Eskom inquiry: Malusi Gigaba
13 March 2018
Chairperson: Ms Z Rantho (ANC)
Minister Malusi Gigaba statement
Relevant Video: Eskom inquiry: Minister Malusi Gigaba [SABC Digital News]
The Committee heard evidence from the Minister of Home Affairs, Malusi Gigaba. He was called to provide evidence related to his tenure as Minister of Public Enterprises.
Minister Gigaba statement included governance and executive appointments at Eskom, testimony submitted by Mr Brian Dames, appointments of board members and executives at Denel and Transnet. His evidence included awarding of tenders during his time as the Minister of Public Enterprises between November 2010 and May 2014.
Minister Gigaba informed the inquiry that Ministers do not get involved in tenders as it was the responsibility of the state owned enterprise (SOE). Ministers were not involved in deciding who was awarded a contract. The involvement of the political head was governed by section 54 of the Public Finance Management Act (PFMA) which states that SOEs are required to notify National Treasury and obtain approval from the Executive Authority (Minister) for significant transactions that meet the materiality threshold.
In his testimony Minister Gigaba said Ministers had no knowledge of the bidding process. Their role was to set out conditions of the procurement process that need to be met beforehand. “Ministers must not get involved in tenders. They should stay away”.
Some Committee members were of the view that Minister Gigaba’s opinion was a dereliction of his duties.
Minister Gigaba admitted that he had been to the Gupta house at Saxonwold, but only to attend Diwali festivals and suchlike which he had subsequently stopped attending. Minister Gigaba was questioned by Members on procurement processes at Eskom, governance, links with the Guptas, and trips to Dubai, the shareholder compact, appointment of boards, the naturalisation of the Guptas and role of the Minister in procurement.
The Chairperson of the Inquiry said the Committee was not instituting criminal charges against anyone. However, the Guptas were perceived by the country to be influencing government and the appointments of Ministers and SOE board members. Some of the incidents happened during Minister Gigaba’s tenure as Minister of Public Enterprises.
Members agreed to issue a summons for Dudu Myeni, Duduzane Zuma and the Gupta brothers to appear.
Witness: Malusi Gigaba
The Chairperson read the oath to Minister Gigaba who took the oath.
The Chairperson said Committee members would engage with Minister Gigaba and the Evidence Leader would engage afterwards.
Mr N Shivambu (EFF) asked why the Committee would be deviating from the standard procedure of the witness being questioned by the Evidence Leader first and then Members engage afterwards.
Adv Ntuthuzelo Vanara, Evidence Leader said the request for Members to engage with the witness first was one that he made but he did not have a problem in engaging the witness first.
Ms N Nobanda (ANC) said she did not see a problem with Members engaging with the witness first as it was a request by the Advocate himself.
Mr M Dlamini (EFF) said the request for Adv Vanara to engage with the witness after Committee Members was denied.
Dr Z Luyenge (ANC) said it could be perceived as dubious if the Committee deviated from standard practice and suggested the Committee follows the normal procedure as the Advocate had indicated that it was not a train smash for him to engage with the witness first.
Minister Malusi Gigaba proceeded to read his statement (see document).
Adv Vanara: From your submission today it would appear that you had to peruse a number of source documents to assist you to recollect the events articulated in the submission. Would that be a fair observation?
Minister Gigaba: Yes, it is a fair observation. As I said at the beginning, some of the documents were not available to me at the time of presenting myself. I am still awaiting to go through them. If there are any gaps I would still have to refer to those. I am prepared to submit any questions I am not able to answer today in writing to the Committee.
Adv Vanara: Is there any reason you are aware of why the source documents you are already in possession of and that you utilised to prepare the submission cannot be made available to the Committee?
Minister Gigaba: I indicated at the beginning that some of the documents were classified as confidential and therefore should they be de-classified we can make them available.
Adv Vanara: Chair, I move to ask the Committee for permission to make such documents de-classified and made available to the Committee. Let’s move to the appointment of board members. On page two of your submission and the last page dealing with conclusions you express some regret around the appointments you made that they were not to be what they intended to be. Is that correct?
Minister Gigaba: Yes, I do.
Adv Vanara: Clearly that suggests that the systems that were in place were not effective enough to stop rogue elements from infiltrating the system. What is it that has to be done to improve the system?
Minister Gigaba: I think we need greater cooperation. There are difficulties we are going to face even going forward because the appointment of the board becomes sensitive information, and even when you appoint them you try to keep the information as confidential as possible and do it as quickly as possible so that it doesn’t leak. There have been many instances where the information has been leaked, and it undermines serving members, and undermines those who are to be appointed. But we do need to find an alignment that allows the appointee members to be vetted properly. Unfortunately when you create a database for the appointment of board members, you cannot vet them prior to the need to appoint them. It is only at the time when you need to appoint them that you need to do vetting. I think the improvement required between the shareholder representative and State Security is the vetting of board members prior to the process being taken to Cabinet.
Adv Vanara: Whilst still on the appointment of board members, your submission paints a picture of you having looked at people’s qualifications, their skills set, and the required skills in the organisation. This matter does not relate to your tenure at Public Enterprises but I am going to ask it because you were a member of Cabinet when this decision was made. Sometime last year Mr Zethembe Khoza appeared before the Committee. At the time he was acting Eskom board chairperson. In my assessment he performed very badly under oath, and he had given himself and the board a 3/10 for performance according to his own assessment. His appointment, together with the interim board members, was confirmed by Cabinet subsequent to his appearance before this Committee. Were you part and parcel of the Cabinet meeting that approved his appointment?
Minister Gigaba: Yes, I was.
Adv Vanara: At that stage you were Minister of Finance, correct?
Minister Gigaba: Yes.
Adv Vanara: What was your assessment of the allegations of wrongdoing to the economy of the country and these allegations of state capture?
Minister Gigaba: The difficulty with the question is that it seeks my personal opinion outside of the Cabinet perspective. But obviously I had a dim view of the proposal that was presented before us. The initial suggestion was that members be added to the board and that Mr Khoza should be retained as an acting Chair until the AGM which was apparently scheduled for early 2018. Our view was that that should not have been done. There was a debate around that matter that someone else should be considered as board chairperson in spite of the fact that the appointments were being made subject to the pending AGM. Ultimately upon discussion it was said that to introduce someone else who was new into the picture at that present moment would subject them to baggage which they did not intend to carry. I personally had a view we needed to appoint someone new as board chairman. That was finally realised in January 2018 when a new board and a new chairman were appointed. I had made my views public on the urgency for changes to the board of Eskom.
Adv Vanara: Mr Siyabonga Mahlangu. What was the relationship between yourself as Minister of Public Enterprises and him, and the circumstances surrounding his being the advisor to the Minister? Can we get clarity on the role he was playing to the Minister?
Minister Gigaba: Mr Mahlangu was a legal advisor to the Minister, and as is expected, special advisors are not part of the department. And although they are governed by the public service legislation, they are not part of the department. Their role is solely to advisor the Minister on aspects that relate to the Minister’s work. Obviously the Minister would not prescribe what people do outside their working hours, and in some instances they would not themselves inform the Minister or report to the Minister what they are doing. It is expected that if they should get into any business activity they should then seek the Minister’s permission and write to inform the Minister. In the instances that it doesn’t happen, the Minister has no way of knowing it is taking place.
Adv Vanara: I am sure the Minister would agree that if the allegations are proven to be correct of his calling Mr Dames to his office and introducing him to people who want coal contracts, that would be something that would inadvertently bring the Office of the Minister into disrepute. What is your view?
Minister Gigaba: That is absolutely correct. Let me start by saying I had no formal request or submission that they needed any additional coal at Lethabo power station. I had visited Lethabo power station once or twice in my official capacity as the Minister, and neither Eskom or the Department’s Energy and Broadband Enterprise branch had brought to my attention any idea that Lethabo needed additional coal. Secondly, much as I as the Minister would have preferred that Coal 3 be built by Eskom, at the time that was my view, that Coal 3 must be allocated to Eskom. There was no decision in Cabinet whether at the Presidential Infrastructure Coordinating Commission (PICC) or Cabinet itself, that Coal 3 would be allocated to Eskom or as an IPP. There was no decision on that matter. I don’t think bringing Mr Dames into that conversation was fair to him because ultimately the decision didn’t rest with him. It would rest with the Minister’s responsible at a policy level. Eskom would only become involved once a decision has been made on how Coal 3 was going to be provided, and where the power station would be built. In making that decision we would also look at what the cost benefits would be of building that power station, whether in Free State, or in KZN, or anywhere else outside the main coal supply provinces in the country.
Adv Vanara: On learning of Mr Dames’ testimony before the Committee and its impact on the Minister, have you called just to find out the accuracy of the allegations made against you?
Minister Gigaba: I haven’t had a discussion with him as I felt that the issue did not require me to. I had not participated in it, Mr Dames had not informed me about it, and anyway none of those issues materialised because Mr Dames ensured that they did not. I did not feel the need to call him and discuss this with him.
Adv Vanara: Notwithstanding that your reputation was subjected to scrutiny as a result of his conduct?
Minister Gigaba: No.
Adv Vanara: Did you have any discussions about the New Largo colliery with the then Group Chief Executive (GCE) Mr Dames?
Minister Gigaba: I am not particularly aware. I would like to be furnished with the details of that.
Adv Vanara: This is the mine that was going to provide coal to Kusile power station. The information that I have is that Anglo had entered into discussions with Eskom to have a mine that would provide coal to Kusile. That does not ring a bell?
Minister Gigaba: The discussions with regard to specific coal contracts of Eskom, I did not involve myself in those. I hold myself in a broader policy discussion with Eskom. This was predicated on what we were drafting as the emerging miners strategy which we started engaging on around 2012 and we were saying by 2018 we would like the 50% plus 1 of Eskom’s coal to be provided by black coal miners. I therefore had that discussion with Eskom. We had several meetings with the board of Eskom. The strategy itself was being drafted by Eskom and spearheaded by the Eskom board including the executive directors. We had two consultative sessions with emerging coal miners at which we had specific discussions around these issues.
Adv Vanara: There appears an outcry even today from black emerging miners to access business. What programmes did you put in place at the time or see to it that the board addresses transformation issues?
Minister Gigaba: The emerging miners strategy eventually was not implemented. I think one of the things we were trying to do at the time was that we implemented a business case where Alexkor would diversify from diamond mining solely to also become a coal mine and supplier to Eskom with Alexkor as the basis to spearhead this emerging miner’s strategy and bring on board many other emerging miners. The emerging miners’ strategy was the biggest plan we were working on and would have resulted by now in billions of rands being managed by black coal miners. The second one related to audit firms. We took a very firm view that black auditors were to be given space to audit the state owned companies (SOCs). Transnet was the first to move toward that direction when they appointed SizweNtsalubaGobodo (SNG) making them the fifth biggest audit firm in South Africa. They also provided their internal audit work to SekelaXabiso which allowed SekelaXabiso to grow. Eskom wanted to do the same thing but when National Treasury changed the preferential procurement rules that took away the transformation that would have taken place. Other SOEs had given their audit services to black firms. Other black professional service providers also got face during that period. We also focused on the enterprise hub development at Eskom and Transnet which resulted in an oil supply contract of about R5.1 billion to a black female in Limpopo.
Adv Vanara: What was the Minister’s view on non-executive directors involvement in procurement within the boards of SOEs?
Minister Gigaba: My understanding is that the non-executive director must not get involved in operational matters. They have responsibility to shield the executive from interference in operations. Where the board gets involved is in receiving and processing the reports and providing them to the shareholder representative, especially when you are talking about huge contracts. The board needs to pay attention to the more strategic policy matters that assist to enhance the policy directives of the country.
Adv Vanara: I think I share that view of yours, Minister. What I am struggling to find out is who introduced this to the contract that board members should get involved in procurement, and when?
Minister Gigaba: I don’t know who introduced it. I also don’t know when it came about. To my understanding even the establishment of the procurement subcommittee on the Transnet board was a decision which was taken prior to my arrival. And the board sought through that to manage the reports and to be able to assist the executive in implementing their decision. My understanding is that even when it came to the 1 064 locomotives, the entire procurement process was led by the CEO and he reported to the board. Insofar as the board is concerned, they ought not to involve themselves in procurement processes. It undermines their role as non-executive directors, and the executive directors.
Adv Vanara: Minister, the reason for this question is that people tend to appear before this Committee and say these are mere allegations and have not been proven in a court of law, which to a large extent is true. But the damage done to the economy is not waiting for people to be proven guilty in a court of law. Can you give an example of the damage done to the economy due to these state capture allegations?
Minister Gigaba: If you look at the performance of the South African economy between December 2017 and now, and how we were able during the course of the year to climb back up to the 1.3% growth projection we had set for ourselves in the 2017 budget, you would see the slowing down of the economy in 2017 as the allegations of state capture and corruption were unveiling. Come December 2017 following the political certainty provided by the ruling party’s national conference, and the high expectation amongst investors that corruption and state capture would begin to be addressed, the rand strengthened against the dollar. There was an appetite in South African stock at the JSE growing among domestic and international investors. You saw the bond yields being reduced so that the economy stood a much better chance. As action began to be taken this year on the Eskom board, on the SAA board, on the eminent change to the Denel board, and the decisive action we took to stop the Denel Asia contract and ensure that Denel gets out of the court case against Treasury, there was a policy sentiment that has resulted in very high economic activity in the first quarter of the year. There is a very high cost to corruption and state capture allegations, and there is a great benefit to action being taken against those. That is why it is important that the country should be seen to take drastic measures in this regard.
Adv Vanara: You have been part and parcel of Cabinet. Cabinet appointed a ministerial committee to look at the employment or re-employment of Mr Molefe at Eskom, and Eskom officials or board members refused to share documents with the shareholder representative or the ministerial committee established by Cabinet. We saw a board stand guard when R30 million went to the Eskom pension fund and there was no accountability. When officials were facing suspension, you were quoted in the media as asking some of these officials to leave Eskom. When the country looks up to Cabinet for leadership, what message does this kind of behaviour send to men and women that look up to Cabinet for leadership?
Minister Gigaba: In all sincerity we should have been more decisive. We shouldn’t have allowed the previous board in the first instance to take that decision. The penalty for that decision should have from the outset been decisive and severe on the board because it went a long way in undermining the integrity of government and Cabinet in particular. I think we have taken the actions now with all the people implicated having been removed, and that is in part why we decided we should employ an acting CEO from outside Eskom, not that it is a vote of no confidence in current serving members of the executive of Eskom, but it is to provide them with a bit of breathing space because they would have worked with all the people involved. We wanted somebody who has not been part of the process leading up to now to come and assist the company moving forward. The indecisiveness has cost us a great deal.
Adv Vanara: On the acquisition of the 1 064 locomotives, at the time you approved the business case, the cost awas around R38.6 billion. There is testimony before the Committee that the cost escalated to around R50 billion. Was this ever brought to your attention, Minister, and if so, what were the reasons furnished to you?
Minister Gigaba: As I indicated in my presentation, I raised this with the Transnet board on several occasions that the delays with the 1064 acquisition were severe on the economy and the capex itself. I said to the board that they need to expedite the decisions, but not in such a manner that it results in bad contracts being entered into that undermine the policy and transformation objectives of the country. But it seems that Eskom had a number of such problems. One of them was that the build program was delayed so much that the cost overruns escalated severely and there was no proper management of the contract. The same applied at Transnet with the Durban to Johannesburg national multiport product pipeline delayed and it seemed again that the problem was project management and management of the contract. I also intervened with the SAA board and said you can’t procure new fleet at SAA without answering the question how you want that procurement to address localisation, the offset, the building of local capability. There seems to be this problem at SOEs, not only after the contracts have been entered into, but prior. I said very clearly in my response to them that there are four conditions that I want you to satisfy me on so that I give you the section 54 approval you require from me to go ahead with procurement. But that year-long delay had resulted not only in the increase in the cost of the locomotive, but they had undertaken another procurement of R4 billion to obtain 100 coal locomotives that were going to fill the gap created by the delay. All of this would have been unwarranted had they immediately established committees, set very clear timelines, complied with the timelines, and ensure that they meet the targets set so that we don’t experience any cost overruns.
Questions by Members
Mr R Tseli (ANC): You were Minister of Public Enterprises between November 2010 and May 2014?
Minister Gigaba: Yes.
Mr Tseli: In your presentation you indicated that ministers are not involved in procurement processes, only in certain large tenders that require approval. Can you qualify that statement as it seems vague and subject to misinterpretation?
