State

of Capture: Much More

Than Corruption
Our experience had made us acutely aware of the
possible dangers of a government that is neither
transparent nor accountable. To this end our
Constitution contains several mechanisms to ensure
that government will not be part of the problem
Nelson Mandela, 1996
 The Power Elite Anchored at the Top
If it were up to me and I made the rules, I would
ask for six months as a dictator. You would see
wonders, South Africa would be straight. Thats why
if you give me six months, and allow Zuma to be a
dictator, you would be amazed. Absolutely.
Everything would be straight. Right now to make a
decision you need to consult. You need a
resolution, decision, collective petition, Yoh! Its a
lot of work.
President Zuma, July 2016.
 7 Ways The Presidents Power-Elite Undermines
the State
1. Securing control over state wealth, through the capture of state-
owned companies by chronically weakening their governance and
operational structures.
2. Securing control over the public service by weeding out skilled
professionals.
3. Securing access to rent-seeking opportunities by shaking down
regulations to their advantage, and to the disadvantage of South
Africans.
4. Securing control over the countrys fiscal sovereignty.
5. Securing control over strategic procurement opportunities by
intentionally weakening key technical institutions and formal
executive processes.
6. Securing a loyal intelligence and security apparatus.
7. Securing parallel governance and decision-making structures that
undermine the executive.
 #1 & #2: Capturing the SOCs
and Weeding out skilled professionals
Cabinet and SOC board changes
April 2009: Jacob October 2010: President ESKOM TRANSNET-
Zuma removes Public Nazia Carrim wife of Iqbal Sharma
Zuma becomes Enterprises Minister has brokered
Muhammed Noor Hussain,
state president. Barbara Hogan after she family member of Gupta Gupta deals and
apparently refuses business associate Salim is in business
presidential interference Essa. with Gupta
into SOC board Romeo Khumalo co-director associates.
appointments. with Essa in a company.
October 2010: Vytjie Mark Pamensky former Tembakazi
Mentor called to a director in Gupta company, Mnyaka is the
meeting at the Gupta Oakbay. Chairperson of
Saxonwold residence and Marriam Cassim previously the Gupta-
offered the Public worked for Gupta company, sympathetic
Enterprise Ministry on Sahara. Progressive
condition that she drops Ben Ngubane was in Professional
the SAA flight route to business with Essa. Forum.
Mumbai. Mentor refuses. Kuben Moodley was in
November 2010: Malusi business with Pamensky and
Gigaba appointed Public advises Gupta-aligned Mines
Enterprises Minister. Minister Mosebenzi Zwane.
Makes wholesale changes Viroshni Naidoo is Kuben
to the SOC boards. Moodleys husband.
 CONT: #1 & #2: Capturing the SOCs
and Weeding out skilled professionals
Cabinet and SOC board changes
February 2011: Gigaba September 2015: December 2015: March 2017:
appoints Brian Molefe CEO President Zuma President Zuma fires President Zuma
of Transnet. appoints inexperienced Finance Minister
backbencher Mosebenzi Nhlanhla Nene
announces wholesale
Together with CFO Anoj Cabinet changes,
Singh, they proceed to sign Zwane into the (reportedly hours after
important position of he presented to Cabinet getting rid of Jonas
off huge deals. (See next
slide). Mines Minister. on the unaffordability of and Gordhan. He
May 2014: President Zuma Seot/Oct 2015: Minister nuclear power); replaces replaces them with
appoints Lynne Brown as Brown appoints Brian him with Des Van Malusi Gigaba and
Public Enterprises Molefe as Eskom CEO, a Rooyen who arrives Sifiso Buthelezi.
Minister. Changes to the month later, Anoj Singh flanked by advisors Ian
joins him as Eskom CFO Whitley, Jessie Duartes
Highly experienced
Denel board, including: civil servants,
Nkopane Sparks Motseki October 2015: Former son-in-law and
Deputy Minister of Mohamed Bobat, including Director-
who owns a stake in the
Gupta uranium mine, Finance Mcebisi Jonas is former Gupta General Lungile
Shiva; offered a R600-million employee, but is forced Fuzile and Deputy
Dan Mantsha who is bribe by the Guptas in to reverse his decision. Director-General
adviser to Zuma and return for the Ministry He appoints Pravin Andrew Donaldson
Minister Faith Muthambi. of Finance. He refuses. Gordhan.
have
now left.

