Business Maverick

DAYS OF ZONDO

The total(ish) cost of the Guptas’ State Capture: R49,157,323,233.68

Atul and Ajay Gupta (Photos: Gallo Images/Business Day/Martin Rhodes)

Appearing before the Zondo Commission on Monday, investigator Paul Holden meticulously laid out the flow of money from government entities to the Guptas’ money laundering apparatus. Almost R50bn can be traced through invoices and bank statements – but, warned Holden, the true cost to the state is definitely higher.

“Manifestly irregular.”

That was the phrase of the day at the Zondo Commission on Monday, when the inquiry into State Capture was taken through the dizzying flow of state funds into Gupta coffers via dodgy contracts.

Paul Holden, who runs the NGO Shadow World Investigations alongside former ANC MP Andrew Feinstein, made his second appearance at the commission to present the hard figures associated with the Gupta family’s capture of the South African state.

Holden read into evidence amounts running to 10 or 11 figures before the decimal point.

The amounts are, to quote commission evidence leader Matthew Chaskalson, “extraordinary”.

At points Judge Raymond Zondo appeared defeated by the sheer volume of numbers, murmuring: “I’m just digesting”.

What was on display was not just the quantum of plunder, but also the efficiency of the Guptas’ vast and sophisticated money laundering machinery.

To give one example: on 29 April 2016, a Gupta-linked company called Cutting Edge Commerce submitted an unsolicited proposal to Eskom to provide the unusual combination of “data management and cleaning services”.

Noted Holden: “[This] unsolicited proposal produced a payment of R71-million in 17 days.”

Pointing out that this time period included weekends and even one public holiday, Judge Zondo observed wryly: “This must really be a record.”

The Guptas made use of no fewer than 14 companies which Holden referred to as “first-level laundry vehicles”: the initial steps in what was ultimately an international money-laundering scheme. Those companies were: Homix, Maher Strategy, Medjoul, Albatime, Birsaa Projects, Fortime Consultants, Forsure Consultants, Matson Capital, Pactrade, Shacob Commerce, Jacsha, Chivita Trading, Block Mania and Ismer.

There was “definitely a sense of momentum” as the years went by and the efficiency of the Gupta enterprise increased, said Holden.

The investigation has revealed that the three primary sites of State Capture were Transnet, Eskom, and the Free State provincial government.

Transnet, for most of the time in question under the stewardship of former CEO Brian Molefe, was responsible for a monstrous 81.59% of payments relating to State Capture: R40,084,201,927.00. A substantial portion of this derived from contracts for Chinese locomotives, coming in at R26,327,322,915.50.

Molefe, who has emerged as one of the key figures in State Capture, was also CEO of Eskom between 2015 and 2016, before being succeeded by similarly implicated Matshela Koko. Eskom accounted for 14.19% of State Capture expenditure. Much of this – involving issues like coal supply – has been well documented, but Holden also pointed out that by 2017, Eskom was overspending on IT providers to such a degree that it required its budget to be increased by 230%.

The Free State provincial government shelled out R441,042,621.08 on Gupta contracts, or 0.90% of the total State Capture spend. Specifically implicated in this spending is the office of the provincial premier – throughout this period, one Ace Magashule.

As jaw-dropping as these figures are, Holden was at pains to point out that they are, by necessity, incomplete.

For one thing: “The commission has identified payments aggregating to just over R102-million made to Sahara [Computers] by organs of state who have been unable to produce evidence to the commission to show that these payments were made in terms of acceptable procurement practices,” Holden said.

There is, however, no firm evidence that these Sahara payments were the product of irregular procurement practices – so they have been excluded from Holden’s total “in an abundance of caution”.

In other respects, the amounts presented by Holden do not “even begin to quantify the harm and loss suffered by the state”, the investigator said.

He gave the example of expenditure where there was almost no real attempt to deliver any value to the government at all: the payment of R254-million by the Free State government to The New Age newspaper, for instance, or the entire Estina Dairy project in the same province.

Where the state did receive some goods or services from Gupta companies in exchange for payment, it was massively overcharged – something possible because of the absence of competitive bidding processes. The Guptas’ Sunbay Trading company was paid R33,078,810 by the Free State government to supply laptops: a unit price which was double that charged to corporate clients.