Minister Gigaba: The Minister does not get involved in tenders. That is done by the respective SOE. But when certain contracts are of the materiality threshold that is stipulated as requiring only section 54 approval then what the SOC would do prior to undertaking the procurement and bid, is they would write to the Minister, present the business case, and inform the Minister of the conditions of procurement, what it would cost, and all the processes required, and then the Minister approves in principle. When the Minister approves the section 54 they do not know who has bid as none of the processes have been undertaken. So you are virtually not involved. You are approving the procurement in principle and setting out the conditions you would want to be met.
Mr Tseli: In the case of what happened in Eskom would you say people responsible for procurement were well aware of all these processes you have outlined?
Minister Gigaba: In relation to what happened at Eskom?
Mr Tseli: In relation to what I have just indicated, there were a number of contracts, a number of witnesses who came before the Committee and alleged that certain contracts were awarded to people who were not supposed to get them like your Trillian and so on. In the light of what happened, would you say the company was aware of the processes you have outlined?
Minister Gigaba: I have not perused the Eskom documents because Trillian, Tegeta, and the other one happened after I had left Public Enterprises. I have not had the opportunity to peruse the documents, except in relation to the forensic audit on Tegeta I called for as Minister of Finance having received the report commissioned by the Office of the Chief Procurement Officer (OCPO) at Treasury. It would seem of course that a lot of government policy was not complied with, and therefore it is necessary that collective measures be taken in regard to those.
Mr Tseli: The appointment of Tsholofelo Molefe as Financial Director instead of Mr Sihoole as recommended by the board, can you talk to that particular aspect – why Tsholofelo Molefe was appointed and not Sihoole. Because from what you were saying earlier, seemingly there was some indication that Sihoole might not be more appropriate to work in a political environment, but was it from Sihoole or was it from the agency that was responsible for procurement?
Minister Gigaba: It was from himself in response to a question that was asked by the agents. There were a number of factors which informed the decision we took. The first one was obviously that, the other one related to the remuneration. He was refusing R4.2 million bonus in addition to the R4.2 million annual salary. If you add that it amounts to R8.4 million. The previous Financial Director had earned a total remuneration of R5.9 million when you considered the long and short term incentives. If you look at that obviously you would be earning as Financial Director far above the CEO of Eskom, and far above the median that had been set for remuneration at an SOC particularly of the size of Transnet and Eskom. Thirdly we were looking at transformation because none of the qualifications of Tsholofelo Molefe disqualified her from taking the post. She was a CA, she had worked at Eskom, she understood the company inside out. She had worked at Eskom for quite a long time and qualified to be considered ahead of Mr Sihoole.
Mr Tseli: So that was from the recruitment agency and not Sihoole himself?
Minister Gigaba: It was from him in response to the question the recruitment agency asked.
Mr Tseli: What were the issues people were questioning around the appointment of Saloojee?
Minister Gigaba: The appointment of Saloojee was not questioned. It has been questioned subsequently I think in recent years why he was appointed and why his contract was extended. And I sought to clarify that you had here someone who had extensive experience in that he held a Master’s degree equivalent qualification from the National Defence Force. He had extensive experience in the defence industry, and he possessed all the wherewithal we needed in the CEO of Denel, and he was a leading candidate from the recruitment process undertaken by the board. When the request came to me in 2013 for the extension of his contract I did not just willy-nilly approve it. I said to the board that there are guidelines which they were to comply with because if Mr Saloojee was appointed by Cabinet and we must extend his contract, I am now changing the conditions under which Cabinet had appointed him. I would need to go back to Cabinet and inform Cabinet of the need to extend his contract and the reasons why.
Mr Tseli: You appointed Mr Singh as CFO right?
Minister Gigaba: The board did, and I concurred with them.
Mr Tseli: And at the time you were convinced he was the best candidate?
Minister Gigaba: At the time I was. And the board was convinced. He had been with Transnet since 2003. He had been Acting Financial Director since 2009, and had been performing well. He was the most suitable candidate.
Mr Tseli: After what happened, do you still hold the view that he was the best candidate?
Minister Gigaba: It is a difficult question because I don’t have the powers to read the future. In hindsight you would say yes it was not the best decision, but the decisions we take today obviously we account for them in the future. We don’t know what’s going to happen in the future. Much may happen. We ourselves will change. If these facts available in 2017 were available in 2011 when this decision was taken, I am sure we would have taken a different decision.
Mr Tseli: But if you were to appoint a CFO today, for example, would you appoint Mr Singh as CFO?
Minister Gigaba: I think I am on record last year calling for his suspension as a CFO and from the Eskom board, and earlier this year asking him and other executives of Eskom to do the right thing and step down on their own which he did and I appreciate that.
Mr Tseli: What were the findings of the forensic investigation you ordered on Trillian, Regiments and Tegeta in relation to Eskom, and if the findings are not there, did you at some stage check the progress with regard to that particular aspect?
Minister Gigaba: I am sure Treasury should be able to provide that report once the forensic investigation is completed. We took the decision that the Tegeta deal should be subjected to a forensic audit, and that is taking place.
Mr Tseli: From a Cabinet point of view, why a forensic investigation?
Minister Gigaba: Quite clearly a wrong decision had been taken with regard to the Tegeta contract. Once the Office of the Chief Procurement Officer came back and said this thing has been irregular, this contract should not have been entered into by Eskom. I felt that in order for us to know what to do next it is not enough to just say the contract is irregular, we need to go further to now delve deeply into who did what, and who should be held accountable, and what the recommendation of a forensic investigation would be for this contract so that we can take the correct decision and save government money.
Mr Tseli: You were worried about large sums of money being spent on New Age breakfasts in the midst of large projects, which I agree. Over and above there was a whistleblower report that says procurement processes were flouted. There was also the SNG report and other things. But the Minister’s instruction only says “In future these matters must be handled through the department”. It does not say anything about the need for us to stop this kind of programme which was irregularly entered into.
Minister Gigaba: The Public Protector was investigating these issues, and so we were satisfied, and that is why I issued an instruction that all information required, be it for the department or the relevant SOC, must be sent directly to the Public Protector’s office rather than via the Minister of Public Enterprises. We thought that would suffice to deal with the investigation. What we interested ourselves in was the management of this. At the time the public broadcaster was involved, and it had been involved with the intention of publicising government programmes and providing Ministers with a two hour platform to account to the country on aspects of their work, and to respond to stakeholder questions. We thought of dealing with how to manage such programmes going forward, and that is why we issued the directive.
Mr Tseli: Is the Minister aware of what came to be known as the whistleblower report which was talking about a whole range of issues happening in the company?
Minister Gigaba: No, I am not aware of that document.
Ms N Mazzone (DA): Thank you, Minister Gigaba. I am glad you are feeling better this week, and I hope your health continues to improve. At what point were you actually introduced to the Gupta family, and why were you introduced to them?
Minister Gigaba: I was actually not formally introduced. I think it was in the course of these invitations to Diwali, and subsequently to the wedding that I met them. It was not a formal introduction, and there is no one I can attribute for that introduction.
Ms Mazzone: Why do you think you were invited in the first place? To me, Diwali is a religious event, a personal thing, and I would find it strange that a random family would be inviting high profile politicians to something as intimate as a Diwali celebration. I would put it to you that Sun City was a large event. It is a very personal thing, and again you yourself had a rather large wedding and invited your friends and colleagues, and certainly not strangers. Why do you think that invitation went out to you?
Minister Gigaba: I don’t know why the invitation went to me, but people do these things. I get invited to graduation ceremonies of people I have not met but they feel that you being there adds value and character to the ceremony. The fact of the matter is that people have different reasons why they do these things, but I have found that particularly many people in business would go to the extent of even inviting celebrities and paying them to attend their functions. It seems to be a common thing and that’s why I did not even find it peculiar, and the only guarantee was that it is a religious function. When I was still living in Durban I got invited to a number of religious activities of different religious and cultural individuals, and I didn’t find it to be an intrusion into their privacy because there is nothing of significance discussed there except exchanging pleasantries and asking about the political situation, “Blah! Blah! Blah!” nothing of significance.
Ms Mazzone: You might find this strange but let me pre-empt why I ask this. You obviously received an invitation to the Gupta wedding. This invitation has been described as a treasure chest, and inside were incredibly beautiful crafted Indian bottles that contained truffles from Switzerland, cranberries from the North Americas, Kiwis from Australia, dried mangos from Africa, golden berries from South America, persimmons from Asia, and other luxury items. You were Minister at the time that this gift arrived. Did you declare that you had received this gift?
Minister Gigaba: I cannot recollect. I will have to check.
Ms Mazzone: Chair, can we place on record that Minister Gigaba is going to come back to us with that answer. Minister Gigaba, your relationship with President Zuma, clearly a favoured member of his Cabinet. You went from Minister of Public Enterprises to Minister of Home Affairs, and then to the very lustrous position of being Minister of Finance, and now in the Cabinet reshuffle being one of the Ministers that is retained and now back in your post at Home Affairs. At any time during your relationship with former President Jacob Zuma, did he or anyone affiliated with President Zuma, instruct you to appoint certain members of a board?
Minister Gigaba: No. I was not. I would go to the President to consult prior to taking any memo to Cabinet, and the President would not say to me “Take this one out. Bring this one in because I think you should put this person on the board”. I don’t necessarily think I was a favoured member of President Zuma’s Cabinet. I think the Ministers play different roles, you are assessed on the basis of your skills, and you are assigned responsibilities based on those skills. That doesn’t necessarily make you a favoured member of Cabinet. There are many people who during his presidency were never reshuffled, and that doesn’t make them favourites. In addition to that you will also remember that I was not the first or even second option for the position of Finance Minister. That is on public record. It is not as if from the outset in 2015 when the first reshuffle took place in the Finance portfolio that I was the first person to be sent there. And you also know from public record that I was also not the second option. There was someone being earmarked for that position of Finance Minister. And when that could not happen because of disagreements in the tripartite alliance, and amongst officials in the ruling party, that is when my name came in. I can’t say I was a favoured member. In addition to that, if I was appointed to do certain things at Public Enterprises and I did them so well, why move me? Why don’t you let me continue doing those things? Within a year after I was appointed at Home Affairs the boards I had appointed were changed virtually all together. Why change them if they had been established to do certain things? Facts and conjecture do not necessarily go hand in hand.
Ms Mazzone: What you have just said interests me. Within a year of you leaving, boards that you established were changed. Would you not agree that it is a bit strange that people went from working at Transnet to Eskom, or sometimes to Denel? It seemed like a revolving door policy. Certainly no new blood was entered into until very recently, and that brings me to something you said just now. You said the old Eskom board was removed because you felt they were too closely linked to aspects that were happening, and it was a recommendation that they be removed because of that. I put it to you that that is not at all the case. They were removed because they had to be removed. In fact on the appointment of Acting CEO Phakamani Hadebe, and Chairperson, Jabu Mabuza, they literally walked in and people were cleared out not because as suggested people were too closely linked but because it was a proven fact that people needed to be placed on suspension. We as a Committee visited Eskom and we were told that there was no other choice but to move in and clear out, and to reappoint a completely new and competent board.
Minister Gigaba: You are obviously confusing the board which are composed overwhelmingly of non-executive directors with executive directors. To move Brian for example from Transnet to Eskom is not tantamount to moving the Transnet board to Eskom. To move Anoj from Transnet to Eskom is not tantamount to moving the Transnet board from Transnet to Eskom. The boards themselves were changed. That’s when you had Dr Ben Ngubane coming in as Eskom Chairperson, Mr Zethembe Khoza, and other Eskom board members that came in. The board of Mafika Mkwanazi was changed, and new board members were appointed. To move an executive director from one company to the next is within acceptable limits.
Ms Mazzone: I tend to agree with you to a large extent as to why there needed to be changes to the board. I am left with no other conclusion to make that the Eskom board was delinquent because of what they had done to come to this state of the loan crisis, as well as DPE. That makes me believe that we had a delinquent Minister as well as a delinquent board. I thank you for that honesty. While you were the Minister of Public Enterprises, Zola Tsotsi was your Eskom board chairperson and you served together for quite some time. Mr Tsotsi came here and gave some very damning evidence that shook the Committee and the country to its core. In his evidence he told us how he was summoned to the ex-President’s homestead and informed by Ms Dudu Myeni as to how board appointments at Eskom should be made. Given that you were the stakeholder in government, and the person to whom he answered, was this ever reported to you, and if so what was your reaction?
Minister Gigaba: No, this was never reported to me by Mr Tsotsi. And obviously the direction of Ms Myeni in her advice to Mr Tsotsi as to how board appointments were to take place was misdirected because it is the Minister via the department that makes board recommendations to Cabinet. You will remember that at some point while I was Minister of Public Enterprises in 2014, specifically I had made public strong remarks about the former chairperson of SAA and expressed my very strong displeasure of her performance. And subsequently when I became Minister of Finance I then took steps to ensure we appoint a new chairperson at SAA. So I have not been influenced by Ms Dudu Myeni, and I certainly would not be influenced by her or anybody.
Ms Mazzone: I am very glad to hear that, Minister Gigaba, and I do find it quite worrying that someone would want to compromise you in that way. I wonder if you’d share with this Committee an example of someone who would come to you and name drop the name of the President as you have indicated.
Minister Gigaba: I don’t have anybody off hand. I would need to remember that because you are talking about something which happened over four years ago when I was at Public Enterprises. Whenever people try to do that with me, that is my standard response and they retreat. They never come back to me. I never get a comeback from the principal saying, “I asked somebody to come and talk to you and you didn’t listen to them”.
Ms Mazzone: Chairperson, we must just note that Minister Gigaba is going to come back to us once he recalls one of the names of the people mentioned. Minister Gigaba, Salim Essa has played a huge role in terms of this inquiry. His name has come up repeatedly in state capture which is now known not be a concept but a very real thing. We cannot ignore the fact that Salim Essa’s involvement in SOEs dates back to 2011 when in fact he was appointed as the head of the tender committee for Broadband Infraco. And what I find strange and can’t get my head around is this construct of a board tender committee being established in SOEs during your tenure as Minister. It started out at Broadband Infraco with these tender committees, TBCs as they are now known becoming an entity within SOEs, and then we see them popping around everywhere. Salim Essa has been linked over and over again to so many different areas of our SOEs that he is almost endemically involved. There’s no entity that he does not have a finger in the pie of. Who introduced you to Salim Essa, and how did it come about that this man arrived, was appointed, and amassed such a large amount of power that he could go from Broadband Infraco to so many different spheres?
Minister Gigaba: All I can confirm is appointing him to the board of Broadband Infraco, but not as chairman of the tender committee. That was the internal functioning of the board. But it would seem that with hindsight one would not back then have had perspective of the people who came in and were appointed to head tender committees or something like that. It would not at the face of it seem to be anything peculiar. When he was appointed to the board of Broadband Infraco he was a very experienced and seasoned ICT executive and business man. He seemed to be bringing a skill we required at the time when we had taken the view that Broadband Infraco needed to be merged with either Sentech or Telkom so that it is able to play its role in the provision of broadband infrastructure in the country.
Ms Mazzone: Minister, I hear what you are saying when you say Salim Essa brought a skill that you required, but I would argue now that we have gone through such a long deliberation and investigation into the various boards and it would appear that people were being appointed who weren’t perhaps the best skilled people for the job at hand because people were appointed and then things started to collapse around them. I think it goes to a deep misunderstanding of what people’s roles were in SOEs and the reason why people were appointed to the board. You earlier said that I didn’t understand the difference between a non-executive and an executive, and I can tell you that if anyone does it certainly would be me. I have to ask this, people like Rajesh Naithani who was an Indian national with absolutely no airline industry was appointed to the SAA board and then shifted by yourself to SA Express. This appointment has come up numerous times in Gupta Leak emails. I personally in the House handed out the Gupta Leak emails and I had marked each envelope for different Ministers and it was handed to the Speaker of the House, and one of those envelopes was marked for you. So if you haven’t received those Gupta Leak emails I strongly suggest that you question the National Assembly table as to why that envelope wasn’t given to you as it was given to all the other Ministers whom I addressed it to. This particular individual was shown in those emails to have asked Tony Gupta to even inquire with you on positions that were available at Transnet. These don’t sound like people who should have been appointed to the board in the first place, and in your earlier testimony you were advised to appoint management positions. Just give us a background understanding of who gave you this advice and whose advice you would count on in agreeing to the appointment made by boards?
