WRAP | ‘Fabrications’ and ‘total collapse’ of SOEs - everything you need to know about part 2 of state capture report

The second instalment of the state capture report, which deals with corruption at state-owned entities (SOEs) Transnet and Denel, was released publicly on Tuesday.

It was handed to President Cyril Ramaphosa by acting chief justice and chairperson of the state capture inquiry Raymond Zondo.

The president received the first part last month. It dealt with evidence of corruption, fraud and racketeering at SAA and the SA Revenue Service , among others. 

The presidency welcomed the report, saying it was a significant step towards ridding SA of corruption.

Here are must-read stories about the report so far:

Malusi Gigaba knew the Guptas and did their bidding

The report said claims by former public enterprises minister Gigaba that he did not know the corruption-accused Gupta brothers must be dismissed.

Zondo said the former minister’s relationship with the Guptas dated back to the early 2000s during his tenure as ANC Youth League leader. 

He allegedly used his position to appoint Gupta associates to key positions at government-owned companies, including Transnet. 

‘Zondo hopes this will kill me politically’

Taking to Twitter in response to the findings in part 2 of the report, Gigaba claimed that three years and R1bn later, Zondo had found no evidence to warrant a recommendation that he be charged with corruption.

“Instead of clearing me, he asks that I be investigated more in the hope this will kill me politically. If only he and his handlers knew,” said Gigaba.

Lynne Brown collapsed Denel

Zondo said Denel was run to the ground after the dismissal of group CEO Riaz Saloojee and the board that was in charge between 2011 and 2015.

Former public enterprises minister Lynne Brown did not retain the board in 2015, which was followed by the collapse of the SOE and concerns about its liquidation. 

Jail or R200m fine for abuse of power

The inquiry chairperson recommended government consider rendering it a criminal offence for public officials who abuse power to either appoint unsuitable candidates to key positions at SOEs or who unduly receive and award state tenders at the expense of the state.

He recommended a 20-year jail sentence or R200m fine, or both, for offenders. 

Brown did know the Guptas and associates

Zondo said Brown lied when she denied knowing the Guptas, as evidence before the inquiry proved she helped them loot state resources.

Despite Brown claiming to not know Gupta associate Salim Essa, the inquiry obtained phone records relating to her, Essa and Tony Gupta “which show she had telephonic conversations with alleged Gupta lieutenant Nazeem Howa, as well as with Atul Gupta".

The conversations happened a day after the suspension of four Eskom executives, states the report. 

‘Investigate Gigaba and allies’

Zondo instructed authorities to investigate former Transnet group CEOs Brian Molefe and Siyabonga Gama, former finance heads at the entity Anoj Singh and Garry Pita, and former engineering chief Thamsanqa Jiyane.

The inquiry found the five, with the assistance of Gigaba’s political cover-up, helped the Guptas loot the SOE and allegedly benefited financially from their criminal syndicate between 2010 and 2018. 

Inside the Molefe and Nyanda alliance

Zondo further recommended authorities investigate and charge Molefe for unduly paying R20m to a company owned by a former minister, Gen Siphiwe Nyanda.

He is accused of breaching provisions of the Public Finance Management Act when he approved the settlement to General Nyanda Security (GNS) Advisory Services in January 2016.

Transnet’s R54bn rip off

Zondo recommended former bosses at Transnet be charged for inflating prices of locomotives initially set to cost R38.6bn before the price was increased to R54bn without a valid justification. 

How the Guptas accessed Transnet

Zondo recommended that Molefe, Singh, Gupta associate Eric Wood and financial services company Regiments Capital, with its associated people, be investigated for “illegal conduct on charges of corruption”. 

This relates to the individuals and companies receiving and laundering R79.23m paid by Transnet to a company owned by Wood and associates, Regiments, on April 30 2014. 

How the Guptas captured Denel

The report reveals the Guptas captured Denel through the procurement of the Gauteng-based defence manufacturing company VR Laser in 2014.

They or their associate Essa are accused of “engineering for themselves a position as Denel’s most privileged supplier of complex engineering systems. This included steel armour plates and being Denel’s single and exclusive partner”.

Zuma helped capture Transnet 

The report found former president Jacob Zuma’s testimony that he had no hand in the capture of Transnet to be untrue.

Zuma, the commission found, insisted on appointing “preferred candidate” and tainted Gama as Transnet CEO ahead of Sipho Maseko. The report states Zuma wanted Gama at the helm, despite him facing serious allegations of misconduct relating to tenders. 

Zuma told the inquiry he had no preferred candidate for the Transnet CEO position, but the report said it had evidence contrary to this claim.

SA reacts

Shortly after the report went public, scores took to social media to weigh in. Some said they were not optimistic that the inquiry’s recommendations would be implemented while others welcomed the report. Some questioned if the ANC would be able to self-correct and undo the damage.

The full report

Read the full second part of the state capture report in the article below