Key players
Malusi Gigaba Brian Molefe Mosebenzi Zwane Lynn Brown Dan Mantsha Des Van Rooyen Sifiso Buthelezi
 #1 & #2: Capturing the SOCs
Between 2012 and 2019 Transnet announced that it would spend R300bn
improving its ageing rail network.
December 2010: October 2013: February 2014: One
June 2011: Gigaba tries month before the tender
Malusi Gigaba moves to make Sharma Transnet announces
Department of Trade R50 billion locomotive is awarded to four train
chairman of Board but, builders, Iqbal Sharma
and Industry official according to media tender. They appoint
Iqbal Sharma (who is in McKinsey to advise on (who adjuducated the
reports, Cabinet refuses tender process), together
business with the based on his proximity to deal structure and
Guptas) to Transnet funding. McKinsey with Rajesh Gupta and
the Guptas. Gigaba Duduzane Zuma, acquire
Board. creates a Special Board agrees to subcontract
December 2010: The part of the work to a stake in VR Laser
Tender committee, Services (ostensibly via
New Age reports that seemingly to circumvent Regiments after which
Brian Molefe will be the original fixed VR Laser Property), an
Cabinets concern, and engineering firm that is
appointed Transnet appoints Sharma chair contract for R35m
CEO. balloons to nearly positioned to benefit
(this committee oversees from the Transnet loco
March 2011: Three tenders of R2.5bn and R100m (signed off
months later this internally by Molefe tender, (through the
above) supply chain process).
happens. and CFO Anoj Singh)

Key players
Malusi Gigaba Iqbal Sharma Brian Molefe Anoj Singh Rajesh Gupta Duduzane Zuma
 #1 & #2: Capturing the SOCs

2015: Seemingly in a Ultimately,

Evidence has also
bid to gain access to according to media
emerged of how the
the lucrative reports, Transnet
proceeds of these
Regiments consulting has paid Trillian
contracts have been
contract with about R170-million
March 2014: for unexplained
spirited out of the
Transnet, the Guptas country through
Transnet awards try to buy Regiments, consulting work.
various Gupta-linked
R50bn loco but fail. They then Evidence has
shell companies.
tender to four buy into advisory emerged of how
Trillian Chairman
firm Trillian after Transnet paid both
train builders. Regiments
Tokyo Sexwale
which a material launched an
portion of the (apparently non-
investigation into the
Regiments work is Gupta linked) and
allegations against
redirected to them, Trillian (Gupta
Trillian but the
apparently with the linked) hundreds of
company was
help of their friend millions for the same
uncooperative and
Eric Wood, a pieces of consulting
the investigation was
Regiments director, work. Regiments is
stopped.
who moved to litigating against
Trillian shortly Trillian & Wood on it
thereafter. on this matter.
 #1, #2: Capturing the SOCs
Denel overhaul between July 2015 and May 2017

July 2015: Public January 2016: Pravin Gordhan calls out May 2017: Finance
Enterprises Minister Ntshepe announces the formation of Denel Minister Malusi
Lynn Brown the formation of Asia as illegal in terms of Gigaba orders the
overhauls Denel Denel Asia, jointly the PFMA as neither he dissolution of VR
Board and installs owned by Denel and nor Brown had given the Laser Asia.
Gupta loyalist Dan VR Laser Asia, owned necessary authority.
Mantsha as chair. by the Guptas and
Mantsha then Duduzane Zuma (and The purpose of the Denel
appoints ally registered in Hong deal seems to have been
Zwelakhe Ntshepe as Kong). to give the Guptas/Zuma
CEO. access to Denels
intellectual property to
develop and sell military
products to the Asian
market.

Key players
Lynn Brown Dan Mantsha Zwelakhe Ntshepe Duduzane Zuma Malusi Gigaba
 #3 Regulatory shake-down

Government ministers acting in concert with private interests use

regulatory instruments or policy decisions in an arbitrary manner to
shake down incumbent businesses including black businesses and
favour particular interests. Instead of prioritising job creation and
economic growth, decisions are taken for the benefit of a particular
company, faction or group.

The Minister of Mineral Resources Mosebenzi Zwane made this clear

when he said: We are clear that if companies cannot mine safely, they
should not be mining at all, and should allow other potential holders,
who respect the laws of the country, to continue mining.

