Gangster State

by Pieter-Louis Myburgh

  Less than four months later, Zwane’s department signed a contract with a little-known company called Estina. The latter was appointed as the ‘implementing agent’ for a dairy project in the small town of Vrede,

  Zwane’s very own hometown. According to the agreement, Estina was required to provide a ‘capital investment’ of R228 million, while the provincial department would pour up to R342 million into the venture over a period of three years. 4 The project’s main beneficiaries were supposed to have been eighty emerging dairy farmers that were to be identified by the department. According to the original agreement, one of Estina’s main responsibilities was to set up an ‘Agri-BEE company’

  for the venture. The emerging farmers were going to get a 51 per cent stake in this ‘Agri-BEE company’, while the remaining shares were to be transferred to Estina. 5

  It sounded like just the kind of plan the country needed to solve its unemployment problem, but it wasn’t that simple. In May 2013, when many South Africans were still outraged by the story that a private jet carrying Gupta wedding guests had been allowed to land at Air Force Base Waterkloof, Volksblad newspaper revealed links between the Free State dairy venture and the controversial family from Saxonwold.

  Linkway Trading, a company strongly associated with the Guptas, had been one of the project’s consultants, and Atul Gupta himself attended meetings during the project’s planning phase, Volksblad reported. 6

  Despite further scrutiny from media outlets, opposition parties and civil society bodies, Magashule’s provincial government kept pouring huge sums of money into Estina’s bank account. Most alarmingly, the intended beneficiaries from Vrede later said they were never uplifted by the project, 7 while the dairy farm seemingly went to ruin due to mismanagement. 8

  Then came 2017’s #GuptaLeaks bombshell: according to leaked emails and documents, the Guptas had allegedly funnelled more than R80 million of Estina’s earnings from the dairy venture through a

  series of shell companies in the United Arab Emirates (UAE). 9 Of this fortune, R30 million had made its way back to South Africa to help settle the bills for their niece’s lavish wedding at Sun City in 2013.

  In the end, the Free State government paid Estina a whopping R334

  million, 10 seemingly with little to show for it.

  After Cyril Ramaphosa’s victory at the ANC’s elective conference at Nasrec in December 2017, the Hawks and the NPA began to move on the Estina scandal. There were raids in early 2018 at the Gupta estate in Saxonwold, at the provincial Department of Agriculture in Bloemfontein and even at Magashule’s office. The Hawks arrested a group of Gupta associates, including their nephew, Varun, and three former provincial officials. But in December 2018 the NPA provisionally withdrew its charges against the eight accused. It seemed like a lack of cooperation from Indian and UAE authorities had made it impossible for the NPA to prove that the Guptas had orchestrated an elaborate cross-border money-laundering operation with the proceeds of the dairy project.11 It remains to be seen if anyone will be convicted over the matter.

  The legal proceedings may have ground to a halt, but not before one of the myriad court filings implicated Magashule as an apparent early role-player in the Vrede project. An affidavit filed by Peter Thabethe, the Department of Agriculture’s former HOD and one of the Vrede accused, included a very interesting titbit. He claimed Ashok Narayan, a known Gupta associate, had acted as an ‘advisor’ to Magashule during early 2012, when plans for the dairy project were being put together. He also claimed that Magashule had approved a trip to India that Thabethe and Narayan embarked on in order to do research for the dairy. 12 In other words, the then premier had been intimately involved

  in the planning process for the controversial project, at least according to the affidavit.

  In January 2018, soon after becoming secretary-general of the ruling party, Ace Magashule faced a small army of journalists for the first time in his new role. The purpose of the event was to brief the public on the outcomes of the party’s first NEC meeting of the year, but the topic inevitably turned to the Guptas. After all, it was in Magashule’s Free State where some of the worst Gupta-linked looting had occurred, such as the Vrede dairy scandal.

  Magashule didn’t say a word about his alleged role in the failed venture. ‘Because we have … adopted the resolution that we must fight corruption, this is what is happening. We are saying whenever there is corruption, the law must take its place, whether it is with Vrede dairy or any other thing … So let’s leave that matter. It’s with the NPA, it’s with the law enforcers. Whatever happens, we are actually reiterating the stance of the ANC, that we need to fight corruption wherever it rears its head.’

