Zondo: Millions of rands siphoned to Gupta-owned newspaper

The state capture commission has recommended that the National Prosecuting Authority and the Hawks investigate and charge former Transnet chief executive Brian Molefe and former Eskom chief executive Collin Matjila with fraud and contravening the Public Finance Management Act.

The commission, chaired by acting Chief Justice Raymond Zondo, has also found that former president Jacob Zuma was at the heart of state capture during his tenure, which ended in February 2018. It found that Zuma assisted the Gupta family in advancing its business interests and those of his own family at the expense of the interests of the people of South Africa. 

The damning 874-page report, formally handed over to President Cyril Ramaphosa on Tuesday, details how the Gupta-owned media company, The New Age (TNA), used public resources of government departments and state-owned enterprises to secure advertising and sponsorships that “defied logic and legal requirements”.

In his report, Zondo identified the TNA as an example of how state capture took hold in South Africa, saying the Guptas’ influence extended to the public sector, as did their strategy to replace officials who were not compliant with their looting scheme.

The report details how facilitators used threats and intimidation to ensure that the will of the Guptas was carried out and they relied on a culture of silence and compliance from employees in the public entities.

“Sometimes, however, key public figures were unwilling to comply. These were the ‘resistors’. In those instances, the ‘resistors’ were removed from their positions and replaced, or were sought to be replaced, with ‘facilitators’,” it says.

One such resistor was former Government Communication and Information System (GCIS) director general Themba Maseko, who was promptly removed from his position and replaced by Mzwanele Manyi (currently Zuma’s spokesperson) for refusing to give  TNA the government’s R600-million advertising spend.

During that period, the GCIS made its largest-ever monthly payment to the TNA — nearly R6-million in March 2012 — and the second highest amount paid to any media house during the period — even though TNA had no established readership or certified circulation figures.

During Manyi’s second year at the helm of the GCIS, the government spent more than R8-million in payments to TNA. In the 2013-14 financial year the GCIS spent more than R9.5-million on the TNA and close to R10-million in the next financial year. 

The report also found that former public enterprises minister Malusi Gigaba was “prepared to do wrong for the Guptas or Mr Zuma”. It said testimony from Eskom executives suggested that Gigaba interfered in the power utility’s operations on many occasions. This occurred even when Eskom awarded irregular and wasteful contracts to the TNA amounting to millions of rand, which were geared towards its business breakfasts. 

Between 2012 and 2014, Eskom spent close to R60-million in advertising and sponsorship at the TNA, with its biggest contract amounting to R43.2-million, which Matjila approved shortly after joining the utility as the acting chief executive. The contract did not have the termination protection clause that Eskom would usually include in such an agreement.

Under Matjila, Eskom received little exposure in its investment, only being afforded  some opportunity to display its branding at the TNA breakfasts. This included hanging some banners. 

“While Eskom would be given an opportunity to speak, this would not be on air,” the Zondo report states, adding that the minister appearing on the show would not discuss the utility, energy efficiency or the 49M campaign to save electricity.

“In addition, the Morning Live show (on public broadcaster SABC) was not even aimed at or watched by the target audience for the 49M campaign because those people would have already been at work at that time.” 

The report also details how Transnet — under Molefe — spent R24.8-million on the TNA’s Big Interview programme from 2011 to 2016 with no evaluation ever done on whether the state logistics company was getting value for money. 

“It is also clear that the spending was wasteful and fruitless expenditure as Transnet derived no value from it. No transparent and competitive processes were followed by Transnet in obtaining these services,” it said.

There was evidence that Molefe and Transnet general manager Mboniso Sigonyela were directly facilitating the use of public funds for TNA spending, the report adds.

“They did not appear to put up any resistance and indeed appeared determined and anxious to ensure that these contracts were concluded and on extremely disadvantageous terms for Transnet,” it says.

National carrier SAA was another institution from which the Gupta family syphoned money, totalling millions. Through the then group chief executive, Vuyisile Kona, TNA newspaper subscriptions increased from 3 000 to 7 000 a day was approved. This meant an extra R2.4-million was spent on TNA subscriptions in 2012. 

Kona alleged that Tony Gupta attempted to bribe him for information on SAA contracts. 

“It is recommended that the law enforcement agencies should investigate a possible crime of corruption against Mr Tony Gupta on the basis of Mr Kona’s evidence that he offered him initially R100 000 and later R500 000 in their meeting at Saxonwold on or about 29 October 2012,” the Zondo report says.

“These matters should therefore be handed over to law enforcement agencies for further investigation and, where warranted, prosecution.”

Judicial Commission of Inquiry Into State Capture Report Part 1 by Mail and Guardian on Scribd

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Lizeka Tandwa
Lizeka Tandwa
Lizeka Tandwa is a political journalist with a keen interest in local government.

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