Tag: state capture

Standard Bank has denied that it has opened a bank account associated with the Gupta family.

It was reported earlier on Tuesday that the top-4 bank had agreed to open bank accounts for business rescue practitioners controlling seven Gupta companies.

However, Standard Banks spokesperson Ross Lindstrom has said the bank terminated all dealings with the Gupta family and all entities controlled by it with effect from June 2016, and that that decision still stood.

Earlier, business rescue practitioner Louis Klopper confirmed that Standard Bank had agreed to open a new account‚ with strict conditions limiting access only to Klopper and his partner practitioner‚ Kurt Knoop.

Klopper said this had been a crucial stumbling block to getting the Gupta companies‚ particularly the four mines owned by the family‚ back up and running.

However, in an e-mail to Business Day, Linstrom said on behalf of the bank: “Standard Bank of SA has not opened and will not open accounts with these companies. Any impression created to the contrary was created by an employee that was acting out of mandate.

“Communication between the employee and [Klopper] was not authorised and did not follow the internal processes of the bank. Disciplinary procedures are currently under way.”

The Gupta family has had to make do with facilities at the Bank of Baroda — a relationship that has deteriorated since the bank started to come under pressure from the Reserve Bank over the large number of suspicious transactions the Gupta family were processing.

On February 16 the directors of Gupta-owned Tegeta filed for business rescue‚ placing Optimum‚ Koornfontein and Brakfontein coal mines in Mpumalanga, as well as Shiva Uranium in the North West, under Klopper’s control.

Property investment companies Confident Concepts and Islandsite Investments 180 were also placed under business rescue.

The mines employ roughly 3 000 people‚ most of whom went on strike when salaries were not paid on February 25. The permanent staff‚ about 1 500 people‚ were paid last week.

By Kyle Cowan for Business Day

New Public Enterprises Minister Pravin Gordhan on Tuesday revealed that his immediate focus would be on revitalising state-owned entities (SOEs) and reversing the tide of state capture that has gripped key sectors of the economy.

The appointment of new boards at several public entities, including operational changes, was expected in the next three weeks, Gordhan told members of the Federation of Unions of South Africa (Fedusa) at a conference in Pretoria.

“It won’t be an easy task, nonetheless it is not impossible,” he said, adding that change was expected in state power utility Eskom following the appointment of a new board.

“There is a huge need to restructure the state entities to function in the public interest, not just to serve a few people,” said Gordhan.

The financial management of public enterprises such as Eskom, South African Airways and rail agency PRASA has been blamed for putting pressure on the fiscus, with billions of rands in guarantees extended to the entities to help them stay afloat.

“A good team at Eskom needs to assure South Africans that they would work to keep costs under control,” he said. “Given 3 to 6 months, we will begin to see some positive signs.”

‘Tough ride’

Gordhan, who was named public enterprises minister on February 26, stressed that rooting out corruption and transforming state-owned enterprises was going to be a “tough ride”.

Treasury has issued R350bn in government guarantees to Eskom, of which over R200bn has been utilised, as the troubled state power utility has battled to rein in bulging operating costs.

The poor state of Eskom’s financial affairs has seen its long-term corporate rating downgraded by Moody’s in November to Ba3, a third notch below non-investment grade.

The ratings agency placed Eskom on review for a further downgrade.

Late last month rival ratings agency S&P downgraded Eskom’s long-term debt to ‘CCC+’, the seventh rung of non-investment grade, with a negative outlook.

Gordhan said he anticipated that those involved in state capture would try to “sabotage” efforts of reversing the damage and transforming the state.

“The damage is not something that happened overnight […] we are on a good wave in South Africa and it is possible to re-capture the state and re-orientate these institutions,” he said.

By Sibongile Khumalo for News24

Gupta bank exits SA

With the state-capture inquiry about to kick off, the Bank of Baroda announced on Monday it was shutting down its South African branches.

The instruction is said to have come from the bank’s headquarters in India.

The bank, which provided banking services to the Gupta family when other banks would not, said its parent company was “rationalising” branches in international markets.

There was speculation at the weekend that it would exit SA.

Baroda said it would stop taking new deposits from March and cease operations altogether at the end of March.

The South African Reserve Bank said the registrar of banks was in talks with Baroda to ensure its orderly withdrawal to protect depositors. The bank had R2.6bn in deposits at the end of December, according to regulatory filings.