Minister Gigaba: The appointments to boards are sourced by the department from various sources. They would include board recommendations, the database established by the department, and in the course of that, two things could happen. One, a person could be appointed to bring in an international expert as we were trying to do at SAA who would assist SAA in the establishment of the international network. When it became clear to me that the gentleman did not have the skills that we needed, we then moved him. I was not aware of his interests and position at Transnet. He never raised it with me. In actual fact I hardly interacted with this gentleman except on one or two occasions when he attended a board meeting when I was there.
Ms Mazzone: I want to take you back to the breakfasts which my colleague and Adv Vanara touched on briefly. I want to specify particularly the amount of money we are dealing with here. I think we have become so desensitised in South Africa to the word ‘million, we automatically refer to billions. You did it yourself earlier, you said billion instead of million, and that is understandable because the amount of money we deal with is so obscene, and certainly the amount of money in state capture is so obscene that we are used to deal with the word billion. I think it is fair to say the average South African will never see a million in their bank account, and it is a definite fact we have to be aware of. Between November 2011 and the financial year end of 2012 a truly bizarre amount of money was spent on New Age breakfasts: R17.5 million for 18 breakfasts with New Age, from Eskom; and R7.2 million for six breakfasts between 2011 and 2012 by Transnet. As a Minister you must now know that New Age is owned by the Gupta family, things are starting to surface; the wedding, the airport landing, there is controversy without a doubt, it is public. You knew that this particular family was being linked to dodgy dealings. When did you take action, and what excuse was given to you for these obscenely large amounts of money being spent by SOEs that belong to me, my colleagues, and every South African. How was this explained away?
Minister Gigaba: In early 2011 numerous SOCs informed the department that they were receiving requests from other departments and SOCs in relation to sponsorships and so on. Around that time I also became aware that The New Age wanted sponsorship from Transnet and Eskom for business breakfasts. As I said I was upset at the huge amount of money, and I took the decision to write to the board of all SOCs. Even though this was below the materiality threshold and was strictly within the operational purview of the board, it was necessary that in matters of this nature the department should be consulted so that we are able to take a view and inform the various SOCs in relation to these issues. On the face of it, this was a good programme which allowed government to communicate its progress to the public, but with hindsight we now know that the processes that were being implemented were inappropriate and should have been stopped right away. As a Minister you face the dilemma of interfering in operational issues and in issues that are within the materiality threshold of SOCs, and of being able to bring to the boards and companies themselves the conscience to take the correct decisions.
Ms Mazzone: A company called Tequesta Group is a Gupta linked company, it is well known in the public domain. Tequesta would eventually go on to earn 21% of every deal gained by the China South Rail (CSR) Corporation, and that is a R5.3 billion deal since 2014. Understand again, Minister Gigaba, that is incredibly worrying as the new Minister of Public Enterprises has always said that “We join the dots, and we fill out the web of state capture as we go throughout our investigation”. You speak a lot about hindsight, but certainly as a Minister you have to stop and say “How is it possible that the same family is involved in so many deals in our SOEs”, and you raise a flag. I have been with you for a very long time. We go back when first appointed as a shadow Minister, and even further than that. Minister Gigaba was a youth leader the same time I was. I would expect when the same family that is now shown to be controversial, constantly in the news, and such a lot of skeletons coming out of the closet, that I would raise a red flag. Minister Gigaba, you never raised a red flag. Why not, why were you comfortable with this if no one in the country was?
Minister Gigaba: But remember I was not involved in deciding who gets what contract and where. My role with regard to the 1064 procurement ended when I signed the section 54 approval which as I said is a statement of policy. Go ahead with the procurement, make the following conditions, and thereafter the onus is on you. You would expect the board would ensure there is no corruption, you would expect that the executives would do the same. They don’t come back to the Minister to say “We have Tequesta, and here are the shareholders. This one does this, and this one does that”. You don’t sit and receive documentation and information in such detail that would raise questions as to their level of interests. Ministers must remain out of procurement in SOCs as well as their department. The issue of who was involved in China South Rail (CSR) were matters which became known once the contract was signed.
Ms Mazzone: I find that statement to be a ‘passing the buck statement’ and I am sure many people will agree with me. You are after all the Minister. The buck stops with you. You are the stakeholder, you are the representative of government. To say a Minister must stay out, Minister Gigaba, I put it to you that you are not the kind of Minister that stays out of these kind of things, and we have seen it in your tenure as Minister of Home Affairs, you don’t stay out of affairs, you are intrinsically involved with issues…
Minister Gigaba: I get intrinsically involved in policy decisions.
Ms Mazzone: Chair, I am not finished.
Minister Gigaba: For the record. I don’t get involved in tenders, and it is wrong to say a Minister must involve himself in tenders. I want to put it on record that a Minister must not. Against your better advice, I offer advice to Ministers that they must not get involved in tenders. They must stay away.
The Chairperson: Can we please give each other time. At some time you don’t want to miss the point you want to say and it becomes difficult to make the point you want to say. Don’t interrupt each other.
Minister Gigaba: Apologies, Chair.
Ms Mazzone: No need for apologies. This is an emotional issue, and I can see that Minister Gigaba is emotional about it. I would be emotional too. I don’t say that Ministers should get involved in tenders so don’t misconstrue what I am saying. What I am saying is that I expect a Minister to take ownership of what is going on in his or her department. As I said to Minister Lynne Brown when she appeared before us – and I am going to say it to you – I think that you were derelict in your duties as Minister to allow these contracts to go ahead, knowing that Guptas were involved in every aspect of your department in which you were the Minister stakeholder and you did not raise a red flag. I am afraid you are going to have to do a lot more convincing because I am not buying the story at all that you did not know what was going on in your entities. If I as a Shadow Minister and member of this Portfolio Committee know exactly who is getting a tender from annual reports and reports being given to a Portfolio Committee, then Minister Gigaba you had to have known and you had more intimate knowledge of these contracts than I did. And Minister Gigaba you will note that I am keeping a very calm tone with you about this because I understand you have a lot to deal with in these answers. But the fact of the matter is if you take a high leadership position, great responsibility comes with that responsibility, and I don’t think as Minister of Public Enterprises that you took enough ownership of what was the beginning of state capture.
Chair, I just want to read a segment of a judgement. It is a judgement released about a week and half ago. In the judgement it says Minister Gigaba was found to have “deliberately told untruths under oath” and furthermore should his decision in conduct of the matter found to be so far out of step with the law, Judge Tuchten concluded that, “The Minister has committed a serious breach of the Constitution so serious that I could characterise it as a violation”. Chairperson, I am going to close with a statement that given the extent of state capture we have uncovered in this inquiry, I would go so far as to say the Minister not only erred in this particular court case, but he erred greatly in his role as Minister of Public Enterprises, and I think that as Minister of Public Enterprises you should have realised that there was state capture taking place under your nose, you should have raised the flag, and you should have taken much stronger action than you did to stop it. No further questions, Chair.
Minister Gigaba: The Honourable Member makes many in-factual observations. First she contradicts herself having argued that I should have involved myself in the tenders, and then changes and says she was not saying I should have. Then she argued that I was passing the buck in not involving myself in SOCs. I wish to insist that I was not passing the buck. It is the responsibility of Ministers not to involve themselves in tender procurement either in their department or in SOCs under their portfolio.
Secondly, the Honourable Member says I was derelict in my duty to allow these contracts to go ahead because they are reported in annual reports, but when the annual report of Transnet was presented I was no longer Minister of Public Enterprises. She further says who gets contracts gets reported in annual reports. I want to insist it would be wrong for Ministers, as the contracts are going on, to take a keen interest in who is getting contracts. That in itself would raise alarm, and Ministers should maintain that view. So sure, you can get to know at the end of the year when the annual report is released. If I were still Minister of Public Enterprises I would agree, but I was not Minister of Public Enterprises. And I was focussed on my new responsibility.
The Honourable Member makes an insinuation that I get involved as is evidenced in Home Affairs. I have not involved myself in any contracts at Home Affairs. I think what the Honourable Member is trying to do is to conjure up justification for her theory, but that does not explain the theory. The theory is flawed, and all other arguments that the Honourable Member is trying to conjure up don’t meet the full theory that the Member has created.
Then the Honourable Member goes further to say that a week and half ago the judgement said I lied on the issue of ‘Fireblade’, but two weeks ago, more than a week and half ago an Honourable Member from her party said “A week ago”. Which week exactly is the Honourable Members referring to? Let me help the Member. This is a judgement in December which is a judgement subsequent to a judgment in October where on the matter of Fireblade versus the Department of Home Affairs (DHA) the ruling was in favour of Fireblade, that Fireblade must be operated by Fireblade, and that DHA must come and provide immigration officers. The judgement of December and October are ‘sub judice’ because they are being appealed. Of course we are engaging with these issues and I hope the Honourable Member understands the context in which the judgement was made because it was not based on the facts of how ports of entry are established and determined. It was based on a minute that was formulated by one party and not concurred with by the other party. Secondly, it is based on a submission which was leaked but did not contain the opinions of other stakeholders on the issue at hand. That we were going to appeal that issue is without any doubt.
The Chairperson: Thank you, Honourable Minister. Honourable Swart.
Mr S Swart (ACDP): In your submission you make a number of assertions and you state for example on page one; “It has been disheartening and shocking for me to witness some of the appointments I made years ago and which were held publicly as positive appointments for governance now being impugned”. Right at the end of your document you also indicate “I am severely disappointed that these roles appear to have in certain instances being abused, that is in SOCs, and I regret any role I inadvertently played in the appointment of any director who subsequently failed to prioritise the interests of the relevant SOCs, and more importantly this country”. Would you agree that with hindsight there were clearly mistakes made, not necessarily with the appointments, but had one taken greater care and one sees the subsequent developments that would have caused you to reach that conclusion. Is that correct?
Minister Gigaba: What it means, Honourable Swart, is that when you take a decision you take it without any malice. You think you are acting in the best interest of country and company. Once things happen in later years, you then regret the fact that what you thought at the time was a good decision came out the way it did because there was no desire or intention on my part to appoint anybody who at a later stage was involved in the type of controversies we are dealing with.
Mr Swart: Is it correct that you relied quite heavily on your departmental officials when it comes to the appointment of boards, and I think you indicated that there could be an improvement in that regard, you spoke about vetting?
Minister Gigaba: Yes, it is true.
Mr Swart: Clearly now when one looks at some of the appointments, and if one starts with the appointment of Mr Collin Matjila. Again hindsight is perfect sight and we see with his appointment in June 2011. Did I understand you correctly that you don’t play any role in the appointment of acting executives?
Minister Gigaba: Yes, that’s correct. And when we appointed him we were appointing an ex-chairman of the National Energy Regulator. He fitted the bill of the Eskom board.
Mr Swart: And now he was appointed by you in June 2011, and as Acting CEO on 1 April 2014. You wouldn’t have played any role in the Acting CEO position?
Minister Gigaba: Yes. When the request was made to me, I deferred it to the board and said “It’s your decision, you decide who is going to be Acting CEO. I will get involved only once you have completed the recruitment process for the permanent CE”.
Mr Swart: As we now know in terms of the Gupta Leak email that on 22 March Mr Salim Essa sent Mr Matjila’s CV to Mr Tony Gupta, and Mr Tony Gupta forwarded the CV to Mr Duduzane Zuma on 23 March, and he was then appointed one week later as Acting CEO. Clearly one can contest the veracity of those leaked emails, but you can confirm that you had no role to play in that appointment?
Minister Gigaba: I had absolutely no role to play, and nobody spoke to me about that.
Mr Swart: And we also now know that Mr Matjila also shared a directorship with Mr Essa in Inca Energy, and through his company Matlapeng Resources which Mr Matjila is a 59% shareholder and co-director with the CEO of Oakbay Resources. Do you see the link already? Again this is in hindsight. One might not have understood the implications of these links going forward, but obviously the issue is how one screens the appointment of a director with links to another company. We saw that with Mr Mark Pamensky who was appointed subsequent to you and also sat as a director of Oakbay Resources. Clearly it is a challenge but one needs to look at which companies do you identify. Now we can say all those companies linked with the Guptas and SOCs, and plan. How do we, going forward, look at screening the appointment of directors?
Minister Gigaba: That would be absolutely correct that we need to find a better and more sophisticated way of screening. Let me leave the issue of Mark Pamensky because I don’t know much about it, but the two were not in the same board. One was at Eskom, and the other one was at Broadband Infraco. There was nothing that intimately connected them within the SOC environment. Perhaps with the exception of Mkwanazi whom we appointed to the boards of both Eskom and Transnet in view of the road to rail migration and the delays that were being experienced in relation to that, and the attempt on our part to bridge the gap. At some point I facilitated a meeting between Mr Brian Dames and Brian Molefe to facilitate a speeding up of that road to rail migration programme. Besides Mr Mkwanazi who we put on the Eskom board to address this we were meticulous to ensure that we do not recycle people within SOCs, especially within our portfolio, and also that we don’t allow people to serve on many boards within the portfolio; a tradition which I also introduced at Treasury so that people focus on the boards to which they have been appointed.
Mr Swart: The issue of your concerns with the New Age breakfasts. You sent a letter but I don’t think you dated that. In fairness to you, on the 30 April 2014, a month after being appointed as Acting CE, Mr Matjila approved that R50 million contract with Eskom to sponsor the New Age breakfasts. Was your caution before or after, it is unfair to ask you because it dates back a long time ago?
Minister Gigaba: My question was before that. I think what could have been happening was that people may have taken advantage of the gap with my having led the election campaign of my party during that time.
Mr Swart: And that we see the CFO at the time, Ms Molefe, refused to sign that, which benefited the Gupta related company, and she must have also being aware of your caution as well. But notwithstanding that, the contract went ahead and we now know that there were actions taken following that. Those actions being that Ms Molefe, Mr Matona, Mr Dan Marokane, and Mr Matshela Koko were suspended the following year. You can clearly see with hindsight. Here you have Ms Molefe who wasn’t prepared to be compliant with a pro-Gupta contract, and had pushed back. We have evidence before us of certain executives who have said that “If you were seen to be on one side of the board, if you were anti-Gupta related companies, you would have been sidelined”. As Minister, would you have been aware of this at all at the time?
Minister Gigaba: Ms Molefe never brought to my attention that there was a push by any so called Gupta related allies for any particular decision. Obviously what happened subsequent to the 2014 elections, I would not have been privy to. But I think I applaud the stance she took because I had written a directive in this regard. And it was peculiar that the board chose as Acting CE someone who was a board member, and none of the senior executives that were there; Dan, Dr Lennon, and even Mr Ntokozo.
Mr Swart: And it is of great concern to us that a person of the calibre of Ms Molefe was sidelined, and when she gave evidence she was incredibly distraught, as her career had been destroyed. As was Mr Matona and others in this effort to capture Eskom.
Minister Gigaba: Including attempts to describe Ms Molefe as having being underqualified to hold the post of CFO which I strenuously explained before the Committee, she was extensively qualified.
Mr Swart: And of course we know the Dentons Report cleared all those executives. But clearly they were in the way of a certain agenda by Gupta related companies and that’s why they had to be removed. Would you in hindsight agree with that?
Minister Gigaba: I would. I think this would apply to a number of things as I argued also earlier, if I myself had been doing such a great job advancing their interests, I doubt then there would have been a push for my removal.
Mr Swart: And so with that view it could well be that Mr Essa did send Mr Matjila’s CV to Mr Gupta on 22 March because it plays into that narrative. That bit could have well have happened. Do you agree with that?
Minister Gigaba: It could have happened. The facts emerging before us indicate that there was a lot of communication and background dealing that was taking place.
Mr Swart: Just to move on to Mr Zola Tsotsi’s evidence which was startling and I am sure you would have been briefed on the content of his evidence. In particular in February 2015, by which stage you would no longer have been the Minister, where he said he was approached by Mr Tony Gupta who requested that “We meet. And at that meeting Mr Tony Gupta told me Chairman [Eskom board] you are not helping us with anything. We are the ones who put you in the position you are in. We are the ones who can take you out. My response was “Do what you have to do. Let me carry on with the job that Cabinet appointed me to do”. So ended that meeting. That is a startling statement because it seems to indicate that Mr Tony Gupta speaks in the plural – him and his brothers – had in fact played a role in appointing him as chairman of the board, and that would have been at the time you were Minister, is that correct?
Minister Gigaba: It would have been at the time I was Minister. But I want to put it on record that they played no such role. I think he was playing marbles with him, and trying to intimidate him.
Mr Swart: But you do understand that it can also create the impression that the Guptas via the President and via you could have played a role. I appreciate that you have put it on record that the Guptas played no role, but it can create the perception that they did in fact play a significant role.
