Public Protector House

The long-awaited state capture report was released yesterday, and one of the outcomes was the instruction by former Public Protector Thuli Madonsela that President Jacob Zuma must appoint a judicial commission of inquiry into state capture. However, Zuma is not to choose the commissioner – that task falls to South Africa’s chief justice.

State of Capture is the final report of an investigation into complaints of alleged improper and unethical conduct by the president and other state functionaries, relating to alleged improper relationships and involvement of the Gupta family in the removal and appointment of ministers and directors of state owned entities (SOEs) resulting in improper and possibly corrupt award of state contracts and benefits to the Gupta family’s businesses.

The report, running to 355 pages, revealed that Madonsela was “concerned” about the Guptas’ involvement in among other incidents, the abrupt removal of the respected Nhlanhla Nene as finance minister in December 2015 – a move that sent the economy into a nosedive and sparked outrage from all over the country. His deputy Mcebisi Jonas then went public with claims that he was offered the job by the Guptas for a sum of R600-million.

The report also delves into the relationship between the Guptas and Eskom CEO Brian Molefe.

Download the report.

Has the state been captured?

Other points investigated by Madonsela include:

(a) Whether former ANC MP Vytjie Mentor was also offered a Cabinet position by the Gupta family;

(b) Whether the appointment of Des van Rooyen to minister of finance was known by the Gupta family beforehand;

(c) Whether two Gupta-aligned senior advisers were appointed to the National Treasury, alongside Van Rooyen, without proper procedure;

(d) Whether the business dealings of the Gupta family with government departments and SOEs were tainted by irregularities, undue enrichment, corruption and undue influence in the awarding of contracts, mining licenses, government advertising in the New Age newspaper, and any other governmental services; and

(e) Whether Zuma on various occasions breached the Executive Ethics Code.

Those specifically named in the document include Zuma and his son Duduzile; Dr Ben Ngubane and the board of Eskom; Ajay Gupta; Minister Lynne Brown; Van Rooyen; Minister Mosebenzi Zwane; and Tegeta Exploration & Resources, a division of Oakbay.

Findings paint an unpleasant picture

The report described the “worrying” possibility that the Gupta family was aware or may have been aware that Nene was to be removed, six weeks after Jonas advised him that he had been allegedly offered a job by the Gupta family in exchange for extending favours to their family business.

“Equally worrying is that Minister Van Rooyen who replaced Minister Nene can be placed at the Saxonwold area on at least seven occasions including on the day before he was announced as Minister,” the report noted. “This looks anomalous given that at the time he was a Member of Parliament based in Cape Town. Furthermore one of the two advisers he brought with to National Treasury on his first day at work, 11 October 2015 had contact with someone at the Saxonwold area the day before.”

The coincidence is a source of great concern.

With regard to Mentor’s allegations, the report notes that no action appeared to have been taken to verify them. This in itself is irregular, and possibly constitutes a violation of the Prevention and Combatting of Corrupt Activities (Precca) Act. “Failure to verify such allegation may infringe the provisions of Section 34 of Prevention and Combatting of Corrupt Activities Act, 12 of 2004 which places a duty on persons in positions of authority who knows or ought reasonably to have known or suspected that any other person has committed an offence under the Act must report such knowledge or suspicion or cause such knowledge or suspicion to be reported to any police official.”

The same applied to Jonas’ allegations – there was no evidence that these were ever investigated by the executive. “If this observation is correct then the provisions of section 2.3 (c) of the Executive Ethics Code may have been infringed as alleged.”

The report noted that the board at Eskom seemed to have been improperly appointed and not in line with the spirit of the King III report on good corporate governance. “A Board appointed to an SOE, is expected to act in the best interests of the Republic of South Africa at all times and it appears that the Board may have failed to do so. It appears as though no action was taken on the part of the Minister of Public Enterprise as Government stakeholder to prevent these apparent conflicts.”

Various unused flights by mineral affairs minister Mosebenzi Zwane may have cost taxpayers nearly R100 000 in possibly fruitless or wasteful expenditure. These costs were incurred during an overseas trip to Zurich – via Dubai – in which he allegedly escorted a member of the Gupta family to a meeting with an international mining company. “Minister Zwane’s conduct with regards to his flight itinerary to Switzerland appears to be irregular. This may not be in line with the PFMA. It appears that Minister Zwane’s conduct may not be in line with section 96(2) of the Constitution and section 2 of the Executive Members Ethics Act.”

Recommendations and instructions

Because Madonsela found that the extent of issues her office needed to investigate and resources that were needed were not within scope of the Public Protector, she instructed the president to appoint, within 30 days, a commission of inquiry headed by a judge solely selected by Chief Justice Mogoeng Mogoeng, who has been tasked with providing one name to Zuma. This judge must be given the power to appoint his/her own staff and to investigate all the issues using the record of this investigation and the report as a starting point.

Zuma must also ensure that the commission is adequately resourced, in conjunction with the National Treasury. The commission must be given powers of evidence collection that are no less than that of the Public Protector. It must complete its task and present its report with findings and recommendations to Zuma within 180 days.

In addition, Parliament must review, within 180 days, the Executive Members’ Ethics Act to provide better guidance on integrity, including avoidance and management of conflict of interest. This should clearly define the responsibilities of those in authority regarding a proper response to whistleblowing and whistleblowers. Consideration should also be given to a transversal code of conduct for all employees of the State.