Zondo: ANC was either incompetent or asleep on capture

The Zondo commission, in the first instalment of its three-part report, finds that the ANC not only folded its arms and allowed state capture to flourish, but in some instances proceeds of this form of corruption flowed to its party coffers.

Reflecting on the rot at state-owned enterprises, Deputy Chief Justice Raymond Zondo reflected on the testimony of former South African Revenue Service (Sars) official Vlok Symington on how the entity was regarded as an international benchmark before its capture.

The same once applied to other parastatals, he said, but the common denominator in the decline of each is how the government and the ruling party failed to call a halt to corruption.

“What Mr Symington said about how highly regarded SARS was internationally before it was subjected to capture by Bain under Mr [Tom] Moyane’s leadership is no different from what I was told about SAA at some stage, Eskom at some stage and Denel at some stage, each of which were subsequently run down considerably with rampant corruption and state capture,” Zondo said. 

“All of which happened, happened under the watch of the government of the ruling party, the African National Congress. Most, if not all, of these entities were led by the chief executive officers and boards of directors who would have been approved by the ruling party through its national deployment committee.”

The decline was not swift, he said, implying that there was time to intervene but either the government and the party did not know what to do or could not be bothered to act.

“These entities did not drop overnight from the internationally highly regarded entities that they once were to what they subsequently became. The decline happened over a number of years but both the government and the ruling party failed dismally to make any effective interventions to halt the decline. Either they did not care or they slept on the job or they had no clue what to do.”

In the last chapter of the 874-page first part of the report, Zondo looks at some of the most egregious instances of capture at parastatals, before detailing how weaknesses in the procurement system were so systematically abused that, in the words of witness [Transnet governance executive manager] Peter Volmink, the legal framework became a “parallel universe” to what happened in practice.

SARS was, Zondo said, one of the clearest examples of how capture functioned, noting that every loophole was used to give Bain & Co a needless restructuring brief, although, as conceded by managing partner for South African Vittorio Massone, it lacked the relevant experience.

Massone also owned up that, should a tender have gone out to the market, Bain would not have been selected. It not only secured the job, but extensions of the dodgy deal, on the spurious grounds that if it were not given a third contract, the work done under its first two would be rendered obsolete.

“Once again, in June 2016, the issue of how to extend the contract arose. Mr Massone wrote an internal email that said Bain cannot go to the market because ‘if we do go to the market, we know we will lose’,” Zondo quoted from the record.

Moreover, Bain was consulted before the request for proposals was issued, meaning it could, in the words of whistleblower Atholl Williams, “draft the rules of the game”.

Speaking of the abuses as they happened across the board, Zondo said Volmink’s description “whilst vivid, is unfortunately not an exaggeration. … It speaks accurately to a fundamental systemic failure.”

He continued that state capture was not a transitory phenomenon, but something that endured for almost a decade because it insulated itself against exposure and accountability. 

With the exception of the office of the then public protector, oversight bodies took no action.

Zondo offers remedies for that problem in a section with recommendations. But first he asks how all governance safety mechanisms could be neutralised.

The answer goes straight to the top.

“There is a pattern of executive interference and political overreach at the SOEs [state-owned entities]. Evidence shows that ministers, and even the former president, Mr [Jacob] Zuma, were regularly involved with operational matters. 

“Boards of the SOEs have shirked their responsibilities, or worse, used their powers to corrupt the SOEs which they have been appointed to protect. This collective misconduct was often evidenced by the abuse of centralised procurement processes so that the approval authority for high value tenders became concentrated in the hands of a small group of top executives and board members.”

Among those who enabled this, he lists former mineral resources minister Mosebenzi Zwane and former ANC secretary general and Free State premier Ace Magashule.

Zwane embroiled himself in the department’s engagements over the Optimum Coal Mine — one of the most flagrant examples of where the Guptas were enabled to secure government business — to the point where the director general was “no longer kept informed about what was happening with regards to the mine”.

Zondo said the commission heard how Magashule — now facing a raft of corruption charges over the Free State asbestos scandal — from 2009 immediately moved to centralise government functions under his office and secure control, particularly, of procurement.

Perhaps the most troubling finding, although he stresses that this was not a specific part of his mandate, is that the ANC’s tolerance of tampering with procurement rules reaped, in at least three instances, a direct benefit to the party’s finances.

“It is a matter of extreme concern that the evidence given at the commission establishes a link between the corrupt grant of tenders and political party financing. Such a link can represent an existential threat to our democracy,” he said. 

“It is inconceivable that political parties should finance themselves from the proceeds of crime, and yet there is alarming evidence to that effect.”

The first example he cited was evidence to the commission that former Johannesburg mayor Geoff Makhubo had solicited a donation to the ANC from technology services company EOH and had repeated that request a week after a contract had been awarded to EOH. 

Some R50-million was donated to the ANC by EOH for the 2016 local government elections.

The second example goes to the heart of the asbestos case, with Zondo stating that over five years Blackhead Consulting, the joint venture that won a R255-million tender to audit asbestos in structures in the Free State “made payments amounting to millions of rands to the ANC”.

The deputy chief justice, who has for four years chaired the inquiry into state capture, said it did not seek to establish the full extent of corruption associated with political party financing or the extent to which other political parties may also have been implicated. 

“However, the two examples mentioned are more than enough to sound the alarm.”

The report, written in accessible, almost conversational style, then adds: “ In fact, there is another example. That is Bosasa.”

In his section with proposed remedies, Zondo says that although the recent promulgation of the Political Party Funding Act was a first step, it did not go as far as it should. “Provision must be made to prohibit donations linked to the grant of tenders,” he suggested.

“The making of any such donations by a prospective tenderer or by a successful tenderer within an extended period of time must be made to constitute a criminal offence as must the receipt of any such payment whether such payment is made directly into the coffers of the political party or by some indirect means.”

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