How the Guptas Have Haunted South African Politics
(Bloomberg) -- Even before South African President Jacob Zuma quit under pressure on Feb. 14, having dragged the country through a succession of graft scandals during his almost nine-year tenure, people who had visited the Gupta family’s Johannesburg mansion were tainted by the connection. Among the most damning allegations leveled against Zuma during his time in office was that he allowed the Gupta family -- whose members are his friends and business partners of his son, Duduzane -- to influence cabinet appointments and loot billions of rand from government coffers, known as state capture. Finance Minister Nhlanhla Nene’s confession that he visited the Guptas’ compound six times may make him the latest casualty.
1. Who are the Guptas?
The three brothers -- Ajay, Atul and Rajesh -- became so enmeshed in national politics under Zuma that their families and associates were collectively known as the Zuptas. The brothers arrived in South Africa from India in the early 1990s as apartheid rule was drawing to a close. Starting with a small technology company, they built up a business empire, with interests ranging from newspapers and cable television to uranium and coal mines. They set up a sprawling compound in Johannesburg’s upmarket Saxonwold suburb, bought a fleet of luxury cars and threw lavish parties. Their public notoriety dates back to 2013, when they landed an aircraft at a high-security air-force base to ferry private guests to an opulent, four-day family wedding. In February, police raided their compound, while immigration officials descended on the offices of one of the media assets they used to own. The Guptas left South Africa earlier this year and family members have been seen in India and Dubai. The Guptas have denied wrongdoing.
2. How was Nene linked to them?
Nene, who was fired as finance minister by Zuma in December 2015, was reappointed to the position by President Cyril Ramaphosa in February and has been tasked with turning around an economy that fell into recession in the second quarter. He told a judicial commission of inquiry into state capture on Oct. 3 about his meetings with the Guptas after previously having said he only met the three brothers on social occasions. This admission prompted opposition parties to call for him to step down. He also told the commission that he was fired by Zuma because he refused to sign a multi-billion rand nuclear power pact with Russia that would have crippled South Africa’s finances. Nene has asked Ramaphosa to relieve him of his duties as finance minister, Johannesburg-based Business Day newspaper reported Oct. 8, without saying how it got the information.
3. Has Nene been linked to anything else?
Up until October, no, but the Johannesburg-based amaBhungane Centre for Investigative Journalism reported on Oct. 5 that a company linked to Nene’s son sought funding from the state pension-fund management company when Nene was chairman of the organization. Although his son left that company, the asset management firm paid Nene Jr. a $1.73 million referral fee for bringing them the deal, according to amaBhungane.
4. Which other ministers have been linked to the Guptas?
Former Mineral Resources Minister Mosebenzi Zwane was removed from his post in a cabinet purge on Feb. 26 and replaced by mining veteran Gwede Mantashe. The nation’s former anti-graft ombudsman said in a 2016 report that Zwane helped a Gupta-controlled company buy a coal mine from Glencore Plc in what appeared to be an underhanded deal. While Zwane hasn’t been indicted so far, a parliamentary panel plans to probe his conduct. He denies wrongdoing. Former Cooperative Governance Minister Des van Rooyen also found himself in prosecutors’ crosshairs — the anti-graft ombudsman said he had questionable dealings with Gupta family members and lied to parliament about them. The Guptas said Van Rooyen didn’t visit them. Then there’s former Public Enterprises Minister Lynne Brown. She was responsible for overseeing some of the biggest state-owned companies that have been at the center of the alleged looting spree by the Guptas and their allies. The anti-graft ombudsman said on Feb. 22 Brown inadvertently misled parliament about contracts that existed between the state-owned power utility and a company linked to the Gupta family, and gave Ramaphosa 14 days to take action. Brown insists she wasn’t involved in operational matters and initially had no knowledge of wrongdoing.
5. Did the Guptas try to befriend anyone else at Treasury?
In 2016, then-Deputy Finance Minister Mcebisi Jonas revealed that Ajay Gupta offered him the post of finance minister and a bribe in exchange for business concessions. Jonas told the commission the Gupta brothers offered him 600 million rand to take Nene’s post and threatened to kill him if he spoke of the proposition. Jonas said he declined the money and the role.
6. Has Jacob Zuma been indicted?
No, but allegations that Zuma allowed the Guptas to unduly influence government appointments and the awarding of state contracts are at the center of the work of the judicial commission of inquiry that Nene and Jonas testified at. Courts have ordered the reinstatement of multiple graft charges against Zuma related to an arms deal in the 1990s. The charges were dropped just weeks before he became president in 2009; prosecutors reinstated the charges, but Zuma has applied for a permanent stay of prosecution, with the case provisionally postponed until Nov. 30. If convicted, many doubt Zuma will ever do jail time -- he’s already 76 and any lawsuits and appeals could take years to run their course.
7. What about Zuma’s son?
Duduzane Zuma, hired by the Guptas in 2005 and their partner in several businesses, has been accused of having brokered meetings where family members allegedly tried to bribe government officials. He’s also alleged to have helped the Guptas win unfair preferential treatment from the state for their coal business. He denies wrongdoing and so far hasn’t been charged on either score. South African civil-society group AfriForum is trying to privately prosecute Duduzane Zuma on culpable homicide charges after a passenger died when his car collided with a minibus taxi four years ago.
The Reference Shelf
- Nhlanhla Nene’s son named in deal with manager of state pension fund money.
- Nene’s testimony before the judicial inquiry into state capture.
- Bloomberg Businessweek on the Guptas: “The Brothers Who Bought South Africa.”
- The Gupta Leaks investigative articles.
- The former graft ombudsman’s report on the Guptas’ influence over government.
- The bribes, swag and cozy ties that the ombudsman’s report highlighted.
- A joint research report on how state funds were looted.
- Bloomberg QuickTakes on how Zuma lost his job and why South Africa lost faith with Zuma and the African National Congress.
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