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Connecting the dots on Gigaba's 'state capture' project

Oct 09 2017 14:43
By Dennis George

While the state capture project has been operationalised by an army of corrupt minions, Finance Minister Malusi Gigaba will be remembered in history as the 'chief architect of the state capture project', according to Dennis George, general secretary of the Federation of Unions of South Africa.

ON SATURDAY Fedusa announced that, over the next few days, we will urgently consult all our structures and other trade union federations like Nactu and Cosatu, on our proposal that organised labour review and possibly withdraw the investment mandate the Government Employees Pension Fund (GEPF) has with the Public Investment Corporation (PIC).

These consultations have now started.

This comes against the backdrop of the interminable attacks against the PIC by the current leadership of the National Treasury led by Minister Malusi Gigaba, ostensibly to create “transparency and accountability” at the institution.

The truth, we of course know, is to gain control of the institution in order to plunder the pension savings of millions of public servants.

The decision to potentially withdraw the GEPF mandate from the PIC has not been taken lightly. We are aware of the consequences – the GEPF is the biggest public sector client of the PIC. More than R1.67trn of the GEPF’s assets are invested and managed by the PIC, in terms of the existing investment mandate.

These are defined benefit funds which means government is the ultimate guarantor of worker’s pensions. There are material risks in seeking, as an alternative, private asset managers and we need to consider our options carefully.

But our preliminary view is that there is no obligation in law for the GEPF to retain the PIC as the exclusive manager of these assets.

The GEPF can look at alternatives, and the relentless assault on and political interference in the PIC led by Gigaba warrants our concerns about the future security of public sector pensions. Over the next few days, we will seek legal advice on these options to help us take the most responsible decision.

The fact that we are even in this position, having to defend the livelihoods of millions of people who have dedicated their lives to building this country, is an utter travesty.

And Gigaba is right at the centre. While the state capture project has been operationalised by an army of corrupt minions, Gigaba will be remembered by history as the chief architect of the state capture project.

Gigaba's tragedy

The tragedy with Gigaba is that South Africa might have given him a chance. He is 46 years old, he is no fool, and he is deeply ambitious. When Jacob Zuma appointed him to replace the highly respected former Minister of Finance Pravin Gordhan in March this year, none of us were fooled by the depraved intentions of the president.

We knew Gigaba was Guptafied, but there was an outside chance that he would read the political mood, extricate himself from the drag of the sinking ship, and come clean with us.

But we also knew that the stakes were high. The country’s fiscal sovereignty – the custodians of which are the National Treasury and associated institutions, like the PIC; the South African Reserve Bank (SARB) and the South African Revenue Service (Sars) – was the final front for the state capturers.

Gigaba had been a key lieutenant in their attack so far, succeeding in taking most of the key state-owned companies for his corrupt handlers. But there was still a chance that, with the keys to the National Treasury and faced with the enormity of the associated responsibility, Gigaba would do the right thing.

He hasn’t and he will not.

Gigaba has been the central architect of the state capture project since his appointment on November 1 2010 as minister of public enterprises. This was after Zuma had removed Barbara Hogan from the position in October 2010, coincidentally following her pushback against alleged presidential interference in state-owned company board appointments.

Thereafter Vytjie Mentor refused an offer for this ministerial position, apparently made to her at the Gupta’s Saxonwold home on condition that she would drop the South African Airways flight route to Mumbai in favour of Gupta aviation interests.

Unsurprisingly, then, Gigaba’s appointment marked the start of a systematic process of reconfiguring the boards of state-owned companies to operationalise the Gupta/Zuma looting.

It is Gigaba who appointed three of the key brokers of the state capture project – Brian Molefe, Anoj Singh and Iqbal Sharma – placing them into key positions at Transnet, where they were able to perfect their capture plan, later emulating this at Eskom.

Enter Brian Molefe

Gigaba’s first accomplishment on behalf of his handlers was the appointment of Molefe in March 2011, about four months after he became public enterprises minister. At the time, media outlets were reporting several anomalies associated with Molefe’s appointment, with the primary allegation that the decision had been predetermined. The evidence was circumstantial but compelling.

According to the Mail & Guardian, the advert for the position of CEO was published on January 26 2011 and candidates were given until February 1 2011 to respond. Gigaba announced the appointment of Molefe on February 16.

At the time, Transnet said 63 applications had been received and nine applicants were interviewed. Ultimately, three names were given to Gigaba, but apparently without prior board approval, leading to the resignation of Transnet non-executive director and former CEO of DaimlerChrysler, Juergen Schrempp, who was apparently disturbed with the way the process had been handled.

The Mail & Guardian reported that: “A senior executive [the article made no suggestion that this was Schrempp] with knowledge of Transnet board operations said the applications had to be vetted and interviews for busy executives and board members arranged. Molefe’s appointment was miraculously quick.”

Interestingly, on December 7 2010, about three months before his appointment, the Gupta-owned New Age, without quoting its sources, said: “The New Age has it on good authority that Molefe will be appointed CEO by the board.”

The paper also correctly predicted other appointments by Gigaba to the new Transnet board, including Don Mkhwanazi and Ellen Tshabalala.

In June 2011, three months after Molefe’s appointment to Transnet, Gigaba wanted Iqbal Sharma appointed as chairperson of the Transnet board. In December 2010, a month after Gigaba was appointed as minister, he had oddly elevated Sharma from his mid-level  position at the Department of Trade and Industry (where he had reportedly met the Guptas) to the board of Transnet.

