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How the Guptas 'captured' South Africa

Daniel Pelz
November 8, 2016

South Africa's president Jacob Zuma faces a vote of no-confidence on Thursday. It follows the release of a damning report about his links with the Guptas, an Indian business family. Here are the report's major findings.

Die Brüder Gupta Südafrika
Image: imago

The 355-page report "State of Capture" written by Thuli Madonsela when she was South Africa's public protector stops short of asserting that crimes that have been committed. But it does call for judicial investigations into a number of allegations that members of the powerful Gupta family influenced government decisions, including the appointment of ministers.

Madonsela also demands further investigations into several business deals between South African parastatals and Gupta-controlled companies. Indian-born businessmen Ajay, Atul and Rajesh Gupta deny any wrongdoing.

The family enjoys close links to President Jacob Zuma. Three of his children worked for companies then associated with the family. Here are the report's key findings:

Two gentlemen in dark suits, the right is smiling at the camera, the left one looks pensive.
Deputy Finance Minister Mcebisi Jonas (right) claims he was offered the post of finance minister. He is seen here with Finance Minister Pravin Gordhan.Image: Reuters/S. Sibeko

1. Claims by deputy finance minister Mcebisi Jonas
Deputy finance minister Mcebisi Jonas alledged that one Gupta brother offered him the post of finance minister. When he declined, he was offered a payment of 600 million South African rand (about 4 million euros) if he accepted, Jonas said. Ajay Gupta told him that the family made 6 billion rand from the state and wanted to increase that amount to 8 billion rand, the deputy finance minister said.

2. Lack of investigations into other allegations

Former ANC member of parliament Vytjie Mentor claimed she was offered the post of minister of public enterprises during a visit to the Gupta residency in 2010. President Zuma was present when the offer was made, Mentor said. She was asked to stop national carrier South African Airways from flying to India in exchange, the former MP alledged. The Gupta family has links to Indian airline Jet Airways. The report noted that there was no evidence that the MP's claims were investigated, which could signify a breach of South Africa's constitution and the governments' code of ethics.

A white plane with a colorful tail and the words "South African Airways" written on it
The Gupta brothers allegedly wanted to stop South African Airways flying to IndiaImage: picture-alliance/Paul Mayall

3. Former minister Van Rooyen's alleged Gupta connections

Phone records show that former finance minister David Van Rooyen visited the area in which the Guptas' Johannesburg residency is located at least seven times, including the day before he was appointed in December 2015. The report calls this "worrying." Before his brief tenure as finance minister, Van Royen was a little-known member of parliament and his appointment was met with surprise by South Africa's public and the business world. Van Royen was replaced by the present finance minister Pravin Gordhan after just four days in office.

4. Dubious business links with South Africa's main energy provider

The report rings the alarm bells over business dealings between South Africa's energy provider Eskom and Gupta-controlled company Tegeta. State-owned Eskom had awarded a contract to Tegeta to supply coal to one of its power stations. "In light of the extensive financial analysis conducted, it appears that the sole purpose of awarding contracts to Tegeta to supply Arnot Power Station, was made solely for the purposes of funding Tegeta [...]," the report concludes.

A signboard with the words "Eskom - Megawatt Park- Head Office" written on it
The report calls for further investigations into business deals between Eskom and Gupta-controlled companiesImage: Getty Images/AFP/G. Guercia

5. Government interference in Gupta business dispute

Madonsela also investigated claims that President Jacob Zuma and other cabinet members intervened in a dispute between companies associated with the Gupta family and local banks. "Cabinet appears to have taken an extraordinary and unprecedented step regarding intervention into what appears to be a dispute between a private company co-owned by the President's friends and his son," the report notes.

6. Other links between government departments, parastatals and Gupta-controlled businesses

Public Protector Thuli Madonsela mentioned another controversial deal between state-owned South African Airways and New Age, a newspaper owned by the Gupta family. New Age is known for its pro-government stance in South Africa. According to media reports, South African Airways spent 9.4 million rand to buy 6 million copies of the paper. The report notes that a probe should take place in "the next phase of investigations."