Manoj Kumar Jha, the bank’s South African acting CEO, declined to comment.

The latest developments come after the bank became ensnared in state-capture allegations through its association with the Gupta family, its companies and associates.

Baroda faced the possibility of closure arising from a directive the Bank issued after it fined Baroda R10m for breaching sections of the Financial Intelligence Centre Act.

Baroda was named in former public protector Thuli Madonsela’s 2016 report on state capture, which directed President Jacob Zuma to appoint a commission of inquiry to investigate whether any official or organ of state had acted unlawfully, improperly or corruptly by giving financing facilities to companies linked to the Gupta family. This included a R659.5m prepayment that Eskom made to Tegeta Exploration & Resources to acquire the Optimum mine that supplied coal to Eskom.

Baroda is to be investigated for its role in facilitating the transaction and its handling of funds belonging to Optimum’s mine-rehabilitation fund.

After a lengthy legal battle and a ruling by the High Court in Pretoria, Zuma finally appointed Deputy Chief Justice Raymond Zondo in January to head the state-capture inquiry.

The National Prosecuting Authority’s asset-forfeiture unit froze more than R110m in deposits held at Baroda, which it said were proceeds of crime related to the controversial Vrede dairy-farm project in the Free State — meant to empower poor community members.

According to the asset-forfeiture unit, the R110m was part of R220.2m paid by the Free State agriculture department to Estina, a company associated with Atul Gupta, for the project.

Very little of this money was used for its intended purpose. Some funds found their way to Atul Gupta’s niece Vega’s blockbuster wedding at Sun City, while other funds went to vehicle dealers and other entities belonging to the Gupta family.

Attempts to reach Eugene Nel, the curator who was appointed by the court on behalf of the asset-forfeiture unit, were unsuccessful.

By Moyagabo Maake for Business Live

MultiChoice pulls the plug on ANN7

MultiChoice admitted on Wednesday that “mistakes” were made in contractual negotiations with the formerly Gupta-owned 24-news channel ANN7 and that the agreement will be terminated when the deal expires in August 2018. The channel will no longer be carried on DStv after that date.

MultiChoice South Africa CEO Calvo Mawela said at a press conference at the company’s Randburg, Johannesburg head office that it would not be appropriate to renew the ANN7 contract considering “ongoing controversies”. He said MultiChoice will issue a tender to appoint and fund a new, black-owned commercial news channel soon.

“This has been a humbling exercise for MultiChoice,” Mawela said. “…We fully understood the outrage of the public given the endemic corruption in the country. We should have dealt with the concerns around ANN7 more swiftly.”

We fully understood the outrage of the public given the endemic corruption in the country. We should have dealt with the concerns around ANN7 more swiftly
Naspers CEO Bob van Dijk said the allegations regarding ANN7 have “caused me a great deal of concern”.

“Reading the news coverage in November, that is not the kind of messaging you want to see about your company,” he said.

In early December, MultiChoice said that it was aware that its deal with ANN7 had caused “real public concern” and instructed its audit and risk committees to probe the contract.

In a statement at the time, MultiChoice independent nonexecutive director Don Eriksson, who chairs the board committees, said: “The MultiChoice board has read the various media reports alleging that MultiChoice has entered into an irregular relationship for the carriage of the ANN7 channel. The board is aware that the ANN7 channel has caused real public concern because of the allegations of corruption levelled at the former owners of the channel.”

ANN7 was owned by the controversial Gupta family, which has been accused of using its close association with President Jacob Zuma to win state contracts. Zuma and the Guptas have denied the allegations of “state capture”. The Guptas sold the business in 2017 to Mzwanele Manyi, a former government spokesman, in a “vendor-financed” deal — in other words, the Guptas loaned Manyi the money to buy the channel.

Asked by TechCentral if Manyi has been told about the decision to terminate the channel, Mawela said: “We explained the whole situation to him and he has accepted our position and he is considering what we have shared with him.”

‘Comprehensive review’
At Wednesday’s press conference, Mawela read out a statement that said that the board-appointed committee conducted a “thorough and comprehensive review” of the deal with ANN7.

“They met several times, studied all relevant contracts, reviewed five years of related payments information and e-mails, interviewed those involved and did various objective contract and cost comparisons.”

The committee found “procedural shortcomings, but found no evidence of corruption or other illegal activity”.

It found the the commercial terms of the ANN7 contract were within acceptable parameters associated with the establishment and cost of producing a news channel.

