POLITICS

Malusi Gigaba's Name Was Mentioned In The 'Betraying The Promise' Report 43 Times

Gigaba's appointment as public enterprises minister marked the start of a "systematic process of reconfiguring" the boards of SOEs to ensure compliance, the report alleges.

26/05/2017 12:18 SAST | Updated 26/05/2017 12:18 SAST
Rogan Ward / Reuters
South Africa's Finance Minister Malusi Gigaba speaks at the World Economic Forum on Africa 2017 meeting in Durban, South Africa, May 4, 2017.

Finance Minister Malusi Gigaba's name was mentioned 43 times in a new, controversial report which highlights state capture in South Africa.

"Betraying The Promise: How South Africa Is Being Stolen" tracked the appointments and decisions Gigaba took during his tenure as public enterprises and finance minister, alleging he was one of President Jacob Zuma's key players in restructuring the boards of state-owned enterprises (SOEs), which "became broadly representative of 'Gupta-Zuma' interests".

This is contained in the 63-page report compiled by nine academics and researchers affiliated to the universities of Stellenbosch, Cape Town, Johannesburg and the Witwatersrand.

It alleges the appointment of Gigaba in November 2010 as public enterprises minister marked the start of a "systematic process of reconfiguring" the boards of SOEs to ensure compliance, starting with his attempt to get a little known Trade and Industry Department official and known Gupta associate, Iqbal Sharma, appointed as Transnet board chairperson in 2011 and the successful appointment of Brian Molefe as Transnet CEO in the same year.

According to the report, this, however, was only the first step in the repurposing of the SOEs.

The second was to allegedly exploit the loophole in the Public Finance Management Act that made it possible to use the procurement procedures of SOEs to benefit selected contractors who had been "sanctioned by the Gupta network".

"The loophole is that SOEs are not required to table their budgets and expenditure plans in Parliament, unlike government departments, which means they cannot be scrutinised in the same way as departmental budgets and expenditures. The details of SOE expenditure can, therefore, be hidden from public scrutiny," the report said.

Sharma was appointed to Transnet's board in December 2010. In 2011, Gigaba apparently wanted him appointed as board chairperson, but the Cabinet was harshly against this.

"This signaled that by 2011, Zuma had not yet secured a fully compliant Cabinet. Seemingly to circumvent Cabinet's veto, Transnet would later create a new structure, formally called the Board Acquisitions and Disposals Committee, to supervise the planned pipeline of future large-scale infrastructure," the report said.

Not long into their tenure, Molefe proclaimed bold plans to procure new trains for the transport of coal and iron-ore to Richard's Bay -- the project was worth R51 billion. Sharma was to oversee the process, but he allegedly approached one of the bidders, VR Laser, on behalf of Gupta associate, Salim Essa, and offered to buy the company. Over the years, the Guptas were said to have pocketed millions from the deal.

There were also widespread shuffles in the board members of Eskom and Denel under Gigaba's watch.

The report shows how the Guptas pocketed millions from deals with parastatals like Eskom, Transet and Denel.

It also mentions Gigaba's appointment as finance minister this year as the "takeover" of National Treasury.

"The centralisation of rent seeking to consolidate the symbiosis between the constitutional and shadow state has moved into a new implementation phase. The increased confidence and brazenness of the Gupta networks on SOE boards and in senior management since the reshuffle confirms this," the report said.

Now that they have control of the National Treasury via Gigaba, the power elite assumes they will have the wherewithal to centralise and control rent seeking."