State capture costs SA at least R50bn but the true cost is definitely higher
In South Africa, evidence is piling up at the Zondo Commission about how the Guptas interfered in the running of state companies to enrich themselves. NGO Shadow World Investigations’ Paul Holden appeared before the Zondo Commission on Monday.
He punctiliously laid out the flow of money from government bodies to the Guptas’ money laundering enterprise. He said, almost R50bn can be traced through invoices and bank statements – but advised that the true cost to the state is definitely higher.
What Holden read into evidence was not just the quantum of plunder, but also the efficiency of the Guptas’ vast and sophisticated money laundering machinery. Occasionally, Judge Raymond Zondo appeared stunned by the sheer volume of numbers, muttering: “I’m just digesting”.
Holden gave an example: in April 2016, a Gupta-owned company Cutting Edge Commerce submitted an unsolicited pitch to Eskom to provide the strange combination of “data management and cleaning services”. “[This] unsolicited proposal produced a payment of R71-million in 17 days.”
According to Holden the Guptas made use of no fewer than 14 companies, he called “first-level laundry vehicles” – the initial steps in what was ultimately an international money-laundering scheme. There was “definitely a sense of momentum” as the years went by and the efficiency of the Gupta enterprise increased, added Holden.
The primary sites of State Capture were Transnet, Eskom, and the Free State provincial government.
Transnet, under the leadership of former CEO Brian Molefe, was responsible for a monstrous 81.59% of payments relating to State Capture – R40 billion, mainly derived from contracts for Chinese locomotives, coming in at R26,327,322,915.
Molefe, the key figure in State Capture, was later CEO of Eskom between 2015 and 2016, before being succeeded by similarly implicated Matshela Koko. Holden sais Eskom accounted for 14.19% of State Capture expenditure. This involved mainly coal supply, but also overspending on IT providers to such a degree that it required its budget to be increased by 230%.
Ace Magashule’s Free State provincial government shelled out R441 million on Gupta contracts (0.9% of the total State Capture spend).
As shocking as these figures are, Holden says that they are, by necessity, incomplete. He cited the example of the losses sustained by Eskom after the Guptas purchased the Optimum coal company. He pointed out that Eskom is claiming damages from Optimum for poor quality coal, delivered in insufficient quantities, amounting to R3-billion.
