STATE CAPTURE

ANC’s milking of state coffers has become a way of life, explosive report reveals

By Marianne Thamm 4 May 2021

Former president Jacob Zuma. (Photo: EPA / JON HRUSA) | ANC flag. (Photo: Leila Dougan) | President Cyril Ramaphosa. (Photo: Gallo Images / Deaan Vivier) | Deputy President David Mabuza. (Photo: Gallo Images / Sharon Seretlo) | South African currency. (Photo: Adobe Stock) | Atul Gupta. (Photo: Gallo Images / Sunday Times / Kevin Sutherland)

Leveraging state coffers to fund and keep the ANC in power is deeply ingrained in the governing party’s political DNA, an explosive report to the Zondo Commission reveals.

Marianne Thamm

Appearing before the Zondo Commission on Monday, 3 May, former Passenger Rail Agency of South Africa (Prasa) CEO Lucky Montana disclosed that it was common for the ANC to ask state agency CEOs to make a “donation” to the governing party. 

While President Cyril Ramaphosa, appearing before the commission on 29 April, said it was “regrettable” that the ANC had accepted donations “from companies implicated in criminal activities”, he intimated he had largely been in the dark about this.

However, according to an explosive and confidential report submitted by the Government and Public Policy (GAPP) think tank to the Zondo Commission and an in possession of Daily Maverick, the ruling party’s milking of state coffers has, over the years, become a way of life.

The submission, authored by GAPP director Ivor Chipkin, and titled Making Sense of State Capture in South Africa, sets out that State Capture, in this context, refers to “a way of winning and maintaining political office through means that are unlawful, frequently criminal and often violent”.

(Editor’s Note: Dr Chipkin was not party to Daily Maverick obtaining a copy of the report.)

2021 Making Sense of State Capture

The centrality of the ANC “as the conduit between the economy and the state and back again is key to understanding the situation in South Africa”, the author notes.

State Capture was as much about accumulation and self-enrichment as it was about maintaining the ANC in power, said the report.

“As long as the ANC remains in power the ability of respective governments to implement policies declines. Daily life in South Africa is becoming poorer, more sordid and dangerous,” the report warns.

Chipkin described this as South Africa’s “impossible conundrum”. 

“Democratisation risks civil war, the status quo produces decline. There are no easy answers out of this dilemma.”

The dilemma, according to the submission, is that the ANC has “held in unstable equilibrium the various fragments of South African society.

“It has done so because of a paradox: the very access to state positions and the resources that fuel factionalism in the ANC [are] also the basis of its strongest cohesion.”

The governing party’s “hostile elites” had to combine to win elections “in order to rise in the class structure and to enter senior positions”.

The model of the ANC’s politics of the transformation of South Africa’s class structure and the integration of political elites, the report states, was first developed in the provinces and particularly Mpumalanga under the premiership of David Mabuza, now the country’s deputy president.

“It is possible to reconstruct how it works because recently a large body of evidence has entered the public domain through the upcoming court case of Fred Daniel,” states the report. The matter is due to be heard in July.

Daniel, a conservationist, brought a R1-billion civil damages claim against the Mpumalanga Tourism and Parks Agency and other government entities in 201o.

Writing in a three-part series on the long-running battle between Daniel and Mabuza, who was MEC for agriculture and land affairs in the Mpumalanga provincial government before becoming premier in 2009, Daily Maverick’s Kevin Bloom described the feud as about much more than money – it is about the “mechanics of corruption”.

Back in 2003 already Daniel had blown the whistle on a land claims scam that the government office had allegedly run using local middlemen. For his trouble Daniel faced violent harassment, smear campaigns and an endless supply of death threats.

We saw that in Mpumalanga the criminal repurposing of the Mpumalanga Parks Board and the land reform process saw key individuals get very wealthy,” notes the report.

Beyond this, the commercialisation “also favoured the emergence of numerous front companies that were largely fund-raising fronts for the ANC. The State Capture Commission has heard compelling evidence that this model of politics was at work in the Free State too.”

What was foremost about the Daniel/Mabuza case, said the report, was the political context Daniel “unwittingly entered into” when he bought large tracts of land in Mpumalanga with the intention of rewilding.

“What he came up against was not simply corruption, but a new model of patronage politics,” notes Chipkin.

This new model ensured that the spoils of government did not make their way to potential supporters, as voters, states the report.

While ANC finances remained a mystery, “how it finances itself organizationally and how the various power networks that compete within it pay for their activities, campaigns and election efforts are key to understanding contemporary politics”, notes Chipkin.

The changing character of the ANC over the past 20 years had altered “not only the quantum of money that the ANC needs to raise in order to operate, but also how and by whom it is raised”.