Minister Gigaba: It could create the impression indeed. But they played no such role to influence me. When we appointed Mr Tsotsi we considered his impeccable career record, and that is what influenced me.
Mr Swart: And I appreciate that in February 2015 you were no longer the Minister, but we alluded to this earlier that on 26 February he received a call and then was summoned to go to the Presidential residence on 7 March 2015 where he received instruction from Ms Dudu Myeni as to the suspension of the four executives that I referred to earlier. Would that not indicate to you, given what I have just mentioned, of Mr Tony Gupta’s assertion that he in fact is in control of some influence? The President indicates this via Ms Myeni that these are the people that are going to be suspended, again to indicate that a Gupta aligned plan that the President himself was influenced by the Guptas?
Minister Gigaba: All I can confirm is that during my tenure Ms Molefe was appointed, and not threatened in any possible way and not suspended. Mr Tsotsi himself was not threatened or summoned by anybody. And that Mr Dan Marokane was firmly in his position as a highly renowned executive at Eskom. And even Mr Koko then was not suspended. What happened thereafter could be an indication of the gap that opened as soon as I was no longer in the position to exercise my responsibility as Minister.
Mr Swart: We know of the 7 March meeting. We know on the 9 March according to the evidence of Ms Daniels and Mr Masango that they were called to a meeting with Mr Salim Essa who we know is a Gupta lieutenant and they were told these executives were going to be suspended. We can clearly see that subsequent to your being Minister, an acceleration of state capture at Eskom because we know immediately, and with your knowledge of Finance that the Tegeta contracts were eventually called for investigation. We know as soon as Mr Molefe arrived at Eskom, he stopped the negotiations with Glencore. He stopped the hardship agreement of Optimum, and that a whole lot of issues were then brought in, and Mr Anoj Singh. Would you agree that the state capture of Eskom seems to have accelerated from that point on?
Minister Gigaba: Of course. It would seem to be I think given the evidence that is now before us. But I myself never received an instruction by the President in any direction.
Mr Swart: I appreciate that. I just wanted to ask as we are going forward briefly the locomotives. I appreciate is not an issue you are prepared for, but I want to touch on the section 54 approvals. Your role as shareholder representative, when you give those section 54 approvals I think it must be of concern to all of us the allegations of locomotive contracts and the role that Mr Iqbal Sharma played. You referred to it briefly relating to the 100 urgent locomotives, and there is correspondence that has been leaked relating to letters by Mr Sharma which seems to be consciously removing a contract from a Japanese company to ensure that CSR gets that contract. Again you have emphasised that you can’t get involved in that, but purely because of the size of the contract, the initial 100, and then the other 1064 that you would have had to given approval of. What I am trying to understand is your role, and I think you have sketched it as a policy role, but surely there must be a deeper manner of oversight both from your side and also our side as Parliament when it comes to the approval because that is the biggest contract entered into by our country when it comes to the locomotives. And we now know of Tequesta. I urge you to read those contracts that were signed between Tequesta and CSR. Myself as a lawyer find it outrageous that there is a 21% commission fee billed into that. All that does is that the company CSR would not require proof of delivery of services that Tequesta was supposed to provide as it is understood that the project would not have materialised without the effort of Tequesta to provide the services listed. That is bribery and I am sure that in due course the law enforcement agency will investigate that further. In view of the fact of your section 54 approval and the fact that this is an ongoing contract and that every month when these locomotives are delivered, we seem to be paying R10 million more that is going to kickbacks.
Minister Gigaba: I think that at the end of this inquiry the Committee needs to advise how members of the executive without compromising themselves get involved in contracts of this nature and size as they are happening, and not after the fact. The problem arises in what started with Honourable Mazzone earlier and the exchanged views and discussions earlier, and given the questions you are asking. I think the Committee should advise how members of the executive should deal with contracts of this nature and size as they are happening, and not post the fact.
Mr Swart: To conclude, should it not be a consideration as a shareholder representative to start looking at holding board directors you might have appointed liable in terms of the PFMA such as was highlighted in the Public Protector Report, and secondly to have directors declared as delinquent directors under section 162 of the Companies Act. I don’t think any shareholder representative has ever made use of that provision. Where we clearly see, and you yourself as Minister of Finance asked Anoj Singh to step down, and this Committee clearly put it to him that he was delinquent director for what he did at Eskom. Should we not have those declarations and applications brought so that such people do not do damage going forward? To my knowledge the only person charged under the PFMA was Minister Gordhan for concocted charges. We have got good legislation but it doesn’t seem to be implemented.
Mr M Dlamini (EFF): Mr Gigaba, you are at the centre of Gupta naturalisation – granting them passports and ID numbers. But before we go there, let’s start with you. There are allegations that your citizenship is questionable. Can you respond to this question; where were you born, and where was your father born?
Minister Gigaba: Honourable Member, I find your question quite peculiar, extremely peculiar, and offensive to my family, offensive to my father who is late. Offensive to my mother, offensive to my father who was born at Nqabeni, Embonela where my clan has lived for hundreds of years, where if you go now, you will find members of my clan living on the lands that the fathers of the fathers of our fathers have lived. Our home where the spirit of my grandfathers still live. It is an offense to my mother who was born at Izingolweni among the Dlaminis where the families of her parents have lived for centuries. It is an offence to all of us. It is an offence to my identity. Having said all of that, because I think it behoves all of us not to attack each other’s identity for political points and for cheap gain. If I attack your identity you would be as offended as I am. If you want to know my identity I invite you to go to Nqabeni, Embonela and speak to members of my family, they will tell you who I am and why my name is Nkanyezi, and where it comes from. Having said all of that I am sure you will respect my right to respond to you as you asked your question. I know what you are trying to do is to irritate me. And you will not succeed. The naturalisation of the Guptas…
Mr Dlamini: Sorry. I am still going to that one. I just wanted to deal with where you were born and where your father was born. Don’t rush. My question was very simple, Chairperson, where was he born and where was his father born.
Committee Chairperson Mnganga-Gcabashe: I think it arises from the comment you raised earlier on. Although it was not a question, you made a comment.
Mr Dlamini: Yes. But that’s why I said “My question to you”. It was very clear.
Chairperson Mnganga-Gcabashe: But if the witness feels the comment needs a reply then let’s not deny him.
Mr Dlamini: Okay, no problem. Let him respond to comments.
Minister Gigaba: Thank you very much, Chairperson. Having raised the issue of the Gupta citizenship, I will deal with it in comprehensive detail because the Honourable Member makes an inaccurate assertion that I am at the centre of the Gupta family naturalisation. There are 62 people in South Africa within the Gupta family. Of those 62 there are 39 who hold permanent residence permits; there are 13 who hold naturalisation, nine of which were naturalised between 2002 and 2006; and only four who were naturalised in 2015; and there are 10 children that were born in South Africa. Of those nine naturalised between 2002 and 2006 when I was not Home Affairs Minister. Surely the Honourable Member would be well advised that that being the majority, including those who got permanent residence permits prior to my appointment as Minister of Home Affairs, does not place me at the centre of the naturalisation of the Gupta family members. There were valid reasons why the department advised that the four that were naturalised in 2015 should be naturalised, and the letter of the law was followed to the full extent including at the end of the process when they were asked to renounce Indian citizenship, and one of the five applicants in 2015 refused to renounce Indian citizenship and therefore remains not a South African citizen. The four that were naturalised complied upon appeal. They started applying for citizenship in 2013 when I was not Minister of Home Affairs. The application was rejected in 2014. They appealed in 2015, and the department established a panel which the Director General (DG) indicated in terms of which their citizenship was then approved. If there was a malicious intent to grant them South African citizenship regardless of what South African law stipulated then they would not have been asked at the end of the process to renounce Indian citizenship. And upon one member refusing to renounce it, he was not granted South African citizenship, and is not a South African citizen even today. That member would have gone on to be granted South African citizenship regardless of what the law says, and that was not the case. We followed the letter of the law to its full extent and did nothing outside it.
The Honourable Member then says we granted them South African passports, and I am sure he is referring to a passport circulating on social media relating to 2015. The first person to whom the Honourable Member is referring was granted a first passport…
Mr Dlamini: Chairperson.
Chairperson Maganga-Gcabashe: Hold on, Minister.
Mr Dlamini: I want the Minister to say the name of the person he says I am referring to.
Minister Gigaba: The person that the Honourable Member is referring to… I was still explaining a passport. A passport can expire after 10 years or once its pages get full. If you look at my official diplomatic passport which was issued in 2017 when I became Minister of Finance it would not be the first diplomatic passport I have held in my life. The first diplomatic passport I held was issued in 2004 when I became Deputy Minister of Home Affairs. When I became Minister of Public Enterprises I was issued with a new diplomatic passport, and so on. The person the Honourable Member is referring to was issued his first passport in 2012 when I was not Minister of Home Affairs. It was not the first time in 2015 that this person got a South African passport. By law because he had been naturalised in 2002, prior to my even being an MP, means this person already qualified to hold a South African passport.
Mr Dlamini: You are saying that when I ask questions you are getting offended. Let me tell you, I don’t care about that. You can get offended as much as you want. I am going to ask questions and you are going to provide answers. So that doesn’t bother me. I have never spoken about anyone from the Gupta family but you have decided to do that so let me ask you a question: Atul Kumar Gupta, does he have South African citizenship?
Minister Gigaba: The Honourable Member, much as he feels he doesn’t care about whether I am offended or not, neither do I care whether he tries to offend me or not. So it’s a draw. You did ask, you expressly said I am at the centre of the naturalisation of the Gupta citizenship. So you can contradict yourself now if you choose so. That being the case, Atul Kumar Gupta is a South African citizenship naturalised in 2002 when I was not even an MP.
Mr Dlamini: Rajesh Tony Gupta?
Minister Gigaba: Rajesh Tony Gupta was naturalised I think in 2006.
Mr Dlamini: Ajay Gupta?
Minister Gigaba: Ajay Gupta is not a naturalised South African citizen. He holds a permanent residence permit only because he refused to renounce Indian citizenship.
Mr Dlamini: Does Ajay Gupta have a South African passport?
Minister Gigaba: I don’t know. I would have to check. But holders of permanent residence permits are not issued with South African passport documents.
Mr Dlamini: The press conference you did dealing with the Gupta naturalisation, your spokesperson Mayihlome Tshwete said you conducted that press briefing in your personal capacity. Is that correct?
Minister Gigaba: He was inaccurately quoted. He did not make any such claims because the media briefing was organised immediately after we went to brief the Home Affairs Portfolio Committee on the quarterly reports of the department, Government Printing Works (GPW), and the IEC. Prior to the presentation of those quarterly reports, the Chairperson advised that the Committee should ask me questions on this issue to which I responded. There was a media briefing afterward at which, I indicated subsequently, I erroneously made reference to Mr Atul Gupta. I erroneously referred to Mr Atul Gupta as not a South African citizen. I corrected that immediately that afternoon and the following day because I had been advised by one of the officials to that effect, and I made mention of that without verifying with the DG. And Mr Mayihlome Tshwete has subsequently reported the matter to the Press Ombudsman that he was misrepresented.
Mr Dlamini: You mentioned when we spoke about issues relating to your family that you got offended. We have dealt with that issue. You will understand that we are dealing with state capture, and it has a lot to do with the influence of politicians, family members being involved in procurement and given tenders, boyfriends/girlfriends, and everything. The families are not immune to the issue we are dealing with. Your wife on the eNCA interview said she helped with the IT systems of Home Affairs as well as processing of passports. Is that correct, is that how we operate?
Minister Gigaba: It is not true. My wife at that interview was being asked about her own background, her own work. My wife has never, does not, will not, would never ever interface with the work of any department at which I am deployed. Where she was working before, if there were matters related to that company bidding for contracts at Home Affairs, she was never involved, and has since stopped working for that company.
Mr Dlamini: The Fireblade approval went to court. I tried to follow the explanation. It went to court on the basis of minutes of a meeting that you gave them an approval. But it went to court various times up until the last judgment of the Constitutional Court. Can you give us that explanation again because the Constitutional Court has given a judgement on the appeal you have made, they have actually dismissed that appeal to confirm that the minutes of that meeting were accurate.
Minister Gigaba: Again the Honourable Member probably hasn’t heard what the Constitutional Court ruled. The Constitutional Court ruling says “We are dismissing your direct appeal to us on the basis that it is not yet right to serve before the Constitutional Court because you yourself have appealed to the Supreme Court of Appeal to overturn the decision of October and December last year at the High Court. So it is not rejected on the basis that there is a minute somewhere. It is only that there is an appeal somewhere, and after that appeal should we wish to pursue the matter with the Constitutional Court, then we can go ahead and do so. The Constitutional Court would consider the matter right to serve before it. The minute referred to emanated from one party to the meeting. The minutes of meetings with government are not taken by non government officials. Therefore you cannot take that minute to be binding until we all have agreed that this minute as presented is signed on and have the matter resolved in that way. In this instance we did not sign on this minute and so it is a minute that emanates only from one of the parties and not both of them.
Mr Dlamini: The removal of the Eskom board members. You say you removed some of the members and left Bernard and Mehlomakhulu. The others you removed on the basis that they had serve a long time on the board. What was the reason for retaining Bernard and Mehlomakhulu?
Minister Gigaba: It was to ensure continuity so that there is no gap between the new members and the old members. Secondly if I am not mistaken, they had not had the same duration on the board as the other members who were being removed.
Mr Dlamini: You say you removed others because of the long duration. Is that the reason that these two were retained, and what does government oversight over SOCs say about removal?
Minister Gigaba: The Honourable Member will remember that in my presentation I referred to a number of policies and guidelines. I said that there are conditions for a member serving on the board of a company. When you have exceeded two terms on a board, depending on the MOI of the particular entity, you then have to be rotated to allow for a new appointment in order to regularly replenish the board with new members. Once you have served longer than nine years, it creates problems with regard to your independence and your proximity to the company in which you are serving.
Mr Dlamini: As per your statement you are saying if people were appointed and do wrong things later, “we cannot be held to accountable”. What do you mean that we can’t hold you accountable?
Minister Gigaba: Because I kept on explaining it was never the intention to appoint someone who was going to do anything wrong. And should any of the people appointed be found to have done anything wrong, they themselves should be held accountable for what they did wrong because they would not have acted on the mandate of the Cabinet that approved the appointments, and on behalf of the Minister when the Minister appointed them.
Mr Dlamini: Minister, we are dealing with Eskom issues here with over 41 000 jobs at risk on the basis of appointments that were approved by the Minister. So are you saying to the nation that if you were a Minister and you appoint people to a board that have collapsed a SOE, you must not be held accountable simply because you didn’t know when you were appointing them. Is that what you are saying?
Minister Gigaba: Absolutely. Because you would not have known they were going to act in a particular way at that particular time.
Mr Dlamini: So you are saying only those board members and the executives must be held accountable, the Minister must be left alone and continue with life as if nothing happened?
Minister Gigaba: Because you deal with the person who did a wrong. Not the person who appointed someone who did a wrong when they did know that someone was going to do a wrong.
Mr Dlamini: So you are happy with the Ministers who under their own portfolios have got departments that have collapsed through their own appointments. I am not talking of people who are appointed when you are not a Minister. So you are saying let those Ministers continue, they are doing a good job, let life continue, South Africa let Minister Gigaba and Lynne Brown, and everyone continue with the job because they appointed those people. Those people have to account, but as for the Minister, it is all well and good.
Minister Gigaba: You need to prove that a particular Minister knew a wrong was taking place and was complicit in the doing of a wrong.
Mr Dlamini: So you are saying not you. Life must go on?
Minister Gigaba: Anybody is presumed innocent until proven otherwise. The fact that someone appointed a board that eventually did something wrong does not necessarily make them liable. Of course they have to answer, they have to be made to account and answer whether they knew, whether that was the purpose, or the mandate they gave to a particular board, and you must act on the basis of facts before you, and not on the basis of what you wish to be facts.
Mr Dlamini: Let me ask the question this way: a Minister who presides over a department which has collapsed, that person you are saying can continue to be made a Minister in another department?
Minister Gigaba: No, I am not saying that. You are now talking about something different.
Mr Dlamini: But you are saying they must not account. Part of accountability means you can’t be moved to another ministry. Here you were given a ministry and it collapsed. Do you say in your own opinion it is fine for that Minister to be moved to another ministry?
Minister Gigaba: You must separate the role of the Minister as an executive authority and the role of the accounting officer. You must prove that the Minister directly contributed to the department collapsing. Once you prove that, you can then take that decision. Unless you have proven that, you can’t arrive at that decision because you would be acting on your wishes, and not on facts before you.
