BOOK EXTRACT | State capture was only the first step

In this extract, appearing in the introduction to Zondo at your Fingertips, Paul Holden provides the reader with a primer to understand two key concepts deployed during the Commission: state capture and the ‘Gupta enterprise’.

What is state capture?

In its penultimate volume, the commission spent a good eighty pages pondering the nature and definition of state capture, recording the inputs and opinions of a wide range of witnesses before it, such as academics.

After considering all this, the commission then set out what it saw as its own understanding of state capture.

Somewhat unexpectedly, the commission does not define state capture in abstract terms, or give a wide definition that can be used to determine whether state capture has occurred in other contexts.

Instead, the commission grounds its understanding of state capture in the facts of the investigation it conducted and, in particular, in the terms of reference that guided its investigation.

As a first step, the commission explored the implications of its wide terms of reference, and then distilled the essential nature of the investigation it had to perform. At its broadest, the commission summarised the terms of reference as being ‘predominantly concerned with the practices of executive members of the state, and the nature of their relationships with private individuals, and specifically the Gupta Enterprise’.

Drawing on the concrete evidence it considered, the commission then described the South African experience of state capture, calling it, quite interestingly, a ‘project’. The notable implication of this is that the ‘project’ was not a series of quickly organised and opportunistically parasitic endeavours conceived on the fly.

Instead, it was a considered and motivated scheme that sought not only to seize and wield influence for financial gain, but fundamentally to transform the political environment to embed this project for good.

Perhaps state capture was therefore only the first step, and, if left uninterrupted, the end result would have been radical state transformation (of the anti-democratic and unconstitutional, rather than economic, kind).

In a powerful and compelling paragraph, the commission distilled the ‘project’ of state capture in SA as follows: state capture in the South African context evolved as a project by which a relatively small group of actors, together with their network of collaborators inside and outside the state, conspired systematically (criminally and in defiance of the Constitution) to redirect resources from the state to their own gain. This was facilitated by a deliberate effort to weaken or exploit state institutions and public entities, but also including law-enforcement institutions and intelligence services. As just intimated, to a large extent this occurred through strategic appointments and dismissals at public entities and a reorganisation of the procurement process.

The process involved undermining of oversight mechanisms, and the manipulation of the public narrative in favour of those who sought to capture the state. Moreover, the subversion of the democratic process which the process of state capture entailed was not simply about extracting resources but was further geared towards securing future power and consequently shaping and gaining control of the political order (or significant parts of that order) in a manner that was necessarily opaque and intrinsically unconstitutional.

The commission fleshed out this definition by providing a sort of checklist of the notable features of state capture. It identified these features present in the South African example of state capture:

1. The allocation and distribution of state power and resources, directed not for the public good but for private and corrupt advantage;
2. A network of persons outside and inside government acting illegally and unethically in furtherance of state capture;

iii. Improper influence over appointments and removals;

1. The manipulation of the rules and procedures of decision-making in government in order to facilitate corrupt advantage;
2. A deliberate effort to undermine or render ineffectual oversight bodies and to exploit regulatory weaknesses so as to avoid accountability for wrongdoing;
3. A deliberate effort to subvert and weaken law-enforcement and intelligence services at the commanding levels so as to shield and sustain illicit activities, avoid accountability and to disempower opponents;

vii. Support and acquiescence by powerful actors in the political sphere, including members of the ruling party;

viii. The assistance of professional service providers in the private sphere, such as advisors, auditors, legal and accounting firms, in masking the corrupt nature of the project and protecting and even supporting illicit gains;

1. The use of disinformation and propaganda to manipulate the public discourse, in order to divert attention away from their wrongdoing and discredit opponents.

The checklist is worth considering because it provides some sense of the interlocking developments and schemes that came together to produce a ‘project’ that was more sinister – and more programmatic – than a series of hit-and-run con jobs. It could also, in future years, act as a sort of early warning system, identifying those things that, if they emerge in concert again, point the way to another crisis of capture.

Who are the Guptas and what is the Gupta enterprise?

In general terms, when people refer to ‘the Guptas’, they are referring to the three Gupta brothers: Atul, Ajay and Rajesh (also called Tony). These three brothers arrived in SA in the wake of SA’s first democratic election and set about establishing an IT empire called Sahara. Sahara largely acted as an importer and reseller of computer equipment. As time progressed, Sahara grew its client base and, importantly, started receiving a wide range of government contracts.

The Guptas were drawn into the ambit of senior ANC decision-makers under the Mbeki presidency. In 2000, Mbeki’s administration created an entity called Brand SA, a marketing vehicle designed to promote SA abroad. In 2006, Ajay Gupta was appointed to the board of Brand SA. In a statement later put out by the Thabo Mbeki Foundation, it confirmed that Ajay had been recommended to the board by Essop Pahad, ‘who rightly or wrongly thought that [Ajay Gupta] had the skills, knowledge and capacity to facilitate the work of the Council’.1 Pahad was, at the time, Thabo Mbeki’s bruising enforcer who served as Mbeki’s minister in the presidency. Ajay Gupta served on the board of Brand SA until 2016.

According to evidence heard by the commission, the Guptas became close to Jacob Zuma during his period in the wilderness; the four years between 2005 and 2009, after he had been fired as deputy president in the wake of the conviction of his financial advisor, Schabir Shaik, his own indictment on charges of fraud and corruption, and his triumphal accession to the presidency of the country. Zuma, in his truncated appearance before the commission, confirmed that the Guptas were his friends. Other witnesses before the commission, including the three erstwhile heads of SA’s intelligence services, testified that Zuma had told them that part of his loyalty to the Guptas derived from the fact that they had agreed to employ his son Duduzane during the wilderness years when others would not touch the family with a barge pole.

This extract is taken from Zondo at your Fingertips: The Definitive Guide to the Zondo Commission by Paul Holden. It is published by Jacana Media.