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The gift that keeps giving – lecture notes for a level corruption



Every day, to earn my daily bread i go to the market where lies are bought hopefully i take up my place among the sellers.

Some time towards the end of last year, the public protector conducted inquiries into accusations of state capture made against President Jacob Zuma, his son Duduzani Zuma and his business partners the three Indian Gupta brothers.

According to the report of the public protector “media reports alleged that the relationship between the president and the Gupta family had evolved into ‘state capture’ underpinned by the Gupta family having power to influence the appointment of cabinet ministers and directors of state owned entities and leveraging those relationships to get preferential treatment in state contracts, access to state provided business finance and in the award of business licences.”
The inquiry looked into irregularities, undue enrichment, corruption and undue influence in awarding of contracts, mining licences, government advertising in the New Age newspaper, and any other government services.

Five state-owned entities are named in the report as being affected for now. These are: Eskom which provides electricity to South Africa through a mix of nuclear, diesel, hydroelectric, pump storage solar and coal processes; Transnet which provides the country with freight rail, engineering, port infrastructure and marine services; Denel which provides turnkey solutions of defence equipment by designing, developing and integrating and supporting artillery munitions, missiles, aero-structures aircraft maintenance, unmanned aerial vehicle systems and optical payloads; South African Airways and South African Broadcasting Corporations. The companies owned and run by the Gupta brothers along with the son of the president got contracts to supply coal to Eskom at prices higher than coal is normally supplied to Eskom. They got their representatives to sit on the board of Transnet in spite of the process not being open and legal. The companies partnered with Deneb to sell Denel products in Asia through a joint company that contributes nothing to Denel.

South African Airways was made to buy their newspaper New Age to the tune of 9.4 million rand worth. South African Airways was also being asked to give up its Johannesburg – New Delhi route to an Airways company owned by the Guptas in India. Services that South African Broadcasting Corporation used to give to ministries etc free of charge must now be paid for into the account of the Gupta companies.

As if all these were not enough, Mr. Jonas, a veteran of the struggle and recently deputy minister of finance swore to affidavit that the Gupta brothers offered him the position of minister of finance in the cabinet if he would do what they want him to do. This offer was accompanied with ghanamustgo bags of money. He rejected their offer and went public with the offer to show how far the government has been captured by the Gupta brothers.

It is to be noted that all these were processes, not events. That process reached a tipping point last week. The finance minister Pravin Gordhan and his deputy Mcebisi Jonas were recalled from an international road show to convince investors and others to do business with South Africa. There are speculations why President Zuma did this. Generally he does not like the way that minister Gordhan has made it impossible for the Gupta brothers to get their way with the South African Treasury. Secondly, he does not like the fact that Minister Gordhan does not think that South Africa need a trillion rand nuclear electricity project right now.

Smaller details have to do with the fact that the four biggest banks in South Africa have refused to do business with the Gupta companies because of accusations of irregularities and perhaps money laundering. Minister Gordhan refused to interfere to help the companies. There is also the small matter of the Guptas wanting to buy a bank and the Ministry and the Treasury not signing on with their permission so that the bank can be theirs. So the minister, his deputy and the director general of the ministry were recalled. The minister and his deputy were replaced and the deputy general resigned. Within 48 hours of these sackings the rating agencies put South Africa into junk status. The rand lost more than four per cent of its value and banks suffered billions of losses on their shares. South Africa faces recession from which it might take five to ten years to get out of.

The type of accusations levelled against President Zuma, his son and the Guptas is the type of accusation that the South Koreans impeached their president and sent her to prison to await trial for using state power to allow her friend to enrich herself. Can it happen in South Africa?

Nobody can say for sure. Last Tuesday the deputy president disagreed with the President on the reshuffle that led to the replacement of the minister and his deputy. The Secretary General of the African Nationals Congress said they were not consulted on the reshuffle and that the list they were asked to endorse came from some where else. The treasurer general of the party said that he was troubled by the way and manner the reshuffle was carried out. By Wednesday morning the three had changed their tune, saying it was alright for the president to reshuffle his cabinet. More importantly, they were not go to allow the generals of other enemy armies to command their own armies. Which means they will not be voting against the president when the vote of no confidence comes up in parliament on Wednesday 18 April.

The important issue here for corruption studies is that state capture is a far more thorough instrument to practise corruption. Compared with the crude stealing of whole budgets, whole foreign loans, whole whatever moneys were allocated to roads, bridges, hospitals, electricity supplies, infrastructure, this was a long term planning of continuous benefitting from corrupt arrangements world without end.

The question must be asked: Which of these two forms of corruption is easier to deal with? Both are caused by the weakness of institutions. Both are caused by the impunity of politicians in office. Both destroy the dreams and possibilities of ordinary people. Both must be dealt with drastically before they destroy the country and the people.

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