Six months on, Gigaba was pushing for him to become chair of this critical institution. But Cabinet, which at this point still retained some of its power, vetoed this because of concerns that he was too close to the Guptas.

Gigaba, as we have seen in his recent attacks on the PIC, is not one to give up easily, and, shortly thereafter, seemingly to circumvent Cabinet’s veto, Transnet created a new structure, formally called the Board Acquisitions and Disposals Committee, to supervise the planned pipeline of future large-scale infrastructure spending (all tenders worth more than R2.5bn).

Sharma became chair of this committee. It was at this point that Gupta-linked entities began benefiting from Transnet tender opportunities, and it was this committee that facilitated the R51bn tender for the purchase of 1 064 locomotives.

The largest chunk of the tender was awarded to China South Rail (CSR), a deal which we now know was facilitated by the Gupta shell company Tequesta. Tequesta benefited from a R5.3bn facilitation fee, or – in straight talk – a bribe.

'R10m bribe per locomotive'

AmaBhungane calculated that this equates to a R10m bribe per locomotive that was paid directly by CSR into Tequesta. 

In June 2012, Gigaba endorsed the promotion of Anoj Singh into the CFO position at Transnet, and he, Molefe and Sharma immediately set about executing a series of some of the most elaborately corrupt IT and infrastructure deals, resulting in hundreds of millions of rand being siphoned from the transport and logistics utility, which then entered into an intricate money laundering network that spans South Africa, Dubai and Hong Kong.

At SAA, Eskom and Denel, Gigaba was also laying the ground for his handlers. At Eskom and Denel, he executed a bloodbath by inexplicably and in one fell swoop sacking the majority of non-executive directors – most of whom held decades of experience in the energy sector.

He replaced them with a mixture of Gupta-aligned individuals and young, inexperienced individuals who were controllable (a strategy we are currently observing with alarm at the National Treasury).

At SAA, Gigaba delayed support for a turnaround strategy for SAA put forward by then board chair Cheryl Carolus. Gigaba’s delays caused serious financial damage to the airline and resulted in the resignation of Carolus.

The space was created for Gigaba to bring back Vuyisile Kona as both acting CEO and board chair after a meeting at the Guptas’ Saxonwold house with Rajesh Gupta, Duduzane Zuma, and Ace Magashule’s son, Tshepiso.

What provides the most colour and flavour to Gigaba’s SAA capture was a text message sent in December 2013 by Siyabonga Mahlangu, special legal adviser to Gigaba, to Kona. As amaBhungane reported, Mahlangu wrote: “Uyangithengisa [you are selling me out]. Why did you let her know that u knew where she [Dudu Myeni] was going.

U will compromise the mission.” The text message was sent after the meeting at the Gupta’s Saxonwold compound, at which Myeni’s appointment as chair was decided. A week after the meeting she was appointed chair. An SAA source, speaking in confidence to amaBhungane at the time, said: “The ‘mission’ was clearly this contract, all of these contracts.”

The intense irony of the events of the past week – Gigaba’s fixation with “transparency and accountability” at the PIC versus his R3bn bailout of SAA from the National Revenue Fund with no conditions on the loan, especially around the tenure of the profoundly compromised Myeni - begins to make sense when one understands Gigaba’s modus operandi over the past decade.

He secures control over state wealth by chronically weakening the governance and operational structures of the targeted institution, he weeds out skilled professionals, he shakes down regulations to the advantage of ulterior forces, and then secures loyal governance and decision-making structure to operationalise his plan.

As minister of home affairs from 2014, he continued to provide members of the Gupta empire preferential treatment that allowed them to loot public institutions by expeditiously naturalising their South African citizenship.

Gigaba’s state capture modus operandi

We are now observing Gigaba’s state capture modus operandi at the PIC with great alarm.

His latest attack was an instruction last week to PIC CEO Dr Dan Matjila to conduct a forensic investigation into “in any concerns of irregularities”. This is characteristic of him “shaking down regulations” to achieve his ulterior purpose.

In the normal course of business, establishing a forensic investigation is the practice of lawfully establishing evidence and facts that are to be presented in a court of law. A legitimate “forensic investigation” requires clear terms of reference: it has to be concerned with specific allegations of specific acts; specific timeframes for alleged irregularities must be set down, and, in the context of the PIC, suspected irregular transactions must be identified to ensure a credible, bona fide process.

A forensic investigation into “in any concerns of irregularities” is an undefined, open-ended tool that political sycophants like Gigaba can abuse to remove the guardians of our members’ pension funds.

Since September 15 2017, three special PIC board meetings have been called by him or his deputy, Sfiso Buthelezi, who is also the chairperson of the PIC board.

The frequency of these urgent board meetings is highly irregular, if not unprecedented, in the history of the PIC and is indicative of him “chronically weakening the governance and operational structures of the targeted institution”.

These board meetings sought to deal with any number of spurious allegations against Dr Matjila and the PIC board. On each occasion, the PIC and Dr Matjila have been exonerated by the board or by internal investigative processes commissioned by the board, to test the veracity of such allegations.

Exactly a week after the last board meeting found allegations against Dr Matjila to be “baseless” and “cleared” him of “any wrongdoing”, Gigaba fired his latest salvo to destabilise the PIC.

We will certainly not allow Gigaba to succeed again in his efforts to capture and destroy another state institution, particularly not at the expense of the pension savings of our public sector workers.

Dennis George is general secretary of the Federation of Unions of South Africa. Views expressed are his own.

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fedusa  |  pic  |  dennis george  |  malusi gigaba  |  opinion  |  state capture

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