The final report of the Zondo state capture commission — all 1,800 pages of it — delivered by a visibly relieved and exhausted chief justice Raymond Zondo to President Cyril Ramaphosa, brings the formal interrogative end to the lengthy and tortuous road uncovering the truth about state capture, corruption and fraud in SA.
It is worth reminding ourselves of the full extent of the inquiry’s reports, starting with part 1, which dealt with the capture of SAA and its associated companies over 874 pages. Part 2 dealt with Transnet and Denel in two volumes over 499 pages. Part 3 delved into the belly of the Bosasa beast in three volumes over 685 pages.
Part 4 dealt with the attempted capture of the Treasury, EOH, Alexkor and the City of Johannesburg in the first volume over 261 pages, while the second volume dealt with the Free State asbestos project and R1bn housing project debacles over 290 pages, and volume 3 and 4 dealt with Eskom over 503 pages.
Part 5’s first volume dealt with the State Security Agency and Crime Intelligence over 452 pages, while the second volume dealt with the SABC, the Waterkloof Airbase landing and the Passenger Rail Agency SA over 402 pages. Part 6 dealt with the Vrede Dairy project/Estina and the closure of the Gupta bank accounts over 274 pages.
The second volume of part 6 dealt with the establishment of state capture, Ramaphosa’s evidence and the role of the ANC, cadre deployment and parliamentary oversight over 481 pages. The third and penultimate volume of part 6 examined the diversion of public funds to Gupta-controlled businesses, the dissipation of state capture funds, and the proceeds from the acquisition of Optimum Coal mine over 239 pages. The concluding fourth volume of part 6 focused solely on recommendations over 200 pages.
Seeing it laid bare like this, 5,160 pages of forensically detailed evidence of how a corrupt, self-serving, avaricious kleptocratic elite trampled over our constitution, urinated on the hopes and aspirations of the poor, and left them to rummage through dustbins eking out a daily existence waiting for running water that never comes in the cold dark load-shed evenings of our wintry reckoning, should bring home how important it is to ensure this is never allowed to happen again.
We cannot let this dark chapter define us. There is no time for hand-wringing. Instead, we must seek redemption in the response, which must be especially swift from the National Prosecuting Authority. Equally, business will have to take the lead where local government is failing as a consequence of cadre deployment, in partnership with local communities. And civil society must redouble its efforts as the last line of defence against an often incapable bureaucracy. Most critically, the governing ANC, in recognising the systemic cause of the failure, must commit to change it.
To do that, the most important aspect of the findings relate to the policy of cadre deployment and why it has to be terminated. Zondo meticulously dismantled the practice as unconstitutional, in effect declaring that the power of policies must trump the power of patronage for democracy to work.
Ramaphosa has, at various times, acknowledged the role of patronage and corruption in government appointments. In his January 2020 newsletter, “Building a capable state is our top priority”, he wrote: “We are committed to end the practice of poorly qualified individuals being parachuted into positions of authority through political patronage.”
His own analysis, as well as those of the ANC in its “Eye of the needle” document of 2001, and ample evidence contained in the Zondo reports, show that the cadre deployment process has been abused to facilitate corruption and state capture.
While it feels naive to expect an about-turn from a governing party that has proven incapable of this sort of honest self-reflection, if the rebuild is to have any credibility cadre deployment has to go.
Sadly, if not surprisingly, the ANC’s response so far demonstrates that the party is a prisoner of its past choices, locked into its own inevitable political decline.
The exhausting issue of Fortress’s capital structure is coming to a head, with a proposal put forward by the board last week to collapse the structure in a share swap deal at a ratio 3.01 FFB shares for every 1 FFA.
This implies that FFA shareholders will receive 80% of distributable earnings, with the remaining 20% attributed to FFB shareholders. Is this fair and reasonable? That is what shareholders will be asked to vote on after a full circular is distributed.
Investec property analyst Nazeem Samsodien believes a fairer ratio is 5.8 to 1, but concedes that the answer is likely to be somewhere in-between. FFB holders won’t vote for a 5.8 swap, with the outcome disproportionately negative as the economic interest attributed to FFA shareholders increases.
Some tough compromises lie ahead if an otherwise attractive real estate investment trust is going to retain its favourable tax status.
• Avery, a financial journalist and broadcaster, produces BDTV's Business Watch. Contact him at Badger@businesslive.co.za.
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