Paul Holden testifies at the State Capture Inquiry on 4 December 2020 in Johannesburg. (Photo by Gallo Images / Papi Morake)

There were also occasions on which the goods or services provided by the Gupta companies were of such a poor quality that this caused additional losses to the state. Holden cited the example of the losses sustained by Eskom after the Guptas purchased the Optimum coal company. He pointed out that Eskom is claiming damages from Optimum for poor quality coal, delivered in insufficient quantities, amounting to R3-billion.

The investigator said that another way in which the state lost out was that other suppliers may have been paid more than was necessary in order to disguise the discrepancy between these payments and those made to the Guptas. Holden said that when it came to the locomotive contracts entered into by Transnet, GE and Bombardier were offered more favourable terms than was warranted by the parastatal – because to fail to do so would expose the exaggerated amounts being paid to Chinese companies to generate kickbacks.

Of particular concern to Judge Zondo was the fact that some of the irregular payments presented by Holden were made after the release of former Public Protector Thuli Madonsela’s State of Capture report in November 2016.

“These transactions were continuing as if there was nothing,” mused Zondo in apparent disbelief. DM

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All Comments 48

  • If we cannot realize that Jacob Zuma ,Ace Magashule ,Brain Molefe,Koko,and other caders stole with impunity in cahoots with the Guptas,and that they are all ANC members,and the goverment of the day, so called freedom fighters who promised a new dawn,and became a bunch of thieves at the expense of

  • there own citizens, dooming them to poverty,that they committed treason on their own citizens,that they are not worthy of leading this country,then there is no hope for SA.We need to become ethical in this country,upholding of the law is important.The guilty must go to jail

  • When all is said and done this simply indicates the utter contempt that these ANC cadres have for the people of this country and the rule of law. Why stick to the rules of fair play while dealing with them?

  • Extradite the Guptas and Duduzane back from Dubai ….. how dare Sheikh Mohammed Bin Rashid Al Maktoum allow them to hide there ….. Make a call Cyril !

  • This was only for Gupta linked capture. Bring in other corruption down to local government level and the total devastation caused by ANC looting shows why we are bankrupt. Jail terms required for economic sabotage for the whole bunch of stooges.

  • The figures mentioned are so ludicrously enormous I am battling to even read them. The criminal greed of those in the know combined with the downright stupidity of those “innocents” who allowed it to happen is beyond belief. Most South Africans are condemned to a future of poverty now.

  • And then Daily Maverick trashes the DA, our only opposition of any size, for tiny, trivial issues! Come election time we all better get real and unite in the only real anti-ANC party. Whether you like Zille or not. The issue is survival of a decent South Africa or it’s demise.

    • Glyn, your tune is so getting extremely boring. Please find a new one or stop singing. You are producing so many false notes that I will never buy anything from you or your record company.

      • Hear! Hear! Daily Maverick is simply reporting the facts. If the DA is so insensitive that it continues to keep Helen Zille in a top position after she had resigned from politics, to cause good black leaders to leave the party and to elect a white man as leader of the party, cont. . . .

      • they must accept reporting of the facts correctly. This is not trashing the party. It is dismaying that Phumzile van Damme felt it necessary to resign. She’s not saying why except that is was because of a clique of individuals. White males? The DA needs to attract people of colour to grow.

        • “The DA needs to attract people of colour to grow.” 100% – do you have any constructive ideas as to how they can do that?

      • I’m not looking to argue but these are realities:
        1. If a strong opposition is not supported we’re (more) screwed as a country
        2. I personally don’t know of any party other than the DA that can fill that role
        3. The DA are not perfect but they certainly are not ANC either

      • 4. I take my hat off to the DA MPs who stand up in that circus we call parliament and try to achieve something
        5. Moaning won’t get anyone anywhere – so rather than dissing people offering sane alternatives …try offering some. Contribute constructively.

      • I’m not sure you’re giving sufficient credit to the difficulties faced by opposition in this country, juggling quotas, qualifications, honesty, integrity on a tightrope attached at both ends to uncontrolled corruption? The DA’s principles are sound – and they have some fine caring people.

    • Glyn,

      Helen does not need DM to trash the DA. She destroyed it all on her own-some.

      She has never learnt the difference between being right and being smart.

