Wednesday, January 19

The looting of Eskom, Transnet and SAA by the media company Gupta


The second section of Part 1 of the Zondo State Capture Report deals with the looting of Eskom, Transnet and SAA by the media company Gupta, The New Age newspaper (TNA) and New Age Business Briefings, between 2011 and 2017.

Millions of rand of public funds were diverted from these public entities.

The facilitators, the followers and the resisters

The commission identified the players in these categories:

  • The “facilitators”: the officials who used threats and intimidation to enforce Gupta’s demands, for example, Mzwanele Manyi, Collin Matjila, the Eskom Board who took office in December 2014 (except the former Minister of Public Enterprises and Administration Richard Baloyi and Chose Choeu), Brian Molefe and Mboniso Sigonyela (on Transnet).
  • The “facilitators or supporters”: those who compromised, covered up or legitimized public spending on TNA, for example, Pieter Pretorius, Joseph Jackson, Daniel Phatlane and Zola Tsotsi, who withheld important information from the new Board before it ratified the contract ; Y,
  • The “resisters” – those who did not agree to Gupta’s demands, such as Themba Maseko, former CEO of the Government Communication Information System (GCIS). Maseko, who was replaced by Manyi after facing the Guptas, has recounted her experience in her book, For My Country.

Zuma Mouthpiece – TNA Media

The Guptas established TNA in 2010, which established the New Age newspaper six months later.

Maseko rejected Ajay Gupta’s demands to divert the 600 million rand advertising budget from the government to the New Age newspaper, and was summarily replaced by Manyi.

Read:

The Zondo Report on SAA, SAAT and SA Express

Guptas wanted the government’s annual advertising budget of 600 million rand

The Zondo Commission noted that former President Jacob Zuma “could do terrible things to make the wishes of the Guptas come true,” for example:

  • Fire former Finance Minister Nhlanhla Nene because he was not cooperating with the Guptas.
  • Engaging in the suspension of executives at Eskom, which resulted in the replacement of three directors by Gupta associates.
  • Keep the position of CEO of the Transnet Group open for two years to incorporate Siyabonga Gama.
  • “… there is absolutely no doubt” that Zuma instructed the late former minister Collins Chabane to fire Maseko or move him from his post as CEO and CEO of GCIS.
  • Zuma did not give the commission a “definitive answer to the question why Maseko was removed from office.”

The commission heard that Ajay Gupta turned hostile when Maseko rejected his demand to divert the government’s advertising budget to the New Age newspaper, and that the Guptas “could summon any minister who did not cooperate.”

Mzwanele manyi

The commission found that Minister Baloyi orchestrated Maseko’s replacement by Manyi, and declined to comment on “whether Maseko’s irregular removal and Manyi’s irregular transfer facilitated state capture.” Baloyi ignored proper and legal procedures.

Mzwanele manyi

Mzwanele Manyi, former director of the GCIS. Image: Moneyweb

During Manyi’s tenure from February 2011 to August 2012, the GCIS paid about R6 million to TNA.

Manyi could not justify to the commission how GCIS could spend millions “in a media business that did not have established readers or certified circulation figures.”

The GCIS paid TNA R8.2 million in 2013, R9.5 million in 2014 and R10 million in 2015.

The commission found that under Manyi, the GCIS “was a facilitator of the capture of the state,” while Maseko “probably would have resisted the incessant pressure from the Guptas on government departments to divert their media spending to their business”.

TNA contracts with Eskom

Five witnesses gave oral statements to the commission: Zola Tsotsi (Chairman of the Eskom Board in 2011 until the end of March 2015); Mark Pamensky (Board member since December 2014); Mafika Mkhwanazi (non-executive director from June 2011 to December 2014); Pieter Pretorius (Head of Strategic Marketing at Eskom) and Chose Choeu (Division Executive Responsible for Marketing).

Read: Newspaper formerly known as The New Age to close

Between 2012 and 2014, TNA concluded three irregular contracts with Eskom: advertising (4 million rand), six business breakfasts (7.2 million rand), four business breakfasts / briefings in 2012 for 4 million rand and in 2014 36 breakfasts / business briefings (43 million rand). 2 millions).

The R43.2 million contract was a wasteful and fruitless expense, it gave Eskom no value, and former Eskom CEO (Collin) Matjila was not authorized to sign it.

Choeu alleged that former Eskom CEO Brian Dames had instructed him to accept an additional ad-hoc deal, as former Minister of Public Enterprises Malusi Gigaba would speak at a TNA breakfast. A report by SizweNtsalubaGobodo (SNG) made findings against Choeu, but Choeu was unaware of this and stated that no disciplinary action was ever taken against him.

Pamensky, who was also a director of Gupta-affiliated Oakbay Resources and Energy, when he joined Eskom’s board in 2014, ratified a contract he hadn’t seen.

Read: Were the Guptas the disease or the parasite?

The commission found that facilitators and facilitators overlooked correct procedures, and “gave false justifications to the Public Protector and Parliament for expenses that were nothing short of wasteful.” Furthermore, the Eskom Board of 2014 ignored its fiduciary duties and “put the interests of the Guptas above those of Eskom and the people of South Africa.”

TNA contracts with Transnet

The commission heard evidence from three witnesses regarding TNA’s contracts on Transnet:

  • Mkhwanazi, president from December 2010 to December 2014, acting CEO of the group from December 16, 2010 to February 11, 2011, who managed to reject Tony Gupta. Gigaba unsuccessfully tried to replace Mkhwanazi with Iqbal Sharma in 2011.
  • Jackson, advertising and branding coordinator for Transnet Group’s corporate and public affairs unit from 2006 to December 2014. Jackson eventually helped TNA secure significant spending from Transnet on TNA advertising.
  • Phatlane, Senior Stakeholder Relations Coordinator at Transnet from 2011 to 2017.

The contracts with TNA included the Great Interview (R24.8 million) from 2011 to 2016, and briefings / breakfasts (more than R122 million) from 2011-2017.

The commission concluded that Brian Molefe, who was appointed as the new CEO of the Transnet Group on February 16, 2011, and Mboniso Sigonyela, the general manager of public and corporate affairs of the Transnet group, directly facilitated the use of public funds for spending. of TNA, disadvantageous terms for Transnet ”.

It added that Sigonyela “used threats and intimidation to ensure that his subordinates complied with instructions to promote the interests of TNA. The expenditure made on these contracts was irregular, fruitless and wasteful ”.


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