South Africa

Days of Zondo

Nene’s testimony thrusts light on Zuma, the classic kleptocrat

A file photo of Jacob Zuma by Greg Nicolson

Finance Minister Nhlanhla Nene gave unprecedented insight into Zuma’s final days of desperate plunder. Over five hours on Wednesday, Nene became the first Cabinet member to lay bare his experience of State Capture, the form of high corruption being probed by Deputy Chief Justice Raymond Zondo in a judicial commission of inquiry sitting in Johannesburg in a building adjacent to the Constitutional Court.

The truth of six Gupta visits

In a 50-page statement, Finance Minister Nhlanhla Nene spoke his truth: he had visited the Gupta family, who lay at the nexus of the corrupt network, at least six times, both as deputy finance minister and later as the incumbent minister in his first term. Nene was returned to the post of Finance Minister by President Cyril Ramaphosa in February 2018 and appeared at the Zondo Commission on Wednesday with all the senior members of his Treasury team in tow.

He presented the testimony which revealed how the Treasury came under attack by former President Jacob Zuma who first axed Nene as finance minister in December 2015 and later fired Pravin Gordhan as finance minister in March 2017.

Zuma, the kleptocrat, at the centre of story of capture

Nene became the first Cabinet minister to sketch an anatomy of how President Jacob Zuma was a central figure to State Capture, generally, but also insofar as it related to a narrowly averted R1-trillion nuclear deal and to the mismanagement of SAA.

By the end of his excoriating testimony, Zuma lay front and centre of the story of State Capture, although Zuma has recently denied that the concept exists and denied that he had had any role in it. Beyond State Capture, Zuma was painted by Nene’s testimony as a late-term kleptocrat desperate to squeeze the final fruits from his access to public power as his term as ANC president came to an end.

Without party power, South African presidents have little influence or sway and at the time Nene’s story played out, from 2015 to the end of Zuma’s ANC term at the end of 2017, he became more desperate to make the final deals of his 10-year administration, which can now fairly be called a kleptocracy.

Hire and fire at will

Kleptocrats hire and fire on a whim, with no need to explain or account for their decisions. To wit, Nene told the Commission that “I believe I was removed from office because of my refusal to toe the line in relation to certain projects. In hindsight, it seems that those projects may have benefited the Gupta family and other close associates of the President (Zuma)”.

He added that “sometimes the Minister of Finance is referred to as ‘Mr No’ when government departments are advised that their proposals must fall within the Cabinet-approved medium-term, policy, strategic and fiscal framework”.

But Zuma did not like the power of Mr No and he felt constrained by the Treasury’s constitutional protection; nor was the former president ever comfortable with the rules governing public finances, like the Public Finance Management Act which sets out detailed processes for how public money should be spent, especially on big-ticket items.

The Minister (of Finance) bears unique obligations in law. The Minister is responsible for tax policy and is the executive authority for the South African Revenue Service, to oversee the collection of tax revenue and the management of the National Revenue Fund,” said Nene, as he reeled off nine pages of laws and processes governing how the National Treasury works.

There are apartheid agents in the Treasury – Zuma

Like kleptocrats everywhere, Zuma planted conspiracy theories to deal with his enemies. He was persuaded by a misinformation dossier called Project Spider Web which claimed that the Treasury was under the sway of billionaires like Richemont’s Johann Rupert, among others. That dossier first came off the email address of Dudu Myeni, Zuma’s confidante and the chair of his charity. Nene told the Commission:

When I read the document, it reminded me of a remark made by former President Zuma where he told me there are ‘apartheid agents’ within the Treasury.”

Zuma made this comment when he summonsed Nene to a meeting with a senior Malaysian official who was trying to make a deal for South Africa to buy an Engen/Petronas refinery. Kleptocrats or despots make deals like these on their own as there are usually commissions payable to cronies.

Zuma tried to strong-arm a state guarantee out of Nene:

It was at that point that President Zuma, in the presence of the Malaysian official connected to PetroSA, raised the issue of spies within Treasury.”

Nene would not be allowed to forget that he had refused to play ball by providing the guarantee for PetroSA to buy the refinery.

A regime of fear

The history of despots and kleptocrats also shows that they run regimes of fear. What was clear throughout Nene’s five-hour-long testimony was that he was often isolated in his resistance to Zuma’s big-spending ways and that fear was a factor of his life and that of other leaders who would not play the capture games.

In October 2015, two months before his axing, his then deputy minister, Mcebisi Jonas, asked to see him urgently.

I got the impression that Mr Jonas was agitated,” said Nene. “We were supposed to meet in my office but we decided to go to his office as he had a good balcony. I could see that Mr Jonas was flustered.”

Jonas revealed the meeting he had had with a Gupta brother, with the arms dealer Fana Hlongwane and Zuma’s son Duduzane, where he had been offered the job of finance minister in return for a bribe.

