READ IN FULL | Chief Justice Raymond Zondo: “Unlikely” that Parliament would prevent state capture

I see that this morning’s function is attended by a number of people who I think I should recognise. I understand that the Minister of Justice and Correctional Services is here or will be here. Professor Thuli Madonsela is here, the one that caused me to be in the commission for four and a half years.

I understand that the mayor of Johannesburg, Ms Mpho Phalatse is also here. Understand that the CEO of Eskom is also here, Mr. Andre du Ruyter. The head of the investigating Directorate of the NPA Ms Andrea Johnson, I understand is here. The CEO of business leadership, Ms Busi Mavuso as well as the founder of the Gift of the Givers, Dr Imtiaz Sooliman. I’m sure there may be others that were not mentioned here that were not given to me. I recognise everybody.

Challenges in our constitutional democracy 

Let me begin by saying how pleased I am Mr Basson and your team that you considered it necessary to invite me to be part of this gathering this morning and to deliver this address in this very important gathering. You have already said that it is important that this gathering takes place two years before we reach the milestone of thirty years of constitutional democracy. That makes it very opportune that we should gather in this fashion because when we reach 30 years of constitutional democracy it will be incumbent upon us as a people to reflect on the journey that we have travelled from 1994. And look at the challenges that we have come across in that journey. Look at the measurements that we have used in that journey to try and address the challenges that we have come across in our country and ask the question, which ones of those have worked and which ones have not worked?

Because if we don’t do that reflection, there is a greater risk that beyond the 30 year milestone of our constitutional democracy, we are going to repeat the same mistakes we have made in the first three decades of our constitutional democracy. We don’t want that because we should aim to ensure that those of us who will still be around when we reach the milestone of 50 years of constitutional democracy; they will be able to look at the country that South Africa will be at that time and be happy that even if it is not exactly the country that they would have liked it to be by then, at least significant advances will have been made and the country would be a much better country than it would have been in the first three decades. This gathering is also opportune for another reason and that is that it’s over two months since the state capture commission handed over to the President the last parts of its report into allegations of state capture, corruption and fraud in the public sector, including organs of state.

Reflecting on state capture 

That makes it appropriate because that means we have had some time to reflect at least on some of the portions of the report about a matter that is so important to our country, namely that our country was captured for private purposes and in the process, billions and billions of taxpayers money was stolen.

Soon after I’d been appointed as chairperson of the Commission in 2018, I made it clear that there were certain very important questions that the commission would need to determine in its investigation. Of course, the one was whether there was state capture. Another one was whether if there was a state capture, how did it come about? Another one was, who were the perpetrators and role players in that state capture. Another one was, what measures should be put in place to make sure that our country is never again subjected to state capture.

Of course, another important question was also to examine what conditions may have existed in our country which provided fertile ground for state capture to take root.

I believe that to a very large extent, the report does answer most if not all of these questions even though not each one is in the same detail as the other.

Many of us gathered here and those who have read on state capture will be aware that internationally an essential part of the definition of state capture includes changing laws, changing regulations and policies which happens at the instance of private actors in order to ultimately benefit their private entities from public funds.

The view we took in the context of South Africa was to go back to the Public Protector’s report and it became clear to us that when you go to that report, the main focus of what the Public Protector [Thuli Madonsela] had in mind was exactly what is dealt with in her report which was that there were allegations that the Gupta family was exercising undue influence on the head of state and through their proximity to him influencing decisions in government and in SEO’s that were aimed at ultimately them and their entities enriching themselves from the public funds unlawfully. It was our analysis that there may be different forms of state capture but what we had in the context of the Gupta family and then head of state and the activities in which they engaged, which included the dismissal and suspensions of various officials, government officials and officials in SOEs and replacing them with certain officials preferred by the Gupta family. In the manner in which it was done was definitely state capture.

Well designed scheme 

Of course, as I indicated earlier on, one of the important questions was to understand how they went about this. It is public knowledge that, long before Mr [Jacob] Zuma became the head of state, the Gupta family had a close relationship with him and his family. When one examines the relationship it seems quite clear that this was a well-designed scheme by the Gupta family with the assistance of the head of state that was aimed at advancing the business interests of the Gupta family and Mr. Zuma has his own son, who was in business with them.

