Koko, or a battle for accountability
The National Prosecuting Authority has failed in another state capture case considered only the foothills of the mountain it must climb
Somewhere between page 881 of volume four of the Zondo report and this week’s ruling by the Middelburg regional court, hope was lost that at least one Eskom executive would soon be made to pay for the wholesale corruption of the power utility.
Chief Justice Raymond Zondo mentioned Matshela Koko, the former Eskom chief executive and head of generation at the power utility, more than 500 times in his findings on state capture and reached the following conclusion: “He facilitated the capture of Eskom by the Guptas and their associates.”
The report narrated in detail how Koko and others, foremost among them former chief financial officer Anoj Singh, colluded to pave the way for the Gupta family to purchase the Optimum Coal Mine in 2016 using Eskom money and recommended criminal charges against all.
When Koko was arrested at dawn on 27 October last year, it was not for enabling the Guptas but for going on a frolic of his own to derive material, personal benefit from contracts at Kusile power plant awarded to the local affiliate of Swiss engineering firm Asea Brown Boveri (ABB).
The timelines of the two corrupt schemes overlapped, with the latter playing itself out from 2014 to 2017.
It centred on the control and instrumentation contract (C&I) for Kusile, which ABB decided to pursue after Eskom terminated the services of Alstom in 2015.
According to the draft charge sheet, ABB, and specifically senior executive Markus Bruegmann, opted for a “top down approach”, which meant they went directly to Koko.
The sole aim of doing so, the prosecution alleges, “was to establish a corrupt relationship” whereby ABB’S local arm, ZAABB, would secure the tender for the information system that serves as the nerve centre of the power plant.
For this to succeed, Bruegmann and ZAABB believed they needed a local black economic empowerment partner, with political influence. They settled on Leago EPC, directed by Koko’s lifelong friend Thabo Mokwena, and the company duly got a R96 million contract to do skills development for the C&I project.
But Leago never paid kickbacks to Koko and hence the hunt began for another empowerment vehicle that could keep its end of a bargain.
Enter Impulse Trading, which signed up as a subcontractor in 2015 after Koko allegedly promised ZAABB contracts of R6 billion should it work with the company.
Impulse’s initial contract was modified and extended, and in March 2016 it secured another at Kusile. A week later, one of Koko’s step-daughters, Koketso Choma, became a shareholder and director of Impulse.
What followed, the National Prosecuting Authority (NPA) alleges, was an elaborate scheme where money would flow from Impulse to intermediaries’ accounts before landing in those of Koko’s wife Mosima and her daughters.
“That is bog-standard money-laundering,” a close observer of the case said this week. “That is what you have been dying to prosecute to get the Financial Action Task Force off your back,” a reference to the government’s efforts to have the Paris-based financial crime watchdog lift the grey-listing imposed on South Africa in February.
The investigation into the ABB matter began more than five years ago, yet the NPA was forced to concede in court that it had not been completed a year after the arrest of Koko and seven other suspects and that it was unable to proceed to trial.
The case was struck off the roll for unreasonable delays on Tuesday following an inquiry in terms of section 34(2)(a) of the Criminal Procedure Act.
The inquiry was launched in September after the prosecution asked for another postponement to obtain six outstanding witness statements from abroad — three each from Germany and the United States — and to await a finalised forensic report, plus a separate data analysis report.
Advocate Tiny Seboko, the junior counsel enlisted to lead the prosecution, argued that the investigation was nearly complete, but magistrate Stanley Jacobs countered that the state could surely do nothing without the forensic report detailing the money-flows between the suspects.
“The flow of funds — my understanding is that they are relevant in order to prepare the indictment. How are you going to indicate who has received through what process? You need that flow of funds,” Jacobs said
This work has been the long-standing assignment of the Bowman Gilfillan law firm, whose contract has repeatedly been extended.
But it would be silly to blame the law firm for delays when it did not have a clear, targeted brief from the NPA and was earning steep fees for continuing work, a source with knowledge of the work said.
Jacobs hinted at the unwieldy scope of the investigation, sounding exasperated that the data being perused by the investigating officer amounted to 18 gigabytes, or a “mind-boggling” billion pages.
Cautioning that the court was not a warehouse for cases not ready for trial, he said: “Matters don’t just get enrolled in the regional court or the high court for purposes of investigation.”
It has been muttered in senior political circles for a while that the fight against crime is being lost because the police “arrest to investigate”, meaning suspects are brought before court long before there is a solid docket, leaving the magistrate with little choice but to throw out the charges.
The Koko case saw the state repeat the same mistake, a lawyer with close knowledge of the matter said, adding that it was worrying that this happened despite the pledge by the NPA that state capture cases would be enrolled only when trial ready.
“This was ‘arresting to investigate’. The prosecutors will tell you, to be brutally honest, that what happened here is that they were forced to arrest prematurely,” the lawyer said.
“But you can’t just go and arrest people and then figure it out later. Not in an arrest of this magnitude because Koko was a pivotal roleplayer in corruption. You do not come to court unless you are ready to proceed to trial the following day.”
Jacobs’ complaint about the sprawling nature of a seemingly unending investigation was on the mark, the same lawyer said.
“You could investigate this for the next 20 years, and there will still be more for you to investigate because it was captured.
[State] capture is a multi-headed
Hydra and if you don’t know how to appreciate what you are trying to achieve and to limit your exposure, you will not get anywhere.”