Under questioning, Nene revealed that they chose the balcony because they were afraid of who may be listening in to their conversations. Nene said that even pot-plants at the Treasury were, by then, regarded with suspicion as listening devices might have been planted in them.

What was clear was that Zuma’s antipathy to and growing attacks on the Treasury had created an atmosphere of fear.

Zuma goes nuclear

Near the end of his term as ANC president, Zuma became desperate to get a nuclear deal with Russia signed. He chopped and changed his Cabinet several times in pursuance of this final deal; amaBhungane has previously reported that officials in the state believe commissions linked to the deal had already been paid while resisters in the South African civil service held up the inking of the deal.

Nene gave an unprecedented account of how much pressure he and the National Treasury faced to get it signed. In 2011 plans for the nuclear build started and Cabinet established the national nuclear energy executive committee as a political structure to oversee Zuma’s pet project. He took over running this committee from then deputy president Kgalema Motlanthe and soon gave it the imprimatur of a security portfolio to place former Intelligence minister David Mahlobo in a powerful position to push the Cabinet for a deal.

Nene and the Treasury stood sentinel against the deal.

The envisaged 9.6-gigawatt nuclear new build programme would have constituted the largest public investment programme in South African history, and, relative to the size of the South African economy, would have been one of the largest public sector investments ever undertaken internationally,” Nene told the Zondo Commission on Wednesday.

He added, “I was also very concerned that the recovery of nuclear build cost through the tariff would have profound consequences for the economy and South African users of electricity.”

But, like kleptocratic despots who need big presidential glory projects to extract rents from, Zuma rode roughshod over the Treasury’s concerns. He appointed a malleable energy minister in Tina Joemat-Pettersson who announced that Russia and South Africa had signed an intergovernmental framework agreement. After a public uproar, this was tamped down into a request for proposals from five nuclear-producing nations.

By July 2015, Zuma went full Putin – he started behaving like the Russian President, who wrote the playbook on contemporary kleptocracy as one of the architects of the capitalism of oligarchs, where rich and connected cadres win big state contracts and so support their political masters.

At a meeting in Ufa, Russia, “Mr Zuma criticised me for not finalising the financial aspects of the proposed nuclear deal with Russia. Mr Zuma said he was not happy that I was not doing what I was supposed to have done a long time ago so that he could have something to present when he meets President Putin for their one-on-one meeting.”

This appears to have been the high-water mark of Zuma’s era of plunder as he pushed for a deal that would have bankrupted South Africa if it were not for a court case brought by a group of Catholic activists who stopped it in its tracks.

I was seen as the person standing in the way of the nuclear deal. I was accused of insubordination, not only by the president but by some of my colleagues,” said Nene, whose testimony held up a mirror to Zuma’s growing desperation.

The nuclear deal, as envisaged by Zuma’s crony ministers, was “absolutely fiscally unsustainable”, said Nene.

In kleptocracies, the ruling class seeks short-term gain and does not have concern for the inter-generational indebtedness this can encumber future generations with. Zuma fitted the model perfectly as he twisted and corrupted his Cabinet into signing off on a nuclear deal on 9 December, 2015, hours before he axed Nene in a curt two-minute meeting.

And in a final part of Nene’s testimony, the picture of Zuma as a despotic leader reaching his end of days was sealed.

The madness of a route to Khartoum

The final part of Nene’s testimony related to how he was forced to arm-wrestle with Myeni who was then chairperson of SAA – what it reveals is how Zuma allowed cronies like her to run state-owned enterprises for personal gain.

Myeni’s reign saw evidence of her trying to extract as many rents as possible from the airline, even though it was technically insolvent to the tune of R7-billion in 2014. It needed a state guarantee to remain flying.

Myeni ran roughshod over a deal to get out of an expensive Airbus contract to save the airline and she sought to bring in an unknown leasing company to buy and then lease back planes to SAA. It was hare-brained – or in Nene’s words, it had numerous “gaps and flaws”.

Things got so bad that at an ANC study group, Nene said he told his comrades, “either Ms Myeni leaves or I leave”.

Zuma called a meeting between Nene and Myeni to get the two to “find each other”. Nene said, “I found this odd because Ms Myeni reported to me, yet the president was treating us like two errant school children.”

As SAA struggled to stay flying, Myeni wrote to Nene asking him to approve a route to Khartoum that would lose money hand-over-fist.

The minister was aghast because the request came three days after Sudanese leader Omar al-Bashir hot-footed it out of South Africa as he faced arrest. The route would be subsidised by the Sudanese government and SAA could be a designated flag-carrier for Sudan, said Myeni.

Nene put the kaibosh on that plan too – but the request for the route to Khartoum reveals how Zuma had by then lost all sight of law and public finances to become a leader of narrow alliances and self-interest. DM

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