The evidence that was led in the commission revealed that the first SEO that the Gupta family and Mr. Zuma seem to have directed their attention to in order to implement their scheme was Transnet because after Miss Maria Ramos, who was Group CEO of Transnet, had left Transnet early in 2009. And her position needed to be filled, and the board of Transnet had interviewed candidates and had decided upon a suitable candidate for the position. Mr. Zuma as the president refused to give his approval that that candidate be appointed. And this was made clear by the evidence of then Minister of Public Enterprises, Ms Barbara Hogan. This led to a situation where for about two years, an important SOE such as Transnet did not have a Group CEO because Mr Zuma had made the decision that he had only one choice for Group CEO for Transnet and that was Mr Siyabonga Gama who at the time was suspended and later dismissed. But Mr Zuma was not prepared to consider anybody else.

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Although there is no evidence that at that stage, the Guptas were involved, all indications seem to point in that direction. The Gupta must have thought that the only way they could succeed in their plans for Transnet, and they would have known that they were great opportunities to make money at Transnet because of the plans, which must have been known to them for Transnet, they must have thought that the only way they could make progress on their scheme was to speak to Mr Zuma to change the minister. And of course, Miss Barbara Hogan was dropped from Cabinet in October and Mr Malusi Gigaba was appointed. Mr Malusi Gigaba testified in the commission that he was friends with the Guptas and he had been friends with them long before that. It didn’t take long after Mr Gigaba was appointed that the Guptas announced in December 2010 that Mr Brian Molefe would be the next Group CEO of Transnet which indeed happened within the following three months or so. It also didn’t take long after Mr Gigaba had been appointed that Mr Siyabonga Gama, who had been dismissed for a variety of allegations of misconduct was reinstated in a division of Transnet called TFR as CEO under very strange circumstances.

The rest of what happened at Transnet after Mr Molefe had been appointed there and Mr Gama had been reinstated is quite well known, the transactions which occurred. Mr Brain Molefe also admitted before the commission that he was friends with Mr Ajay Gupta, which means that the Guptas were friends with the Minister of Public Enterprises and friends with the Group CEO of Transnet at the time. This is an indication of how they began to implement their scheme.

Temba Maseko, an excellent civil servant 

But already in 2010, they had meetings with Mr Themba Maseko who was the CEO of GCIS in the presidency, because they had an eye on the advertising budget of various government departments. Mr Themba Maseko resisted the pressure that they sought to put on him to agree to give them the whole of the advertising budget of various government departments in a corrupt manner.

What was to happen, as you will recall from the report is that when they realised that Mr Maseko was not cooperating with them in their corrupt scheme, they threatened him and said that they would report him to his seniors who would replace him with somebody who would cooperate and indeed, that happened. And he was replaced and they began to get business after he had been replaced.

Mr Maseko was an excellent civil servant. About six weeks before that he had been rated and given more than 100% in terms of his performance in his job.  This is how they began. Of course, later on, they focused their attention on Eskom and they realised that some of the executives at Eskom were not people who would be prepared to work with them and obviously engaged the head of state, Mr Zuma, in order to implement the scheme at Eskom. Already in 2014, the Guptas knew that Mr Brain Molefe was going to be the next Group CEO of Eskom while he was at Transnet. It may well be that the head of state wasn’t aware of those plans, but it may well be that they were so influential that they knew that if they wanted Mr Brian Molefe to be the group CEO of Eskom, that is what would happen. I say that because in 2014, at the head of state, Mr Zuma would have approved the appointment of Mr Matona as Group CEO of Eskom in October.

Pressure at Eskom

And Mr Matona did not last more than six months. So, what the Guptas had told Mr Henk Bester in 2014, so as to show how influential they were, in order to put pressure on him to agree to partner with them in regard to a certain transaction at Transnet, namely that Mr Brian Molefe would be the next group CEO of Eskom, happened. But in order for it to happen, various executives were suspended. An excuse was created to say there was a need for an investigation into the affairs of Eskom which would serve as a justification for the suspension of the executives concerned. The head of state was directly involved in a meeting which planned or discussed these measures. We know them to have been the Gupta plans because of what happened afterwards but also because of the involvement of Mr Salim Essa prior to the suspension of the executives.