“The negotiations with ANN7 began at a time when MultiChoice wanted to add local black voices to reflect more diverse local news coverage on the DStv platform. In addition, annual payments to e.tv (which produces the eNCA news channel) had escalated substantially, heading towards R500m/year,” the statement said.

“The commercial rationale was to assist in the development of the new ANN7 channel by contributing to their costs and allow it a reasonable term of three to five years to develop. Should it fail, MultiChoice would let the agreement lapse at the end of the period, as allowed for in the contract.

“The payments made to ANN7 were not abnormal relative to other local news channels carried on the DStv platform. MultiChoice paid an amount to ANN7 for a start-up 24-hour local news channel that was substantially lower than that paid to e.tv. The terms of the agreement were renegotiated and payments increased when it became apparent that ANN7 needed to improve quality on the channel.”

MultiChoice made an upfront payment to ANN7 of R25m on 15 September 2015, but denied this was abnormal or even unusual. Critics had accused MultiChoice of paying the money to try to influence government policy on set-top box encryption.

When concerns were raised about the owners of ANN7, MultiChoice management should have acted more swiftly to escalate issues to the board for formal consideration and decision
No one will be fired over the ANN7 deal, Mawela and Van Dijk emphasised at the press conference.

“The process of negotiating the ANN7 agreements was a collective MultiChoice management process and not that of an individual,” the company said in the statement.

“No correlation was found between payments made to ANN7 and the MultiChoice lobbying effort,” it added.

However, there had been “procedural shortcomings”, including failure to conduct a due diligence test on ownership of the channel. It said it has never done this for any channel.

“Given the experience with ANN7, the committee is of the view that in future such due diligence should be instituted and be made compulsory for all new start-up channels,” MultiChoice said.

The committee also found that MultiChoice should study international best practice and formalise its lobbying processes. “The new process should be adhered to by all involved to ensure that an acceptable line is not crossed in such activities.”

It added: “When concerns were raised about the owners of ANN7, MultiChoice management should have acted more swiftly to escalate issues to the board for formal consideration and decision.”

Remedial actions
It said it will immediately implement several remedial actions. These include:

  • Ensuring that robust due diligence processes will always be followed for start-up channels;
  • Requiring management to highlight issues of controversy and reputational risk at the quarterly audit and Risk committee meetings; and
  • Formalising MultiChoice’s lobbying process.

In the absence of national guidelines on lobbying and interaction with regulators and government, MultiChoice management will develop guidelines for approval by the board.
MultiChoice will begin the process of sourcing a new commercial news channel that is black owned and that “represents the majority of people in this country”, it said.

The successfully bidder must be owned, managed and run by a black South African company, free from any political or other interference, it said. It must be able to provide independent, non-partisan and critical news coverage of current affairs. And it must take into account South Africa’s history, diversity of cultural backgrounds, language and socioeconomic circumstances in the way it produces content.

Mawela said MultiChoice managed its communication with the public about ANN7 poorly.

While I am pleased that the investigation into the ANN7 contract did not discover any corruption or other illegal activity, the questions we have faced have been sobering
“While I am pleased that the investigation into the ANN7 contract did not discover any corruption or other illegal activity, the questions we have faced have been sobering,” he said. “We made mistakes and must now embark on a path of restoring public trust.”

Democratic Alliance MP Phumzile Van Damme, who lodged a complaint against MultiChoice with communications regulator Icasa over the ANN7 payments — and over a controversial channel-supply agreement between the pay-television operator and the SABC — said Wednesday’s press conference “left many questions unanswered”.

“While we welcome MultiChoice’s efforts in conducting its own review of its carriage agreement with Gupta-owned ANN7, it is difficult to objectively assess the findings of its investigations without sight of the full report,” Van Damme said.

“A press statement, scant on detail, vaguely admitting ‘mistakes were made’, and holding no one accountable for those ‘mistakes’, simply does not cut it,” she said in a statement. “The public needs to know the whole truth about the dealings between MultiChoice, ANN7 and the SABC.

“It is quite clear now that the Icasa probe is more important than ever to ensure that the full facts are put on the table, and those responsible for any wrongdoing are held accountable.”

Van Damme also decried MultiChoice’s decision to pull the plug on ANN7.

“The DA supports a plurality of voices in the media space, and do not believe in shutting down of those we do not agree with,” she said. “This matter was never about whether ANN7 should be on air, but about the exchange of money allegedly to influence government policy.”