  Magashule faced another line of questioning at the press conference.

  Like his boss Jacob Zuma, he had a son, Tshepiso, who worked for the Guptas, but he denied there was anything wrong with this. ‘It has never been a secret,’ he said. ‘When I became premier he was working for the Guptas, it was not a secret, you knew as the media. ’13

  But claiming that he had been transparent about Tshepiso’s role in the Gupta business empire was disingenuous. The media and public only became aware of the dubious tasks Tshepiso performed for the Guptas thanks to the #GuptaLeaks, not because the premier had been candid about what his son was doing for the controversial family.

  Magashule also conveniently left out the fact that it was not just Tshepiso who was working for the Guptas. Several members of the Magashule family had been doing the Guptas’ bidding, including the premier himself, as evidenced by the meetings he allegedly facilitated between Atul Gupta, Thabo Manyoni and Mxolisi Dukwana.

  Tshepiso, the eldest of Magashule’s sons with his wife Seipati, started working for the Guptas in November 2010, about a year and a half after his father was sworn in as premier of the Free State. He would have been about twenty-seven years old.

  A spreadsheet in the #GuptaLeaks shows that Tshepiso worked as a consultant for Mabengela Investments, an entity in the Guptas’ stable of companies. Duduzane Zuma was a shareholder and director of Mabengela; therefore Tshepiso would have worked alongside the president’s son.

  In 2012, Tshepiso earned a basic salary of just under R60 000 a month, according to the spreadsheet. Although not quite as generous as the R100 000 a month that Zuma Jnr earned at that point, for a twenty-eight-year-old it was not bad.

  Tshepiso proved to be a very useful link between his father and the Guptas. The #GuptaLeaks illustrate his role as a conduit for information between the premier’s administration, the ruling party and Saxonwold.

  In July 2014, Magashule’s chief of staff, Janet Kay, emailed the following request to Moipone Ngomane, the deputy director for international relations in the Office of the Premier: ‘Tshepiso Magashule, the Premier’s son has requested the Premier’s itinerary whilst in India. I am not sure whether it’s confidential. If not, please forward to him at [Tshepiso’s email address].’ Tshepiso was copied in

  on the email.

  Ngomane responded to Kay as follows: ‘We do not have the itinerary, at the time of departure the itinerary within India was not available from the Embassy.’ Tshepiso forwarded this response to Tony Gupta.

  Correspondence in the #GuptaLeaks shows that Tshepiso was not the only one carrying messages between Magashule and the Guptas. A day before the general election in May 2014, Mosidi Motsemme sent Tshepiso an email with a list of names and cellphone numbers for hundreds of ‘FS ANC party agents’. ‘It will be appreciated if air time amounting to R120 per person could be loaded today, 06 may 2014,’

  Motsemme wrote, adding that the request was ‘as per directive of the FS ANC chairperson’. At the time, Magashule was still chair. The email was also forwarded to Kabelo Nthongoa, who then passed it on to Tony Gupta.

  One media report on this exchange referred to Motsemme as ‘an employee at the Free State provincial legislature’.14 While correct, it is not the full picture. As previously mentioned, Motsemme, who is des
cribed as Magashule’s ‘Bloemfontein wife’ in ANC circles, is the mother of two of his children. Magashule is also linked to an upmarket property in Bloemfontein’s Woodlands estate owned by Motsemme. In 2015, Volksblad reported that the structure was allegedly in breach of building regulations.15 The property is registered in Motsemme’s name, but Magashule for some reason told the newspaper that he was the owner and that he had funded it through a bank loan. 16

  Meanwhile, none of the media reports gave further details about Nthongoa, the person who forwarded the ‘directive’ regarding the airtime to Tony Gupta. Some digging revealed that she is Magashule’s daughter-in-law, having married Tshepiso in 2014. According to

  consumer trace records, Tshepiso and Nthongoa reside at an address in Avonwold Road, Saxonwold. The house is about a kilometre away from the Gupta compound and is owned by Confident Concept, one of the Gupta family’s property-holding companies.

  Further investigation revealed that Magashule used this property to meet up with the Gupta brothers. A source who did business with the Free State government said he was once asked to meet the premier at a residence in Saxonwold. I showed him a picture of the house in Avonwold Road and he confirmed that it was the place. When my source got there, Magashule was with a man who looked vaguely familiar. He would later realise that it was Atul Gupta.

