DAYS OF ZONDO, PART TWO
How Malusi Gigaba sold South Africa for a song
Malusi Gigaba’s role in State Capture was to weaken the governance structures of state-owned entities. His actions as the public enterprises minister nearly took South Africa down.
In his first budget speech in February 2018 as the newly appointed finance minister, Malusi Gigaba drew inspiration from American rapper and poet Kendrick Lamar to allay the public’s growing concerns that the Jacob Zuma administration had backed South Africa into a daunting fiscal and economic crisis.
“As urban poet Kendrick Lamar says: ‘We gon’ be right, we gon’ be alright,” Gigaba exclaimed, looking smug and throwing in some humorous hand gestures. Except, it was no laughing matter as South Africa – with the benefit of hindsight — hasn’t been “alright” since then.
His budget speech slapped the nation with a one percentage point increase in value-added tax to 15% (a first since 1994), making life more expensive for the poor, unemployed and forgotten. Gigaba preached reining in government spending to save money but provided taxpayer-funded financial assistance to struggling state-owned enterprises (SOEs), mainly Eskom and SAA.
At the time of his budget speech, Gigaba had never been asked to account for appointing Gupta-linked individuals in senior roles at SOEs including Transnet, Eskom, Denel and SAA while he was the public enterprises minister from 1 November 2010 to 25 May 2014.
During a Morning Live interview the day after his budget speech, Gigaba attempted a mea culpa for appointing ethically compromised individuals such as Brian Molefe and Anoj Singh (the pair were first at Transnet, then moved to Eskom), Dudu Myeni (SAA), Siyabonga Gama (Transnet), Gupta family ally Iqbal Sharma (Transnet) – just to name a few. But the mea culpa was hollow and fell flat. “If I’d known then some of the things I know now, I would have done some things differently,” Gigaba admitted during the interview. “It was a good decision to bring more black professionals into SOEs.”.
Enter Judge Zondo
With the recently published second report into State Capture by Acting Chief Justice Raymond Zondo, Gigaba can no longer dodge accountability. The Zondo Commission report has ripped into Gigaba, revealing that he was a pivotal character in the spiderweb of SOEs being caught up in State Capture during Zuma’s nine-year administration.
In the large universe of SOEs (there are about 700 in South Africa), the Zondo Commission’s first two reports have so far focused on Gigaba’s skulduggery at just two entities: Transnet and Denel. The upcoming third and final instalment of the report is expected to be the mother of all, examining the capture of Eskom and Prasa – entities whose affairs were under Gigaba’s watch.
In the Zondo Commission’s second report, Gigaba’s role in the State Capture project was to weaken the governance structures of Transnet and Denel by appointing executives and board members who were closely aligned with Zuma, members of the Gupta family and their business associates. The focus was also to enrich politically connected individuals through lucrative contracts.
The Zondo Commission’s report doesn’t offer new information and evidence about the capture of Transnet and Denel, as the high-level corruption has already been unveiled by investigative journalists. But the report provides insights into the anatomy of State Capture, how it initially started and how it took a network of pliable individuals in the public and private sectors for it to fester.
Early attempts to capture Transnet
The early hallmarks of State Capture started after Zuma was first elected as South Africa’s president in 2009.
In his first Cabinet, Zuma chose Barbara Hogan as the public enterprises minister. On Hogan’s to-do list was searching for a Transnet group CEO after Maria Ramos resigned shortly after Zuma ascended into the Union Buildings. Hogan testified at the Zondo Commission in 2018 that Zuma was invested in the appointment of Ramos’s successor and often interfered in the process. This was unusual, as Zuma had other pressing matters to tend to, like setting out his vision for the country as the newly elected president. After a lengthy search, Pravin Gordhan emerged as a frontrunner for the Transnet CEO job but withdrew his candidacy because Zuma had plans to appoint him in his Cabinet as the finance minister.
With Gordhan out of the way, Zuma put pressure on Hogan to appoint Siyabonga Gama as the Transnet group CEO because he was an insider at the SOE, leading its freight rail division since 2005.
But Hogan was opposed to promoting Gama because he faced a corruption investigation relating to Transnet’s procurement of security services from General Nyanda Security Risk Advisory Services, a firm linked to former communications minister Siphiwe Nyanda. The investigation found that there was a case of misconduct against Gama.
Despite this, Zuma still insisted that Hogan should hire Gama, but she refused. For not acceding to Zuma’s demand, Hogan was fired as the public enterprises minister – a job she held for more than a year.
Gigaba’s web of compromised SOE appointments
In November 2010, Hogan was replaced by Gigaba, whom the Zondo Commission found had a close relationship with Zuma and members of the Gupta family that started in the early 2000s when he was the president of the ANC Youth League.
