What emerges from the previous two parts of this series is a clear picture of a Business Empire that is primarily built on the foundations of Gupta Money and political influence brought about by Jacob Zuma’s Presidency. The collective Zuptas currently have direct ties to two Government Ministers and Departments (the Department of Mineral Resources and the Department of Cooperative Governance and Traditional Affairs) and no less than three State-Owned Enterprises (ESKOM, Transnet, Denel). There is therefore no reason for us not to believe that the Guptas do indeed have the power to influence Ministerial appointments, the awarding of tenders and indeed broader economic policy, but in a strange way we should be thankful that this situation was exposed when it was, because it could have been far, far worse.
The fact of the matter is that the current situation is not nearly as bad as it could have been had some of the Guptas’ more daring machinations paid the dividends they were hoping for. One easily imagines that we would not nearly have seen the level of fallout we did had Mcebisi Jonas but accepted the Guptas offer of the Finance Ministery and been appointed instead of David van Rooyen. If that had happened, then there is no telling what the results may have looked like.
At this point in the series, I had hoped that I would be able to quote Porky Pig (“That’s all folks”), but if writing this series has taught me anything, it would be that a lot of the evidence do point in a certain direction, but also raise even more questions, so I am left with no alternative but to quote the (not so) good people over at Verimark “but wait, there’s more.” Just about the only thing that is certain at this point in time is that we’ve not seen the back of this by a dam site.
Please note, those of you who have managed to get this far into the series, that I am not about to make any statements or allegations, but I am going to ask some questions. When we go about connecting seemingly random dots, the do not always form a clear picture, but sometimes they do and this is more an exercise in my own paranoia surrounding Jacob Zuma and our Government than anything else.
1. Is that it? Is that all the Zupta Empire can conjure?
The answer to that question is sadly no, because biggest and most troublesome question that started to pop up in my mind as a went through process of compiling this is how it was even possible for all of this to escape the attentions of other “independent” organs of State. What is beyond any shadow of a doubt is that there are large amounts of money involved in all these transactions, so one would expect the South African Revenue Service to pay extremely close attention to all of it, but be severely disappointed, because everyone has seemed to miss the boat. Or have they?
Enter into the fray, if you will, Tom Moyane and the SARS “Rogue Intelligence Unit.”
The first “SARS Wars” started brewing on 28 May 2014 when an alleged SSA double agent named Belinda Walter (at the time working for British American Tobacco’s competitor Carnilinx as an attorney) wrote to SARS regarding her relationship with then Group Executive Johann van Loggerenberg. In June of that year, acting Commissionar Ivan Pillay appointed the Kanyane Panel to look into the allegations, which the panel subsequently found (on 12 August 2014) had no credible basis unless corroborated by other information at a later stage and could therefore not be used as basis for a formal investigation. Despite these findings, Pillay nevertheless appointed the Shikhakhane Panel to conduct further investigations into any misconduct or impropriety relating to van Loggerenberg’s conduct in the matter of and allegations made by Belinda Walter. At this point, there had been rumours of a “Rogue Unit” in the press, but there was no evidence that such a unit actually existed, outside of allegations made by a lover scorned.
That was apparently that, until a major change happened at SARS.
The change I refer to is Jacob Zuma’s appointment of Tom Moyane as the new Commissioner at SARS in place of acting Commissioner Ivan Pillay on 24 September 2014. The Shikhakhane Panel concluded its investigation and handed its report to Moyane on 5 November 2016, but the powder keg took spark on 9 November 2014 when the Sunday Times ran a piece on the “Rogue Unit” written on the back of leaked memorandums and other internal SARS documents. It was only after this article saw the light of day that Moyane met with the Shihakhane panel and expanded its mandate to also investigate the claims into the rogue intelligence unit at which time all the interviews with involved persons have been concluded and they had no chance to deliver evidence on the “Rogue Unit.” The accuracy and bias of the Shikhahane Report is therefore rather questionable, but it was nevertheless published on Politicsweb on 28 April 2015, finding great impropriety by Johan van Loggerenberg, but more importantly also finding that the “Rogue Unit” had been established unlawfully and “SARS should ensure that proper structures of co-operation between SARS and Government agencies statutorily tasked with intelligence gathering and crime investigation are established in order to assist SARS with the capacity it may require. Alternatively, the Commissioner, through the Minister of Finance may request Parliament to enact legislation giving SARS the investigative capacity it requires.” [Par 190.4.3]
We know that, to date, no request to grant investigation powers to SARS has been made by the Minister of Finance and that all investigations must therefore be conduction in cooperation with established bodies like the South African Police Force (SAPS), Directorate for Priority Crimes (Hawks) and National Prosecuting Authority (NPA) among others, which brings me to the big question; can we establish a direct link between the appointment of Tom Moyane and the State Capture perpetrated by the Guptas?
