State capture: How dalliance with Guptas felled Jacob Zuma

More than anyone else, the term state capture has been associated with the Gupta brothers, who were claimed of having excessive influence on former South African President Jacob Zuma, accusations that eventually led to his downfall.

The three brothers, Ajay, Atul and Rajesh, were a wealthy family, originally from India’s Uttar Pradesh state and moved to South Africa in 1993.

They started Sahara Computers that later diversified into other sectors including mining and media, building a multi-million-dollar empire over the years. With time, they also developed deep relations with politicians including high ranking officials of the ruling party, the African National Congress (ANC) as well as senior government officials. 

Using these relations, the Guptas would influence economic and political decisions in what grew to see them execute state capture – which an inquiry commission said was diversion of state resources for personal gain – over South Africa. While it has been difficult to figure out how much the Gupta’s looted, a former South African finance minister put it at 500 billion rand (Sh3.3 trillion).

The Guptas influenced the award of state contracts and their companies ended up getting tenders that would add up to billions of rands. Most affected were key state owned enterprises such as the country’s power utility Eskom, railway infrastructure manager Transnet, South African Airways (SAA), the South African Broadcasting Company (SABC) and the Passenger Rail Agency of South Africa (PRASA).

There were also the dodgy deals or outright looting of South African coffers, with the country’s Treasury also losing billions. In one instance, a 2018 BBC report notes, that a preservation order obtained by the high court “showed millions of dollars worth of public money which was intended to support poor farmers was directly deposited into Atul Gupta’s personal account”.

The Guptas were also accused of influencing cabinet decisions including ministerial appointments. Mcebisi Jonas, who was deputy finance minister between 2014 and 2016, told a commission formed to investigate state capture by the Guptas that the brothers had offered him the position of  finance minister.

This had happened before the then minister was fired, indicating their insider knowledge of the goings on in Zuma’s cabinet. Former ANC MP Vytjie Mentor also claimed that she was offered the post of public enterprise minister. 

Zuma’s close ties with the Guptas during his tenure as president were also seen in son’s, Duduzane Zuma’s, relations with the Guptas as business partners. There are also reports that one of his wives –Bongi Ngema-Zuma–  had worked as a communications officer at a mining firm owned by Guptas while Duduzile Zuma – his daughter – had at some point been a director at Sahara Computers.

Revelations of the impact the Gupta family had on South Africa including the hold on their then President led to countrywide protests in 2017 demanding the resignation of Zuma. There had been grumbling earlier, including protests but the April 2017 demonstrations were reported as the biggest political protests in years. and took place across the country’s major cities. 

This led to the party’s National Executive Committee recalling him from office in February, leading to his resignation. In the televised resignation speech on February 15, 2018, Zuma said he had disagreed with his party but all the same yielded to its demands. 

In January 2018, South Africa formed the Judicial Commission of Inquiry into Allegations of State Capture, better known as the Zondo Commission, taking its name after its chair Justice Raymond Zondo. 

The commission would run from January 2018 to June 2022, listening to 278 witnesses but also sifting through thousands of pages of documents before handing its report to President Cyril Ramaphosa. To undertake this work, the commission said it spent almost one billion rands (Sh6.6 billion at current exchange rate).

“The Commission found that state capture did take place in South Africa ‘on an extensive scale’,” it reported a summary of its work, adding that its six voluminous reports “provide detailed insight into how state capture was organised and facilitated by some leaders in both the public and private sectors.”

Following the extensive work, the Commission would define “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 of the state, conspired systematically (criminally and in defiance of the Constitution) to redirect resources from the state for their own gain.

Different players have given different estimates as to how much South Africa lost to the Gupta family and the commission noted that it would be difficult to quantify but it ran into billions of rands. Former Finance Minister Pravin Gordhan told the commission  that the “total economic impact of state capture could be as much as R500 billion (Sh3.3 trillion)”. 

“However, the Commission estimated the total amount of money spent by the state which was ‘tainted’ by state capture to be around R57 billion. More than 97 per cent of the R57 billion came from Transnet and Eskom. Out of these funds, the Commission estimated that the Gupta enterprise received at least R15 billion,” said the Zondo Commission in its reports.