  The meeting took place in September 2015, shortly before Free State agriculture MEC Mosebenzi Zwane was appointed as the new minister of mineral resources in Zuma’s cabinet. My source said Magashule and Atul discussed Zwane’s imminent promotion. Apparently Magashule wanted Atul to bring certain issues concerning the appointment to Zuma’s attention. ‘I asked Ace why he doesn’t just tell Zuma directly,’

  my source told me. ‘He said the Guptas have more influence with Zuma than he did.’

  As a national minister, Zwane went on to become one of the most prolific functionaries in the Guptas’ shadow state. All indications are that he abused his position as mining minister to help the Guptas buy the Optimum Coal Mine, one of their biggest cash cows thanks to lucrative coal-supply contracts with Eskom. And when the Guptas’

  empire started to unravel, Zwane threatened to punish the country’s major banks after they decided to close the family’s accounts.

  Zwane’s appointment as mining minister was, it seems, facilitated by several connected businesspeople from the Free State who acted as

  messengers between the Guptas and Magashule. As one example, shortly before Zwane’s unexpected appointment, his CV was forwarded to Tony Gupta by France Oupa Mokoena, 17 a businessman from Zwane’s hometown of Vrede. One of Mokoena’s companies, Koena Property Developers, had pocketed R25 million through housing contracts during Zwane’s short stint as MEC for human settlements.

  To say that Zwane served the Guptas well in his position at the Free State Department of Agriculture and Rural Development would be a gross understatement. As we have seen, as MEC he oversaw plans for the establishment of the Gupta-linked dairy farm in Vrede. It would have made sense for the family to elevate Zwane to the national cabinet.

  And Zwane was just one example of the small band of former Free State officials from Magashule’s administration with whom the Guptas chose to staff their state-capture project. As mentioned previously, when Zwane moved from human settlements to agriculture, he took with him Seipati Dlamini, who had been CFO for the cooperative governance and traditional affairs segment of the provincial housing department. In her new role as CFO for agriculture, Dlamini was involved in putting together the Vrede dairy farm project. When Zwane moved to the Department of Mineral Resources, she once again went with him. This time she was appointed as deputy director-general for mineral regulation. 18 The Vrede scheme later came back to bite her when she was arrested and charged over the matter.

  In March 2017, Zwane appointed Thabo Mokoena as the mining department’s new director-general, a powerful position that partly entails approving or rejecting applications for mining licences.

  Mokoena was no doubt well acquainted with Magashule. After all, he had been the municipal manager in Magashule’s hometown of Parys from 2011 to 2013. 19 Mokoena’s conduct at the Department of Mineral Resources suggests that he was as eager as Zwane to further the Guptas’ interests. For instance, he fired an official for serving non-compliance notices on Gupta-owned collieries in Mpumalanga. 20

  Richard Seleke is another former Free State government official who was later called upon to serve in the Guptas’ state-capture enterprise.

  He was the HOD at the Free State Department of Economic Development, Tourism and Environmental Affairs when he was appointed to the Transnet board in late 2014. 21 At the time, Zwane was the MEC for this department, his last posting in Magashule’s executive council (apart from a brief return to agriculture) before his promotion to Zuma’s cabinet. Transnet has, of course, been at the centre of the Gupta narrative.

  In 2015, Seleke was appointed as director-general of the Department of Public Enterprises, the custodian of state-owned entities (SOEs) such as Transnet and Eskom. Emails in the #GuptaLeaks reveal that about six months beforehand, his résumé was sent to Duduzane Zuma from a mysterious email account with the alias ‘Business Man’.

  Judging by the email’s content, it appeared as if Seleke was behind the account. ‘Evening sir please find attached my CV and supporting documents,’ Business Man wrote to Zuma Jnr. 22

  More disturbingly, this same account was used to forward confidential information about certain SOEs to the Guptas. 23 Seleke denied all knowledge of the emails, but in October 2018 he stepped down as director-general amid the ongoing probes into his relationship with the controversial family. 24

  There is plenty of evidence that the Guptas also roped in Magashule’s mates for their state-capture project. In 2011, the SABC made the fateful decision to appoint Hlaudi Motsoeneng as its acting chief operating officer. Despite unresolved problems with his qualifications, he was later appointed to the position permanently.