By Duncan Mcleod for TechCentral

The Asset Forfeiture Unit (AFU) is hoping to seize at least R50bn in 17 cases it is currently investigating related to state capture, acting head of operations advocate Knorx Molelle said on Tuesday.

In an interview with eNCA, Molelle said his team had already prioritised six matters which were before the courts, awaiting preservation orders.

“The matters are before the court and hopefully in the next couple of weeks we will have court orders,” he said.

The AFU has already taken action against two Gupta-linked companies – Trillian and McKinsey – hoping to recoup R1.6bn in assets related to consultancy work done by the companies for Eskom and Transnet.

Through their engagements, Trillian had indicated a willingness to co-operate, Molelle said.

“We are quite confident that, in the next day or two, we would have recovered the funds that have been taken away.”

Assets would only be attached as a last resort, he said.

“If there is willingness with those that we are dealing with that they are prepared to make good, the actual physical removal will be a last resort.

“An engagement that we having is absolutely critical. We are sitting and resting with the comfort that should that not bare any fruits, we also identified the relevant assets from which we can recover.”

Mollelle said the matter should be finalised within the next two days.

The AFU was investigating six other matters in which they were hoping to recoup money in the current financial year, he added.

‘We are working at our utmost best’

The money would be deposited into the Criminal Asset Recovery account and reinvested into fighting crime or to the state, where needed.

Acting head of the Specialised Commercial Crimes Unit, advocate Malini Govender, could not clearly say when individuals would be prosecuted in cases related to state capture, only commenting that it was a complicated matter that needed time for thorough investigation.

“We have only been dealing with this since March, so you cannot expect that in a month or two months we are going to take something to court. We are working at our utmost best and hardest in ensuring there is sufficient traction to get this matter to court,” she said.

The NPA – together with National Treasury, the Financial Intelligence Centre, the Companies and Intellectual Property Commission and the AFU – had an 18-man team dedicated to the “eight legged” state capture investigations, she added.

Seven of the investigation’s “legs” came from former Public Protector Thuli Madonsela’s report into state capture, while the eighth stemmed from a separate complaint.

Both officials denied any interference by the National Director of Public Prosecutions Shaun Abrahams.

“At no stage did he give any instruction that we do not proceed. In fact, at some stage he was… anxious at what he perceived to be a slow pace,” Molelle said.

14 Gupta-linked companies and individuals to have their assets frozen

At least 14 people and entities linked to the alleged corruption by Gupta-linked company Trillian and international consultancy firm McKinsey have been identified in a preservation order obtained by the Asset Forfeiture Unit.

The AFU is going after the big shots at Trillian and McKinsey. The people named in the court order include Eric Wood, who is Trillian CEO; Trillain CFO Tebogo Leballo; Prakash Parbhoo, a partner at McKinsey; and Jean Pierre Goerges Desvaux, who is a senior partner and managing partner at McKinsey.

The court order also identifies Trillian property in the high-end business precinct Melrose Arch in Johannesburg.

Others named in the order include: Veronica Magwentshu, Thabiso Legoete, Johannes Faure, Daniel Roy, Trillian Capital Partners, Trillian Finanical Advisory, Trillian Management Consulting, Trillian Properties, Trillian Securities, McKinsey and Company Africa, and “any other person who becomes known to the applicant as having an interest in the property.

By Lizeka Tandwa and Mahlatse Mahlase for News24

Judge President Dunstan Mlambo says none of the grounds of review of former Public Protector Thuli Madonsela’s State of Capture report have any merit and President Jacob Zuma is not entitled to the review he seeks.

Zuma had applied to the High Court for the State of Capture report to be reviewed and set aside.

Mlambo says the president was ill-advised and reckless to launch this review, adding that his court challenges had delayed resolution of state capture allegations.

Earlier on Wednesday found that the Public Protector does have the power to instruct the president to exercise executive authority.

This means the remedial action instructing Zuma to appoint a state capture commission of enquiry – led by a judge appointed by the chief justice – was lawful.

The court further held that the Public Protector’s powers are wide.

It also ruled that Zuma will have to foot the legal bill for trying to halt the state capture report.

Zuma has been dealt a second legal blow with the High Court dismissing his application to set aside the public protector’s state of capture remedial action.

The president has also been ordered to establish a commission of enquiry led by a judge chosen by the chief justice within 30 days.