I think we can.
Yes, you could argue that Moyane was merely searching for the truth with regards to the Shikhakhane panel, but when you consider the fact that Johann van Loggerenberg (acting as Head of Special Investigations under the authority of the Deputy Commissioner Ivan Pillay) was starting to generate a reputation for himself due to his ability to bring wealthy individuals and politicians (like Julius Malema, among others) to book, then it becomes quite apparent that certain people at SARS could pose a direct threat to the operations and aspirations of the Gupta Business Empire and its continued success might very well have depended on getting rid of them.
Moyane achieved just that when he suspended both Pillay and van Loggerenberg shortly after the Sunday Times report on 9 November 2014. Van Loggerenberg ultimately resigned on 4 February 2015 and was followed by Ivan Pillay on 7 May 2015. But the SARS Wars also claimed many other members of the Revenue Service’s top structures:
- chief operating officer Barry Hore;
- modernisation and strategy head Jérôme Frey;
- the head of the case selection division under Hore, Jacques Meyer;
- anti-corruption and security head Clifford Collings;
- Pillay’s special adviser Yolisa Pikie; and
- spokespeople Adrian Lackay and Marika Muller
In one fell swoop, Moyane not only opened up space for his own people in the top structures of SARS via his “restructuring programme” and could presumably prevent any investigations into the Zuma/Gupta family, but even if he fails to achieve that goal, it actually matters very little because even if an investigation were to be launched, it would now fall under the auspices of the infamous Security Cluster of Ministers who all rallied to Jacob Zuma’s side during the entire Nkandla debacle.
This line of thinking is also supported by Floyd Shivambu’s allegation that the Guptas moved as much as R2 billion to Dubai and yet did not pay the 10% levy on such transfers as required by the South African Reserve Bank. One has to wonder how such transfers just happened to escape the attentions of the South African Revenue Service (as the Customs authority) and the answer can only be Tom Moyane or one of his goons.
Given the far reaching and possibly disastrous consequences of SARS under the control of the Zuptas, I really do hope that the line drawn here is nothing but a crackpot conspiracy theory, but given its importance it should be investigated by a truly independent and preferably international body and we have to wonder, what exactly is it that Paul o’Sullivan was about to reveal to the world?
2. What’s eating KPMG?
It seems very odd indeed that a company like KPMG could suddenly, after a fifteen year relationship and being “privy” to everything, but especially the happenings since 2014, suddenly be the first to decide to end their association with Oakbay and the Zuptas.
At the time there was simply no indication that the Zupta Empire was about to be collapse or hauled before a court of law. So it does not make any sense for them to just give up such a meal-ticket and don’t you go and believe, even for a split second, the yarn about “association risk to the company’s public image and reputation” either, because in the international context of KPMG, any damage done to its reputation by (and financial repercussions of) this situation are negligible at best. So what do the good people over at KPMG know that we mere mortals do not?
Well, there’s the matter of the “Second SARS Wars” for a start.
