Original sin: Gateway to state capture

The players in the weapons scandal involving bribes of about $300 million escaped justice

Every few weeks, the spectacle of Jacob Zuma abusing the legal process in his ongoing attempt to evade corruption charges reminds the country that once upon a time there was the arms deal scandal.

The deal came just five years after the ANC took power, at the insistence of then president Thabo Mbeki, and stands as the party’s original sin in a rent-seeking spiral that swallowed the resources that should have gone towards lifting the people who elected it out of apartheid-era poverty.

It made no sense to buy billions of rands of arms that mismatched the military needs of the country, and the supposed industrial spinoffs did not deliver the thousands of jobs promised. What did happen was what always does in the arms trade — strategic political donations were made and inducements paid to secure contracts.

In 2003, Schabir Shaik was accused of paying R1.2 million to Zuma over seven years in return for political patronage.

He was also accused of soliciting an annual bribe of half a million rand on Zuma’s behalf from Thint, the local subsidiary of French arms manufacturer Thales, which sold the state combat suites for new navy frigates. It would be payment for shielding the company as shown by investigations by the auditor general, public protector, parliament’s standing committee on public accounts and the directorate of public prosecutions.

Zuma’s arrangement with Thales was formalised in an encrypted fax sent to its offices in Paris and Mauritius that would come back to haunt him though the country’s first national director of public prosecutions, Bulelani Ngcuka, declined to indict him alongside Shaik despite prima facie evidence of corruption.

Two years later, when Shaik was convicted, Mbeki fired Zuma as deputy president. Days later Ngcuka’s successor, Vusi Pikoli, announced his decision to indict Zuma.

The enmity between the two polaropposite politicians turned into a war Zuma won when he was elected ANC president in Polokwane. He was formally charged days later, by which time Pikoli had been suspended after he refused to withdraw search warrants against then national police commissioner Jackie Selebi in a bribery investigation.

Then, as now, Zuma portrayed the charges as a conspiracy.

His cause was furthered by Judge Chris Nicholson’s decision nine months later to stay the prosecution. Nicholson’s ruling heaved with political musing — he quoted Cardinal Richelieu — and concluded that the decision to charge Zuma, read with that to suspend Pikoli, pointed to “baleful political influence” exerted by Mbeki and his cabinet.

In January 2009, Nicholson’s decision was overturned and his reasoning severely criticised by the supreme court of appeal, which added the following: “It would be naïve to pretend that we are oblivious to the fact that Nicholson J’s judgment has had far-reaching political consequences and that there may be an attempt to employ this judgment to score political points.”

Mbeki had conceded the presidency days after the ruling and Zuma was months away from being elected to the position.

By the time he resigned, Mbeki’s awkward authoritarianism and Aids denialism had cost him political allies and public sympathy. The architect of the modern South African state was seen as the author of both his own downfall and a chapter that invited graft and greed into the upper echelons of that state. It was ironic for a president whose affections included poetry and inexpensive pipe tobacco.

His biographer, Mark Gevisser, told The Guardian in 2008: “Everything that’s happened to Mbeki is a consequence of the arms deal. If the arms deal is the poison well of South African politics, then it’s Mbeki who contaminated the water.”

In being outmanoeuvred by a man who lacked his intellect and ideological vision, he left the path clear for Zuma to capture the state.

The sophistry of one president explaining on television why he would not let Judge Willem Heath and the Special Investigating Unit look into the arms deal — a violation of the separation of powers — made way for the crudeness of another who defied the courts and fired capable finance ministers for blocking a nuclear deal with Russia. The policies Mbeki put in place with the aim of transforming the state were subverted for patronage that has become unstoppable because almost everyone is doing the same.

Nobody has been convicted for the looting of R500 billion, on President Cyril Ramaphosa’s estimation, from state entities by the Guptas and multinational corporations with the help of ministers, executives and midranking officials.

The first state capture trial, the Nulane Investments fraud that set up the Estina dairy farm scandal, ended in the discharge of all suspects in April. An appeal is pending.

The money-laundering case against former Eskom chief executive Matshela Koko was struck off the roll because the National Prosecuting Authority was not ready to take it to trial a year after its arrest.

The Transnet case is wobbling and hope is fading that the entity can bring those who brought the country to its knees to justice.

Only Tony Yengeni, the ANC’S former chief whip and chairperson of parliament’s joint standing committee on defence, went to prison for his role in the arms deal. He was convicted of fraud for taking a 47% discount on a Mercedes from a representative of Daimler-benz Aerospace, one of the bidders, after entering a plea bargain that saw him acquitted of corruption. Yengeni would serve four months of his fouryear sentence.

Former defence minister Joe Modise died in 2001 under suspicion of rigging a tender in favour of British defence company BAE. A decade later Sweden’s Saab alleged that a subsidiary was used by BAE to channel funds to Modise’s adviser, Fana Hlongwane.

Among the ongoing revelations about the deal was a telling throwaway line from Thales’ South African director Pierre Monyot. Admitting and defending a R1 million donation to the ANC and ongoing payment to Zuma for travel and legal fees, he said he “had no money at the time”.

If Zuma’s need for money and protection proved boundless, others in the first democratic government who had spent decades in prison or in the underground struggle similarly found themselves without personal savings or assets after a lifetime of sacrifice.

The terms of the peaceful transition to democracy had given them power but not control over the country’s economic resources, which remained in the hands of the white elite who needed to court a new political class for continued influence.

Money was the obvious means and in the euphoria of the era, attitudes to largesse were relaxed. The country’s wealthiest man, Johann Rupert, told an anecdote of how he lent Nelson Mandela a secluded cabin where he could spend a weekend with Graça Machel. It read as cute, rather than the controversy it would have been had a European president holidayed in a luxury goods tycoon’s home.

Outside the state, Ramaphosa, Tokyo Sexwale and a handful of others became rich in companies’ rush to acquire black shareholders and board chairs. Government contracts proved another route to wealth, but the vast majority of South Africans remained confined to poverty by race.

Mbeki’s answer was to create a black middle class, from whom wealth would trickle down, by way of black economic empowerment.

More than two decades later the merits of the policy are still debated, but political analyst Moeletsi Mbeki, his brother, in 2010 dismissed it as money for nothing for a new minority.

“In fact, one of the serious downsides of black economic empowerment [BEE] is that it takes people who should normally be entrepreneurs and who should be creating new companies and new jobs out of that space and just makes them wealthy,” he said.

“BEE has been a disaster because it created this massive economic inequality; it created this class of idle rich who have tons of money but do nothing.”

The Koko case exemplifies how equity partners became a vehicle for corruption, in this instance at Kusile, that crippled state entities. It was a sideline, pursued alongside the scheme he and Anoj Singh devised to give the Gupta brothers Eskom funding to buy the Optimum Coal Mine. Charges will eventually follow in that regard, as Chief Justice Raymond Zondo recommended.

The problem for Ramaphosa is the evidence against those in the ANC who are not politically expendable.

It echoes the choices Mbeki faced but multiplied to the degree where the promise or pretence that he could stop the feeding frenzy that continued into Covid-19 contracts has slipped away. He may have jettisoned Zweli Mkhize but, by last month, Ramaphosa was speaking in defeat when he said would only act against ministers implicated in state capture if they are criminally charged.

Nobody has been convicted for the looting of R500 billion from state entities by the Guptas and multinationals