The use of the Heath and Safety law, for example, is then used to
achieve the firesale of existing assets in favour of sectional business
interests.
 #1, #2 & #3: Capturing the SOCs: Coal contracts
How the law appears to have been used in favour of the Guptas.

IDWALA & BRAKFONTEIN No water licence & weeding out of skills

2006: Tegeta Exploration and 2014: News breaks that Tegetas March 2015: Three months later, the However, shortly thereafter, Eskom
Resources, Tegeta Resources, Idwala Brakfontein Colliery in Mpumalanga Brakfontein Mine secures a coal informs Tegeta that it is suspending
Coal are registered and obtain has apparently also started mining supply contract worth R400-million the supply contract to investigate
prospecting rights in Mpumulanga, coal illegally and that polluted water is per year. Despite, apparently not quality inconsistencies following
Limpopo, Free State, KZN. draining into an adjacent wetland. The having a water licence, the mine is problems at Majuba
Department of Water Affairs issues a contracted to supply Eskoms Majuba Five days later, Eskom lifts the
directive to the mine for failing to power station in Mpumulanga for 10 suspension after the Group
take reasonable measures to prevent years bringing the total value of the Executive for Generation
pollution and for using water without contract to R4-billion. Matshela Koko apparently
authorisation, but apparently the intervenes. The Eskom employees
2011: News breaks that Idwala Coal is company is able to continue its mining who found inconsistencies with the
mining coal near a sensitive wetland without resistance. coal are coincidentally suspended
on the Vierfontein Farm in and the two laboratories
Mpumulanga, apparently without the 2014: News breaks that Zola Tsotsi contracted to test the
requisite water-use licence. (then Eskom chairman), has approved Brakfontein coal are also
a R500-million coal supply contract suspended.
2011: News reports state that despite with Idwala Coal in Mpumalanga. The While Eskom, it appears, is going
not having a water licence, Idwala has contract doesnt go through after out of its way to bend the law to
continued to mine and has by now some senior Eskom executives express In the lead up to the Brakfontein enable the Gupta- owned
damaged the area to such an extent concern over Idwalas illegal mining contract being awarded, the following Brakfontein mine to continue, the
that Department of Environmental operations. Shortly thereafter, things happen, according to the power utility is using the full
Affairs documents show that there President Zumas Cabinet announces media: might of the law against one of
exists the possibility that protected that the entire Eskom board will be Four laboratory tests show that Eskoms oldest coal suppliers. This
species were destroyed. replaced, many of whom are Gupta- Brakfonteins coal is not of a high is the Tegeta / Optimum scandal
aligned (see slide 4). enough quality to use at Majuba and perhaps encapsulates the
power station. story of state capture best (see next
A fifth test finds the coal to be slide).
marginally within specification, but
still high risk Eskom accepts this
test and allows Brakfontein to
continue supplying the coal.
 #1, #2 &#3: Capturing the SOCs: Coal contracts
How the law appears to have been used in favour of the Guptas.
TEGETA / OPTIMUM How one company was forced out of business
in favour of a Gupta company
July 2013: Glencore, which owns July 2015: Four things happen: August 2015: Glencore announces November 2015: Zwane travels to
Optimum Holdings, writes to i) Glencore asks Eskom if they that they are placing Optimum Switzerland to meet Glencores
Eskom because they are losing will consider paying R300 per Coal Holdings and Optimum Coal Ivan Glasenberg. Thuli
nearly R1bn per year based on tonne of coal until the end of Mine under business rescue. Madonselas State of Capture
their 1993 coal-supply contract of 2018, and then R570 between report cites an independent
R150 per ton of coal. They invoke 2019 and 2023. Instead of source saying that Rajesh Gupta
the hardship clause, which considering this request, Eskom and Salim Essa were present at the
means that Optimum and Eskom imposes a fine of R2,1-billion on meetings.
could enter into negotiations if Glencore for supplying poor Days after Zwanes return,
either party felt that the coal- quality coal, ironically the same Optimums business rescue
supply contract was no longer in month that it lifted the practitioners conditionally agree
their best interest. suspension on the Guptas to sell the mine to Tegeta for
Brakfontein Mine which had been September 2015: Mosebenzi R2,15-billion.
May 2014 they sign a Co- found to be of poor quality; Zwane is appointed Mines
operation Agreement, which ii) Glencore then announces Minister. In her report, Madonsela notes: It
paves the way for a new coal- that it has to retrench 380 is potentially unlawful for the
supply contract to stop Glencores employees because of its Minister to use his official position
losses. financial troubles; of authority to unfairly and unduly
iii) KPMG approach Glencore with influence a contract for a friend or
April 2015: Brian Molefe becomes an offer from an anonymous in this instance his bosss son at
Eskoms acting CEO. client later confirmed to be the expense of the state.
the Guptas offering to buy (Duduzani Zuma is a shareholder
May 2015: A month after his Optimum for R2-billion. in Tegeta). This scenario would be
appointment, Molefe apparently Optimum turns the offer down. further complicated if his actions
meets with Optimums CEO to say were sanctioned by the
that Eskom would continue President.
enforcing the old contract (R150
per ton), despite the losses to
Glencore and the serious threat of
job losses.
 #4 Securing control over the countrys fiscal sovereignty and #5 Securing control over strategic
procurement opportunities by intentionally weakening key technical institutions and formal executive
processes.