I will not enter into too many of the specifics regarding the SARS Wars themselves, but it should be kept in mind that the unlawful formation of the “Rogue Unit” goes all the way back to when Pravin Gordhan was Commissioner of SARS and KPMG is involved in all of it because another recommendation of the Shikhakhane report was that SARS appoints an independent body to do a forensic investigation into the activities of the “Rogue Unit” in order to determine whether criminal or civil proceedings should be instituted against individuals involved. KPMG was appointed to conduct the investigation in December 2014 and Moyane instructed that Advocate Martin Bressey work with the firm and assist it in “capturing oral evidence.” The report was “finalized” and handed to Moyane on 4 December 2015, but like the previous SARS Wars the report was marred by irregularities and media leaks.
Press leaks in September 2015 brought to light that KPMG
- received letters from the legal counsel of SARS (August 2015) containing findings which they felt should be included in the report. These recommendations were not only included in the final report, but were included verbatim;
- never actually captured any oral evidence but conducted a documentary review of documents, evidence and minutes of previous enquiries
- released with the final report with a disclaimer stating that the report could not be used to resolve disputes or disciplinary matters and could not be released in part or as a whole to the press.
- developed a conflict of interest in March 2015 when British American Tobacco declared it as their preferred auditor, ending BAT’s seventeen year relationship with PriceWaterhouseCoopers. Since BAT was part of the investigation van Loggerenberg was conducting when Walter made the allegation against him, it meant that KPMG would now be investigating the domestic activities of one of the world’s largest multi-national companies while being in their employ.
These four facts could go to prove that KPMG did not fulfil the mandate for which it was employed, was biased in favour of another client (BAT) and was pliable by including the recommendations of outside parties in their final report.
Then the unthinkable happened, KPMG (and SARS for that matter) got a very large spanner thrown into the works; Pravin Gordhan was back as Minister of Finance just over a week after the “final” report was submitted to Moyane. What’s more is that Jacob Zuma, being the politically vengeful individual we know him to be, then went and allegedly instructed Hawks boss Berning Ntelemenza to launch an investigation into Gordhan’s involvement in the rogue unit on the back of the Shikhakhane (and by extension the KPMG) report and he did so amid a growing public spat between President and Minister over Tom Moyane.
The report’s potential consequences for KPMG suddenly took on a completely different dimension. In the event that Pravin Gordhan is found guilty of unlawful conduct and removed from his portfolio, the report would literally go from a containable domestic “nuisance” to an international sensation in a matter of minutes. If such an event is to ever occur, then the disclaimer added to the final KPMG report would be utterly meaningless in the eyes of the press and it is only a matter of time before the world’s media makes this same connection between the Zuptas, KPMG and SARS; in the eyes of the media court, at least, KPMG would not only be complicit in facilitating the Zupta State Capture, but it would have proven itself as biased, pliable, unprofessional and not at all serious about the confidential nature of its business in an industry where your reputation is literally worth its weight in Benjamins ($100 bills) if not solid gold.
You might remember that the fifth large multi-national accounting firm Arthur Andersen had no choice but to surrender its auditing license even after having its conviction of obstructing the ends of justice (as relates to their auditing of Texas based energy giant Enron that went bust in 2001) vacated on appeal. The damage done to its reputation was so severe that there was simply no use in trying to practice anymore and this might be what KPMG tried to avoid when it cut its ties to Oakbay on 4 April 2016.
3. The Oakbay Share Price Paradox
Biznews.com ran a piece that touched on the subject of the Oakbay share prices by Martin Williams on 14 April 2016 and if things aren’t strange enough already, Twilight Zone be damned, the Oakbay share prices are a mystery all its own.
JSE listed Oakbay Holdings is in as precarious a position as any corporate could ever find itself. Not only does Oakbay presently find itself without an accredited auditor (as is required for continued listing on the JSE) while there doesn’t seem to be a bank in sight that would even touch it with a stick, but yet the share price of Oakbay Holdings has been remarkably resilient in the wake of the Jonas Revelations, shedding a mere 7.5% of its value since the statement issued by Mcebisi Jonas on 16 March 2016 (R20.00) and 15 April (R18.50).
