Editorial

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Cyril’s scary China deal: are we that desperate?

When Jacob Zuma fell from power, the Guptas and their Indian bankers were allowed to flee the country unhindered. The government and state-owned enterprises are now – so they declare – moving to recover the massive sums they lost as a result of the activities of the Guptas and their collaborators. President Cyril Ramaphosa and his Minister of Public Enterprises Pravin Gordhan have gained much of their credibility from their apparent commitment to the project.

But, if it ever was seriously the intention of the Ramaphosa government to go after the Guptas and their collaborators, more recent events suggest they may have lost their enthusiasm for the cause.

In August last year The Sunday Independent reported that Johannesburg law firm Werksmans Attorneys had been paid R300 million between February 2016 and April 2019 by the Passenger Rail Agency of South Africa (Prasa) for forensic services, despite the Auditor-General having flagged the law firm’s contract as irregular. Ironic, since former Prasa Group CEO Nkosinathi Khena had appointed Werksmans in August 2015 to investigate 141 contracts above R10m, after the A-G’s 2014/2015 report found that R550m in contracts awarded during the tenure of the Gupta-endorsed former CEO Lucky Montana, were irregular.

The affected companies to be investigated by the lawyers included Swifambo Rail Leasing Pty Ltd, awarded the multi-billion too-large-to-travel locomotive supply tender, Siyangena Technologies and Mazwe Investments Pty Ltd.

In an “intervening witness affidavit” filed in the high court, Pretoria, in April last year in the case between Prasa and Siyangena Technologies, Montana claimed the appointment of Werksmans was “a fraudulent act” by the board’s audit and risk committee chairperson, Ms Zodwa Manase.

Manase denied this. “No individual non-executive director has the power to unilaterally appoint any supplier. As the chairperson of the audit risk committee, I firmly believe in and complied with governance, ethics and proper company policies,” she told The Sunday Independent.

So, too, did Werksmans director Bernard Hotz: “The appointment of Werksmans was entirely lawful. It was found to be lawful by a court of law.”

“The board appointed Werksmans to do a deeper investigation into the findings of the A-G,” Prasa spokesperson Nana Zenani told The Sunday Independent.

Right or wrong, the controversy appears to have made Prasa lose enthusiasm both for the project – and for paying Werksmans’s bills.

In January, just days before Prasa was to file critical papers at the North Gauteng High Court, the law firm and the senior advocates it had briefed withdrew as its legal representatives because of Prasa’s failure to pay a R19m fee bill that had been outstanding for six months.

In a letter to the Administrator of Prasa, Werksmans chairman David Hertz wrote: “The disastrous result will be that the Siyangena matter will not proceed on an opposed basis… [and] Prasa’s application will, in all likelihood, be dismissed by default.

“Ultimately, Prasa will be called upon to pay over R6 billion to the very persons and entities identified as key role players in the corruption frenzy at Prasa which was highlighted [in the] investigations which precipitated Prasa taking this matter to court.”

Prasa has subsequently paid the outstanding bill, and Werksmans and counsel have returned to the case, now postponed to a future date for hearing.

You will see that our Transnet story on page 12 has a similar, ongoing theme.

We all know these attempts to recover “Gupta” loot are made more difficult by the continuing threat posed by hostile, still-powerful factions within the ANC. Less widely known is the legal threat posed by the fact that senior government and SOE executives  – from Zuma, all the way down, actively collaborated and shared in the plunder.

Our law has inherited a general principle, still applied by our courts, from early Roman law, hence it is still often referred to by its Latin phrasing: In pari delicto potior est conditio defendentis – A plaintiff who has participated in wrongdoing cannot recover damages resulting from the wrongdoing.

Are the circumstances of the Guptas’ capture of the state so extraordinary that they allow our courts to take a different view?

Our cover image portrays Minister of Public Enterprises Pravin Gordhan facing this dilemma, not in his personal capacity, but in his official capacity as minister responsible for Transnet and a senior representative of the ANC.
So much for our debts from the past. What of the future? Even before the dawn of Corona, the signs were disappointingly bad, as so well articulated by Sam Sole in the accompanying guest editorial. amaBhungane has Noseweek’s wholehearted support for this big undertaking.

In case readers doubt the seriousness of the cause, consider this: the Limpopo project will provide an African export opportunity for China’s out-of-date, out-of-work electricity-from-coal industry, and an out-of-China venue for some of its dirtiest polluters: its metals-smelting industries that we will be stuck with for a century.

Note here that on the same day lockdown was declared by Ramaphosa, Minister of Environment Barbara Creecy promulgated new so-called anti-pollution regulations – which double the pollution levels previously allowed! A requirement of that China deal? Why else make such a retrogressive move without explanation?

As standard practice, the labour to construct and run the multiple power stations and smelters (tax free) will be Chinese. For us to repay this debt we will be committed to letting them export the metals they produce duty-free to China at a price set by them.

We haven’t even got to the scale of the water crisis yet that they are about to precipitate for the northern provinces, game reserves and Mozambique.

President Ramaphosa personally signed the deal on his visit to China in October last year. Was this recklessness a measure of the government’s desperation? Otherwise, as Tanzania’s new president John Magufuli has declared: “Only a drunken man would have signed such a deal.” (He’s cancelled theirs.)

l Jack Lundin suggested readers might like a bit of light relief from all the present-day shock-horror, so see page 25 for his bitter-sweet memoir of days in a bizarre Rhodesian bush school in the 1950s.

In a similar vein, our guest columnist from New York, Ronald Wohlman shares some hilarious entries from his Covid lockdown diary.

We will survive! – The Editor.

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