Mr Dlamini: Mr Iqbal Sharma. Cabinet rejected his appointment as chair. Did they give you reasons why they rejected his appointment?
Minister Gigaba: Among others it was that he had recently been a government employee as a DDG and Head of Trade and Investment South Africa. I think he stepped down from that role in 2009/2010 if I am not mistaken, and that because of that it was too early to make him Transnet board chair. And secondly that Mr Mkwanazi had only been appointed for less than a year and it would not be read correctly if we then accepted his retirement from the Transnet board. Cabinet felt that the issue which seemed to be a concern of his having been the Transnet CEO, and now the Chairman, and the challenge of separating the roles based on experience, Cabinet felt that those issues could be resolved.
Mr Dlamini: On page 17 of your statement you say you were advised to replace Mr Mkwanazi with Mr Iqbal Sharma. Who advised you?
Minister Gigaba: The advice would come from the department based on submissions presented to me having the department consider a number of facts before them. Sometimes I would agree with them, and sometimes I would not.
Mr Dlamini: The appointment of Sharma as a Non Executive Director (NED) at Transnet, how did that come about, who advised you on that?
Minister Gigaba: The advice would emanate from the department. They would have looked at the variety of skills required, and how those skills would assist us to look at the corporate, commercial, as well developmental mandate of SOCs, and we would select from the database of available people who have the skill set we required in order to meet those objectives.
Mr Dlamini: The position of NED within the Transnet system, when did it become available?
Minister Gigaba: It was available prior to my becoming a Minister. Board members are actually non-executive directors.
Mr Dlamini: So there is no way that the board rejects Iqbal Sharma being a chairperson and then he moves to becoming a non-executive director?
Minister Gigaba: A Chairperson is a non-executive director. You do not get appointed first as chairperson of a board and then as non-executive director. The process is the other way around. That is why Cabinet is saying Mr Sharma should not become the chairperson of the board but we still support him becoming a non-executive director.
Mr Dlamini: Ms Molefe as CFO of Eskom instead of Sihoole. Again you were advised by the department that you must appoint Ms Molefe. But also Ms Molefe appears to have been one of the top names that were recommended. How many other names were there, and how many were female?
Minister Gigaba: What the board would do is to submit three names which they recommend from which the Minister can choose. Ideally, the Minister would choose the top candidate because that would be the preferred candidate of the board. But there could be very valid reasons why the preferred candidate is not suitable, and the Minister chooses the next candidate to occupy the post. In this instance as I indicated in my submission, there were valid reasons why Mr Sihoole would not have been suitable as the financial director at Eskom. And there were valid reasons why Ms Molefe became a suitable candidate.
Mr Dlamini: I am asking you on the list, was she the only female?
Minister Gigaba: She was the only one.
Mr Dlamini: You mentioned that Mr Sihoole had an issue of working in a political environment. And Ms Molefe had no issue with that?
Minister Gigaba: She had no issue with it because she was already working for Eskom, which is a SOC whose shareholder is a political entity called government.
Mr Dlamini: What were the specific reasons that Mr Sihoole outlined?
Minister Gigaba: I did not probe those reasons. I considered the submission presented before me, and did not feel it was necessary for me to conduct another interview on top of the one the board had already conducted.
Mr Dlamini: You say in your statement you were upset about The New Age breakfasts because of the huge amounts but you went on to participate in the same TNA breakfasts yourself. How did that happen?
Minister Gigaba: I was upset about the contracts that were been entered into. As I said, what created the dilemma for many SOCs, and what made Ministers participate in the SABC TNA programmes was the fact that the public broadcaster was involved, and this provided an opportunity for government to outline its programmes unmitigated for a substantial amount of time each morning.
Mr Dlamini: You mentioned that you were invited to Gupta weddings and graduations, did you go to the Gupta house in Saxonwold either for an invitation or anything?
Minister Gigaba: Yes. The few Diwali celebrations I attended were at the residence. They were few, and I subsequently stopped attending them when I decided I would stop attending events where you are invited to people’s residences.
Chairperson: After the session with the Minister, we will have to meet. I know it is not on our agenda. In our preparation for today, we had four witnesses that we were supposed to interact with but three of them declined the invitation. Therefore we need to talk about that after the Minister.
Dr Z Luyenge (ANC): Honourable Minister, thanks for your presentation. You have killed me in terms of the manner in which you approached this inquiry. It is only one of the characteristics of a leader to concede to take responsibility when things have not gone your way. I invite you to your very first page where you said “I take seriously both allegations that have been made in relation to the state capture and my opportunity to address them. It has been disheartening and shocking for me to witness some of the appointments I made years ago, and which were hailed publicly as a positive appointment for government, now being impugned. I take seriously the task of assisting this Committee in uncovering the extent of corruption that appears to have transpired”.
The question at hand, Honourable Gigaba, is there is a deliberate looting of state resources and that SOEs are being used as a vehicle to achieve the selfish agendas of known and unknown forces. Eskom is the most critical entity where this has come to be seen by the communities themselves as well as ourselves. Certain state organs like the Public Protector and Parliament, the media and this Committee took a decision to get into a fact-finding mission and engage further the relevant stakeholders and leadership leading those institutions. We are here to say, what sort of contribution can you make in order for the country to know that the quagmire that we find ourselves in as a very promising country, a country that aspires to be a developmental state, but the corruption, the deliberate thieving by individuals and groups, the syndicates that seek to actually render the country as one of the worst in Africa.
You have started to respond in a manner I think is assisting this process on the role of the politician and the role of the administrator. Ms Mazzone and Mr Dlamini referred to in relation to the responsibility as the leader. The politician and as the leader, Honourable Gigaba, you cannot allow the situation where the CEO and the DG take responsibility and then you say it is not my responsibility to partake in administrative issues. That is wrong. The political-administrative dichotomy requires an interface, speaking to the thin line between the doctrine and the phenomenon. Without undermining the fact that what takes precedence is the doctrine more than the phenomenon – the decision maker. What is good about you is an element of brilliance, where you find out that you altered somewhere, you go back and retract and correct that.
You said this Committee must make a determination as to whether the PFMA is correct to bar political leaders in administrative issues including procurement. The Auditor-General’s report evaluates what has happened but the monitoring exercise is done during the progress of the work. The impromptu visit that ministers do and leaders of departments, if you allocate R50 million to a particular entity, there is nothing wrong in you going there after three weeks to check as the top whether that money you have allocated is spent in the manner that was said.
I think it is a very important aspect that must be dealt with because at no stage will you ask question when the wrong has actually happened. You won’t be able to go back and correct it. What happened at Eskom during your era, it is something that we say you happened to be there when the prophets of doom have targeted that entity including Transnet. Let me quickly run through before your comment: In 2010, the Eskom board approved the business case for extending Koeberg’s lifespan, the plant hire extension plan include the once-off replacement of Koeberg 6 steam generators, …that was issued the same year, at the start of 2011 Eskom board signed off on the Eskom executive procurement committee recommendation that Westinghouse US should be awarded the bulk of the tender with a smaller part apportioned to Areva originating from France. Areva then signed letters of intent with Eskom during President Zuma’s visit to France in March 2011. The next Minister Malusi Gigaba vetoed the board’s earlier decision to award Westinghouse the bulk of tender, this was one of Minister Gigaba’s intervention into the Eskom procurement. I want you to give simple clarity on this, were you part of the then President’s visit and what role did you play that ended up being an intervention that benefitted Areva?
Minister Gigaba: Thank you Honourable Luyenge for the question. The agreement with Areva, I was not part of the agreement with Areva, I was not part of the meeting, I was not in France at that time and I wish to put it on record. You know it is part of a bigger strategy by business when they don’t get things their way, they try to tarnish the image of the people they view as standing between them and the contract which they seek. I’ve been a victim of that, of a vicious vilification campaign based either on the decision I took either with regards to transformation in SOEs or decisions I refused to take such as this one. My refusal to sign the Koeberg steam generators had absolutely nothing to do with Areva. It was based purely on what I viewed at that time as an attempt to make me a rubber stamp. Having been advised when I probed further that there were problems in that, amongst others, even as I had to approve the section 54 the deal had been struck and was about to be signed just the following day. That’s why I was being put under pressure to sign it.
When I became Minister of Public Enterprises in November 2010, I was already advised that Eskom and Transnet are big SOEs and indeed they are. Between the two of them they are going to drown me in some missions that are heavy and voluminous, and they tend to get things their way. Ministers do not seem to be able to tell them no. This seemed to be part of that effort, make a submission late, demand that the Minister sign off, you’ve already called people who are here to sign the contract, they are already in the country. So, what is the purpose of section 54 approval? To rubber stamp, it cannot be. I said to them, I need to apply my mind and that means I need to have enough time and my advisers must also have enough time to peruse, study and scrutinise this document. It is not that this was because of the agreement signed with Areva at which meeting I was not there.
As I said, President Zuma did not call me to say, “Minister, I want you to give this thing to Areva. But, at the time we were dealing not only with this, there were prospects of nuclear energy generation additional to Koeberg. One would get invited to all sorts of things. I was invited to some conference on nuclear power stations in South Korea and I refused to attend it. I obviously would not have agreed to meet with any nuclear energy company. I was invited to some conference at which meeting some executives of a certain airline OEM were to be present and I was to have dinner with them. As soon as I got that information, I refused to go. At one stage as I was invited to a defence air show in France, and unbeknown to me, some executives where lined up to meet with me. Thank God the aeroplane had a serious technical fault, we ended up having to stay over in Johannesburg. As I was going home, I then learnt that there was this thing and I cancelled the trip. No one whether from Areva or any other company would have been involved in the decision I took with regards to the Koeberg steam generators. What influenced me were precisely the processes before me at the time and what I was to learn later.
Mr Luyenge: It’s fine for now. In relation to the shareholder compact, during your era, did you ever engage the board on the presentation or the providing of information contained therein to the relevant Portfolio Committee, that is, this Committee? Secondly, how does this Board Tender Committee operate, is it a sub-committee of the board or is it a committee that actually take charge of procurement issues over the CFO or supply chain of the entity? I’m asking this because I take it that a Board Tender Committee is a political structure at the same time there is a notion that says a politician must not be involved in procurement. But you have this certain group made up of politicians – but the super politicians, the accounting officer, the political leader of the Department is not part of that, what is your view on that? Something needs to be done.
Then, on the state capture generally, if you are given a condition, the Eskom BTC has pronounced the lenders are saying if you get rid of one, two, three, four, we will give you money, is that not capture? Why would you be given a condition to be lent money? What is that? I become a bit confused if there is such a condition before they lend you money. Get rid of Malusi in order for us to give you money, I’m sure that is capture more than the one we are investigating. That approach does not make me comfortable. I want you to talk to that, if lenders are going to be that robust and order entities to fire certain officials. What is the difference between that and the one that says you be a Minister?
We once visited SAA and the then SAA Chairperson was saying the service providers, about 300 of them, are all whites. The SAA chairperson then approached the Minister of Finance, and did not get help. Is that the correct state of affairs at SAA? What did you do when Ms Dudu Myeni approached you about this information that the service providers at that time are pure white and localisation content is not considered?
Chairperson: I see the hand of Adv Vanara. Can I give him time before the Minister responds to questions.
Adv Vanara: In the interest of treating everyone equally and fairly, the Committee had taken a decision that there shouldn’t be any interruption of a witness or exchange of notes between the witness and legal representative unless it is on an issue of law. I have been observing some exchange of notes on factual matters. I just needed in the interest of fairness in treating every witness equally that the Committee deals with this matter.
Chairperson: Thank you Adv Vanara, it is a reality that we took a decision that no exchange of notes between the witness and your legal adviser on factual issues. I think you do understand and if you are doing it, don’t do it again. You can respond to Mr Luyenge’s question and you can give us a response on what has just come up.
Minister Gigaba: Thank you, Chair, I think in that matter it was an attempt to provide details and facts but not help frame my responses because she was not there when I was Minister of Public Enterprises. So, the responses are really based on my recollection and the facts that are before me. I appreciate that concern.
The four question that are before me, one relates to the shareholder compact. It was my intention and I did ask the Departments to engage SOEs to probe the possibility of making the shareholder compact or the strategic intent public and to submit it to the Portfolio Committee for reference and noting especially the KPIs. When I became Minister of Public Enterprises one of the difficulties, especially with the big SOEs, was that they often hardly met their shareholder compact or their KPIs. And yet they would go on and receive bonuses and all sorts of things. People will find interesting, sophisticated, detailed ways of explaining why they needed to get the bonuses. And one of the things I proposed was that we consider reviewing the long or the short-term incentives because they tended to make the remuneration of senior executives to be larger than was publicly acceptable – yet on the other hand the KPIs were not met. Sometimes they set themselves low KPIs which they will easily meet.
If you take for instance, the crane moves per hour at the Durban port or the on-time arrivals of the crane on the Richard Bay line you would have in many instances late departures, late arrivals. Sometimes by the time the crane arrives at the Richard Bay terminal, the ship that it was supposed to load would have left or it would have been delayed and now the coal supplier would be charged for the delay right through the value chain, all because of inefficiencies at Transnet. Transnet was under performing compared to all its peers and at the time countries like Singapore and others were over performing. Now we dealt with this, it wasn’t merely an issue of technology even though the introduction of new cranes in Durban and PE helped a lot in improving crane moves. It was largely a management function, the inability to manage the people who are operating at the port. I said to them, I don’t want to be the only who knows about your KPIs, I want the Portfolio Committee and the country also to know what your KPIs are.
We were experiencing delays in the Build programme at Medupi and Ingula, in addition there were freak accidents at Ingula. There were recurrent strikes at Medupi. There was no ability on the part of Eskom to manage these contracts. The capital project management skills were not available, and the company had not established that specialised function amongst its executives. And so, there wasn’t anybody who was particularly responsible for the management of such big capital project. That was the context and really, I still believe that the KPIs of SOEs – which operate as a natural monopoly – must not be confidential. I think they should be public. I think the Portfolio Committee needs to know. The problem with such state- owned companies which are natural monopolies is that they become arrogant in how they treat their suppliers, customers and even how they relate to the shareholder. They choose which information to share that will result in positive benefit for the company. I was arguing with them, surely we needed to change that to ensure that the Portfolio Committee will make this thing public, they post it on their website so that everybody knows. If I am an iron ore miner I should know what your KPIs are. If I am a coal miner that exports coal, I need to know what your KPIs are in my area of work. It was my intention and indeed I engaged with the board about making either the shareholder compact available to the Portfolio Committee and the public or at least the KPIs. Obviously, the corporate plan can’t be made public because it contains market sensitive information but the KPIs are something that should be made public.
The board tender committee is a board sub-committee. I wouldn’t necessarily say that it is made up of politicians because board members are supposed to be independent non-executive directors and their job is not to play politics with the company. Their job is to provide a governance oversight over the company on behalf of the shareholder and to account to the shareholder through regulated means. It is an issue we need to discuss very carefully. What is the administrative role of the Minister? Now it is different in departments because the line of accountability is much simpler and more clarified. From the Minister there is the DG, then DDGs, you know the line functions. In an SOE, where there is a board which is an accounting officer, a governance structure, there is the CEO who is an accounting officer. At what point should the Minister get involved? I really would be wary as a Minister to even be invited to sit and discuss the tenders of the company even if I was invited by the board itself. Unless the board is saying to me: Minister, we want to report to you about the irregularities that we have found in certain contracts and tenders. That is a different matter, but where they are still making a decision, to involve the Minister is to expose someone who should stay away from this process. My view would be to consider this in the Shareholder Management Bill and whether any changes should be introduced to the PFMA, obviously in consultation with National Treasury and Cabinet. The Committee may want to make suggestions about what we should do to curb a recurrence of some of the problems that we have experienced over the years.
