‘State capture’ report sets SA on fire

By Jade McClune

‘State capture’ report sets  SA on fire

Windhoek – Thousands of South Africans yesterday took to the streets to demand the resignation of President Jacob Zuma, who is heavily implicated in the just-released ‘state capture’ report compiled by the country’s public protector.

Zuma yesterday morning withdrew a court challenge he had filed last month in an attempt to prevent the public protector from releasing her report on state capture allegations. The judges presiding over the case in the Pretoria High Court ruled that the report had to be released by 17h00 yesterday.

Former public prosecutor Thuli Madonsela had signed off her report, entitled ‘State of Capture’, on October 14, prior to stepping down from the post, but Zuma initially sought to have the report quashed on the grounds that he did not have enough time to respond and question Madonsela’s witnesses.



Madonsela launched the probe after receiving “three complaints in connection with the alleged improper and unethical conduct relating to the appointments of Cabinet ministers”.

Undue influence

According to her report, the complaints followed media reports alleging that Deputy Minister of Finance Mcebisi Jonas was offered the post of finance minister by the Gupta family long before his then colleague Nhlanhla Nene was abruptly removed from office by Zuma on December 9, 2015.

“The post was offered to him by the Gupta family, which has a long standing friendship with President Zuma’s family and a business partnership with his son Duduzane Zuma. The offer took place at the Gupta residence in Saxonwold, City of Joburg Gauteng,” reads the report.

“The allegation was that Atul Gupta, the oldest of three Gupta brothers who are business partners of Zuma’s son, Duduzane Zuma, in a company called Oakbay, among others, offered the position of Minister of Finance to Deputy Minister Jonas and must have influenced the subsequent removal of Minister Nene and his replacement with Des Van Rooyen on 9 December 2015, who was also abruptly shifted to the Cooperative Governance and Traditional Affairs portfolio four days later, following a public outcry.

In March, Deputy Finance Minister Jonas issued a statement alleging he was offered the position of Minister of Finance by members of the Gupta family in exchange for executive decisions favourable to the business interests of the Gupta family, an offer he declined.

The Gupta family has though denied Jonas’ allegations. At the time Jonas is alleged to have been offered a Cabinet post as minister of finance, Nene was occupying the post.

Nene was removed from his post on December 9 , 2015 by Zuma and replaced with Minister Van Rooyen, who in turn was replaced by Minister Gordhan on December 14, 2015 as minister of finance, a mere four days after his appointment.

Jonas reported that he was personally offered the post of finance minister by Ajay Gupta, which Jonas declined: “Mr Ajay Gupta continued to speak. He disclosed names of ‘Comrades’ they were working with and providing protection to. He mentioned that collectively as a family, they ‘made a lot of money from the State’ and they wanted to increase the amount from R6 billion to R8 billion and that a bulk of their funds were held in Dubai.”

Treasury a stumbling block

According to Jonas, Ajay Gupta indicated that the National Treasury was “a stumbling block to the family’s business ambitions. As part of the offer to become finance minister, Jonas would be expected to remove the current director general of the National Treasury and other key members of executive management.

Gupta apparently mentioned that his family had made President Zuma’s son a billionaire and that he has a house in Dubai.

“As Jonas was walking towards the door, Ajay “Gupta made a further offer of R600 million to be deposited in an account of his choice. He asked if Jonas had a bag which he could use to receive and carry R600 000 in cash immediately, which he declined.”

Following Jonas’ statement, former ANC MP Vytjie Mentor issued a statement to the press alleging she was also offered a Cabinet post by members of the Gupta family in exchange for executive decisions favourable to their business interests, an allegation denied by the Gupta family.

“The media reports also alleged that Vytjie Mentor was offered the post of Minister for Public Enterprises in exchange for cancelling the South African Airways (SAA) route to India and that President Zuma was at the Gupta residence when the offer was made…”

“The media reports alleged that the relationship between the president and the Gupta family had evolved into ‘state capture’, underpinned by the Gupta family having power to influence the appointment of Cabinet ministers and directors in boards of SOEs and leveraging those relationships to get preferential treatment in state contracts, access to state-provided business finance and in the award of business licenses.”

How the Gupta fortune grew

The report shows that the Gupta family, originating from India, arrived in South Africa in 1993, where they established businesses with their most notable business being a computer assembly and distribution company, called Sahara Computers.

The family is headed by three brothers: Ajay Gupta, the eldest, as well as Atul Gupta and Rajesh Gupta, the youngest.

“According to a letter submitted to my office, total revenues from their business activities for the 2016 financial year amounted to R2,6 billion, with government contracts contributing a total of R235 million of the revenues,” Madonsela wrote.

The Gupta brothers later diversified their business interests into mining through the acquisition of JIC Mining Services, Shiva Uranium and Tegeta Exploration and Resources, Optimum Coal Mine and Koornfontein Coal Mine.

They also started a media company, called TNA Media, which publishes a newspaper called The New Age and owns a television channel called ANN7. “The New Age newspaper has also secured contracts with some provincial government departments and state owned entities, most notably Eskom and South African Airways, Madonsela noted.

Close friends

According to her report, the Gupta family are known friends of President Zuma, who has openly acknowledged his friendship with them, most notably during a discussion in the National Assembly on June 19, 2013 when he admitted that members of the Gupta family were his friends.

Madonsela said: “Ajay Gupta also admitted to being friends with President Zuma when I interviewed him on 4 October 2016. President Zuma’s son, Duduzane Zuma, is a business partner of the Gupta family through an entity called Mabengela Investments.”

She noted that Mabengela has a 28.5 percent interest in Tegeta Exploration and Resources. Duduzane Zuma is a director of Mabengela. Members of the Gupta family and Duduzane have secured major contracts with Eskom, a major State-owned company, through Tegeta. Tegeta secured a 10-year coal supply agreement with Eskom SOC Limited to supply coal to the Majuba Power station. It also secured contracts with Eskom to supply coal to the Hendrina and Arnot power stations.

“Eskom CEO, Brian Molefe is friends with members of the Gupta family. Mr A. Gupta admitted during my interview with him on 4 October 2016 that Mr Molefe is his ‘very good friend’ and often visits his home in Saxonwold…

“The Gupta family recently purchased shares in an entity called VR Laser Services that has major contracts with Denel SOC Limited, a State-owned armaments manufacturing company. VR Laser has also partnered with Denel to apparently seek business opportunities abroad,” the report noted.

Madonsela recommended that President Zuma appoint a commission of inquiry to investigate the findings and allegations contained in her report.

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