Cape Town - President Jacob Zuma’s son Duduzane stands out as a central figure in the public protector’s report on state capture, as a major business partner of the Gupta family and the person who took Deputy Finance Minister Mcebisi Jonas to the meeting where he was allegedly offered Nhlanhla Nene’s job as minister.
This, in turn, forms the basis for further inquiry into whether:
* The president allowed the Guptas and his son to influence the appointment of cabinet ministers and board members of state-owned entities.
* Zuma turned a blind eye to attempts to influence the awarding of contracts to Gupta businesses.
* The president and the cabinet intervened improperly in the relationship between the Gupta family and banks which terminated their accounts.
Former public protector Thuli Madonsela gave Zuma 30 days to appoint a judicial commission of inquiry to look into these questions, among others.
Should these allegations be proven they would not only put the president in violation of the Executive Ethics Code once more, but could amount to a contravention of the Prevention and Combating of Corrupt Activities Act, Madonsela noted in her report.
This was because Jonas had alleged he was offered the finance minister’s job and a cash payment of R600 000 in exchange for his doing “certain favours” for the Guptas.
Zuma’s failure to verify these allegations could amount to a contravention of the act, which obliges anyone “who knows or ought reasonably to have known or suspected that any other person has committed an offence under the Act” to report it to the police.
The intervention in the relationship between the banks and the Guptas, with whom his son is in partnership, needed to be looked at as a possible conflict of interest in terms of the Executive Ethics Code and Constitution, Madonsela said.
A considerable portion of the report State of Capture deals with the acquisition of Optimum Coal Holdings by the Gupta firm, Tegeta Exploration and Resources, in which Duduzane Zuma’s company, Mabengela Investments, holds a 28.5% stake.
Madonsela noted that the Eskom board appointed in December 2014 consisted “predominantly” of directors with links to the Guptas and Duduzane Zuma and that Eskom chief executive Brian Molefe was not only a family friend, but had called Ajay Gupta 44 times and been called by him 14 times between August 2 last year and March 22 this year, in the period when the Optimum deal was being concluded.
Eskom not only failed to negotiate new terms for a coal supply agreement with Optimum Coal Holdings despite it making a loss on the supply of coal, but imposed a R2.1 billion penalty for poor quality coal on the owners, Glencore, forcing it into business rescue.
Once it was in business rescue, Eskom controlled the terms of its sale, eliminating a rival suitor to Tegeta and, more significantly, agreeing to prepay R659 million for coal that was actually supplied to Tegeta by the Optimum Coal Mine, which it did not yet own.
This decision was taken on the night the banks funding the deal declined a request from the Guptas to cover a R600m shortfall required for the deal to go through. Eskom’s decisions appeared to be for the sole purpose of helping Tegeta to buy the mine, Madonsela said.
“It appears that the conduct of the Eskom board was solely to the benefit of Tegeta in awarding contracts to them and in doing so funded the purchase of OCH (Optimum Coal Holdings) and is thus in severe violation of the Public Finance Management Act,” Madonsela said.
“As mentioned above, there appears to be a clear line of communication between Mr Molefe, the Gupta family, and directors of Tegeta (Ms Ragavan and Mr Howa).”...
Key findings and recommendations
A commission of inquiry is to be set up within 30 days. It will be headed by a judge to be appointed by Chief Justice Mogoeng Mogoeng. He will submit one name to the president.
* The national treasury will fund the commission.
* The investigation was “hamstrung” and delayed by the late release of funds. When they received funds of R1.5 million it was not enough.
* Ajay Gupta denied Des van Rooyen regularly visited his home, but cellphone records place him there on numerous occasions.
* From August 5 to November 17 last year, Brian Molefe was at the Guptas' Saxonwold home on occasions.
* The report found it worrying that Van Rooyen was at the Gupta home a day before he was made finance minister.
* It also found it worrying that former finance minister Nhlanhla Nene was removed after Mcebisi Jonas warned him he was going to be removed from his position.
* Mcebisi told the public protector that Ajay Gupta said they had made President Zuma’s son Duduzane a billionaire and that he had a house in Dubai.
* Mcebisi told the public protector that Ajay Gupta offered him R600 million, to be deposited in an account of his choosing. As Jonas was leaving the home he was offered R600 000 in cash, which he could take in a bag if he had one. Jonas declined.
* Zuma told Nene he was going to be deployed to the Brics bank, despite knowing heads of state could not make appointments on behalf of the bank, Nene told the public protector.
* The public protector on March 22 requested President Zuma respond to claims he had played a role in the Guptas offering ministerial positions. This was the start of many interactions with the president’s lawyers and the presidency, including the cancellation of a meeting by the presidency and a refusal to respond to questions sent to him. The protector gave the president the opportunity to respond to questions until 11am on October 13. - Mphati Nxumalo