The full bench in Pretoria rejected every ground of Zuma’s argument for review.

He was also ordered to personally pick up the costs of this application as he was ordered to pay the costs of an earlier application which was dismissed on Wednesday.

In the nearly two-hour judgment, Mlambo rejected each and every one of President Zuma’s grounds of review.

“None of the grounds of review has any merits and the president is not entitled to the relief that he seeks. The remedial action taken by the Public Protector is lawful, appropriate and reasonable and rational.”

He says Zuma’s statement to Parliament that he intended to establish a Commission of Enquiry undermined any basis to challenge the remedial action.

“The review application was a clear nonstarter and the president was seriously reckless in pursuing it as he has done. His conduct falls far short of the high standard expressed in Section 195 of the Constitution.”

The president has been ordered to establish the commission of enquiry, and fully support the judge appointed by the chief justice.

Rule of law upheld

Former Public Protector Thuli Madonsela has given her first reaction to Wednesday’s judgment.

She says it upholds the rule of law and enforces accountability.

“The essence of this judgement is the rule of law… justice and as Judge President Mlambo said, it’s really about restating and reinforcing the rule of law.”

Madonsela was also asked about how the ANC should have responded to reports of state capture.

“I expected nothing from the governing party, given the fact that we govern through indirect democracy because of proportional representation. I believe that the governing party should’ve ensured that this matter is investigated.”

Victory of accountability

The Economic Freedom Fighters (EFF) has released a statement in response to Mlambo’s ruling.

The EFF welcomes the judgement of the North Gauteng High Court that Zuma must personally pay the legal costs in the case.

“We welcome this damning judgment as a victory of accountability because many public representatives use public resources to defend personal interests and not those of the state or the public.”

The EFF says Zuma is one individual who has used taxpayers’ money to defend personal wrongdoing.

He has engaged in expensive litigation not to defend public interest or even state interest, but a persona, the opposition party said.

“We call on Zuma to immediately comply with the directive of the court and personally pay all the costs of the litigation. He must waste no time and no single taxpayers’ cent to appeal a clear and cogent judgment.”

Read the whole State of Capture report here.

By Barry Bateman for EWN 

The dirty underbelly of the Naspers darling

MultiChoice and Naspers are in the crosshairs of public opprobrium for playing tough tackle in their negotiations to protect their market dominance.

“This company is aggressive and entrepreneurial. We often go with our gut,” says a MultiChoice executive to explain revelations of the company’s negotiating tactics, which have landed its parent company Naspers in a mighty pickle.

Naspers is facing three investigations: a litigious class action by a US law firm is exploring the allegations; a parliamentary inquiry on the scale of the Eskom probe is being planned for early 2018; and MultiChoice’s board is engaged in a probe to get to the bottom of the allegations.

MultiChoice and Naspers are in the crosshairs of public opprobrium for playing tough tackle in their negotiations to protect their market dominance, but the company says this is standard lobbying. Here’s a recap of what’s bugging the global Internet and media company:

An investigation by News24 into the #Guptaleaks emails revealed how a company regulatory affairs honcho wrote policy for government that landed up on the email servers of the Gupta family after being mailed through by former communications minister Faith Muthambi.

A set of minutes, which the DA calls secret, but which MultiChoice says never was, alleges that MultiChoice tied an agreement to pay the SABC for digital channels to support for a position that excluded encryption and protected the company’s position.

MultiChoice’s support and contracts with the National Association of Manufacturers in Electronics components in return for their lobbying against encryption.
Analysts say industry incumbents who write policy for government engage in regulatory capture — this is where private interests drive public policy. In mining, a similar trend is apparent. Special interests that are not immediately visible to the public motivate the writing of draft laws and practices such as aggressive inspections and work stoppages.

Standard lobbying

Executives at MultiChoice who spoke to HuffPost SA on condition of anonymity are taken aback at the allegations. The company would not formally respond as lobbying and regulatory affairs are part of the ongoing probe at the company. (See statement below.)

One said that companies often wrote draft policy positions for government as part of the lobbying process. Broadcasting is complex and the South African state’s governance thereof has been sclerotic: there have been five communications ministers in the eight years that President Jacob Zuma’s been in office.

“In lobbying, we are saying what we think the law should say.” As to how the email landed up on a Gupta company server, an executive said: “Faith Muthambi told us she didn’t like those people [the Guptas] at all.”

