Ajay Gupta would always joke with visitors: ‘Hey, you want to be a minister? I can make you a minister.’
where Wood’s company Trillian (and its previous partner Regiments) did business worth R600 million in the past two years, AmaBhungane reported.
Mabaso is also an adviser to Zwane. The overlapping personalities and roles reveal a web of connected interests working together. “Things are going to change around here,” says Van Rooyen in his first message to staff. “Treasury will be accessible to rural areas.” The minister uses the phrase “accessible” again later that day in his only statement as finance minister. A Cabinet minister is allowed two advisers; in Van Rooyen’s case, Whitley and Bobat. Van Rooyen says of Mabaso, the third person who joined him on his first day at the Treasury: “[He] is going to work here. He will have a desk.” Officials say Treasury director-general Lungisa Fuzile fumed: “If I’m not paying him, he can’t be here.” Mabaso would never again be seen at the Treasury.
That night, after he has been harangued for documents all day, Fuzile emails a confidential briefing for Cabinet on the economy to Whitley, who promptly emails the state documents to Bobat and then to Wood, with the words: “Gents, finally.”
The Treasury has been captured by private interests.
At Luthuli House, the governing party’s headquarters in Johannesburg, the political chiefs are watching the markets in panic on December 10 and 11. The rand is in free fall and so are share prices. Broadcasts and social media are aflame with public outrage. Phones are ringing off the hook.
Political and business pressure force urgent change. Cooperative Government Minister Pravin Gordhan agrees to return as finance minister. By Sunday night, he and Van Rooyen change jobs. The crisis ends, but the battle for the state is just starting.
WHAT CHANGES IN THE SECOND TERM?
“In his first term, Zuma was happy to have Cabinet’s economic cluster do its own work, as long as he was in control of security. But in his second term, he started
FORMER GOVERNMENT OFFICIAL
asserting himself. This is because the Guptas had realised that the Treasury, Eskom, Transnet and the Passenger Rail Agency of SA were key to unlocking great wealth,” says a public finance official.
The Gupta family comes from Saharanpur in India. They came to South Africa just over 20 years ago as moderately successful traders in computer parts. They immediately set about cultivating political influence by hospitality at their sprawling Saxonwold mansion.
And they ensured their naturalisation as black South Africans to benefit from black economic empowerment. They made friends with Zuma, who was still deputy president of the ANC, but out in the wilderness without a job after being fired by former president Thabo Mbeki. By Zuma’s second term, their friendship had been cemented.
A former government official who spent a lot of time in Saxonwold says the oldest Gupta son, Ajay Gupta, would always joke with visitors: “Hey, you want to be a minister? I can make you a minister.”
The Gupta family, led by a matriarch, but managed by three sons – Ajay, Atul and Rajesh (Tony) – began to build an empire that was government-facing. This meant focussing on state licences, advertising contracts and parastatal tenders to build their fortune.
The Gupta networks wanted in on mining, banking and media deals and the massive infrastructure spending trip the young democracy was about to embark on.
Trains (Transnet, for example, is spending R50 billion on 600 new trains), planes, defence equipment and commodities are in the cross hairs of this network of capture, which is calculated to have cost South Africa billions in lost tax revenues, pilfered mining funds and ill-gotten gains, including dodgy advertising deals and mining licences extracted with the help of top politicians.
In October, Gordhan asked the court for a declaratory order confirming he could not interfere in the banks’ decision to close the accounts of the Gupta family. Attached to the documents was an eight-page certificate by the Financial Intelligence Centre detailing red-flagged transactions to the value of R6.8 billion.
The network around the Gupta family needed to neuter the Treasury, whose praetorian guard of officials repeatedly put up roadblocks to their ambitions.
In a nuclear subcommittee meeting that Zuma chaired in the week of Nene’s axing, he joked to a Treasury official who was leaving the meeting after he had labelled plans for eight nuclear reactors as completely unaffordable to the fiscus: “Your last minister [Gordhan, who was Nene’s predecessor] defied me in many ways.”
Officials say this was a reference to when Treasury in 2013 scuppered PetroSA’s plans to buy Engen from Petronas, the Malaysian company that owned a controlling stake.
Five finance officials City Press spoke to detailed numerous occasions last year, prior to Nene’s axing, when Zuma would rail against the Treasury. Officials who refused to co-sign an early agreement with Rosatom, the Russian nuclear agency, got up the presidential nose well before the axing.
The Petronas reminder also came as a warning because earlier in December, the Treasury had questioned an expensive aircraft-leasing agreement by SAA using Quartile, an outside company, to raise capital at a significant premium to market.
“The events of December were focussed on SAA and nuclear,” says a senior government leader. They were also about a big defence deal.
Salim Essa, a young Johannesburg businessman regarded by some as a fourth Gupta son, had gone from being a successful Houghton businessman to a multimillionaire, some say billionaire, as he grew his own fortunes in alliance with the family in a series of deals where a sweetheart relationship with the state was essential.
In December last year, Essa was champing at the bit to take Denel offshore through his company VR Laser Asia, which he had engineered into a joint venture with Denel to manufacture equipment for the Indian market.
Treasury refused to approve the deal, although the arms company’s board had already done so after firing CEO Riaz Saloojee, who opposed Essa’s plans.
In the end, though, most agree that Nene was nuked by nuclear. A day before Nene’s last Cabinet meeting, Zuma was to chair a meeting of a high-level nuclear Cabinet subcommittee he had taken charge of.
Before the formal meeting, he met in caucus at the presidential guesthouse with ministers, including State Security Minister David Mahlobo, International Relations Minister Maite Nkoana-Mashabane, Public Enterprises Minister Lynne Brown and Energy Minister Tina Joemat– Pettersson.
Nene was excluded from this meeting because of Treasury’s consistent view: “The bottom line is that 9.6MW of nuclear was unaffordable”.
After the caucus, the formal nuclear committee meeting started, where the assembled ministers presented a chorus of lines about why nuclear power was imperative. “Energy is power. National security is energy security. We want it.”
Nene attempts a question. He asks why the deal is being priced at eight rands to the US dollar when the currency is far weaker, which would create false cost assumptions. Then he agrees that a request for proposals for a nuclear build partner would be announced at the next day’s Cabinet meeting. He is fired the next day.
THE END. AND THE BEGINNING
In his first week, Gordhan acquaints himself with the condition of the economy and calms the ruffled nerves he finds at the Treasury.
He and his team see off the SAA-Quartile deal and begin to put pressure on the airline to provide its financials, which are months late.
They hold off on issuing guarantees that will keep the airline airborne. Then Gordhan drives down to Durban on holiday in December. His phone rings. It’s Zuma saying: “Why are you being so hard on Dudu?”
This year, Gordhan faced three onslaughts by the Hawks and the National Prosecuting Authority, which culminated in fraud charges laid and dropped. This week rumours – which had gained currency in August – again swirled about a potential Cabinet reshuffle. Haffajee is researching state capture at the
Public Affairs Research Institute