Please note! This essay has been submitted by a student.
Gregory David Roberts, a prolific and philosophical writer once said “If fate doesn’t make you laugh you merely just didn’t get the joke”. In this case the joke, for the lack of a better word, is the saga of State Capture that has, in a political and economic sense, toppled the Republic of South Africa upside down and the punch line of this joke would have been the moment former president Jacob Zuma spoke to the country after the ousting of Thabo Mbeki in September 2008 saying “We must safeguard the independence and integrity of those institutions tasked with the defense of democracy and that must act as a check on the abuse of power.”
Our esteemed author has also said that fate responds to us and in response to his actions the once promisor of prosperity and the defender of democracy, Jacob Zuma is now widely regarded as the abuser of power and the murderer of a democracy fought with blood and tears of the children of this nation. Before venturing into the exploration of the seedy and corrupt world of state capture in South Africa, we first must understand what exactly it is.
The term set capture was first used in the year 2000 by the World Bank to describe the ways and means in which former soviet economies were being contorted by the will of oligarchs. The Anti-corruption watch dog, an organization called Transparency International succinctly defined state capture as “ a situation whereby powerful individuals, institutions, companies or groups within or outside a country use corruption to shape the nations policies, legal environment, and economy to benefit their own provable interests.”
Falling down the rabbit hole of state capture in South Africa – The Zuma/Gupta relation
In 1993 the now infamous Gupta family landed in South Africa shortly before the country’s first democratic elections, merely a year later Sahara computers was established cementing the foundations of a wealthy business empire. It was only in 2002 did former president Jacob Zuma shake hands with the Guptas and so marked the beginning of an allegiance that would in the future make national and international headlines.
South Africa was on the verge of a drastic political shift that finally extended its rippled effect to the ousting of Thabo Mbeki. It was a fortunate time in Jacob Zuma’s political career. Having secured himself the position to be the face of the African National Congress. The acting head of the NPA also announced that the corruption prosecution against Zuma shall be discontinued. In the run up to the election the Guptas provide resources to Zuma such as helicopters to transport him to various locations in the country.
In May of 2009 Jacob Zuma was inaugurated as the new president of South Africa. The sixth month of his presidency marked the beginning of his decline as news of Zumas Nkandla compound reared its head. It was confirmed that the compound received a R65-million upgrade at taxpayers’ expense. The Nkandla controversy, a saga in its own respect, lead to a frenzy of cover ups by Zumas government that eventually paved its way to the constitutional court.
A partnership that was the cause of many raised eyebrows was formed in April 2010 that saw Atul Gupta and Duduzane Zuma take over as directors of the Dominion holding company. The Dominion uranium mine, one of South Africa’s largest uranium deposits was once owned by Uranium One, a Canadian based company, when the Gupta family’s interest was sparked. At the time the mines operations were placed on hold after Uranium One had placed it under care and maintenance due to the decreasing worldwide prices of uranium. Uranium One had announced in May 2010 that it had sold Dominion for a whopping 37.3 million dollars.
That year fared to be a prosperous one for the Gupta family. The Guptas obtained part of Arcelor-Mittals’s R9bn empowerment deal, raising questions about who is eligible for state empowerment programs. The Guptas and Duduzane Zuma scored a R9-billion deal – ahead of a consortium led by ANC chair Baleka Mbete – that gives them a stake in global steel giant ArcelorMittal worth more than R3-billion. In 2011 it was revealed that that one of Zuma’s then-fiancées, Gloria Bongi Ngema, landed a plush job with the Gupta family and that the president’s controversial friends may have assisted his fiancé purchase o a R5.2-million home in the upmarket Pretoria suburb of Waterkloof.
Later that year COPE MP Philip Dexter called for a full-scale investigation into the business interests of the Zuma family. Dexter said “It is clear this pattern of a family enriching itself due to its relationship with the head of state is unashamedly playing itself out. The Guptas and Zim are being rewarded for their support of Zuma politically and financially.”
Brothers Ajay and Atul Gupta believed that they are losing millions of Rands due to the “constant negative publicity” surrounding their friendship with Zuma and his family. They expressed that when government ministers visit their luxury compound in Saxonwold, northern Johannesburg, they do so as friends. The Guptas deny they have benefited from South Africa’s BEE laws. According to Ajay Gupta the opposite is true. “Sahara did its own empowerment transaction. We gave 26% to black people, the transaction was funded by Nedbank. It’s not that we’re taking anything, we’re giving.”
On the V&A Waterfront deal, the Guptas claimed their stake in the recent purchase of the property by a consortium, led by property group Growthpoint. The Gupta’s Oakbay Investments buys 33% of Afripalm holdings. Afripalm owns 35% of Unipalm. Unipalm owns 33% of a trust, that is Growthpoint’s BEE partner, and Growthpoint has a 14% BEE equity component.