The executive says only 10% of its recommended policy proposals ended up in the final law, which clarified what the respective functions would be of Telecommunications and Postal Services Minister Siyabonga Cwele and the communications minister after Zuma split the department in two.

“[It’s true], though, that we lobbied everyone and their dog on encryption,” said an executive. This is a separate policy to the one that ended up in the hands of Gupta man Ashu Chawla.

ANC MP and former communications minister Yunus Carrim says Naspers chairperson Koos Bekker “…almost saw himself as an adviser to me [on encryption] as somebody new to the sector. And yet, because of his vested profit and other interests in the pay-tv sector, he obviously couldn’t play any such role.”

A DStv decoder for you, you and you

As a young MP, Carrim sat on parliament’s communications committee. One day, he remembers a furious Frene Ginwala, who was the National Assembly speaker, calling out MPs for taking MultiChoice’s gifts of decoders for MPs. She said it was absurd because “we have to make policy impacting broadcasters”.

Carrim would like to see an end to gifting by MultiChoice and other government-facing companies, which depend on public regulation or licence to operate.

In my experience, there seem to be various forms of ‘regulatory capture’ including perks to MP’s and the preparation of documents for other stakeholders to advance MultiChoice’s interests.
Yunus Carrim
He says the lobbying become more aggressive as certain members of the ANC study group were courted by MultiChoice to take positions against encryption, even though the ANC policy at the time was for conditional access to the set-top boxes that will enable converting old TVs for digital television.

“Of course, business should lobby government as vigorously as they want, but they can’t seek to buy government policy. Lobbying should be within reasonable limits and within a generally accepted framework of ethics,” says Carrim.

DA MP Phumzile van Damme says establishing a code of conduct for public policy lobbyists is essential and will be part of an investigation into state capture in the communications sector in the new year.

MultiChoice responds

We note that your questions deal with the parameters of an acceptable level lobbying. We think it is inappropriate to deal with that at this time, as the MultiChoice Board’s Audit and Risk committees are specifically and currently reviewing these matters. We don’t want to pre-empt or influence the outcome of that process. The audit and risk committees are chaired by an independent non-executive Director. Their report will be submitted to the MultiChoice Board on completion of the review. When this process is concluded, we will communicate the outcome.

We believe that no improper conduct took place in our meeting with the SABC. It was not a clandestine meeting. The meeting was held at the request of the SABC, on their premises and was recorded. Top management and board members of both parties were represented. No kickbacks were paid. It was a negotiation meeting and the final decision on our proposal lay with the SABC Board.

As you know, the Constitutional Court has found in favour of the Minister’s policy. Ultimately, the SABC considered its position and decided to enter into the agreement. Our position on encryption of set-top box for digital migration was well known and had been in the public domain.

We have a long-standing relationship with the SABC dating back to the early 1980s. The parties have bought and sold content from and to each other for many years and will continue to do so.

By Ferial Haffajee, Editor-at-large for HuffPost South Africa

Treasury capture is something to fear

Pravin Gordhan’s axing as finance minister just more than six months ago was met with consternation, which was made worse by the man who replaced him.

Here was Malusi Gigaba – the man who had used his position as minister of public enterprises to lay the ground for the Gupta family to plunder Transnet, Eskom, Denel and other state-owned companies – being entrusted with running Treasury, the state’s most important ministry.

Many cried foul, arguing that the move was akin to entrusting a ravenous wolf with care of the sheep.

At the time, Economic Freedom Fighters (EFF) leader Julius Malema told reporters in Johannesburg that “[President Jacob] Zuma has captured Treasury, which means the Guptas have captured Treasury. He has achieved what he always wanted to achieve.”

At Gigaba’s swearing-in ceremony at the presidential guest house in Pretoria on March 31, local and foreign journalists mobbed him, demanded answers about everything from his suitability for the job to the impact his appointment would have on credit ratings.

He stunned the media with well choreographed responses. He appeared to be a man who had his job figured out.

A few days later, referring to a Save SA protest outside his office, Gigaba told his staff: “Forget all the noise outside. Do your jobs. What you see and hear will pass. Change brings with it such anxieties.”

Shortly after his appointment, rumours began swirling that Gigaba, who harbours presidential ambitions, was ready to disentangle himself from the intricate state capture network.

Many hoped he would hold off-the-record briefings with senior journalists and editors to inform them about how he would free himself from the web of Zuma’s friends, the Guptas.

