.
Zondo said that Pretorius clarified the allegations. However, Zondo added that those who wanted Pretorius to recuse himself “should write to the commission with a substantiation of the allegations so that they can then be looked into properly.”