With regards to the lenders, it is a simple thing in my opinion. You take a loan, you have a credit card, definitely it is a loan – it is not something you have, it is money that the bank lends to you. You use it and use it until you accumulate too much debt and then the bank says to you: Hey, chief, we have given you a credit line of this much, you’ve exceeded it, now we have to get our money back. Now they start imposing conditions because they think you are not managing your financials well. When I was young in the ANC Youth League, we had a friend who had a credit card and this card would buy all sorts of things, largely alcohol. There was an old man at Nedbank in Johannesburg where we were banking. He would call us and say: Tell your friend to stop buying alcohol; he is blowing up his account. Now we had to impose conditions on him – that is basically what the lenders will do. They’ve lent you the money; you’ve accumulated debt or misused the credit line so they now impose conditions. It is not capture; they are now acting in their own interest. If they don’t control you, what is the risk of you not paying them back, they lose money and credibility because they will have account to the shareholder. Why didn’t you see in time that this person is failing to pay you back? It is the challenge we were facing in SAA last year. With Eskom, the bill is growing. Even though we changed the SAA board, the lenders still said to us, you’ve done well but not enough for us to lend to SAA. The same applied to Eskom. We had to strain ourselves to assist Eskom raise the money they needed otherwise they wouldn’t have been able to pay salaries at the end of March. That would have had such an effect on the company and would have spilled over to the national fiscus. As the national fiscus doesn’t have the capacity to pay back the Eskom R258 billion guaranteed loan, that is the challenge. I think not only in regard to state capture but commercial management of our state owned companies, we need to improve their balance sheet and their financial sustainability so that they are able to keep the lenders at ease and still be able to raise money in the bond market. It became a problem at the end of last year and beginning of this year that a number of SOEs are unable to go to the financial sector to raise money. That is the challenge we need to address with DENEL, SAA Express, SAA, and Eskom itself. You need to ensure that they are financially stable so that they are able to pay back.
On the former SAA Chair, when I was appointed at Finance, we met, at which meeting she presented me with several reports of forensic investigations. It dealt with a wide variety of issues and one related to suppliers and service providers to SAA. I met with the board that we changed and discussed this with them and clearly they had not had time to properly process the reports. I said to them in your failing to process your own forensic report, now you know about irregularities and other problems, you are now liable for criminal charges. And now I know about this, I have to act. We engaged with them, we then changed the board and subsequently I tabled the reports to the new board and they are dealing with them. Transformation must not be sacrificed during all of these processes. It is going to be very important for this Committee in terms of the work it is doing to separate state capture and transformation and not to conflict the two. So that at all times, we raise the banner of transformation and not link it with state capture in any possible way.
We must also reject with contempt the notion that some of the deals that were entered into between 2015 and now at Eskom were about transformation, they were not. If we accept that argument, we are then accepting the argument that those who did wrong have the right to hide behind transformation. It is not true, it can’t be correct, they were wrong. However, transformation itself, the empowerment of black people, women and youth, the changing of suppliers of state owned companies, the ending of evergreen contract at Eskom, SAA and other state-owned companies must remain the main focus of the work of this government. This government was established precisely to ensure that transformation by the people who have sacrificed enormously during the years of the struggle and who continue to sacrifice and suffer even today.
Mr Luyenge: Hon. Gigaba as a fully-fledged politician and leader, now this problem statement I’ve alluded to. Now as we conclude our work as this Committee, do you really believe that the top-level looting, thieving by the top echelons in our country is a reality? The state capture that has been seen even by ordinary men and women in our country (spoke in the vernacular 5: 27: 50) not necessarily in supply chain processes but broader perspectives of the running of the entities, such as money coming from Eskom for social responsibility. There is also looting that are transfers coming from Eskom for social responsibility to a CSO. We see in papers a contribution from Transnet and Eskom to this particular organisation. People are continuing to enrich themselves, Hon. Gigaba what can be done to ensure that they are held responsible? We must not look at this from one side, there is looting on the other side that we are not looking at.
Minister Gigaba: The responsibility lies with all of us to establish regular screening because sometimes I think that the screening of non-executive directors must not end at the time they are appointed. It must be continuous so that we don’t have the gap developing between the time they were appointed and the time when we find out the wrong taking place. In between we have no mechanism to know. I think the screening must be continuous without intruding into people’s private lives because we don’t run a police state. All of us who are in the public space must be willing to be screened from time to time so that we are as we are expected to be. I think that is what I would say, that regular screening of people who serve on the board, of contracts that have been entered into, and financial dealings of state owned companies. Many of these state-owned companies are quite huge. What I have seen is that the DPE has expertise in the management of state owned companies that many government departments don’t have. The meticulous ways in which the department prepares for the AGM, scrutinising the annual financial statements and annual reports, ensuring compliance with existing legislation, looking at the board performance review and reading the reports of the social and ethics committee, audit risk committee and so on – it is quite impeccable but obviously it is not enough. You need to deepen the capacity. Now how do you deepen the capacity without creating a bloated bureaucracy. It is something we need to address but at the same time we need to take those skills because we are dealing with Eskom now, there could be massive problems elsewhere. In the same way we might be looking at a Steinhoff and thinking it is an isolated event but when you put on your magnifying glass you actually realise that there is corporate corruption, Steinhoff-type, where well skilled and trusted people, who know their fiduciary duties, and know their areas of expertise, are involved knowingly in a lot of serious wrongdoing. There is no way for you to know until you are threatened with the loss of pensioners’ money, loss of significant investment which could have contributed so much, and loss of credibility as a country. We need to find a way to ensure that in looking at Eskom we can aggregate the proposals that come out of this process and engage extensively with the SOE reform process.
I think the Committee has done well to undertake this process, there are lessons we draw from here. However, there are also engagements you need to have with what the President said he would do in the State of the Nation Address (SONA) to directly lead the SOE reform process due to the configuration of state owned companies and the role that they play. We must not at the end of this reduce the role of state owned companies and focus only on financial sustainability and commercial enterprise. We need to continue to focus our state-owned companies on building national champions, investing in a skills technology plan and ensure that they catalyse inclusive growth and development and play their developmental role.
Mr Luyenge: If it were not for the looting and thieving in the country, how wealthy is South Africa? You are the former Minister of Finance, you’ve seen what is there. If it is utilised, monitored and evaluated, how wealthy is the country? In support of the President’s call to stamp out corruption starting from the top echelons, I think that is where we must get to without forgetting private business as well as CSOs, they are part and parcel of government and CSOs are the beneficiary of taxpayers. What is your view on that?
Minister Gigaba: I think that without corruption...corruption creates a negative perception about the country among investors. I think it has become so endemic that investors, not only international but domestic ones, have concerns about good governance, political stability which has become so huge that investors are withholding their investment. Look if we are able to grow at 1.3% in 2017 which was without a doubt a difficult year, imagine what could happen if all these concerns were not there. We could have out-performed ourselves, I believe that this year both in terms of GDP growth as well as per capita income, employment and investment, we are going to begin seeing positive spin offs from the actions we are taking to fight corruption. We are going to begin to see great improvement in the quality of lives of ordinary South Africans.
This will remain our primary focus to create employment, ensure people have jobs and improve the level of income especially for those on the lower rung of society, reduce the number of people that rely on social grants for their livelihood, especially those that are able bodied. When I say able bodied that includes people who live with disabilities because many of them can still work and earn income from their sweat. I think we can now improve the quality of lives of ordinary South Africans. It is not only about ensuring that we can save public resources from looting but it is also the confidence are arising from proper management of the country and entities as well as the economy at large that will have a positive effect on the economy, job creation and the rising income of ordinary South Africans.
Mr Shivambu: I’m concerned about two things. I think Minister Gigaba is sometimes too elaborate in his answers and you end up not knowing what he is saying. I request that his answers do not become unnecessarily elaborate so that we get the point clearly. I’m concerned that after last week’s Portfolio Committee on Home Affairs meeting, he did a press conference where he said that Atul and Ajay Gupta, are not citizens of South Africa. The next day the Director General of Home Affairs said only one of them is not a citizen. When the Minister was supposed to appear in Parliament, he got sick. We are happy that he recovered quickly from his sickness and will able to respond to questions. Do you know if Ajay Gupta has got a South African passport or not?
Minister Gigaba: Thank you Hon. Shivambu. Mr Ajay Gupta is a permanent residence permit holder. The Department of Home Affairs does not issue passports to permanent residence permit holders; if it has, we would have to investigate how that happened. I have already instructed the Department to consider revoking his permanent resident permit in light of the allegations levelled at him. If he is found holding a South African passport we would investigate how that happened because he is not supposed to be in possession of a South African passport as a permanent residence permit holder.
Mr Shivambu: Immediately after the press conference on their citizenship, social media (which you and your office have access to) had a copy of an authentic Ajay Gupta passport copy which I’m sure you have seen. That is part of the public documents submitted to a court process which involved the Financial Intelligence Centre. I’m sure you know he’s got a passport. How long does it take to verify if he has a passport or not? Does it need a long investigation?
Minister Gigaba: The Honourable Member is confusing Atul Gupta with....
Mr Shivambu (interjecting): I’m not, there is a passport of Ajay Gupta and Atul Gupta.
Minister Gigaba: The passport that was circulated is.....
Mr Shivambu (interjecting): Do you want me to show you. You are saying that I’m confused, and I can show you the evidence of the reflection of Ajay Gupta
Chairperson Mnganga-Gcabashe: Let’s take a sip of water and allow each other to respond. I’m allowing you now, Minister Gigaba.
Minister Gigaba: The passport circulating on social media was that of Atul Kumar Gupta that was issued in 2015.
Mr Shivambu: So, you do not know yet whether Ajay Gupta has a South African passport or not?
Minister Gigaba: The Honourable Member said it is the copy of Ajay Gupta’s passport. If it is, we would like to get a copy of that and get the source of where the Honourable Member got it. This is because on social media you can electronically generate anything. There is a death certificate circulating on social media of somebody who died of polony, that death certificate is obviously not authentic.
Mr Shivambu: There is an issue which you said you take offence to. What is offensive if people ask you about your nationality? It happens every day when we apply for visa. When we travel, people ask us about our nationality, where were you born. Even visa applications specify where was your father born. What is offensive about that?
Minister Gigaba: What is offensive about that, Hon. Chairperson, is that I know for a fact that the source of the question is as malicious as the extensive vilification campaign that I’ve been subjected to for political reasons over many months. All of that vilification has been malicious and this question itself is malicious. It would be fine if the Honourable Members started by telling me who they are and what their concerns are before asking who I am. The Honourable Member has known me for a very long time. This issue has not arisen before; why does it arise now? The reason is because the Honourable Member is part of a massive vilification machinery that is directed at me personally for political reasons.
Mr Shivambu: The person that asked you the question is a member of the EFF because there is an allegation that you might not be of South African origin.
Chairperson: Hon. Shivambu, we can’t allow a question where a person is being directly attacked. Hon. Gigaba is a Minister in the Republic of South Africa therefore he is a Member of Parliament in the Republic of South Africa. He has an ID of the Republic of South Africa. You can’t ask him that personal question live on TV. We are dealing with Eskom here. You can ask that question privately. I cannot allow that.
Mr Shivambu (interjecting): Questions must be asked and he can clarify that.
Chairperson: No, you are becoming too personal. Those are personal question, why are you asking a personal question? Where is your mother born?
Mr Shivambu: My mother was born…
Chairperson (interjecting): No, no, those are personal questions.
Mr Shivambu (interjecting): I’m not even offended about it.
Chairperson: It is not going to help us going forward in making a report about this committee inquiry. No, we cannot allow that happen. Ask questions relevant to the subject matter: the Eskom inquiry, Denel and other relevant issues, not a personal matter. I cannot allow that, it is wrong.
Mr Shivambu: That’s fine, that’s okay Chair. When did you first meet the Guptas, outside the Diwali events they invited you to. Let me give you a clearer context, any of the Gupta criminal syndicate: Atul, Tony, Ajay, Salim “Gupta” and all of those surrounding the Gupta criminal syndicate. When did you first meet them before the Diwali activities?
Minister Gigaba: I cannot recall the exact date, Honourable Member. It is many years ago. I’ve not interacted with them for quite a long time. I cannot recall the exact date of meeting anyone of them for the first time.
Mr Shivambu: Apart from the Diwali have you been to their private residence to talk about anything that relates to the Departments or Ministries that you were leading?
Minister Gigaba: No.
Mr Shivambu: You’ve never been to their…
Minister Gigaba: I’ve never been to discuss any government related activities.
Mr Shivambu: But have you been there for private purposes, outside of the Diwali that you’ve owned up to?
Minister Gigaba: I’ve only been there for Diwali.
Mr Shivambu: Do you know how many times you’ve been there?
Minister Gigaba: Several times, I mean it was a few Diwali celebrations and I stopped afterwards.
Mr Shivambu: What does several times mean?
Minister Gigaba: Anything between two and three but after that I stopped.
Mr Shivambu: If someone were to say that you’ve been to the Gupta compound more than five times, will you say you’ve not done that?
Minister Gigaba: Well, they would’ve calculated. If that’s what you want to say, then you have to provide evidence.
Mr Shivambu: So, your recollection only reminds you of two or three times?
Minister Gigaba: It reminds me of those several times.
Mr Shivambu: How many times did you go to Gupta compound, is it two, three, five or 10?
Minister Gigaba: As I said, I cannot recall. I was not calculating.
Mr Shivambu: Would you be able to give us numbers if we allow you space to recall how many times you’ve been there?
Minister Gigaba: It is not official therefore it is not in my diary; I cannot go back to my diary to recollect.
Mr Shivambu: Are you not creating space that when we give you evidence that you’ve been there like seven or eight times, you will say well I have opened it up. I’m sure in the next five years you won’t recall that ‘I have been there two or three times’. You will give us another number.
Minister Gigaba: You would be speculating
Mr Shivambu: What is speculation? How many times is approximate, 20 times?
Minister Gigaba: You would be speculating, not me. I have already answered the question.
Mr Shivambu: Is it between five to 10 or 15?
Minister Gigaba: I have answered the question, Chair.
Mr Shivambu: So you do not want to give us the number of times that you’ve visited the Gupta criminal compound?
Minister Gigaba: See, Honourable Member, it was not in my official diary so I would not be able to say how many times.
Mr Shivambu: And your memory is not serving you well enough to remember how many times you’ve been there?
Minister Gigaba: I meet a lot of people all around the country for a variety of reasons. When it comes to social events I do not make an effort to calculate and record them.
Mr Shivambu: When was the last time you went to Dubai and how many times have you been there when you were Minister of Public Enterprises and Home Affairs? That includes private and public visits.
Minister Gigaba: I would have to confirm that and bring it to you, but I can confirm to you that it has nothing to do with the Guptas. I’ve never been invited to Dubai by them, I’ve never been hosted by them. It was on official business or I think once on personal business. That’s it.
Mr Shivambu: So, you don’t know how many times you’ve been to Dubai?
Minister Gigaba: No, I said if it is on official business. I will have to go back and check. I can provide that information to the Committee. When it comes to personal times, I think I was there once in 2014 if I’m not mistaken. In those instances, I was not invited or hosted by them.
Mr Shivambu: Before you appointed Salim Essa to the board of Broadband Infraco, where had you met him?
Minister Gigaba: As I said earlier, Chairperson, when we appoint members of the board you do not have to meet them first. Honourable Members would be better advised. If you appoint anybody to the board of any state-owned company, you do not have to have a meeting with them first.
Mr Shivambu: Do you have a bank account in Dubai at any of the banks in Dubai?
Minister Gigaba: It’s part of the vilification campaign of which the Honourable Member is part of the active machinery. I do not have any account in Dubai, I never had, I never will. I only have one account, it’s with FNB, Honourable Member.
Mr Shivambu: Did you disapprove of the Eskom sponsorship of The New Age breakfast show?
Minister Gigaba: Yes, I did. I expressed very deep concerns, I wrote a letter to the state-owned companies to that effect.
Mr Shivambu: Are you aware that Ministries were paying The New Age breakfast show anything between R200 000 and R1 million to appear on The New Age breakfast show on SABC? COGTA paid R486 000. The Department of Communications under Faith Muthambi paid about R 958 000. Are you aware that ministers and ministries are paying to appear on the Gupta television platform which they created?
Minister Gigaba: Unfortunately, those Ministers did not submit such a report to me.
Mr Shivambu: But when you appeared on the 24 April 2014, the Ministry of Public Enterprises paid R218 000 for your appearance on that platform. Are you aware of that?
Minister Gigaba: The Department would’ve paid but I would need to find that information and furnish it.
Mr Shivambu: No, but we asked you that question officially as the EFF and you responded as the Minister to say ‘I appeared on The New Age breakfast show and R218 000 was paid for that appearance. Have you forgotten about that?
Minister Gigaba: Honourable Member would be advised to remember that when I was invited to appear before the Committee, that was not one of the questions. I would have found the information and presented that information to the Committee.
Mr Shivambu: Do you have additional income outside of what you are paid by parliament or government as a member of the executive?
Minister Gigaba: The Honourable Member would be better advised to read my declaration forms that I do every year. The one I do as Minister and the one I submit as a Member of the Parliament.
Mr Shivambu: So outside of those declarations, you do not have any other form of income?