One senior news executive told me this week that Gigaba’s people had arranged a meeting with him. It never took place.

Just what the doctor ordered

It is near impossible to completely capture the South African state without placing National Treasury on a leash.

This is not only because Treasury allocates each department its annual budget, but because through its public finance unit, it monitors government expenditure and reins in wayward ministers, directors-general and chief executives of state-owned entities.

Through the office of the chief procurement officer (CPO), Treasury monitors compliance with tender regulations and is able to refuse government departments permission to break the rules.

Having axed Nhlanhla Nene, Gordhan and Mcebisi Jonas for their refusal to sign off on the nuclear deal (among other reasons), Zuma needed someone whose conscience had been dulled.

What better man than Gigaba?

A trusted lieutenant, and a man whose footprints – a damning report by prominent academics found – will feature prominently in the story of how the Gupta highwaymen pulled off their great South African robbery.

A desktop review of Gigaba’s six months in the Treasury reveals a terrifying picture. Cabinet’s decision to move the budget allocation process from Treasury to the presidency has nothing to do with Gigaba.

But is it just a coincidence that something which has been coming since 2015 was implemented as soon as he arrived?

When all the make believe explanations are stripped away, only one reason remains for why Zuma’s Cabinet arrived at this decision.

The reason, as one senior government executive put it, is “for anyone who wants resources for projects that cannot be motivated for in the open to use nefarious means to achieve the directing of the budget one way or the other”.

This becomes increasingly clear when we take into account the fact that the budget allocation process is handled by an interministerial committee. All ministers have an opportunity to motivate for priority projects.

If the committee influences budget allocation, why would Cabinet want it handed to a presidency with neither the technical skill nor the research capacity to do the job?

The battle for the soul of Treasury

Two weeks ago, City Press reported that Gigaba had established a parallel administration, effectively undermining Treasury director-general Dondo Mogajane.

Gigaba’s spokesperson Mayihlome Tshwete denied the allegations.

But as fate would have it, minutes of a meeting City Press obtained revealed that acting CPO Willie Mathebula was undertaking a sweeping restructuring of his office without Mogajane’s knowledge.

The minutes revealed that, while Mogajane was in the dark about the proposed changes, Mathebula had already met Gigaba and his deputy Sfiso Buthelezi to discuss the restructuring.

The proposed changes reveal something sinister underway at Treasury: that Mathebula, Gigaba and Buthelezi were concerned that the office of the CPO “was a dictator and not an enabler” and believed the office “did not consult” their counterparts in other departments.

More alarmingly, they discussed withdrawing the office’s governance, monitoring and compliance (GMC) unit’s powers to decide if departments’ requests for tender deviations and extensions were justified.

The refrain that Treasury is a dictator, a de facto government, or a stumbling block to development is not new. It is a common refrain we hear from Zumarite ministers such as Nomvula Mokonyane.

In February, the Sunday Times reported that Zuma himself had expressed frustration about Treasury’s processes.

Zuma and Mokonyane’s unhappiness stems from their repeated failure to get Treasury to approve the nuclear deal, estimated at R1 trillion, the R56bn Moloto rail development; and the R14bn Mzimvubu water projects.

Cabinet wants to appoint Chinese companies, without any bidding process, to finance and build the last two.

A Treasury report City Press reported on in April showed how the ministry put a stop to a government-to-government procurement agreement between Zuma’s administration and the Kremlin for a Russian company to finance and build nuclear power stations.

But without the GMC’s approval for projects to bypass legal tender processes, these megacontracts will never see the light of day.

It is for this reason that Mathebula, Gigaba and Buthelezi’s mission to hobble the GMC should set off alarms.

In the 18 months to June, the GMC halted more than 200 tenders amounting to more than R4 billion from being awarded through “deviations” – which include false emergencies and other excuses about single suppliers and continuity of service.

Treasury’s deviation reports do not attach values to numerous other requests for deviation which the GMC blocked during the same period.

They could easily amount to hundreds of millions of rands.

South Africans should not allow Gigaba and co to curtail the GMC’s powers.

One reason is that Eskom’s R1.6bn in questionable contracts with management consulting firm McKinsey and Gupta-front Trillian were awarded through deviations before the GMC was established.

Should Gigaba manage to neutralise it, it would be open season on tenders across government. This would be the final step in the capture of the state.

By Sipho Masondo for City Press. Published on News24

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My Office News Ⓒ 2017 - Designed by A Collective


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