This week Montana shed some light on an estimated R80-million that Swifambo Rail Leasing director Auswell Mashaba, a member of the ANC, made to the “movement” after his company was awarded a R3.5-billion contract by Prasa in 2013.

While Mashaba has refused to testify, in a previous affidavit to the commission he claimed, “I was forced to pay money to people who said they were collecting money for the ANC and I agreed to pay R80-million.”

Apart from Mashaba’s sugar daddy donation, Montana also revealed that he had met Angolan businesswoman Maria Gomes, and the then treasurer of the ANC, Zweli Mkhize, in Johannesburg to discuss donations to the ANC. Montana claimed Mkhize had provided Gomes with bank account details for donations. 

“Chair, I was there with Mr Mkhize,” said Montana. 

This week’s evidence on Prasa aside, the Zondo Commission has heard a tsunami of evidence about suitcases stuffed with cash and paid to the likes of Malusi Gigaba, Deputy Minister of Home Affairs/Minister of Public Enterprises/Finance/Home Affairs.

The struggle today is not simply between avowed constitutionalists and democrats and their opponents. The struggle today is for the very integrity of the state in South Africa.

Others seen leaving the Gupta Saxonwold estate, the family’s office complex at Sahara Computers or a luxury Melrose Arch apartment with laden car boots include two former Transnet CEOs, Brian Molefe and Siyabonga Gama.

The GAPP submission to Zondo sets out how gaining control over the levers of power “through illegal and unconstitutional means” has been used by many in the ruling party.

“The struggle today is not simply between avowed constitutionalists and democrats and their opponents. The struggle today is for the very integrity of the state in South Africa,” Chipkin submitted.

According to the report, the diversion of vast sums of taxpayers’ money into “war chests” for the ANC and the governing party’s subsequent fragmentation into powerful warring factions reveals State Capture as an unconstitutional political project which threatens democracy.

The report notes that, “Despite the supposed supremacy of the Constitution, the rules of the political game in South Africa are defined in the ANC and according to its increasingly toxic culture incorporating authoritarian and democratic tendencies simultaneously.”

One of the keys to the ultimate success of the political project that evolved gradually into State Capture was the integration of various homeland territories and their government officials after 1994 as well as the inclusion and recognition of traditional leaders by the ANC.

This provided a path for “aspirant Black capitalists” and former state managers and officials as the ANC came to control the distribution of senior positions in public service. 

The revision of the ANC’s constitution in 1997 set out how the party would function and elect leadership through its branches, which led to extraordinary growth – from 621,237 members in 2,700 branches in 2007 to 1.2 million members in 2012.

In the run-up to Polokwane in 2017, ANC membership ballooned by 30%, with high growth in the Eastern Cape and Free State.

By 2017, the Eastern Cape had fallen into third place behind Mpumalanga, and Limpopo had almost caught up. Between 2012 and 2017, the report notes, “growth in three provinces in particular was dramatic”.

“In 2012 the North West sent 234 delegates to Bloemfontein [elective conference in Mangaung]. Five years later it sent 538, an increase of 113%, Mpumalanga sent 467 delegates in 2012 and 736 in 2017, a nearly 60% rise. The number of Free State delegates rose 26% to 409.”

Also in 2009, notes the report, the size of the executive grew noticeably under Jacob Zuma. His government consisted of 33 ministers and 27 deputy ministers (totalling 60) as opposed to Kgalema Motlanthe’s 27 ministers and 20 deputies. 

“By the end of Zuma’s term, the executive had grown to 71.”

This growth, notes the report, also marked a shift towards more local and regional politicians “hoisted to the executive”. 

In 2009, 16 members of the executive came from provincial or local governments, making up 26% of the Cabinet. By 2014 this had risen to 26, or 40%.

If this happens, the ANC will cease to be the pivot point in the double process of political integration and economic transformation. The ANC will cease to be the chief site of the political and become an ordinary political party in a political field defined by the constitution.

“From 2009 the composition of cabinet suggests that the (provincial) origins of a politician had become an important criterion for their selection to cabinet,” the report notes.

A dominance in regional politicians from North West and Mpumalanga becomes clear from 2009, while the third leg of the “Premier League”, the Free State, “scores poorly in cabinet positions, but not in the leadership of the ANC itself, where Ace Magashule, the former Free State Premier, is the Secretary General of the party”.

The “palace” politics of the ANC, writes Chipkin, “comprises party leaders, their families and their wider network of lovers and mistresses”.

It also included the leaders’ staff, bodyguards and drivers and personnel in private offices. 

