Transnet was the “primary site” of state capture. Of the total value of contracts issued to Gupta-linked companies, the Zondo C
ommission reported, Transnet accounted for R41.204-billion. This amount represents “72% of the total state payments in respect of contracts tainted by state capture”. Key to these irregular transactions, or their “primary architects and implementers”, were Brian Molefe, Anoj Singh and Siyabonga Gama.
The much-publicised arrests and court appearances of the trio on Monday, 29 August have understandably created excitement and perhaps incited the public into a celebratory mood. These developments are certainly noteworthy but do not warrant a celebration – not yet. They’re simply a welcome start to a process whose conclusion is still unclear. Whether the conclusion ultimately attracts applause will depend on how wide the net is cast to punish the culprits. This case goes beyond the immediate Transnet trio.
The trio were involved in a number of dodgy deals. The two separate purchases of locomotives – 95 at one point and 100 another – are sufficient to illustrate just how they orchestrated the syphoning of state funds, its impact and the range of actors involved. China South Rail Corporation (CSR) secured a contract worth R3.5-billion in 2012 for the production of 95 locomotives. But, CSR should not have received the contract, for it fell short of meeting the black economic empowerment requirements.
Gama, then chief executive of the rail section of Transnet, driving the deal, pooh-poohed CSR’s shortcomings. He reasoned that the company was typical of the foreign-owned companies that were setting up in South Africa and should not be judged harshly. From securing a contract it did not deserve, CSR went on to receive a total payment of R3.5-billion, R700-million more than was originally quoted.
The increase happened despite the fact that 85 of the 95 locomotives were delivered late. CSR should have been punished for the late delivery. The agreement made provision for penalties in instances of delay. Based on the number of delayed locomotives, and the duration of the delays, Transnet should have imposed penalties amounting to roughly R1.7-billion – but it never did.
While awaiting delivery of the initial order of 95 locomotives, Transnet decided that it needed 100 more locomotives. Instead of issuing a public advertisement, and inviting bids, they decided to approach certain companies. CSR was among the companies solicited to submit bids. That CSR was even considered defied logic. The reason for not going the route of an open tender was because the 100 locomotives had to be delivered urgently and they wanted to target companies that could deliver on time.
Of the companies that were considered, Mitsui was most suitable for the task, especially because it had a record of manufacturing the heavy-haul locomotives that Transnet sought. Mitsui was overlooked, however, in favour of CSR. As had happened with the earlier order, the initial price tag jumped by R969-million, from R3.871-billion to R4.840-billion. Even worse, there was hardly any localisation in the production or the use of parts. Treasury regulations stipulated localisation at 60%. On delivery of the locomotives, it was a measly 15%.
It is now well known why regulations were overlooked. Those who made the decisions got kickbacks. What is perhaps more interesting is how these “architects of state capture” got into those positions of authority. Only when looking at this aspect does one really appreciate the systemic nature of state capture. It went beyond these three individuals, to implicate the entire state and key private institutions. State institutions were configured to facilitate this massive looting of public resources.
Individual efforts to block the rot proved fruitless. Consider Barbara Hogan, for instance. In her role as minister of public enterprises, Hogan refused to appoint Gama in 2009 when the post of group chief executive became vacant. Gama was not even considered for appointment, yet former president Jacob Zuma wanted him. In fact, Gama was then under investigation for the irregular awarding of a contract to a company owned by one of the ANC bigwigs, Siphiwe Nyanda.
The Transnet board’s preferred candidate was Pravin Gordhan but he quickly became unavailable as he was appointed to the cabinet. The board re-advertised and got an even more qualified candidate, Sipho Maseko, who was then chief executive of BP Southern Africa. Zuma refused to have Hogan submit Maseko’s name to the cabinet for discussion and possible approval. Hogan was relentless and Zuma fired her.
As president, Zuma had power to fire cabinet ministers. The only body that could restrain him was his party. But, it did not. The party’s deployment committee had, too, joined the chorus demanding Gama’s appointment. The opposition to Gama was dismissed as racist, to reserve the post for a white person. None of the contenders were white. The protest was simply hot air to disguise the real intention – appointing Gama to facilitate even more irregular contracts.
Where Hogan was resistant, Malusi Gigaba proved willing to go along. The former president of the ANC Youth League was a hard-working and cerebral chap. Former president Thabo Mbeki adored him, and protected him from rivals, for he considered Gigaba the kind of a cadre the ANC should produce. By 2010, however, Gigaba had become a celebrity politician, a fashionista of sorts. That was an expensive lifestyle to maintain, making Gigaba a suitable companion for the greedy Guptas.
The appointees to the Transnet board proved to be just as greedy as the minister who appointed them. Gigaba did not raise objections when the board usurped the powers of managers and experts to write tender specifications, decide on amounts for tenders and approve bids. Inclusive of Gupta proxies, Iqbal Sharma and Salim Essa, the board simply allocated tenders to companies that gave them kickbacks. The Transnet board, therefore, was just doing the opposite of what it was meant to do – depleting the company instead of building it.
Faced with a wayward executive, only parliament could hold them to account. The majority party, however, protected its comrades in the executive, some of whom were sharing in the loot that came from state capture.
Thankfully, the media, parts of it at least, had managed to evade the corrupting grip of the “architects of state capture”. Newspaper reports of thievery surfaced as early as 2010. But, nothing happened for a considerable period of time. As he had done with parastatals, Zuma appointed undeserving individuals – such as Shaun Abrahams at the National Prosecuting Authority (NPA) – who were only too grateful for the appointment and did not want to risk losing it by doing their jobs. They suffered from unbridled ambition, which tends to get in the way of honour.
We have come a long way. The head of the NPA Shamila Batohi charging the Transnet trio is not an insignificant development. Nomgcobo Jiba and Abrahams did nothing, and Mxolisi Nxasana was fired just as he tried to do something. And, it was encouraging to read that the NPA was promising even more arrests, including politicians. Those are the ultimate enablers of state capture. They used their positions of authority to disfigure governance structures and trample on regulations.
But, politicians shouldn’t stand alone in the dock. Consultancy companies – McKinsey, Regiments, Trillian etc – also need to explain their actions. They shouldn’t be allowed to buy our silence by secretly paying back the loot. Then, finally, we should ask: why were the banks quiet when Molefe was depositing huge chunks of cash into his account? Banks watch such activities, and people, especially politically exposed ones, are called up to explain them. Why did this not happen in the instance of Molefe and his ilk?
For now, we should simply nod at the arrests. Much, much more still needs to happen before we can celebrate. Justice for the havoc wreaked by state capture is still a distance away. And, to achieve justice, requires constant vigilance. Libambe lingatshoni! (Do not let the sun go down!)
Mcebisi Ndletyana is a professor of political science at the University of Johannesburg and co-author of a forthcoming book on the centenary history of Fort Hare University.
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