      • Hey Johan – if you think you’re sick of the political BS in this country, can you even begin to imagine how sick of it HZ is? Speaking for myself I would have cracked and said something “right” years ago, regardless of consequence …probably why I’m not in politics.

  • Excellent sleuthing – well done Holden & Feinstein!
    And still the Guptas continue to languish in luxury in Dubai spending the billions stolen from the SA taxpayer…& under the watchful eye of the Zuma family. Dubai …the disgusting world capital for thieves, money laundering & fraudsters! Sis!

  • The question that I come up with everyday is, with all this damning evidence, how much more does the commission really need to arrest people and start the prosecution process. Guilty until proven innocent and languishing behind bars may speed up the information flow :))

    • The law was changed to allow the NPA to start investigating and prosecuting based on findings at the commission. One would like to think they are in the process of doing something currently, but who knows?

      • I would imagine that there is proactive information sharing between the commission and new era NPA. A little bit more high level communication from the NPA would not go amiss when all the recent exploding bombs have further shattered everyone’s opinion of the ANC Government.

        • My understanding is that progress is being made by the NPA but it’s very slow and being kept under wraps. The number that I heard that that 13 people that had appeared before Zondo were in jail, and that was 18 months ago so there should be more by now. We have to accept that the very high profile

          • people will probably get away with their misdeeds by simply delaying the legal process.

  • This thievery must be accurately communicated to the masses to say you haven’t got a house, your kids don’t have a good school, there is no water and electricity, there are no jobs, because your cherished ANC Government stole the money meant for you.

    • And THIS is the crucial point: Palesa Average does not read or even have access to DM or has the wherewithal to understand the Zondo commission proceedings. For them there are only two options: either not to vote at all or vote ANC because DA ‘brings back apartheid’ and is a white party.

      • Agreed, this is the crux of the matter. Who “swept the boards” in the recent elections? The ANC. What was the voter turnout? I recall far less than 50%. The poor and uneducated (thanks to the ANC) voting for a dream that will never be fulfilled. DM readers know that, they don’t and never will.

        • Just an update – the largest voter growth in the last election was for the EFF…both the ANC and the DA lost ground to the EFF. A worrying trend and set to be much worse next time around!

  • SA needs a branch of the NPA that willl only concentrate on putting Zupta cadres in orange overalls for the next 20 years. It should be similar to the Brazilian Operation Car Wash. They have put away its president and his cronies over a long peroid. CR, the people of this country beg for action.

  • Dep-Chief Justice Zondo exclamations, regularly, suggest profusely – to me atleast – that he has never read one single item of DM, nor PolWeb, nor amaBhungane, nor Pauli van Wyk, nor…a MULTITUDE of corruption revelations from the ‘other’ press! Ever! & these began before GuptaLeaks! Quo Vadis SA

    • Which, in a judge, is not necessarily a bad thing. He is a judge. There can now be no question of a tainted judgement. All evidence presented is de novo. (A rather unique position to be in…)

  • The only way this much money can leave the country is with the tacit and overt support of banks. Ergo, this is much, much bigger than anyone thinks. Follow the money to Dubai and likely Swiss banks. There’s probably a fat bank account funding lawyers to keep the arm of the law short.

  • Where did all the money go? It’s a lot to spend on Porsches and Johnny Walker black. Do SA taxpayers own half of Dubai?

  • To put the R50bn in perspective, if an RDP house on a serviced stand costs R100k, then we could have built 500,000 houses, about a quarter of our backlog. Imagine how many jobs that would have created! Even our least sophisticated voters understand that.

    • And that is only what is quantfied here. Add all the Kusile and other Eskom fraud and our entire housing backlog plus schools and hospitals could be sorted out.

  • Q for the investigative teams : when you analyse bank statements, do you assume that the “description” is correct? I could make any payment to anybody and call it whatever I want. “SPCA Family Day”

    Our banks need to put up a read-only access facility to find REAL bank transactions.

  • Zondo is doing a great job hearing evidence of corruption. He MUST get Zuma to testify…..
    Cyril Ramaphosa is not anything like Jacob Zuma. The ANC has corrupt factions, and corrupt individuals like Ace Magashule. That doesn’t mean the entire ANC is corrupt.

  • I sincerely hope that the trading on the bond and currency markets done by Eric Woods and hoods is thoroughly investigated for insider trading specifically around the Nene/van Rooyen saga.