“It includes political allies and colleagues, many, as we have seen, former homeland leaders and officials. Friends are there as are spiritual advisors (mainly from Rhema and other Pentecostal churches). In attendance are policemen and members of the intelligence community, both officially and unofficially.” 

The ANC too had “a long entanglement with criminal gangs” and “gangsters and organised criminal syndicates are present at the ANC court [in the metaphorical palace] too”.

While the negotiated settlement prior to 1994 had given the ANC “the keys to the political kingdom”, the report notes that the economy “remained overwhelmingly in white hands”. 

“The broad strategy of the movement was to capture state power so as to extend control over the economy.”

The politicisation of public administration in the 1990s meant that access to senior positions in government was largely decided through ANC political structures, especially provincial and regional committees.

Party members had to pass through party structures before they could access resources.

“The failure to distinguish between political and administrative roles is especially acute at local government where it is hard baked into the very definition of roles.”

The only way forward, says Chipkin, is the “progressive reform of government”.

“The professionalisation of the public service by, in the main, distinguishing between political office and administrative office and creating a buffer between the two will reinforce the autonomy of the civil service.”

If this buffer was achieved through a process of independent and meritocratic recruitment and promotion it would gradually improve the organisational capacity of government departments at all levels. 

“When accompanied by transparency in public procurement and intensive media reporting on and civil-society monitoring of government performance there is a prospect of building bureaucratic strength quickly.”

Most importantly, notes Chipkin, civil service reform will reduce the scope “for networks within the ANC (and other parties) to deploy their members and associates into key positions in government and in the state.

“If this happens, the ANC will cease to be the pivot point in the double process of political integration and economic transformation. The ANC will cease to be the chief site of the political and become an ordinary political party in a political field defined by the constitution.” 

What would become of frustrated elites? 

“They too might reject the new political dispensation and choose exit. This time, though, they will encounter a more powerful and capable state.” DM 

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All Comments 43

  • About 10 years ago I met a bloke in the change rooms at gym who asked for a donation to bury a comrade in Polokolwane. In return he offered me mining contracts if I donated R20k – which I did not. This explained why he asked me what I do for a living because I went to gym at 9am most days. Blatant.

  • This is organised crime and the ANC is a willing and active participant. It knowingly accepts the proceeds of crime. If it were a company, its directors would be arrested but for some reason it appears acceptable for a political party and its office bearers.

  • Thanks for this report. Its important to know that SA, in plain words, has become a kleptocratic oligarchy, the last line of defense being the ragged leftovers of the previously white-owned economy. This is such an interesting model, I’m surprised there aren’t dozens of PHD’s based on it.

    • Cont’d… There is so much at stake for the ANC, I’m almost relieved the opposition is such a whipped bunch. There is no way the ANC elites will accept losing an election, which is the only exit in this tragic mess.

      • Spot on! I thing most of the minority are feeling this way. Rather the devil you know than the devil you don’t! And of course…with so little left to steal, the only way forward is to sidestep the constitution, and “share” whatever is left! Not a thrilling thought!

        • Sadly the DA has had to be the ANC watchdogs -reactive rather than proactive… enabling the EFF to gain a strong foothold with the disenfranchised majority. For the DA to be really effective, they need to get out into the communities, supporting grass root issues with action & not promises.

  • The narrative that the ANC is trying to push is that there is a ‘Good’ ANC and a ‘Bad’ ANC and that the good ANC remains the best answer for South Africa. This was an inevitable result of the ANC monopolising political power. What SA Inc needs is genuine political competition.

    • Right. That is why I am so disappointed at seemingly thinking people who seem to attack the DA as a sport. We read articles like this involving huge amounts going to a truely bent ANC and the media attack the DA for very minor items. If the DA disappears, we will live in a one-party-dictatorship.

      • Part 2: I am not saying that the DA is perfect, perfection does not exist in a free democracy. It is only the best chance we have of blocking the ANC. Try naming an alternative …. You cannot, there is NO ALTERNATIVE in the time required. It is time DM woke up!

        • it is time for ALL of US to wake up. Also the DA must wake up and become a more dynamic organisation – refer Steenhuisen’s terrible recent video. Difficult to support them just because they are the only alternative…

          • The main reason to support the DA is that the governance of the Western Cape is lightyears ahead of any of the other provinces.

          • YOU are what I am referring to. It may be “difficult” for you to support the DA, what alternative have you got? Grab your “difficult” in both hands and support the only successful party in SA. Think Cape Town and the Western Cape. One video is nothing! Think what Nelson would have done!

          • The ‘experimental’ DA (ie with black leadership) was unpalatable to the old guard (Leon, Zille & their donor network of white elites) and so we have this puppet show version, fronted by a C-student and peppered with charlatans and psychopaths like JP Smith. Hell no. I will never vote DA again.

