The siphoning off of money from state-owned enterprises (SOEs) to fund The New Age newspaper was a typical example of the “calculated strategy” by the Gupta family to appropriate public funds where there was no discernible value for these enterprises or government departments, the Zondo commission concluded in its first report to President Cyril Ramaphosa.
Government information department GCIS, Eskom, Transnet and SAA all fell victim to this strategy, which was facilitated by internal executives or officials acting in cahoots with the owners of The New Age newspaper.
The money that was channelled to the company through advertising and sponsorships for business breakfasts “defied logic and legal requirements”, the commission’s report said. The New Age’s primary client base consisted of government departments and parastatals.
Facilitators of this strategy were former Eskom CEO Collin Matjila, Transnet group CEO Brian Molefe and Transnet head of corporate and public affairs Mboniso Sigonyela. Eskom sponsored 36 business breakfasts for R43m, while Transnet spent R24m on the Big Interview between 2011 and 2017 and R122m on sponsoring business breakfasts during this period. They derived little value from this expenditure, the commission found.
The commission’s investigation showed that the contracts entered into by The New Age, Eskom, Transnet and SAA were not only irregular and unlawful but wasteful too. It concluded that the boards and executives of those entities who supported and facilitated the conclusion of the contracts were likely guilty of financial misconduct.
In some instances this financial misconduct probably also amounted to a breach of their fiduciary duties to SOEs. Obligations under the Public Finance Management Act (PFMA) were also breached by the 2015 board of Eskom.
The Government Communication Information System (GCIS) was captured through the removal of its head, Themba Maseko, who resisted the Guptas’ demands that GCIS devote its entire advertising spend to the newspaper. The commission concluded that Maseko was removed on the instruction of former president Jacob Zuma in compliance with the wishes of the Guptas.
“The influence they [the Guptas] exerted over former president Zuma was considerable. They managed to ensure that a well-performing and principled public servant was removed at lightning speed when he refused to accede to their demands to divert millions of rand of public money to enrich their media business.
“Zuma replaced Mr Maseko with a facilitator in the form of Mzwanele Manyi. During Manyi’s term as director-general of GCIS millions of rand were spent on The New Age in circumstances where there was no credible readership information or certified circulation figures for the newspaper.”
The report said it was inconceivable that this would have been allowed to occur if Maseko had remained at the helm of GCIS.
The commission recommended that law enforcement agencies investigate a possible crime of corruption against Tony Gupta related to his offer of R100,000 and then R500,000 to former SAA chair and acting CEO of SAA Vuyisile Kona at a meeting at their homestead in Saxonwold.
As regards Molefe’s role in the conclusion of the contracts between Transnet and The New Age and particularly his misrepresentation that some of those contracts were partnerships when they were sponsorships, the commission recommended that the law enforcement agencies conduct further investigations with a view to his possible prosecution by the National Prosecution Authority (NPA) for fraud and/or contravention of the PFMA. “Mr Molefe’s efforts at justifying the The New Age contracts do not bear scrutiny,” it said.
The commission recommended that the law enforcement agencies conduct further investigation with a view to possible prosecution of Matjila by the NPA for fraud and possible contravention of the PFMA for his role in the conclusion of contracts between Eskom and The New Age and particularly his misrepresentation that one or more were partnerships when they were sponsorships.
The commission found that the reason the contracts were changed from sponsorships to partnerships was so that they fell within the delegated authority.
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