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Because the evidence was clear that the day before the suspensions, he met a number of officials together with Mr [Matshela] Koko at Melrose arch where they told these officials about what was going to happen. After the executives had been suspended, negotiations were decided upon by the board of Eskom which was dominated by people who had some or other relationship with the Guptas. This board decided that there should be negotiations aimed at paid out the executives. During the evidence, none of the board members could explain why these executives had to be paid to go in circumstances where the board said they had no problem with them. Ultimately millions were spent by Eskom just to get rid of those executives, but only three were got rid off, because one, that is Mr. Koko, was allowed to return. We now know in the light of the report of the Commission, why he returned and why he was treated differently.

The transactions which happened afterwards at Eskom revealed, just as they do in relation to Transnet, what actually the Guptas were after.

Denel 

But apart from Transnet and Eskom, there was also Denel and when one goes to Denel and looks at how they went about capturing Denel, one finds that the approach was very similar to what they did at Eskom. Indeed, one of the Gupta associates who gets mentioned in both Eskom and Denel was Salim Essa. But at Denel, it would appear that they had started as early as 2011/2012 to try and capture Denel. But the problem was there was a very strong and professional board there that was led by a very strong chairperson. A board that had done exceptionally well at Denel. And the Group CEO of Denel, who was there was somebody of integrity and who resisted all attempts by Mr. Salim Essa and the Guptas to capture Denel, Mr Riaz Saloojee. However, there was to be a new board at Denel in 2015, and the Minister of Public Enterprises at the time, Miss Lynn Brown, made sure that she allowed this very well-performing board to all go when its term ended except for one or two members, who do not appear to have distinguished themselves in any way.

And the new board was then appointed. And the new board like the Eskom board was dominated by people who had some other relationship with the Guptas. The chairperson of the board was an attorney who had previously been struck off the role for all kinds of unprofessional [behaviour], and it’s according to the judgment of the High Court, which struck him off the roll, including matters relating to lack of integrity. When I heard this evidence in the commission, I could not understand why Minister Brown or her department would have wanted that particular attorney to be a member of the board or chairperson of the board. Because if they wanted an attorney, there were so many attorneys in Johannesburg, who would not have had the kind of adverse record that this particular one had. It was to transpire later on that he had been an advisor to minister Faith Muthambi who had shared certain confidential government information and documents with the Guptas.

And, of course, the evidence that was led in the commission showed that this chairperson of the Denel board had a very close relationship with the Guptas.

How the Guptas operated 

I mentioned the Guptas approach to these three SOEs because it’s important to remind us how they operated. The way they dealt with personnel at Eskom that they didn’t like or didn’t want to stay or keep is the same as the way they dealt with personnel at Denel. At Eskom, they suspended certain executives. That’s what they did also at Denel. At Eskom the excuse they used to us was that there was to be an investigation by a certain law firm, Dentons. At Denel, that’s the excuse they also used. And at Denel, the CEO who had resisted all their advances, Mr Saloojee, was kept suspended for about one and a half years without being brought to a disciplinary inquiry. In circumstances where he protested his innocence against various allegations they actually challenged the board to charge him in a disciplinary inquiry. But the board wouldn’t do that and they preferred to pay him while he was staying at home until his contract was about to expire. They paid him out and he left. Of course at Eskom, they didn’t take that long. It was two three or so months and they got rid of the executives that they did not want.

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I consider it important to mention this because I think if I had been told some years back that something like this could be allowed to happen in government, I would not have believed that private people could have so much influence on the head of state. That they could have officials that they didn’t want in SEOs kicked out and replaced by those that they wanted. I would not have believed that but it happened, and it happened in our own country.

The money that was looted in the SEOs is of course counted, at least in terms of the evidence before the commission, [in the] billions. I know that it has been estimated at more than billions. It is a lot of money that could have been used to build clinics, to build schools, to get rid of mud schools, to get rid of those toilets in rural schools that are dehumanising. It is money that could have been used to build bridges and to build roads and to maintain essential infrastructure that needs maintaining. But that was not done and the country and its people continues to suffer. Various questions arise in the context of what I call the Gupta-Zuma State capture.

Would Parliament stop state capture? 

One of them is why Parliament did not stop this? The evidence that was led in the commission is quite clear that Parliament had all the powers to stop it, but it did not stop it. Because the majority party in Parliament didn’t want to stop it. Many times opposition parties tabled motions for the establishment of inquiries to look into the allegations about the influence of the Guptas on the president. But the majority party did not allow this. A number of times, opposition parties tabled motions of no confidence in the President as a way of wanting to stop this, but of course, the majority party would have none of it.

