Betrayal of the Promise: How South Africa is being stolen is the latest report on state capture and does not mince words in its description of the rot that has engulfed the government. The report describes Gupta- and Zuma-led networks as a virus-like, parasitic, criminal enterprise and goes into some detail when illustrating the extent to which State and State-owned enterprise coffers have been looted over a period of many years.
The 63-page report was penned by a totally unaffiliated and seemingly apolitical team of researchers, from several universities around the country.
They describe how the looting of the state – which has seen more than R10 billion channeled to Gupta-linked companies – was systematically coordinated.
It’s nothing less than a ‘silent coup’ the report observes. Maybe ‘cash blitzkrieg’ would be more apt.
The most interesting part of the report is the researchers’ graphic depiction of how the alleged looting network actually worked:
This network of patronage consists of 12 companies and 15 individuals who are connected to the Guptas and Zuma. This network is structured in three tiers.
- At the top there are the ‘controllers’ or patrons, such as Zuma and the Guptas who “sit at the apex and are usually the strongmen directly responsible for predation and exploitation as they control resources.”
- The second tier consists of ‘elites’ such as Ace Magashule (premier of the Free State), Faith Muthambi (former minister of communication), Malusi Gigaba (current minister of finance and former minister of public enterprises), Brian Molefe (CEO of Eskom and former CEO of Transnet), Mosebenzi Zwane (minister of mineral resources and Anoj Singh (Eskom CFO and former Transnet CEO). These individuals are responsible for establishing and maintaining patronage networks, which facilitate the distribution of benefits.
- The third tier are ‘entrepreneurs’ or ‘brokers’, such as Iqbal Sharma (former chairperson of Transnet’s tender committee), Eric Wood (CEO of Trillion), Salim Essa (CEO of VR Laser) and Ashok Narayan (CEO of Homix). They are the middlemen and are tasked with transferring funds to Gupta-linked entities.
The researchers went even further and provided an example of how the network plundered Transnet:
The collusion started earlier than people imagined – in this case when Zuma replaced Barbara Hogan with Malusi Gigaba as the minister of public enterprises – in 2010.
Shortly after his appointment, Gigaba appointed Gupta-linked Iqbal Sharma as the chairman of the Transnet tender committee. This committee supervised all tenders worth more than R2.5 billion and, almost immediately, Gupta-linked entities started to see the cash flowing.
One transaction related to the R51 billion tender for the purchase of 1 064 locomotives from four companies, including China South Rail which won a tender worth R14.6 billion. The Guptas have close links with China South Rail and the report claims that large sums of money were paid to Hong Kong-based Gupta entities.
Other links include benefits for VR Laser Property to supply components and Trillian Asset Management to provide financial and corporate-structuring consulting services.
Additional links include Neotel, which apparently benefitted from brokering work performed by Homix, a low-key Gupta entity. International IT company SAPS was also “strongly encouraged” to partner with another Gupta company: Global Softech Solutions.
The Guptas also benefitted in other ways as is depicted in the graphic above.
State capture under the auspices of radical economic transformation
Another core theme of the report is that this looting has and continues to be performed under the smokescreen of radical economic transformation (RET). This has resulted in the creation of a Zuma-centred black power elite, or “parasitic bourgeoisie” as Wits vice chancellor Adam Habib described them during the launch event.
The report states that “RET has been turned into an ideological football kicked around by factional political players within the ANC itself and the alliance in general, who use the term to mean very different things. “Crucially, RET is used to give ideological legitimacy to what is essentially a political project to manage the symbiotic relationship between the constitutional and shadow state.”
The report also offers three solutions to this network of patronage, which most people outside of the Zuma/Gupta network will support.
- The Gupta-Zuma network needs to be broken and dismantled. This will require political action within and outside the tripartite alliance to dislodge Zuma, coupled with legal action to criminalise and bring the perpetrators of State capture to justice.
- Secondly, a new national economic consensus is required to which all parties subscribe. There has never really been a broadly shared and fully supported economic policy framework. RET is already a factional political football. One can speculate that a positive outcome of this political crisis would be the adoption, for the first time ever, of a new economic consensus – that can both unite the different factions of the alliance by giving real substance to RET, while enjoying broad stakeholder support in the business community, labour sector and civil society.
- Thirdly, all stakeholders, in particular the political actors who will replace the Zuma-centred power elite at some point in the future, must commit to realising the vision of a new economic consensus within the framework of the Constitution and relevant legislation.
As one State capture report after the other appears, it is becoming clearer that we do not only need a judicial enquiry into State capture, but also a full criminal investigation. If Zuma remains in power this will most certainly not happen, but let’s hope that this weekend may change this scenario.
I believe the end is nigh.
Brought to you by Moneyweb