Minister Gigaba: I’m sure if the Honourable Member had read my declaration, he would know the answer to the question he is asking me.
Mr Shivambu: I’m asking this because you swore an oath at the beginning. Sections 16 and 17 of the Powers and Privileges Act would classify non-disclosure of that as a criminal offence which has a prison sentence. Do you have any additional income outside what you’ve declared here in Parliament and in terms of the Ministerial Handbook?
Minister Gigaba: Chairperson, I invite the Member to make his allegation.
Mr Shivambu: I’ve asked a question, you have to answer.
Minister Gigaba: I’ve answered you.
Mr Shivambu: In your oversight of the state-owned companies, have you ever subjected any SOC to what is required in section 54(2) of the PFMA? Have you ever subjected any transaction to that section because it places certain obligation on the executive authority, which in the definition, is the Minister? “the accounting authority for the public entity must promptly and in writing inform the relevant treasury of the transaction and submit relevant particulars of the transaction to its executive authority for approval of the transaction”. Have you ever subjected any of the state-owned companies when they are engaged in any major transaction to that section when you were Minister of Public Enterprises?
Minister Gigaba: As the Honourable Member correctly put, in section 54(2) you are required that when a section 54 application is signed, the Minister of Finance must also concur.
Mr Shivambu: I am asking if when you were Minister of Public Enterprises, you have ever had a request to utilise that section to approve any transaction being conducted, any of the tenders that were being conducted by Transnet, Eskom or any of the entities under the DPE. It says it is you who must give approval for the transactions listed there which includes “acquisition or disposal of a significant shareholding in a company, acquisition or disposal of assets”. Have you ever been sought to provide approval of those transactions listed in the PFMA?
Minister Gigaba: Whenever we have to do any of these, we have to comply with the letter of the law.
Mr Shivambu: I am not asking whether you complied with the law, I’m asking whether you’ve done it.
Minister Gigaba: The Honourable Member is asking me to remember if there was any disposal of significant shareholding, acquisition or disposal of asset and so on. In the course of the many submissions that state-owned companies provide, the Department would make any necessary arrangement for the instance where the Minister of Finance must concur. The same would have applied when I was Minister of Finance; submissions would also come to me for concurrence.
Mr Shivambu: I think you are going back to those elaborate answers that do not give a clear context. Do you agree that the list of transactions in section 54(2)(a)-(f) requires tenders to conclude them?
Minister Gigaba: That’s what section 54(2) says.
Mr Shivambu: So why were you being emotive that Ministers must not get involve with tenders?
Minister Gigaba: Honourable Member, you are deliberately misreading what this requires. This does not require Ministers to get involved in tenders.
Mr Shivambu: What does approval mean?
Minister Gigaba: This is a section 54 application. It does not require Ministers to be involved in the nitty gritty of the application. When a company writes to a Minister and says ‘Minister, we request the approval to either acquire or dispose of certain shares’. When the Minister approves that, it doesn’t mean that the Minister is involved in the tenders themselves, the Minister is approving in principle the application. The actual conducting of the entire transaction is conducted by the state-owned companies themselves not the Minister.
Mr Shivambu: It is not a deliberate misreading. You are the one who misunderstands what the law says. For instance, if Transnet is going to buy locomotives for R38 billion, it states that the Minister concerned is the one that ultimately approves because that is a major acquisition, that’s what the law says.
Minister Gigaba: I can show the Honourable Member the section 54 application which I signed for Transnet. It did not deal with who is bidding or who is winning the bid; it didn’t deal with all of that. It provides for the Minister to give a broad based in principle approval for the transaction to take place. It takes place prior to the bidding process, the Minister does not get involved. No Minster gets involved in any of the transactions that state-owned companies involve themselves in.
Mr Shivambu: I think that is your own narrow reading of the law.
Minister Gigaba: It’s your own narrow reading. It’s your own manipulative reading.
Mr Shivambu: What did you do to end the evergreen contracts at Eskom? What policy directives did you give that the people supplying coal should not do it in the manner they have been doing it? What is your contribution in that regard?
Minister Gigaba: I was spearheading the establishment of a policy intervention, the emerging miner strategy, which would have resulted in the ending of those evergreen contracts.
Mr Shivambu: So, you are still brainstorming.
Minister Gigaba: I was not brainstorming, I was spearheading the …
Mr Shivambu (interjecting): What exactly did you do?
Minister Gigaba: I just answered the question.
Mr Shivambu: What does spearheading mean? Did you call a conference, did you write a policy, did you write to state-owned companies to say this is what must happen?
Minister Gigaba: I explained this earlier. The Honourable Member chose either deliberately not to listen or to listen selectively. I explained, Honourable Chair, that we worked with the board to establish the emerging miners strategy which has five pillars. It was quite an extensive strategy. One of the objectives was that by 2018/19, 50%+1 (fifty percent plus one) of coal supply contracts to Eskom must be provided by black emerging miners in South Africa. Part of the consultation process which involved extensive meetings with the board also involved two broad consultative meetings with stakeholders in the emerging miners sector. We agreed with them on the approach to take, and they were supportive of the policy proposal we were creating. That is when we then began discussions between Alexkor and Eskom to diversify Alexkor’s asset base to involve not only diamond mining but also coal mining so that we use Alexkor to leverage the involvement of black miners in the coal supply programme.
Mr Shivambu: That’s fine. Maybe to avoid again whole elaborate answers, can we get a written submission on what you said you did in ending evergreen contracts?
Minister Gigaba: Realise, Honourable Chair, that extensive responses irritate the Honourable Member.
Mr Shivambu: Adv Vusi Pikoli put in his book that you instructed SizweNtsalubaGobodo (SNG) that they must remove him for SNG to be able to gain access to government tenders especially from state-owned companies. Is that the case?
Minister Gigaba: I rejected that allegation back then and I still reject it now.
Mr Shivambu: That’s fine. When Brian Molefe was first appointed as CEO of Transnet, you were the Minister of Public Enterprises?
Minister Gigaba: Yes
Mr Shivambu: Was a Cabinet memo drafted which involved who must be appointed out of the people who were interviewed for the position of CEO of Transnet from the Transnet board?
Minister Gigaba: Yes, there was a board memo.
Mr Shivambu: Which other names were in that memo
Minister Gigaba: I cannot recall which other names were in the memo.
Mr Shivambu: But you recall there was a board memorandum?
Minister Gigaba: Of course
Mr Shivambu: Ok, that’s fine. We will make a follow-up about that. I want now to deal with recent issues. When you were the Minister of Finance, Public Enterprises under Lynne Brown appointed an Eskom board in December last year which was chaired by Zethembe Khoza. Were you in the Cabinet meeting that approved such board appointments?
Minister Gigaba: Yes, I said so earlier.
Mr Shivambu: What did you say when that board was recommended?
Minister Gigaba: I expressed my views, I still express right now my discomfort in disclosing my own individual opinion out of the Cabinet meeting because Cabinet meetings are confidential. Nonetheless, I did express my view that someone else should have been appointed as the board chairperson.
Mr Shivambu: Do you know every time the ANC Secretary-General, Mr Ace Magashule, speaks about the Guptas, he says they are honest business people, South Africans, who must be respected as such. Do you share the view of the ANC Secretary-General?
Minister Gigaba: Well, you are quoting the ANC SG, that certainly is not what you’ve heard me say.
Mr Shivambu: I am asking about your views. Do you think they are a problem or are they aiding the development of business in South Africans and whatever is achieved in this country?
Minister Gigaba: I certainly do not think so.
Mr Shivambu: What is your view about the allegations of corruption, wrongdoing and malpractice around them? What is your view as a person who used to visit them during Diwali and even went to their weddings?
Minister Gigaba: I am on record as saying the allegation of state capture must be investigated. I have hailed the establishment of the Commission and the announcement of the terms of reference. I am on record earlier today as welcoming the work of this Committee and declaring my full cooperation with the Committee.
Mr Shivambu: Are you aware that Iqbal Sharma has some connection with the Guptas?
Minister Gigaba: I am now aware of it.
Mr Shivambu: When did you become aware of it?
Minister Gigaba: When everyone else became aware of it. At the time that I appointed him, neither I nor the Department of Trade and Industry, nor very many ministers were aware of his connection with the Guptas.
Mr Shivambu: And Salim Essa is the same?
Minister Gigaba: Is the same, yes.
Mr Shivambu: The Eskom board, you issued a joint statement as the Minister of Public Enterprises, how was that board constituted? Who brought the names that ultimately formed the Eskom board?
Minister Gigaba: It was a joint process of National Treasury and DPE.
Mr Shivambu: Do you know which name came from where?
Minister Gigaba: The officials in the Department worked on the names. They presented them to the Ministers, we looked at them. We decided who to recommend to the principals.
Mr Shivambu: Do you know who submitted the name of Sifiso Dabengwa?
Minister Gigaba: The name came from the process of consultation of the two departments.
Mr Shivambu: Mr Gigaba when you are asked question, don’t try to act cleverer. You must listen carefully, not jump to what you are not asked.
Minister Gigaba: Neither should you try to act cleverer when you ask questions. The facts should not irritate you. Don’t be irritated by the facts.
Mr Shivambu: We will make an assessment on what you’ve said here, and your forgetfulness is just convenient. There is an allegation that is in the public discourse about you having transferred R500 000 to a girlfriend through an intelligence official. Is that the case?
Minister Gigaba: That is absolute rubbish, it’s got nothing to do with this inquiry.
Mr Shivambu: It has nothing to do with the inquiry, but we want to link that, because the allegation, let me give you the scenario. You have got a criminal syndicate of the Gupta which include Tony, Atul and others, who utilise politicians. Among the politicians that have been utilised is the former president Jacob Zuma, Lynne, yourself
Minister Gigaba (interjecting): This is an allegation that you’ve not …
Mr Shivambu (interjecting): Don’t jump into that, I am giving a scene
Minister Gigaba (interjecting): Honourable Chair, if the member must make this allegation he must do in a form substantive statement.
Mr Shivambu (interjecting): You will be able to respond
Inquiry Chairperson (interjecting): No Hon. Shivambu, I want to say to the Minister when Hon. Shivambu was starting with the issue of the allegation he said there are allegations outside. I think he is privileged to say allegations.
Mr Shivambu: (echoing) yes. The allegation outside there…
Minister Gigaba (interjecting): Let me address you Chair. He made the allegation in reference in relation to the R 500 000 to which I responded to say its absolute rubbish. He then went on to say that the Guptas use several politicians and he mentioned me, that he did not refer to as an allegation.
Mr Shivambu: Chair please listen. The allegation is that you are one of the Guptas stooges who are given money in Dubai to go around spending on a girlfriend. That’s why I am asking did you give R 500000 cash to your girlfriend which you generated from the Guptas. Is that the case?
Minister Gigaba: There is also an allegation about you Mr Shivambu
Mr Shivambu (interjecting): we are asking about you.
Minister Gigaba: No, there is also an allegation about you Mr Shivambu to which you are advised to respond. I’ve already said Chair that these allegations are absolute rubbish. There is no truth to them, no basis to this allegation. Its part of the vilification machinery in which Mr Shivambu is allegedly actively involved.
Mr Shivambu: Let's leave him, Chair, he is confused, he doesn’t know what he is talking about. Majority of the things he has said here do not make sense and are not believable. We will process it at the end of the inquiry, thank you very much.
Minister Gigaba: I want to address that
Inquiry Chairperson: Thank you very much Hon. Shivambu and Hon. Minister. We will process all the issues we have gathered in this inquiry including the issues we have gathered from the Minister.
Ms Mnganga-Gcabashe: Good afternoon Minister Gigaba. Let’s talk transformation. I agree with you regardless of what was being said at Eskom when you intervened on the appointment of a CFO as taking into consideration the women being is position of power, moving and starting from lower rank of Eskom being developed by the company and find themselves as part of the dominantly male management leadership within the state-owned entities. For me, that intervention I cannot really challenge. When a person is a CA and is groomed by the company not unless I shall be convinced that it was done in a transparent manner or done with other motive other than the merit appointment. So that in a way was addressing the succession plan as is supposed to be done. But having said that, let’s come back to the procurement transformation within the Eskom and other entities. We are seized with a 40-year procurement, the procuring of goods and services of a coal supply to Eskom on a non-open tender process. That has been said by a number of group executives, former CEOs, CFOs and to some extent former board members, Chairpersons and acting chairpersons of Eskom. For us that is a major problem in terms of transformation. When you talk about the policy intervention fifty plus one, that you are pioneering I would want to know what prevented Eskom as a company or an entity of the state from implementing such policy that will in a way address what I’m raising now.
Minister Gigaba: Thank you Hon. Chair. I think the programme was abandoned when the new term of the administration started because we were quite advanced with it at the time we left DPE. But I stand to be corrected, it could be that the new leadership continued with it or may be the strategy was there but was not implemented. But, to my understanding it was abandoned after May 2014, it did not get implemented.
Ms Mnganga-Gcabashe: It is saddening to hear that there was an initiative, but it was abandoned. When we raised this with other witnesses prior to you, reminding them that we are 23 years in democracy as a democratic government and we still have a non-open tender for coal supply of 40-years. When you joined and started to create some kind of initiatives as government requires you do so through the procurement and supply chain management Act and PFMA. When you joined in 2010 that was 16 years into democracy, that was an opportunity even if it was difficult we are still dealing with process, changing board, it would have been enough time. I was saying before you came here, 15 years would have been enough, more than enough time for us to deal with those. When you talk of a coal supply, to me it’s rather an insult to black people in general and Africans in particular. I was born due to the Group Areas Act my parents were removed from the port city area in Durban when I was two years old to be relocated through Group Areas Act to KwaMashu township. I grew up there and like many of us, as long as I can remember, I had an understanding of what was going on around my house and neighbourhood. I would see that almost every house at a stage we had a stove to warm our family home with coal. Our African people, our parents at that time were black from their hair, toes and to the clothes they were wearing, running around to deliver those coals to each and every house as workers at that time and being under paid. When we come in to democracy its an insult that Eskom still feels that the generation of those people are only good for delivering coals not to be part of the procurement of coal supply to Eskom. Starting from what you’ve raised, the mining which falls under another Portfolio Committee for the mining of coal. But, you are correct to say that those blacks emerging miners to supply in Eskom. Its an insult even to realise that no one has convinced me seated here, I joined the Committee on the 25th of October 2017 but I’m yet to be convinced that at least 30% was set aside just as a start for the black emerging contractors in general and I’m not to apologetic to say Africans in particular. Those 30% set aside as you earlier on referred to the involvement of the engineers, how can a national sphere be overtaken, who developed this Procurement Act, Supply chain management process, and asked the sphere of the local government to adhere to those legislation. And then the local government sphere which are made up of metros and municipalities are able within those procurement processes and regulations to set aside certain procurement processes for infrastructure, that is done by engineering department in a metro and it has been happening for few years and you come to the highest sphere of government and is not able to do that and really why is that in your opinion. For us as representatives in parliament, as Ministers and Department to some extent I think we have failed our people.
Minister Gigaba: Chairperson I agree with Hon. Mnganga-Gcabashe on her assessment of the fact that we could have done more. It’s unfortunate that this grandiose plan, very ambitious, was not seen through to fruition after 2014 because it would have transferred significant assets back into black hands. I think if I’m not mistaking, it can from our calculation in 2013-2014, it’s around 2.7 and 2.8 billion rand which would have been transferred into black hands had we gone ahead to implement a plan of this nature. We were working together with the Department of Mineral Resources, I think I remember we had several meetings with Minister Susan Shabangu about this issue and they were supportive of the direction we are taking. I think the ball was dropped and having been dropped, it was replaced by wrong doing which did not assist the transformation objectives. Now that having happened, it is necessary to go back to what was initially intended. That’s why I earlier mentioned the point that the entire inquiry into the collapse of good governance at Eskom and the inquiry into state capture must not result into nation being sacrificed and equated to corruption, we need to bring the attention to transformation. We are not talking here about small supply services, the supply of coal to Eskom would have been a significant move which would have made black people a significant player not only in the mining sector but which would also makes them a significant player at Eskom and Transnet because even the coal fired locomotives in regards to Transnet also need to have this conversation taking place so that we can assist black mining companies to have an opportunity to participate in the supply of coal to our state-owned companies.
Ms Mnganga-Gcabashe: Would you agree with me when I say that non-open tender of the coal supply in Eskom contravenes the PFMA?