Of course, Parliament operates on the basis of the majority. Whatever decisions are taken by Parliament, are taken on the basis of the majority. But a question that arises in the context of what we’re talking about is whether Members of Parliament, who saw the evidence that was piling in the media, in the public domain, about what the Guptas were doing over the years and continued to refuse for a long time, to establish inquiries and to let something be done about the head of state; the question arises whether they were acting to protect the interests of the people or they were acting to protect the interests of the party? I know that there are arguments for and against this.

But I would have thought that there are certain matters where members of Parliament ought to say: ‘Here we are dealing with the interests of the people. Our salaries are paid from the taxes of the people. And it is the interests of the people that must prevail.’

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Another question that arises in the light of what happened, namely, the failure of Parliament to prevent state capture, is whether if for some reason the Guptas were to be back, and they would not be in jail, and they would be free in South Africa, [and] they started all over again, [would] Parliament act differently from the way they acted before? That is, if they were again, that is the Guptas, to have a president who is president of the majority party and over whom they have the kind of influence they had with the previous head of state, would Parliament be able to act differently?

I doubt that they would. Because the evidence that was led before the commission, that was given before the commission by both the national chairperson of the majority party and the president of the majority party, was quite clear that members of the majority party are not expected or should not vote in support [of] a motion of no confidence in the president of the country who is their president, or the president of the party.

If that is so, it’s unlikely that the majority party would act differently and therefore Parliament would act differently.

Difficult matters 

And the question arises, does that mean we are at a risk that what happened to us as a country, which saw us losing billions of rands, could happen again at some stage and Parliament would not be able to prevent it?

These are matters that we must consider. The Commission in its report has dealt with some of them. But these are very difficult matters and all of us need to engage with them. For our country, for the sake of our children and our grandchildren, we need to ask ourselves the question: do we know how we would prevent another state capture that is similar to the Gupta-Zuma State capture? And I hope that in this gathering, maybe answers will come out.

We as a country have come out from a very terrible period of state capture. We need to focus on what it is that should be done to make sure it doesn’t happen again. We need to focus on what we need to do to drastically bring down corruption in our country because it has reached completely unacceptable levels. The legal framework is there. The institutions, some of them are there, but there are gaps which seemed to affect our determination as a people to deal with corruption.

Paramount to protect whistleblowers 

But one of the things we need to remember as we seek to ensure that we are ready to tackle any future state capture and corruption is that the protection of whistleblowers is paramount. The protection of whistleblowers is paramount.

The Commission heard a lot of evidence from some of the whistleblowers who have helped the commission in this investigation. If we do not as a country look after these whistleblowers, who helped the country during state capture, they will not be available next time we need them. Others will look at how we as a country have treated these whistleblowers and they will not come forward.

There is no way we can defeat or even make a serious dent on corruption without whistleblowers. And to get a lot of people reporting corruption, we must create a conducive environment and we must ensure that they are properly protected. Because to fight state capture and corruption, we need to make sure that there are proper laws in place. But we need to make sure that there are people who will report corruption. And we need to make sure that the police are capacitated to make the arrests that need to be made. And the courts will do their job.

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I can assure everyone present here that the judiciary stands ready to do its part in dealing with corruption and state capture. The judiciary stands ready to ensure that the Constitution of the Republic is respected. The judiciary stands ready to ensure that the rights that everyone is guaranteed in the Constitution are protected.

And we all know that the judiciary has a history of coming out very strongly when the need arises to protect the Constitution and our constitutional democracy. It has done so a number of times including during the Nkandla judgment. And it did so last year when it appeared that the country was on a brink of lawlessness. The Judiciary will play its role.

I take this opportunity, as I conclude, having expressed my appreciation to the role played by whistleblowers in the investigation of the commission to also express my appreciation to the media for the role they have played over the years, particularly to report on state capture. Particularly investigative journalists, who did a lot of work that the commission found very helpful. I know that Mr Basson played a very important role in relation to Bosasa. And there are many other journalists. We need them to continue to play that role. We need them to continue to investigate and indeed, to unearth all corruption and acts of state capture. Thank you very much.

I just want to say one thing that today is the first day in the history of this country that this country has a Deputy Chief Justice who is a woman. History has been made today.

– That was the full speech of Chief Justice Raymond Zondo which he made at News24’s On the Record summit on 1 September.

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