/ 2 February 2022

Zondo report recommends Jacob Zuma be investigated for Transnet corruption

Zondo Commission Continues To Hear Zuma's Recusal Application
Acting Chief Justice Raymond Zondo says former president Jacob Zuma had “sought to thwart” attempts by Barbara Hogan, then the public enterprises minister, to appoint a Transnet group chief executive from 2009 to replace Maria Ramos.

The ANC’s cadre deployment policy and Jacob Zuma’s influence over the appointment of executives at state-owned entities has again been raised in the second part of the state capture commission report, released on Tuesday evening, with recommendations that the former head of state and several key players be investigated for possible corruption.  

In the latest instalment of the much anticipated three part report, Acting Chief Justice Raymond Zondo detailed how state capture was at the heart of the Zuma administration and severely derailed Transnet, resulting in more than R41.204-billion being irregularly awarded to benefit Gupta companies. This amount represents 72.2% of state payment to contracts tainted by state capture. 

“Transnet became the primary site of state capture in financial terms,” according to the report, which runs to more than 500 pages.  

Zondo recommended that law enforcement agencies further investigate Zuma, and others, with a view to possible prosecution for corruption and/or racketeering, regarding his insistence that Transnet Freight Rail (TFR) executive, Siyabonga Gama, be reinstated. 

“It is recommended that the law enforcement agencies conduct such further investigations as may be necessary, with a view to the possible prosecution on a charge of corruption in terms of Chapter 2 of POCA [Prevention of Organised Crime Act], to determine whether the reinstatement of Mr Gama as CEO of TFR at the insistence of My Zuma, Mr Gigaba (former public enterprises minister) and [former Transnet board chairman Mafika] Mkhwanazi constituted an improper inducement to Mr Gama to do anything, thus amounting to corruption,” according to the report. 

In the report, Zondo points a finger at the ANC’s cadre deployment policy, which favoured tainted individuals such as Gama.  

Spheres of influence

State capture had crept into Transnet as early as 2009, shortly after Zuma’s election as president, where he fought against recommendations by his then public enterprise minister, Barbara Hogan, that his preferred candidate, Gama, not be appointed as group chief executive at the state logistics company. 

The commission found there was evidence that state capture at Transnet involved a systematic scheme of securing illicit and corrupt influence or control over decision-making. 

“Corrupt actors” sought to gain control over staff appointments and government bodies to influence large procurement and capital expenditure by changing procurement mechanisms, according to the report.  

These included the altering of criteria to favour certain suppliers, inflated payments and advanced payments. A small group of senior executives and directors were strategically positioned to collude in the awarding of key contracts. 

“The evidence shows that these key employees at an operational level in Transnet were disempowered or marginalised from participation in important procurement decisions which affected their work … There was an increased reliance on consulting and advisory services.” 

At the heart of the corruption lay companies associated with the Guptas and one of their surrogates, businessman Salim Essa, namely McKinsey Consulting, Trillian Capital and Regiments. Money for unnecessary, overcharged work was laundered through the companies and eventually ended up in the Gupta coffers. 

More than R1-billion was laundered through various shell companies nominated by Essa  and another Gupta fixer, Kuben Moodley, from fees paid by Transnet to Regiments. The commission found that all of the shell companies operated as money laundering vehicles without any legitimate business activity. 

Revenue received from Regiment by the shell companies was within days laundered to lower level money laundering entities, none of which paid PAYE to the South African Revenue Service. 

Hogan testified that from her earliest days as minister, Zuma “interfered” and sought to “thwart” her appointment of a new group chief executive at Transnet. 

She stated that Zuma improperly and recklessly interfered in matters relating to the appointment of directors and chief executives of state enterprises. She added that the actions by Zuma contributed to corruption, nepotism and a lack of accountability.  

In 2009, Pravin Gordhan withdrew his candidacy for group chief executive a week after a selection process recommended him for the position. 

Gama, who was a candidate for the position at the same time, was under an investigation for his conduct following allegations of corruption in relation to the procurement of security services from General Siphiwe Nyanda’s company while heading Transnet Freight Rail. 

Hogan and the board formed the opinion that the serious nature of allegations against Gama precluded him from appointment as group chief executive.  

The report states that the board considered Gama unsuitable for appointment because, in addition to the allegations of corruption, an assessment raised worrying concerns about his judgment and important gaps relative to the requirements for the position. The assessment also found that Gama lacked greater cognitive development to handle the complexity of the position. 

The board and Hogan recommended the appointment of Sipho Maseko, who was assessed as highly capable.  

Hogan testified that during a meeting in June 2009, Zuma indicated that he was not prepared to accept the appointment of Maseko, and insisted on Gama. 

Hogan resisted this on the basis that he was not the board’s preferred candidate and was facing disciplinary proceedings.

According to the report: “President Zuma adopted the position that no new appointments would be made at Transnet until the proceedings [against Gama] were completed. In July 2009, Hogan sent President Zuma a decision memorandum, detailing the selection process, the strong motivation for the appointment of Maseko, the investigation into Gama and the cooperative governance aspects of Group CEO appointments.” 

While Zuma denied claims made by Hogan during his testimony at the commission, Zondo said that the former president’s version “must be rejected as a complete fabrication”. 

“If he had no objection to appointing Maseko who was recommended by both the board and his own minister of enterprises, why then was Mr Maseko not appointed? On Hogan’s version, the reason why Maseko was not appointed is that Zuma would not allow the matter to be taken to cabinet because he said that his only choice was Gama. Mr Zuma fled the commission before he could be asked to explain this.”

Gama received support from two cabinet ministers, Jeff Radebe and Nyanda, whose business was implicated in the corruption charges against Gama at the time. 

Gama or nothing

The then ANC secretary general, Gwede Mantashe, and a faction of the ANC also pushed for Gama’s appointment. 

During his testimony, Mantashe said he supported Gama because it was appropriate to promote “black excellence”, adding that Gama had demonstrated his abilities at Transnet Freight Rail. 

Mantashe stated that his support also rested on the notion that Gama should be appointed above white candidates favoured by the board, adding that he was concerned about racism. 

The report stated that Gama enjoyed support from ministers, the ANC, its youth structure under Julius Malema, the South African Communist Party and labour federation Cosatu, who released harsh statements accusing Transnet of persecuting Gama. 

“It is therefore reasonable to infer from public support shown for Gama by key members of the ANC that he also enjoyed the support of the deployment committee and this led ultimately to his appointment as group CEO in 2016. 

“President Zuma’s position was Gama or nothing, despite having received Hogan’s report on or about 28 July 2009 and acknowledging the urgent need for the appointment of group CEO. He allowed the position to go unfilled for almost two years until his removal of Hogan as minister with effect from November 2010,” Zondo stated. 

The report also found that Gigaba was involved in the appointment of Anoj Singh, Brian Molefe and Gama — allegedly three of the key enablers — who in turn gave free reign to Iqbal Sharma as chair of the acquisitions board when Transnet procured 1 259 locomotives in three separate procurement exercise totalling R60-billion.