South Africa


Zuma’s nudge nudge, wink wink nuclear meeting with Pravin Gordhan, Lungisa Fuzile

Former finance minister Pravin Gordhan allegedly warned then president Jacob Zuma that unless done properly, a nuclear deal would make the arms deal scandal look like a Sunday school picnic.

Former President Jacob Zuma allegedly called then minister of finance Pravin Gordhan and his director general, Lungisa Fuzile, to a meeting with a nuclear physicist to secure backing for the controversial nuclear deal.

This was before any formal cost processes had been undertaken to make this unaffordable deal a reality and as such Fuzile concluded that the only purpose for the strange meeting had been to “nudge” them along so they would be on the right page when the deal eventually landed up with Treasury for approval.

Treasury’s own financial modelling later showed that the deal to build a 9.6GW plant would have saddled South Africa with an unsustainable debt-to-GDP ratio of between 75% and 95% by 2030 against a debt ceiling of 60%.

Testifying before the State Capture inquiry for a second time, Fuzile corroborated elements of the testimony of Gordhan and his successor, Nhlanhla Nene, on the push for the nuclear deal and, among other things:

  • The closure of the Gupta bank accounts;

  • The shenanigans at South African Airways under Dudu Myeni;

  • Bathabile Dlamini’s bid to have Treasury side-step a Constitutional Court ruling on Sassa to continue working with Cash Paymaster Service(CPS);

  • The push for the Denel Asia/VR Laser deal, thereby handing the Guptas crucial commercially valuable intellectual property; and

  • A failed bid to have Treasury back a multi-billion-rand deal for PetroSA to acquire a 51% stake in Engen.

Fuzile, who later resigned as DG after a shocking incident during which Gordhan, his then deputy, Mcebisi Jonas, and senior Treasury officials were summarily recalled from an investor roadshow abroad, said that first he had heard about South Africa’s plan to sign an agreement with Russia when a senior official from the Department of Energy called him about a document she was expected to sign.

Treasury had not contributed anything to the agreement and the official had called him about concerns over a reference to tax incentives offered to the Russians.

SA is decidedly legalistic on tax matters and exceptions (tax incentives) can’t be given “willy nilly”, Fuzile testified.

That agreement was an indication that some in government were forging ahead with the costly deal without due process and the contemplated tax incentives were inconsistent with SA laws.

Fuzile said that at some point he and Gordhan were called to a meeting with Zuma at the presidential residence Mahlamba Ndlopfu. Upon arrival, they found Senti Thobejane, then advisor to the minister of energy, waiting for them.

Thobojane was later fired by Tina Joemat-Pettersson — previous reports by Amabhungane raised questions about his whereabouts.

Zuma was late for the meeting, but while waiting, Thobejane took them through his “thoughts” on nuclear energy.

Once the former president arrived, Gordhan told him about the conversation and Zuma allegedly said that this was part of the reason for the meeting, Fuzile said.

Gordhan, he testified, was very clear with Zuma that “every rule in the book” would have to be followed if the country was to proceed with a nuclear deal.

He (Gordhan) told him (Zuma) this was important because failure to do that would turn the arms deal problems into a Sunday school picnic.”

Zuma then allegedly suggested that Fuzile and Thobejane swop notes to ensure procurement processes were in line.

This, Fuzile testified, was strange because advisers have no signing authority as this rested with the accounting officer, the DG of a department and ultimately, the relevant minister who has executive authority.

Asked by the commission’s senior advocate, Vincent Maleka, what he made of the purpose of the meeting, Fuzile said it could only have been to “nudge” them along, to win them over.

Why else would you jump to people who would need to approve it down the line?”

He then explained how Treasury had been widely regarded by government officials as a stumbling block to various costly expenditure projects, including the nuclear deal.

This had resulted in a general level of dissatisfaction with the team responsible for controlling fiscal spending. As an illustration of the impact of this, Fuzile described persistent rumours and threats communicated to him that he would have a “new minister” and that the country’s budget office would be relocated to the Presidency under Zuma.

Asked by Maleka who those were that were so dissatisfied with Treasury, Fuzile said:

Definitely former President Zuma was one of those persons.”

Generally, the Budget process gives rise to dissatisfaction as departments want to spend and the government does not always have the money — so this can create fertile ground for resentment.

But, he then added:

When the authority (the president) feeds into it… then your department of finance/Treasury lands in trouble.”

He said the then DG in the presidency, Khulekani Mathe, once told him that Zuma had asked the National Planning Commission to ask whether Treasury’s Budget process was aligned to “priorities”.

In what appeared to have been “real anger” from Zuma, he allegedly told Mathe that if the evidence confirmed that Treasury was not playing ball, he (Zuma) would shake the tree.

If they must fall, then so be it…” the former president had allegedly told Mathe, Fuzile testified.

The nuclear deal, at a cost of more than R1-trillion, will have been the single biggest project in post-apartheid South Africa, yet while Treasury officials were doing their job, asking tough questions, some were frustrated and pushing for ill-advised commitments prior to cost analysis or consideration for the impact on the economy.

It would seem that people had other interests,” Fuzile said.

He confirmed testimony by Nene and Gordhan relating to other situations that landed Treasury in trouble, such as PetroSA’s failed bid to buy a 51% stake in Engen, the Denel/VR Laser deal, the closure of the Gupta family’s bank accounts and its backing for a sweetheart deal to save a cash-strapped SAA from having to make pre-delivery payments for new aircraft while the airline under Dudu Myeni had tried to scupper this by seeking approval for an alternative deal involving a “middleman”.

Overall, Fuzile said:

The minister of finance and Treasury became a stumbling block in the erosion and (corruption) of due process in policy and decision-making in the state.”

In the case of the Engen deal, he said there was again a “cavalier” attitude to due process as there was an expectation for Treasury to put up a guarantee for the full price, while PetroSA was only meant to take up a 51% stake. This was because a third-party partner was prepared to sign only subject to full due diligence which had not even been done.

The deal eventually fell through and Zuma reminded Fuzile of this sometime later.

At a controversial December 8, 2015, meeting where Treasury again outlined its serious concerns with a nuclear deal, Zuma allegedly turned to him saying:

You and your former minister (Gordhan) had stopped the PetroSA/Engen project.

In other countries of the world, finance ministers don’t tell the president there is no money. Their job is to find the money. Perhaps this is not the approach of ministers in SA.”

This, Fuzile said, had shocked him, but he could not, with a clear conscience, sit there and back the unaffordable nuclear deal.

The next day, on December 9 2015, at a Cabinet meeting chaired by Zuma — and attended by several Cabinet ministers and officials from various departments who were present when Treasury explained that more work needed to be done before proceeding with the deal — the nuclear plan was tabled and approved as if there had been no objection by Treasury to the grossly underestimated cost figures supplied by the Department of Energy the previous day.

The department’s figures, Fuzile said, were based on a favourable US dollar/rand exchange rate of R10 — out by some 40% and a level that the rand had not reached in years, Fuzile said.

The commission resumes on Tuesday with testimony by National Treasury economist, Catherine MacLeod who is expected to testify about, among other things, the performance and fluctuation trends of the rand. The commission is also scheduled to hear, in the coming days, an application by former finance minister Des Van Rooyen, who hopes to cross-examine Fuzile. DM