Momentous national decisions are taken on the basis of ad-hoc political

judgments, without prior consideration of the legal, financial, economic or
other public policy implications. Where technical opinions contradict the
plans of vested factional interests they are actively suppressed or excluded
from consideration. Processes are constructed in a manner that avoids
deliberation on basic facts and critical evidence.
Despite our mounting national debt and slowing economic growth, intense
pressure is placed on the National Treasury to fund ill-considered political
projects or issue sovereign guarantees that will bind the country to foreign
debt for years to come. Guarantees are favoured because they enable the
executive to collateralize the country while bypassing parliamentary
approval. Often it is argued that large projects will be financed by China or
Russia all that is required is a State Guarantee. What is not explained is
that these projects establish permanent obligations to foreign nations
without the democratic and transparent scrutiny of parliament. Hence, if
you have an irresponsible National Treasury, pursuing narrow interests, the
consequences will be catastrophic for the nation.
 #4 & #5: Nuclear as an example
The proposed 9.6GW nuclear project is one of the largest public investment programmes in South
African history. Compared to the size of our economy, it would be one of the biggest investments
undertaken by any country in the world. Therefore the decision has to be taken in the best
interests of every South African, not sectional business interests. The consequences otherwise
would be catastrophic for us, our children and our grandchildren and our great grandchildren for
decades to come.
2014: Contract of
May 2010: The 2011: Cabinet 2011: Zuma
the Director General
Guptas and approves the establishes the inter-
of Dept of Energy
Duduzane Zuma buy Integrated Resources ministerial National
Nelisiwe Magubane
Uranium Ones Plan (IRP2010) 2010- Nuclear Executive
a trained electrical
Dominion Mine 2030, a 20 year road Committee (NNEEC)
engineer with more
later named Shiva map, outlining the as a political
than 15 years
Uranium via an mix of the countrys structure that will
experience is not
Industrial future electricity oversee the nuclear
renewed. The
Development generation. This programme.
position is left vacant
Corporation loan. includes the need for
for nearly a year
9 600 MW of nuclear
when Thabane Zulu is
power but not as the
appointed Director
primary solution. The
General, with no
IRP will be updated
experience in energy
every two years.
sector (from Human
Settlements).
 #4 & #5: Nuclear as an example
2015, several things A joint National This report is 2017:
happen: Treasury -Dept of never submitted DoE transfers
Former Finance Energy Task to any formal procurement to
Minister Nene Team is government Eskom
and former established to structure.
Energy Minister take the nuclear Instead during a Eskom releases RFI
Tina Joemat- build programme Cabinet meeting
on 9 December, Court ruling declares
Pettersson forward and the nuclear
accompany Zuma compiles detailed Nene delivers a
presentation procurement plan
to Brics Summit in preliminary invalid because
Russia where report that laying out the
unaffordability of government did not
Nene is presented models the fiscal follow due process.
with a letter of and financial Nuclear; and the
guarantee, in his implications of Energy Dept, at
name, from the nuclear. the same
Russians, to sign meeting, submits
against nuclear. a memo to
He refuses. Cabinet
recommending
that nuclear
procurement go
ahead. Cabinet
approves this and
hours later Nene
fired
 #6: Securing a loyal intelligence and security apparatus

The current leadership is increasingly and arguably deliberately governing through a national
security lense. The use of clandestine forces to influence state operations and undermine
constitutional institutions cannot be underestimated.