          • Hi Wilhelm, it’s easy to criticise. If you can do a better video why don’t you do it and show us all how John Steenhuisen should have done it?

        • Being the alternative to the ANC is pretty sad. Would you appoint someone who says in their CV, “I am the alternative to a really useless guy”?
          Also, in my opinion, being better at governing that the ANC is not a huge achievement.

          • So? Look at the Western Cape and Cape Town. DA is THE RIGHT PARTY.

        • The alternative is a real social democrat party. The DA is a neoliberal zombie, propped up by a reputation earned during its brief Zuma-era renaissance and catering to a dwindling base of ex-NP voting English speaking retirees who dislike Afrikaners. I’m 51, I remember apartheid, I hate the DA.

          • I’m aware of the benefits of DA vs ANC rule. I recall the ANC’s disastrous attempt to rule Cape Town. And because I saw the ANC clearly, I lost hope and voted DA every election after 1998, for nice roads and streetlights and safety. It’s soft apartheid, when only some can have it. I can’t anymore.

    • The issue here is that there seems to be an attempt to paint the DA into a right wing corner. And that is simply complete and utter hogwash. Sure, there are policies that some people don’t agree with in South African context,like the non racial policy, but to then deduce DA is right wing is madness.

      • cont. I would love a balanced article on the topic of opposition, that actually does some analysis instead of the current knee here reactions we are seeing. The fact that the DA is light-years ahead with clean governance seems to only be countered with accusations of racism;facts seems not to matter

      • Allowing monopoly both commercial and politically generates this outcome. This is a consistent historical pattern globally If we only had Shoprite and no competition for them, the stores would be dirty, prices expensive and quality poor. Any ANC clean up now will not last without genuine competition

  • Great article linking the dots of the root causes of SA’s problem. The ANC controls the levers that need to be moved to fix. The voting system in the ANC, and thus by extension the ANC itself, is surely unconstitutional and thus illegal. To move forward this has to be proven and then acted upon.

  • This report isn’t telling us anything we didn’t know already. The biggest criminal gang in the world – #voetsekANC

    • #voetsekANC is rhetoric. We all signed up for democracy; so we need the voters to vote for someone else. SA needs competition for political power. The ANC have acquired monopolistic control over political power and misplaced loyalty to a party of the voters.

  • This kind of corruption is not unique to S.A. Just look at that ‘great’ democracy called India where a Trumpian president is doing the same! Apparently there a string of loud media outlets are beholden to the BJP! &… there is a largely ‘religious’ majority empowering it! No simple solutions here.

  • The very first step in correcting this mess is to cut off the money supply and starve the corruption to death. That must be done at the source. Tax payers’ contributions need to be deposited into a trust account overseen by 3 judges. We can proceed from that starting point.

  • We appear to live in what I term a dictatorial democracy. You are free to vote, so it’s called a democracy but after that it’s pretty much a dictatorship for the winning party. That’s not how it was intended but it’s an unintended consequence of the architecture of the system.

  • The emergence of this info reminds me of mafia structures in New York in the 70’s and 80’s, except the SA criminal element is also the political power center. The problem of the mafia was mostly fixed through the drafting and use of RICO. Would be fascinating if a legal mind like Pierre de Vos..1/2

    • would write a speculative piece on whether if we had legislation like RICO, could the ANC be classified as an organisation that exists primarily to engage in crime, and as such its leaders be prosecuted for leading the organisation. I think this is roughly analogous in principle to the mafia trials.

      • RICO is interesting as it was drafted specifically to criminalise a person’s association with criminal organisations, which then allowed conviction of individuals who directed criminal activity but did not directly participate. Anyone?

  • One thing the Colonists left in India when they pulled in 1948, was a professional civil service. We will NEVER have that here after what the cANCer has achieved for themselves.

  • Thanks, Daily Maverick, for publishing this report. To me it is the most scary thing about corruption that I’ve yet heard of. It seems so deeply embedded, one wonders how the country is ever going to get past it and become a true democracy, where the constitution is king.

  • No wonder they can not pay salaries, there are so many of them.
    Bred for patronage schemes and manipulation. Cutting through this Gordian knot is going to be almost impossible, so many livelihoods depend on it continuing.
    Turkeys don’t vote for Christmas

  • All the experts who have commented and know all the answers should stop talking and actually do something instead of sitting on the sidelines making clever comments.

  • The system of cadre deployment is why Ace’s faction will get nowhere in this current bunfight.

    All those middle and elite class cadres are comfortably numb – not going to risk upsetting their career paths

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