  Motsoeneng, who is known to enjoy a close relationship with Magashule, grew up in QwaQwa in the eastern Free State.25 He started his career as a journalist and presenter at Radio Sesotho, which later became the popular radio station Lesedi FM. In the mid-1990s, Motsoeneng moved from his rural hometown to Bloemfontein to work at Lesedi FM’s new headquarters, where he soon ingratiated himself with the province’s top politicians.

  At the time, Magashule’s northern camp was still involved in a fierce political battle to gain control of the Free State. Motsoeneng and some of his radio colleagues apparently sided with the Magashule bloc and provided them with a platform on Lesedi FM. ‘They gave Ace airtime when he had that fight with Terror Lekota,’ Mahlomola Majake, a former Free State ANC insider, told News24 in 2016. ‘With their constant coverage they helped push Ace into power. ’26

  Upon being appointed to his powerful position in the SABC, Motsoeneng almost immediately entered into a costly subscription agreement for The New Age to be delivered daily to SABC personnel.

  By all accounts, the staff were not interested in reading the Guptas’

  newspaper, and complained about the wasteful expenditure. 27

  Motsoeneng also sought to help the Guptas by broadcasting The New Age (TNA) Business Briefings for free on SABC2. 28 Magashule and his provincial administration made regular use of this propaganda platform. One of the earliest TNA Business Briefings was broadcast

  from Ilanga Estate, an upmarket events venue outside Bloemfontein, in May 2012. The guest speaker was President Jacob Zuma.

  After that, the business breakfast circus rolled into the Free State at least once a year. In December 2013, the event was held at the Barnard Molokoane High School in Magashule’s hometown of Parys, according to his official diary. Magashule would use these briefings to ‘unpack’

  his State of the Province addresses.29

  In August 2015, public enterprises minister Lynne Brown installed Hantsi Matseke at the state-owned diamond company Alexkor
as its new chairperson. A #GuptaLeaks report later revealed links between known Gupta associates and a company that had been appointed by Alexkor to market its diamonds. 30 The #GuptaLeaks also revealed that the powerful family once wanted Matseke to be appointed to the board of the South African National Roads Agency (SANRAL). 31 As mentioned previously, Matseke is one of Magashule’s oldest friends from Parys. She is also in business with Magashule’s daughter Thoko, and her company Friedshelf 863 benefited from the Free State housing saga of 2010. ‘I have no relationship, whether personal or business, with any member of the Gupta family,’ Matseke told me. She said her CV was in the public domain and was therefore accessible to anyone.

  ‘Accordingly, I have no control over comments made by third parties, including the Gupta family, about my suitability for positions.’

  In early 2018, before her own sacking as minister of public enterprises and in an apparent last-ditch effort to ensure some continuance of the Gupta capture project in the Ramaphosa era, Lynne Brown tried to have Playfair Morule appointed as Eskom’s new chairperson. 32 As previously mentioned, Morule, South Africa’s former high commissioner to India, is a long-serving Magashule ally. His wife,

  Tankiso, was among the band of connected businesspeople who secured lucrative housing contracts during Magashule’s reign as premier.

  There is overwhelming evidence that Magashule, his administration, his family and some of his closest friends formed key cogs in the Guptas’ state-capture machinery. Under his watch as premier, the Free State pumped almost R440 million into the Guptas’ coffers through the Vrede dairy farm deal, the controversial mobile clinics and payments to the family’s media entities.

  The Guptas plundered his home province, and it is inconceivable that Magashule played no part in it. After all, he was ‘advised’ on the Vrede dairy project by Ashok Narayan, one of the family’s most trusted lieutenants. 33 And he personally met with The New Age bosses when the Free State was committing to ever-larger subscriptions of the newspaper. He allegedly took Mangaung’s mayor and at least one MEC to Saxonwold for clandestine meetings with Atul Gupta. His son Tshepiso lives in a house owned by the Guptas and located a stone’s throw from the former shadow state’s main seat of power, a property that Magashule himself used as his Johannesburg base on at least one occasion. Furthermore, his son, his daughter-in-law and the mother of his children served as conduits for the flow of information to and from his shady friends in Saxonwold.