A senior source in the department of justice suggested the problem was not confined to state capture cases but indicative of a wider inability to investigate serious crime in a way that would lead to convictions.
The recent admission by the Directorate for Priority Crime Investigation (the Hawks) that it is investigating 3 000 charges against a notorious Cape Town gangster refers.
“Why the hell would you do that, you can nail him on one or two very strategic charges and have the same impact,” he said. “So you bring 3 000 charges. How many affidavits is that, how many witnesses, isn’t that where the problem lies?”
It is striking that the United States’ investigation into the ABB matter was concluded more than a year ago, with the help of evidence supplied by South Africa, while the NPA was unable to use the same evidence to bring the case against Koko and his co-accused to trial. “Why were they able to finalise their case for corruption that happened here? Because they are competent and capable. They know how to do complex cases. We don’t and we don’t want help.”
A senior member of the NPA has privately blamed the delays in the case on the time-consuming nature of requests
for mutual legal assistance and extradition orders.
But two points are worth raising here.
First, the NPA’S hopes of having Bruegmann and fellow accused Sunil Vip surrendered to South Africa are minimal, given that Germany does not extradite its nationals. It is instead seeking to prosecute the pair in Germany.
Second, there have been many requests for legal assistance to the United States in the ABB matter. But according to an impeccable source, the latest was filed only a few weeks ago and forwarded to the relevant US authorities by the justice department.
The American investigators’ work was instrumental in bringing ABB to ink two settlement agreements with South Africa.
In 2020 the company agreed to refund Eskom R1.56 billion. Last September, it undertook to put aside R6 billion as a provision to cover costs that might arise as a result of ongoing investigations into its contracts at Kusile power station.
The NPA has been adamant that these do not afford anybody at ABB immunity from prosecution. But there are unconfirmed fears that the company was, in fact, promised immunity — without authority — by senior state advocate Phuti Matabane, who appeared in court 10 days ago for allegedly failing to press charges in an unrelated R6 million corruption case.
The NPA’S Investigating Directorate has vowed to re-enroll the case against Koko and his coaccused when it is ready, but will need national director of public prosecutions Shamila Batohi to submit a letter to the court certifying that it
is ready for trial.
The humiliation it suffered this week was the second time that the Investigating Directorate proved unable to sustain money-laundering charges in what are considered entry level state capture cases, seven months after the Nulane Investments trial ended in the discharge of key associates of the Gupta brothers.
There the Free State high court held that the state failed to pass the barest threshold to prove that Iqbal Sharma, Ronica Ragavan, Dinesh Patel and a clutch of Free State officials colluded to defraud the province of more than R24 million.
That was the sum paid to Nulane Investments, which was set up by Sharma, to perform a feasibility study for a dairy project. It pinpointed Paras, an Indian firm linked to the Guptas, as the preferred entity to run a dairy project in Vrede in the Free State. This would become the Estina dairy farm scam in which R280 million allegedly flowed to the Gupta family.
Acting Judge Nompumelelo Gusha found that the prosecution was unable to prove that provincial officials broke the law when they gave the contract to Nulane.
Without proof that the money
was stolen, it was then hard-pressed to sustain the charge of moneylaundering in relation to the myriad transfers that followed between companies in the Gupta brothers’ business empire.
Lawyers close to the matter have asked why prosecutors failed to adduce evidence from the Bank of Baroda’s records at its disposal. In these records, Sharma justified a transfer to an Emirati bank account linked to the Guptas as payment for the feasibility study while he had subcontracted it to Deloitte in South Africa, at a fraction of the cost.
The supreme court of appeal agreed a fortnight ago to hear oral argument in the NPA’S application for leave to appeal the ruling. It means that the prosecution lives to fight another day in the country’s first state capture trial.
But the process of challenging Gusha’s ruling saw more evidence of its ineptitude.
The NPA initially filed for leave to appeal the ruling on 8 May, saying she had made a litany of errors in law.
It was later forced to withdraw this first application and supplant it with a 30-page application for the reservation of questions of law in terms of section 319 of the Criminal Procedure Act, which is the correct process to follow when the accused had not been acquitted but discharged
in terms of section 174 of the same Act.
The mistake was detected and corrected by advocate Nazeer Cassim SC, who has at intervals been enlisted by the Investigating Directorate to help steer the case. Cassim is not alone among the country’s finer legal minds to have helped the entity with state capture cases.
But the Investigating Directorate has scaled back its use of private counsel in the past year, insisting that its prosecutors should be entrusted with the responsibility of taking forward cases flagged by Zondo.
Its standard response to public pressure to bring key players in the scandal to trial is that Zondo’s findings were merely a nudge to investigate and formulate charges. In other words, the actual work takes years, and whether it could happen faster has become a matter of circular debate about resources, skill and political will.
Observers are unanimous that the obvious lack is one of skill, because the NPA has not recovered from the Zuma administration’s sabotage of its organisational strengths.
It is one of the few state entities that is consistently receiving more funding from the national budget. The money does not flow straight to it, but to the department of justice and ministerial approval is needed for the NPA to hire specialist skills.
The question is whether it is well spent. Jean Redpath, a senior researcher at the Dullah Omar Institute’s Africa Criminal Justice Reform Programme, said the ongoing recruitment of junior prosecutors was “the opposite” of what the NPA needed, and noted that it was unable to attract the expertise required on a permanent basis.
What is sorely needed, Redpath said, it seasoned advocates who can succeed where for now the state keeps failing.