State-capture architects will just make way for ‘new Guptas’ if status quo remains
Are the Guptas done? And if they are, what does it mean for the state capture project? The Gupta family was given a last-minute reprieve from having its only bank accounts shut by Bank of Baroda last week. On Monday, the family will find out whether the high court will give it more time as it considers an application by the family to require that Baroda continues serving it.
However, it is only delaying the inevitable. The court has already noted that the family has a slim chance of success. Many of the Guptas’ closest associates are already out of luck. Trillian Capital Partners, for instance, has had its accounts shut at the big banks, with only Baroda willing to engage, for now.
Duduzane Zuma, who found himself with plum directorships in several Gupta businesses, has had all his accounts shut.
One can only assume that others implicated in the Guptas’ activities, such as Salim Essa, Mark Pamensky, Eric Wood, Brian Molefe and Anoj Singh, are having nervous conversations with their banks — if their banks are even answering their calls.
The Guptas will have several relationships they can call on to try to keep operating, effectively using firms and people as fronts. That seems to be the strategy with some of their larger businesses including the media and coal assets. But that will not be a long-term solution – as soon as they are outed, banks will close those accounts too. And there aren’t many people who will take on the huge risk of acting as a front for the family.
The Oakbay group must be teetering. Some elements of it, such as JIC Mining Services, are genuine businesses that can be sold as going concerns.
But life is going to be interesting for Shiva Uranium and the group’s extensive coal interests. Shiva is indebted to the Industrial Development Corporation (IDC), which holds most of Shiva’s assets as security. It is surely a matter of time before Shiva becomes IDC property.
The Guptas claim to have sold their coal interests to a related party using a Swiss shell company. Those interests, including Optimum and Koornfontein, depend on money flowing from Eskom through inflated coal deals. As the parastatal convulses from leadership and political shocks, some sanity may enter the picture, which will be bad for the coal deals.
The real question, though, is what it all means for state capture. The Guptas may be finding it increasingly difficult to extract cash from the political patronage machine they have helped to construct, but that machine keeps on running. In the absence of the Guptas, other associates will step into the breach.
One must remember that the Guptas were not the first family to gain notoriety for intersection with the Zumas. The Shaiks hold that honour. Schabir Shaik went to jail for facilitating bribes to Jacob Zuma and with that, the Shaiks found themselves marginalised. The Guptas may be following the same script.
In September, the Sunday Times reported that Gayton McKenzie and Kenny Kunene are being lined up as black economic empowerment partners for a R5bn deal with a Russian oil firm. The deal was apparently shepherded by State Security Minister David Mahlobo.
Both men have spent time in jail – McKenzie for bank robbery and Kunene for running a pyramid scheme.
ANC insiders apparently call them “the new Guptas”.
I presume the old Guptas are licking their wounds in their United Arab Emirates mansion. Given the shambolic management of their finances during their campaign of extraction from SA, they may not have quite as big a nest egg as they would have liked.
They are likely to find themselves losing associates fast, as others fear being tainted by association and still others realise they can’t direct patronage the way they once could.
But they still know how to work the network and can still operate to some extent. The Sunday Times story noted that McKenzie and Kunene went via Dubai to close their deal with Russia. It seems inevitable, though, that the Guptas will be frozen out as unnecessary middlemen in the toxic political-business nexus that has been the leitmotif of the Zuma era.
The end of the Guptas is not going to mean the end of state capture. It is only political change that can achieve that. The ANC’s elective congress represents the best chance to make a move in that direction.
Of course, legal warfare could ensure the conference never happens, and even if it does, the patronage network may get the leadership it wants.
But there is a reasonable chance a new era of clean governance may be sparked.
That really will be the end of state capture.
THE GUPTAS MAY BE FINDING IT DIFFICULT TO EXTRACT CASH FROM THE POLITICAL PATRONAGE MACHINE