This is really no secret, folks, because the fact of the matter is that the Guptas own the majority of Oakbay Resources & Energy’s 800 000 000 shares. Of these, some 639 995 900 million shares are owned by Oakbay investments, while long-time associate companies Saranya and Action Investments own a combined 112 940 453, which means that just over 47 000 Okbay Resources and Energy shares are available on the market for outside investors. The simple conclusion to be drawn is that the major shareholders are just not unloading their shares onto the market, despite all the troubles currently facing Oakbay. This does not explain, however, what happened on 10 February of 2016.
On that particular day, the Oakbay share price shed roughly three quarters of is value during midday trade, tumbling from R 30.48 to R 7.55 when a single trade comprising of 1102 shares hit the market. An investigation by the JSE at the time found that no impropriety or manipulation has taken place, but this all seems too good to be true to occur on the back of such a small volume of shares being traded and especially when the Oakbay share price has proven itself to be largely immune to the political storms taking place around it.
What happened on 10 February 2016?
4. The Saudi job?
As I was writing this, the fact that most of the back alley deals took part in Dubai (United Arab Emirates) seemed purely incidental and that there was nothing linking it to the domestic events, but that theory was blown completely out of the water when News24 ran the story of Jacob Zuma opening a weapons factory in the United Arab Emirates during a recent state visit.
Perhaps this is the same visit during which he allegedly took R 6 billion of Gupta money to Dubai and if that holds true, then it all ties in nicely with the Guptas suddenly leaving South Africa on 7 April 2016, but that is not the question I wish to ask here. The question I wish to ask if there is any connection between the Zuptas and the joint venture between Rheinmetall Denel Munitions and Saudi Military Industrial Corporation that resulted in the Al-Kharj military industrial complex.
Al-Kharj seems to follow the same pattern as the now ill-formed Denel Asia in that it is illegal for such ventures to take place without authorisation from Treasury (Minister of Finance) and the Minister of Public Enterprises. Regardless of this, both these ventures effectively opened their doors in a very short space of time between them and to the complete surprise of both Ministries involved. Moreover, the Gupta Business Empire stood to make billions due to their involvement in VR Laser Services, which was almost guaranteed to benefit from large contracts to supply steel components to Al-Kharj and perhaps this would fully explain the formation of Denel Asia in the first place.
It also casts a different light on the R2 billion in “assets” that the Guptas have already moved offshore; do they perhaps own a larger stake in the Al-Kharj military industrial complex than we are aware of?
5. Denel. It may not be a river in Egypt, but seems to be one in the UAE
It also emerged recently, via a City Press article, that there is a stronger Zupta influence at Denel than we have previously thought. The Chief Executive Officer of Denel, Riaz Saloojee was suddenly fired, presumably by Minister of Public Enterprises Lynne Brown, on 14 April 2016 after being on suspension for eight months along with two of his top officials due to alleged irregularities with the company’s profit statements. This is a most curious development since the there was never any finding against Saloojee, the company has never recorded an operating loss or received anything but a clean audit under Saloojee’s stewardship and, what’s more, it was confirmed to the trade unions representing Denel’s employees that his contract would be renewed for another five year term when it ended in January 2016 before his suspension around August last year.
So what’s up with that?
I find it a great coincidence that Saloojee’s suspension would come just prior to the happenings around Denel Asia and the same City Press article alleges that Saloojee resisted outside pressure to make “prescribed” appointments to Denel subsidiaries and that that is the real reason behind his suspension and ultimate axing from the parastatal. But this casts serious suspicions on Public Enterprises Minister Lynne Brown.
Appointed 25 May 2016, Minister Brown’s appointment predates (just) the vast majority of the Zupta’s more daring grabs of State businesses. Barely a month after her appointment, Iqbal Sharma gives Transnet tenders to himself and three months later, Brown appoints Mark Pamensky to the ESKOM board. On the other hand, the formation of Denel Asia has not been approved by either the Treasury or Department of Public Enterprises as is required by law, so perhaps Minister Brown’s only crime here is that she’s been a little too submissive to her boss, Jacob Zuma.
Either way, I still think that the Minister should come forward and explain herself.
I simply do not know whether any of the questions I posed here warrant further investigation or if they even have the most remote element of truth to them, but what we can be sure of is that making sure of everything is in our collective best interests.