State capture cronies using dirty tricks to stymie clean-up, warns Gordhan
From populism to fake news, they're using any trick in the book to defend their ill-gotten gains, he tells Zondo probe
Pravin Gordhan, who is fast being turned into public enemy number one, has again warned of the fightback against the clean-up of the state, saying there are people who benefited from corruption and state capture who are trying to “defend their largesse and access to largesse”.
On his first day of testimony at the Zondo commission, the public enterprises minister warned about the dangers of populism and the “politics of distraction so that the spotlight does not fall on you”. He said any trick in the book was being used to defend people’s ill-gotten gains.
“Throughout the world, fake news is a reality. All of that is to ensure that elites or small groups of people become beneficiaries of distractive processes.”
He said he was experiencing this at the department of public enterprises where there were instances of big state capture and small state capture, where CEOs develop their own client bases to defend them when they get into trouble.
“Those attacking us have something to hide, something to protect, something to distract the public with,” said Gordhan.
His comments came as the EFF staged a protest outside the inquiry where the party’s deputy leader Floyd Shivambu said Gordhan was a “danger” trying to destroy state-owned enterprises such as Eskom and South African Airways.
Gordhan’s highly anticipated evidence proved to be somewhat of an anticlimax on Monday as most of the day was spent on the context and previous reports on state capture, as well as the role of the national treasury as a guardian of state resources.
He said state capture became a sophisticated scheme that advanced racist pejoratives and external agencies like Bell Pottinger, consulting firms, auditors and lawyers to entrench itself.
He said the country had been significantly damaged by state capture with hundreds of billions lost and honest public servants being marginalised, their reputations tarnished and jobs lost.
Gordhan said it allowed a climate of impunity in respect of crime and corruption.
As the first member of the ANC national executive committee testifying at the inquiry, Gordhan acknowledged that the governing party fell short of its electoral mandate by not acting swiftly against its members involved in corruption.
Justice Raymond Zondo said he struggled to recollect instances when the ANC took disciplinary action against its members over allegations of corruption.
Gordhan indicated that the ANC would have to explain this when it appeared at the commission to respond to allegations about its role in facilitating state capture and lack of action against grand corruption by senior members.
He said the phenomenon of state capture became evident around 2014 as it was previously thought to be individual acts of corruption.
He traced how former president Jacob Zuma showed “personal interest” in certain mega-projects that were unaffordable to the fiscus, such as the Russia-SA nuclear deal. Zuma had taken over the chairmanship of the energy security cabinet subcommittee due to “urgency” to push through the deal.
Gordhan also told Zondo how Zuma intervened to get the treasury to give guarantees for PetroSA’s purchase of Engen from Malaysian company Petronas even though there was “resistance” for due diligence to be conducted on the deal. The cost of the deal had also been inflated from the market price of about R12bn to R18.6bn.
He said there was also an attempt to ram through a joint venture between Denel and Gupta-affiliated VR Laser during the short stint that Des van Rooyen served as finance minister in December 2015. The deal, which involved Gupta associate Salim Essa’s VR Laser Asia and VR Laser South Africa, co-owned by Duduzane Zuma and Rajesh Gupta, was aimed at “exploiting Denel’s intellectual property”, Gordhan said.
The documentation to approve the deal was submitted during the two working days Van Rooyen was at the treasury but he did not have the opportunity to sign it. Gordhan halted the deal when he was reappointed finance minister.