In 2012 the DA national spokesperson Lindiwe Mazibuko writes to public protector Thuli Madonsela on two occasions, asking her to investigate if the Zuma’s family is benefitting from upgrades at Zuma’s Nkandla compound. Thus began the downfall of the Zuma presidency and the Gupta empire.
As we further explore this myriad of controversy it becomes apparent that the Guptas brought their downfall on themselves. In April 2013 a private plane taking guests to a Gupta family wedding at Sun City lands at Waterkloof Air Force Base. It later emerges that the chief of state protocol, Bruce Koloane, facilitated the landing on the instruction of “Number One”. This ruffled many feathers especially within the ANC.
The ANC and the country were further enraged when Zuma announces the axing of Finance Minister Nhlanhla Nene and appoints the little-known Des van Rooyen. A former mayor on Johannesburg’s West Rand, Van Rooyen arrives at the National Treasury with two advisers linked to the Guptas, Mohamed Bobat and Ian Whitley. Van Rooyen stays in the job for just four days as Zuma’s announcement sends the rand into a nosedive, sparking outrage. Zuma moves Van Rooyen to a different post and reappoints Pravin Gordhan, a former finance minister. Gordhan was subjected to many scandals and was axed from his position 2017.
The Guptas was faced with a hard hitting blow in 2017. The infamous Gupta leaks which consisted of 100 000 to 200 000 incriminating emails was released sending the family and their associates spiraling to their downfall. The controversial leaks gave light to some explosive details which in summary include:
The British PR firm Bell Pottinger was hired by the Guptas to mend their toxic reputation in South Africa. The contract, worth 100 000 pounds a mouth was led by Victoria Geoghen. Leaked emails revealed her strategy to deflect attention from the Guptas by focusing on race and inequality. The aim was to ignite a fire with the country’s fragile politics. Geoghen went as far as editing the speeches of the Guptas political allies and soon enough a campaign against White Monopoly Capitalism materialized on social media, adding more fuel to the fire. Despite the firms refusal to confirm or deny the allegations of their involvement in the social media campaign, a statement was released by the firm’s Chief Executive, James Henley. Henley expressed that the firm was indeed involved in an “inappropriate” social media campaign. The fiery anger spilled onto the street with the emergence of Black First Land First, an organization that has alleged ties to the Guptas.
In 2007 amid mounting pressure to bring smugglers and tax evaders to book the Special Projects Unit was set up by Deputy Minister Ivan Pillay with one of SARS lead agents Johan van Loggenberg. In 2009 Gordhan leaves SARS to join the newly elected president Jacob Zuma as his minister of finance. He was soon replaced by Oleg Mahashahla.
The very same year Mike Peega, a recently dismissed SARS employee released a dossier called Project Snowman to the media claiming SARS spied on and targeted politicians and Zuma sympathizers. SARS denied all allegations.
The Special Projects Unit found evidence of state officials and members of the Tabacco Task Team were involved in the illegal tobacco trade. Despite all this van Loggenberg struck a romantic relationship with lawyer Belinda Walters whose client was in the direct line of the revenue service. In 2014 SARS takes the units finding to the HAWKS. Though nothing comes of it a short while later Zuma shifts Gordhan from his position as finance mister and replaces him with the deputy.
The very same month saw van Loggenberg and Walters split and allegations of their relationship flooded the media to which Pillay sets up a panel to investigate.
Tom Moyane steps into the equation as a Zuma appointment and launches an investigation by the KPMG which will ultimately cost tax payers 22 million rand. Despite no concrete evidence from either reports, the Sunday Times releases ethically questionable reports branding the Special Projects Unit as the “Rogue unit” and falsely implicate Pillay, Gordhan and van Loggenberg.
The finace mister is then axed and the Rand plummets drastically. With over a 100 billion Rands missing from the economy and the mounting pressure and outrage from the public Zuma reinstates Gordhan as Finance Minister.
Despite the press ombudsman expressing that the reporting of the Sunday Times was completely inaccurate the Rouge Unit narrative sticks granting the HAWKS and its MPA Shaun Abrahams the way to persecute Gordhan and his associates. A letter requesting Gordhan to be questioned by the HAWKS was issued. Pillay, Gordhan and van Loggenberg was summoned to appear in front of the HAWKS to which Gordhan boldly refused.
The NPA then chargers Gordhan, Pillay and Magashule with fraud. The charges were justified by an early retirement payout given to Pillay and a vague mention of the Rouge Unit. Gordhan responded by publically questioning the HAWKS and Abrahams for their motives. With the court date soon approaching and amidst the mounting pressure a hostage drama at SARS was filmed and released to the media. The video showed Moyane and his associates coercing the SARS deputy Director of law to revoke his favor of Gordhan and to advocate for the charges against him. The embarrassed MPA dropped all charges and was called to parliament to be question for his actions. The web was finally unraveled.