Gama was eventually appointed as the Transnet group CEO after Gigaba became the public enterprises minister. His time at Transnet was chaotic for the company because he was fired then rehired after facing more allegations of corruption.
There are more instances in which Gigaba bent to the will of Zuma and the Guptas by appointing compromised individuals at Transnet. The process of appointing Molefe as the Transnet CEO in February 2011 was sullied from the start: he was handpicked by Gigaba, who overlooked a more suitable and qualified Dr Mandla Gantsho for the top job.
Part one of the Zondo Commission report found that, during the interview process, Gantsho scored higher points than Molefe, making the former a frontrunner for the Transnet CEO position. But Gigaba snubbed Gantsho because “he knew that Mr Molefe was the candidate that the Guptas wanted to be appointed to that position”, the Zondo Commission found.
Beyond the Transnet executive leadership level, Gigaba also intervened in board appointments. In November 2010, he handpicked candidates for the new Transnet board to include Iqbal Sharma, who in 2012/14 was the business partner of Gupta associate Salim Essa. Sharma was later promoted to control Transnet’s bid adjudication committee, the nerve centre of procurement processes at SOEs.
With compromised individuals firmly placed at Transnet’s executive leadership and board level, corrupt schemes ensued. When Gigaba was the sole shareholder of Transnet as the public enterprises minister from 1 November 2010 to 25 May 2014, he oversaw the company’s multibillion-rand programme to procure electric and diesel locomotives.
Transnet’s wide-ranging freight, rail and logistics operations are important for SA’s economy, as its locomotives move everything from coal to steel across the country and neighbouring countries. From 2011, Transnet wanted to modernise its fleet of locomotives and ended up procuring 1,064 from Chinese manufacturers – the planned cost of which swelled from R38-billion to R54-billion. But the locomotives programme became a kickbacks scheme, with Molefe, Singh, Gama, Essa and others unlawfully benefiting from it.
DM168 couldn’t reach Gigaba for comment after the release of the second part of the report. But Gigaba has been vocal about the report, trashing Judge Zondo, the entire Zondo Commission and its adverse findings against him.
“[Three] years and R1-billion later [the duration and cost of the Zondo Commission], DCJ Raymond Zondo has found NO evidence to warrant a recommendation that I be charged with corruption. Instead of clearing me, he asks that I be investigated some more in the hope that this will kill me, politically. If only he and his handlers knew!” Gigaba tweeted.
Arguably, this is an incorrect interpretation of the Zondo Commission report.
Zondo has repeatedly noted that the referral of allegations of wrongdoing for prosecution or further investigation may be made on the basis that there are reasonable prospects that evidence can be corroborated. In other words, any evidence that can be corroborated can potentially be used to prosecute Gigaba.
The Zondo Commission found that Gigaba was a regular visitor to the Gupta family’s compound in Saxonwold, where he discussed the affairs of SOEs such as board appointments and channelling Transnet and Denel contracts to entities linked to the family.
For his hard work, Gigaba’s driver, known to the Zondo Commission as “witness three”, testified that Gigaba would always carry a “travel bag full of bundles of R200 notes”. “Witness three” suspected that the money came from the Gupta family. Gigaba’s estranged wife, Norma Mngoma, also corroborated the version of events of “witness three”, adding that the Gupta family would often bankroll Gigaba’s penchant for expensive suits, fine dining and travel for leisure.
Law enforcement authorities have been asked to investigate Gigaba criminally for the cash payments from the Gupta family under the 2004 Prevention and Combating of Corrupt Activities Act.
No redemption for SOEs
Dr Iraj Abedian, a senior economist, says, if Gigaba and other State Capture enablers had not occupied their senior positions for greed, they could have used SOEs to make a meaningful contribution to the economy and made a dent in stubborn unemployment and inequality levels. “After all, SOEs have huge capital and investment budgets. If used the right way, they can make a big difference to society,” he tells DM168.
Since 2003, the government has embraced a developmental statement model to use SOEs to grow and further industrialise the economy, and create jobs. This delivered tangible results as the economy grew by 5% by 2007 and the official unemployment rate hovered around 26%. Today, SOEs are collapsing, they have added to the more than 35% unemployment rate and they depend on taxpayer-funded bailouts for survival. DM168’s calculations show that SOEs, mainly Eskom, SAA and SA Express, received bailouts amounting to R92.2-billion during the Zuma years.
Political analyst Dr Ralph Mathekga says the problem is that corruption is entrenched and built into every sphere of SOE and state organs and the ANC, adding that they are too far gone to be used for good. DM168
This story first appeared in our weekly Daily Maverick 168 newspaper which is available for R25 at Pick n Pay, Woolworths, Exclusive Books and airport bookstores. For your nearest stockist, please click here.