The Gordhan Files on state capture and what Zuma cost the country

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Ferial Haffajee from Daily Maverick published this report after the affidavit of Gordhan was leaked last night.

Public Enterprises minister Pravin Gordhan’s testimony to the Zondo Commission of Inquiry, as contained in his affidavit which was leaked on Wednesday night, has revealed that the axing of former Finance Minister Nhlanhla Nene in December 2015 cost the South African economy R500-billion.

This is the first formal figure of what the era of high corruption cost as the markets tanked and the rand went into free fall following what was regarded as an attack on the Treasury.

Gordhan’s 68-page affidavit also places former president Jacob Zuma front and centre the State Capture project. In recent speeches, Zuma has denied that State Capture exists and also said that he had not come up at the Zondo commission of inquiry.

Gordhan will reveal for the first time:

– How Zuma personally tried to commandeer three big deals to be funded by the fiscus despite misgivings by the Treasury;

– How he failed to protect Gordhan when he faced an investigation by the Hawks soon after taking over from Nene; and

– How Zuma took control of the appointment of a SARS commissioner from him and put in place Tom Moyane who was fired last week by President Cyril Ramaphosa as tax boss.

Of Nene’s axing, Gordhan writes that: “The devastating impact of this unexpected announcement on the South African economy is estimated to be approximately R500-billion. As commentators and market analysts had described, over two days, the market value of the country’s 17 biggest financial and property shares fell by R290-billion. This figure excludes the remainder of the equities market that was also hard hit by the decision. South African bonds lost 12% of their capital value (R216-billion). The rand depreciated sharply from R13.40 to R15.40/USD overnight,” Gordhan will tell deputy chief justice Raymond Zondo when he appears before the commission later this month.

Two days after this meltdown, on a late Sunday afternoon in December 2015, Gordhan received a call from the ANC’s deputy secretary-general Jessie Duarte. “(Duarte) contacted me explaining that I was going to be asked to do something by former president Zuma, and that I should not refuse the request,” Gordhan writes.

“I received a similar message from the deputy president of the ANC and the country at the time, Mr Cyril Ramaphosa.” Three hours later, Gordhan went to the Presidential guesthouse Mahlamba Ndlopfu where he met Zuma.

During that conversation, former president Zuma indicated that he was of the view that Mr van Rooyen (Des van Rooyen was appointed Finance Minister by Zuma but lasted for two days) was suitable for the Finance Minister position, but others felt that the turmoil when markets re-opened on Monday could be even more serious if Mr van Rooyen was returned…. he wanted me to take up the position in order to calm the markets.” Gordhan was back at his desk by Monday morning.

Zuma had been strong-armed by the ANC into returning Gordhan to the Treasury and he was not happy with the Finance Minister’s terms of return.

These were: to deal with Moyane at SARS, to deal with Dudu Myeni who was chairing the national carrier SAA and to end the push to procure nuclear power stations at a cost of R1-trillion. On the day that Nene was fired, the Cabinet had approved the nuclear deal.

A clash between the two comrades turned mutual nemeses was inevitable and it came soon enough.

Two months into his second term as Finance Minister, Gordhan faced another crisis. “Shortly before my Budget speech in Parliament, Major General Mthandazo Berning Ntlemeza head of the Directorate of Priority Crime Investigation, known as the Hawks, requested and attended a brief meeting at the Treasury. General Ntlemeza advised me then that two investigations were ongoing: into SAA and SARS…. I believe that the capture of the Hawks under General Ntlemeza was central to the State Capture project. This capture enabled the Hawks to be abused for political objectives through malicious law enforcement action and without regard for the impact that abuse of power would have on the integrity of the country, the economy or personally on the individuals, such as myself, who were targeted in this orchestrated campaign.”

A few days later, Ntlemeza hand-delivered a set of 27 questions to Gordhan’s office, related to the high-risk investigations unit at SARS. Charges against Gordhan relating to that unit had also been filed by Moyane on 15 May 2015 (SAPS Brooklyn Case No. 427/05/15).

I arranged to visit the then president later that day to present the correspondence and questions from the Hawks to him and to ask him whether he was aware of, and agreed with, this law enforcement action against me.

During that meeting, I objected strongly about this persecution and asked former president Zuma whether political activists like myself must now prepare to be eliminated during the democratic era even though we had survived the oppression of the security police in the apartheid era.

In response to my objection, he merely flipped through the pages of the letter. He said he would discuss it with the then Minister of Police, Mr Nkosinathi Nhleko. I received no information from the former president in this regard subsequent to this meeting.”

Gordhan reveals in his affidavit that he believes he was first redeployed out of the Treasury after the 2014 election to pave the way for three projects that Zuma took a personal interest in.

The Treasury team had resisted giving guarantees and approvals for each of the mega-deals that Zuma wanted to be done.

The first was the procurement of 9.6 Gigawatt of nuclear power generating capacity as provided for in the integrated resource plan of 2011 – the former president established a national nuclear energy executive coordinating committee (NNEECC) shortly after the plan was adopted.

Following the establishment of the NNEECC, it was evident that former president Zuma wished to procure the 9.6 GW of nuclear power generating capacity for South Africa from Russia. Such a transaction has been estimated to cost in excess of R1-trillion, if not more,” says Gordhan in his affidavit.

He then sets out how Zuma pressurised him to fund the deal but Gordhan and his team at the Treasury would not accede to fast-track the nuclear buy and he says this was one reason he was removed from the Treasury and made the Minister of Co-operative Governance and Traditional Affairs instead.

Zuma also personally lobbied Gordhan to provide guarantees for the purchase of the Engen share held by Petronas, the Malaysian oil company. When former minister of energy Ben Martins applied to the Treasury for a state guarantee for the deal in 2014, Gordhan and his team raised red flags because there was a difference of up to R6-billion in how the stake was valued.

In his own testimony before the Zondo commission of inquiry, Nene revealed that the fact that the Treasury had put the kibosh in the Petronas deal for years had left Zuma fuming.

The final big deal that Gordhan and his team delayed related to the joint venture between Denel and a Gupta-linked company called VR Laser to create the company VR Laser Asia in Hong Kong. “Extraordinarily belligerent attacks were made on me personally and Treasury more broadly by Mr (Dan) Mantsha, the (then) chairperson of the Denel board. He demanded that I retract, in writing to the Denel Board, comments and statements I had made regarding the lawfulness and desirability of the joint venture, and apologise to the Denel Board.”

Gordhan was fired as Finance Minister shortly after this and Mantsha is now Zuma’s attorney at the Zondo Commission of Inquiry.

Gordhan’s testimony will be third by a Cabinet minister before the Zondo Commission. Gordhan will frame his testimony with the following statement: “… State Capture and corruption are consequences of the unleashing of the worst human instincts – self-enrichment, neglect of the higher mission, placing one’s self-interest before the community’s interests.” DM