December 2009: President Jacob June 2012: Jiba suspends and May 2014: President Zuma December 2014: President Zuma
Zuma appoints Menzi Simelane as institutes charges against Major appoints Nathi Nhleko as Minister appoints Tom Moyane as
Director of the South African General Johan Booysen, former of Police. Commissioner of the South African
National Prosecuting Authority Head of the Hawks in KwaZulu- Revenue Service (SARS).
(NPA). Natal, who was investigating July 2014: President Zuma
corruption charges against commences the process to December 2014: Police Minister
December 2010: Nomgcobo Jiba, presidential ally, Thoshan Panday. remove Nxasana, after convening Nhleko suspends respected Hawks
widely known as a presidential He is subsequently arrested and an enquiry to determine his fitness Head Anwar Dramat over
ally, is promoted to Deputise the charged with 116 crimes, including to hold office. allegations that he was involved in
NPA. racketeering, murder and the illegal deportation of
attempted murder. The charges August 2014: News of the so- Zimbabwean criminal suspects in
April 2011: Head of Crime are later withdrawn. called SARS rogue unit breaks, 2010. At the time he was
Intelligence (a unit within the implicating former Finance apparently about to launch an
SAPS) Richard Mdluli is arrested October 2013: Mxolisi Nxasana is Minister Pravin Gordhan and investigation into Nkandla.
and charged on counts of fraud appointed as NPA head. He former deputy SARS commissioner
and corruption, as well as for his clashes with Jiba and lays criminal Ivan Pillay. December 2014: Nhleko appoints
alleged involvement in the murder charges of perjury, flowing from Lieutenant General Mthandazo
of his mistress husband. He has statements she made under oath Ntlemeza as Acting Head of the
been on suspension since then. in the course of the Booysen case. Hawks (made permanent in Sept
2015)
Dec 2011: Menzi Simelane is
suspended following a Supreme
Court of Appeal decision that his
appointment is invalid, based on
questions around his
independence.
 #6: Securing a loyal intelligence and security apparatus

January 2015: Ntlemeza suspends May 2015: Presiddent Zuma June 2015: Zuma appoints March 2017: Hawks head Berning
Major General Shadrack Sibiya, agrees to let Nxasana resign. He Advocate Shaun Abrahams NPA Ntlemeza loses his appeal and is
former Head of the Hawks in is paid R17 mill the balance of head. ordered out of his position by the
Gauteng. At the time he was his ten-year contract. Civil society High Court based on his lack of
investigating Mdluli. groups file a case to review the September 2016: Jiba struck off integrity to hold such an office.
R17m golden handshake. In 2017 the roll of South African advocates
March 2015: Police Minister Nxasana drops a bombshell in his for her role in a number politically March 2017: Fikile Mbalula is
Nhleko suspends Robert McBride, responding affidavit, effectively related cases. She is placed on appointed police minister
Executive Director of the claiming President Zuma lied special leave.
Independent Police Investigative under oath when he said (in his
Directorate (IPID), also for alleged affidavit) that Nxasana wanted to
links to deportation of leave out of his own volition.
Zimbabweans. Nxasana said: It was never my
intention to make a request to
leave the office, nor did I ever
make such a request to the
President ... The presidents
version in this regard is false.
 #7 of 7: Undermining of Collective Political
Institutions in the Executive
There appears to be concerted efforts underway that undermine collective political
institutions in the Executive, including Cabinet. It appears that critical decisions are
delegated to handpicked groups, masked as Inter-Ministerial Committees, that are
able to function in an unaccountable manner. Recent examples include:
The IMC on Banks (purportedly set up to investigate the regulations and
legislation that govern them, but strangely chaired by Mines Minister Mosebenzi
Zwane and set up after the Banks closed the Gupta bank accounts);
The IMC on Communication, unusually chaired by the President;
The National Nuclear Energy Co-ordination Committee (NNEECC), as already
stated above, and chaired by President Zuma.
The nature of IMCs is that in and of themselves they lack transparency, in that they
do not report to Parliament (which individual members of Cabinet are required to
do) and they are not formulated in legislation (as is the case of formal Cabinet
Structures).
In essence, we must ask the question whether Cabinet is still able to function as a
forum for honest deliberation on matters of public policy.