Minister Gigaba: I think we could agree that it does, and it contravenes basically every tenet of our constitution which in the preface enjoins us to correct the wrongs of the past. It creates a situation in terms of which the insignificant sectors of our economy not only coal supply but audit sectors and other sectors, you have these evergreen contracts that lasts through generations. In actual fact, it could very well be necessary to subject these contracts to the Competition Investigative Commission to determine the extent to which such contract undermines South African competition laws.
Ms Mnganga-Gcabashe: I’m glad you are in agreement because the supply chain processes within the Act was established and one of its purposes is to be transparent and if we don’t follow all those processes with such billions of rand then certain people must answer. These committees – bid evaluation, bid specification and appeal committee are there for us to have open tender, follow all the processes tat have been outlined in the regulations provided to us by National Treasury, parliament and government at large. If that doesn’t take place then really somewhere heads must roll, and I hope when these matters are further investigated by the Judiciary Commission because they have broader scope and skills than us to investigate, they will come to the bottom of this and certain people must answer. For me not to give black people and the African people in particular the economy of this country, that alone is cruel to our people.
Minister Gigaba: I agree again, one of the things we had done was to establish a Supplier competitive development programme, I hope the department still pursues that programme. We had convened a CSDP summit between Eskom and Transnet and number of the suppliers in sectors of Eskom and Transnet with the intention of identifying the sectors which each black supplier could participate in state-owned companies which would have helped to transform the supply chain of our state owned companies but what I can say with a degree of confidence is that in many instances , the managers, the executives of our state-owned companies are not focused as well as they should on transformation and I am talking about significant transformation which is going to change the game, game changing transformation and the board in many instances are either timid or scared in engaging in game changing transformation and that’s why the shareholder must step in to provide leadership and vision to ensure that both the board and the executives implements significant transformation that is going to result in significant transfer of asset into the black hands. But without shareholder activism and leadership in providing the vision and enforcing transformation right into the accountability mechanisms of state-owned companies we will not see significant change, what will end up happening is that the board will narrowly focus , important as it is on managing the commercial affairs of state-owned companies but they will not pay sufficient attention to issues of transformation that can change the game and catalyse the involvement of black women and youth players into the supply chain particularly as industrialists and entrepreneurs.
Ms Mnganga-Gcabashe: Can you briefly unpack for me
Chairperson: Hon. Mnganga-Gcabashe, I’m worried you know everything you said is not recorded you are very far from the mic.
Ms Mnganga-Gcabashe: Can you unpack for me the term oversight of the Minister to SOEs, I will tell you why. It confuses me because members of parliament and in particular members of the Portfolio Committee on Public Enterprises their task is to oversight the DPE and its own SOEs. If the political executive- minister plays an oversight role, it tends to confuse. Can you summarily explain especially to focus on procurement processes?
Minister Gigaba: The oversight by the Minister is stipulated in a number of policies and legislations – the PFMA, the Companies Act and different memorandum of incorporation. I will first explain it narrowly and also problematise the issue. Narrowly, the oversight of the Minister is much at the arm’s length in ensuring the implementation and compliance with the shareholder compact, the government in terms of the PFMA, Companies Act but it’s an arm’s length involvement by the Minister. In terms of procurement, the Minister again does not get involved in the actual work. The Minister does not get involved directly in the transaction that State-owned companies are engaging. The company would send a request to the Minister that we want to buy 1054 locomotives for the following reasons and they go on explaining it and they provide a business case and how these are going to assist, how much money they intend spending, how much they think they will generate. The Minister gives an in- principle approval. They will explain to the Minister how they are going to implement this and what are the timelines in terms of which they are going to implement the procurement. Then the Minister gives an in-principle in terms of which they indicate, yes you can go ahead, I approve that. If there any conditions they wish to attach, they go ahead and do so. If they think the conditions they wish to attach are being met in the business case, they can say I approve, you can go ahead, the institutions you have provided are robust. But the Minister is far away from an SOC in terms of the procurement. The Minister cannot and must not seek to influence the direction towards which a contract is going save to provide the principles, the broad parameters in terms of which such procurement must take place. Those parameters are defined in terms of existing legislation and policies in the country that assist government to move forward. The problem arises as we were discussing earlier because you are not involved in the day to day transaction process and you will get the report later. Sometimes when you get the report, you realise that key objectives have been missed or sometimes most of the local partners which have been identified especially for big projects have been short changed in the agreements entered into. This is because the SOC would not have paid close attention to the agreement between the original equipment manufacturer and the local suppliers. You find out that the OEM has the lion share of the work including the significant aspects of the transaction or in some aspect the OEMs have colluded either knowingly or unknowingly in short changing the local suppliers. It’s important that boards and executives should pay close attention to how the interests of local suppliers are catered for in the transactions entered into. If you consider that the Infrastructure Programme announced in 2012 would have resulted in four trillion rand in the South African economy, if we had set aside anything between 30-70% for local suppliers and partnerships with OEMs for South African local suppliers it would have been a game changing mission for the South African economy. And in terms of poverty, of wealth creation, increase of per capita income, the South African economy would be far different in 2020 which was our window for the Infrastructure Programme we announced in 2012.
Ms Mnganga-Gcabashe: I take your point and it is relevant that for transactions which are operational matters, the Minister cannot be involved. I think there is something fundamentally wrong within our legislation that the Minister as political head of a department overseeing SOEs cannot intervene in a particular process. I listened to you saying if we follow that route, that the Minister only recognises the problem after the financial year-end when the annual report is presented and that does not assist anyone. I would’ve thought that the ideal situation will be that for certain big value procurement amounts, an executive report should be given to the Minister to decide that this procurement must go to a particular company. At the end of the procurement process followed by the bid committees, a report must go to the Minister about procuring for these millions and billions in principle as you have said. You are able to interrogate that report to see where black people, women, youth, Africans and people with disabilities are benefitting. At that point, you are able to intervene in principle in terms of 50% plus one, 30% for women, 20% for youth, 5% for disabled. If the executives cannot interrogate this, that’s where the serious problem is.
At the end of that process, the political head should be able to satisfy him or herself that all the procurement processes are being followed. I am not saying that there is no fraud and corruption in the local government sphere. As a person who has worked for 10 years in a metro and five years at a provincial legislature, I find coming here in 2014 and sitting here as Chairperson of the Portfolio Committee of Public Enterprises very difficult, especially being exposed to this Inquiry. That is the source of the problem: how can you have an executive who is unable to intervene when he is supposed to intervene? And you can cry foul only at the end of 12 or 14 months. For instance, the Minister should have the power to deal with that Eskom policy that allows board members to do business at Eskom where they sit on the Bid Tender Committee and adjudicate procurement for Eskom.
Minister Gigaba: Honourable Chair, I think this question goes into the very gist of a developmental state and what we need to do. Perhaps in the Shareholder Management Bill process, because I like the suggestion that the Member is making so that in the middle of the procurement process an interim report is presented to the Minister. It is not dealing with the nitty-gritty of the transaction but give a broad picture of compliance with legislation, so that you don’t become disempowered and wait until the process is finalised. The Committee must also think what will be the safeguard, what will we do to prevent undue influence and interference. How do we ensure that there is no corruption in the process and there are no loopholes. It’s an important suggestion that I would request the Committee to consider especially relating to the Shareholder Management Bill that will be served before the Committee.
Ms Mnganga-Gcabashe: It can be a committee formed by a number of Ministers from the different departments. At a local council level the report will go to Exco, the Mayor is the Chair of that Exco, the CFO if possible becomes part of that, the CEO accompanying the municipal manager (she gave an example of what happens at the local level). I think you and other Ministers before you missed that part to make sure that employees of companies are not involved, tomorrow as a portfolio committee not as an inquiry we are meeting with the department and Transnet and I as the Chairperson of the Committee will be chairing that meeting. I will also raise this thing of the employees doing business. Finally, for me Chairperson, I will like to say to you here as the former Minister of Public Enterprises and Minister of your department is that you are seated with this allegation of corruption and fraud and you are only looking at top management. There is a lot of corruption that is taking place in the middle management and I say as a member of the Portfolio Committee, that the Ministers must start going down to their departments and SOEs to make sure that they pay attention to the middle management on the procurement of goods and services. Due to this inquiry we get on daily basis inside information from these SOCs of besides my own experience of the middle management. Some of them are divisional COO in every province, what is happening here in Cape Town in one of the division is something that I will say tomorrow. Generally, I’m not saying we should neglect the top management, but top management instruct the middle management and in turn they do you a favour and do theirs. And then the whole system is corrupt, and this is the time to do away and end corruption. There shall be consequences even if you are a junior official at the SOEs and are involved in fraud and corruption. Thank you, Chairperson.
Chairperson: Thank you, Ms Mnganga-Gcabashe. Minister, those were just comments you need to consider and maybe take note of them. Minister, I want to ask one or two questions. Were you aware when you first became a Minister of Public Enterprises that concerns had been raised that there was a Gupta influence in the appointment of boards and executives? Those allegations were already known if I’m not mistaken as far back as 2010. If you were aware, what did you do to avoid those tendencies as Minister of Public Enterprises?
Minister Gigaba: To be honest with you, I was not aware of any such allegations. They were not prevalent at the time, even the appointment…. You know the appointments we made, as I said earlier, were hailed as good appointments. At that time no allegation was made about them. Only subsequently that allegation has emerged in relation to some of those names. If you take the appointment of one person on a board of say 15 very independent non-executive directors that involved Peter Moyo, Nunu Ntshingila and other business luminaries, it would have been and it remains unfathomable how this one person would have been able to impose and have sway over such an eminent panel of non-executive directors. I’m saying first, I was not aware back then. Secondly, one person on a board and one person on another board would not have the power and influence to be able to sway the entire board.
What seems to have happened was that a network was being created which tried in different areas beyond the public glare to influence certain decision and that network became evident at a later stage. But also there were many very strong board members who would’ve prevented wrongdoing from happening, be it at Transnet or Eskom, who are able to take decisions and ensure the companies continued functioning. I think the problem arose largely in 2015, things fell apart in a very significant way. Without casting aspersions one would say that the real significant difficult problematic decisions seem to have started around 2015. Why and how, I can not speculate but in 2010 I was not aware of that allegation. And surely being aware, we would’ve acted. Some of the people we are talking about, around 2011 they were very eminent in the business community, and they were highly regarded by the media and the investor community. Nobody back then would immediately and directly associate them with any allegation. And so I myself, the Minister, like everyone else was not aware of their links to the Gupta family. And nobody had a crystal ball to know what problem they may do later.
Chairperson: The week before last, we were presented with information by Mr Masango, a former Eskom GCE. In his reply to questions from Members, he spoke about big international companies getting Eskom contracts. Members were worried about the process when a big company gets the job, the very same company can look for a sub-contractor regardless of from where that company comes. For example, Eskom has companies like Trillian and McKinsey. All those international companies still have the leverage of having the same people in those companies and making them sub-contractors. As a policy maker in government, Minister, you spoke to us the role you played in upholding the broader policy work. How do you see the policy of localisation working in such a big company as Eskom which could have been of good help for people working in South Africa who have their own companies and the potential and capacity for working for Eskom. However, the big companies are there taking the sub-contracts and getting more than the locals. As a minister then, what was your role in policy issues when such things were happening?
Minister Gigaba: That is a problem in major SOCs. The problem with the 1 064 locomotives procurement by Transnet and with the Build programme at Eskom. If I may use Eskom as a case study, we were assisting Eskom to resolve the ongoing strike at Medupi which resulted in delays in the Build programme around 2013. We called all the original equipment manufacturers, the Japanese companies, I forget the name, and others to say there is problem in what you are doing. We called the top executives of these companies down to Eskom, we also invited the Minister and DG of Energy to have a conversation. We called their major sub-contractors which although some were South Africans, a significant portion of them were not. What emerged for us was that Eskom in implementing the Build programme, they had not built the capability to manage the contract. They entered into a contract that was not favourable to them which was quite ambitious as a result of which there were delays and cost overruns and the contract management skills did not exist at the time in Eskom in the form of capital project management. This resulted in failure to manage on the ground the contract and the contractors and failure to implement the programmes and anticipate difficulties. There were problems in how you implement a localisation programme in a way that it is going to empower South African companies broadly but affect the local communities particularly. It became really clear that our SOCs need to build contract management skills and that’s why we valued the infrastructure development pipeline established by the PICC because it gave us a sense of long term infrastructure investment. You could popularise this programme and enable South African companies to organise themselves to partner with global OEMs and prepare themselves to partake in the infrastructure roll out programmes.
We advised Eskom to establish a capital management division headed by a senior executive, to rebuild contract management skills broadly, but also deploy them on the ground of the Build programme. We advised them to engage with the local communities. I led them to meet the Mayor in Waterberg and have a discussion with them the Medupi project and what could be the offset for the community, leading to the establishment of a skills development college in the area particularly empowering the workers so that as the Build programme gets completed, the workers can be retrained to get jobs in other areas. So, there is a lot of work that we did but I think the main issue is the solution provided in the course of the discussions – the SOCs must establish a long-term project pipeline and develop contract management skills.
On the earlier suggestion that we establish a mechanism in the form of an inter-ministerial committee (IMC) especially for major contracts, I think we can quantify the size of such contracts which would require an IMC type of oversight body to ensure there is localisation and compliance with our transformation laws. I think all of those interventions would assist us moving forward. There is a 70% localisation target set for government broadly, but government doesn’t meet that target. The SOCs have no strict oversight to ensure that they comply with these. I think we need to establish those mechanisms and make these a part of the reporting to the shareholder ministers so that we can monitor. One of the things we suggested to the Office of the Chief Procurement Officer in the National Treasury was that need to provide an annual report on meeting the procurement target to government which also should be made available to the Committees. If we say we have a 70% local content target, we provide a report that says government this year spent so much money, we met local content target by this much or failed and these were the main culprits and what the reasons were they failed, and what penalties are taken to ensure they meet the local content target. I think this requires heightened attention on our part as policy makers so we can ensure full compliance particularly with the progressive legislation that we have adopted. Thank you.
Chairperson: Thank you, Minister, for coming to the Committee. We have been looking forward the past two weeks to ultimately meeting. You made time to come and meet us. I want to clarify that this Committee is not putting criminal action against anyone. The allegations that we hear, we come here as a Committee to ask about those allegations. Not because we want to put you on the spotlight that you are criminal. It is not us that will tell you that you’ve done something wrong, therefore you are going to be charged. We are doing our oversight work as this Committee. We know you are now not the Minister but you were a Minister of this Portfolio Committee. Apparently, there were wrongdoings happening during your time as a Minister and the Gupta family that you hear the Members talking about here, is a family that has been perceived by the whole country as actually influencing our government in appointing Ministers, boards and executives and they are not from South Africa. They are a company coming from somewhere else, I don’t know where they are coming from, but they had a huge influence within the government according to the information that we have. So, it’s not as if we want to irritate anybody about the Gupta Leaks and companies. It is because we are concerned about the falling of our country as members of this Portfolio Committee. I want to put it to you, Hon Minister, that your submission and interaction with Members will be further investigated and we will interact with it as a Committee and discuss what we have received from you and other people that have come to the Committee.
At any time, you think we have missed something, you are allowed to contact the Committee Secretary and please don’t forget the promises you have made in the Committee about submissions you are going to make. We are now going to allow you to leave so that we can discuss our issue as the Committee of Public Enterprises.
Mr Shivambu: Chair, I think some of the assurances you are giving are not consistent with the law because when a person takes an oath here, you mentioned it is according to section 16 and 17 of the Privileges and Powers of Parliament Act. Section 17(2) says:
(2) A person who-
(a) threatens or obstructs another person in respect of evidence to be given before a House or committee; or
(b) induces another person
(i) to refrain from giving evidence to or producing a document before a House or committee;
(ii) to give false evidence before a House or committee;
(c) assaults or penalises or threatens another person, or deprives that person of any benefit, on account of the giving or proposed giving of evidence before a House or committee;
(d) with intent to deceive a House or committee, produces to the House or committee any false, untrue, fabricated or falsified document; or
(e) whether or not during examination under section, wilfully furnishes a House or committee with information, or makes a statement before it, which is false or misleading.
commits an offence and is liable to a fine or to imprisonment for a period not exceeding two years or to both the fine and imprisonment.
If there is deliberate misleading, don’t give an unnecessary assurance that this is not going to lead to that. If some of the information that was given here we suspect might be a wilful and a deliberate misleading of the Committee, we are going to make a follow up. That is why we keep making a reference to criminal proceedings might be pursued against people who have deliberately misled this House. If evidence comes out, there will be consequences. So, don’t make unnecessary assurances because one could be in court for making unnecessary assurances.
Chairperson: Thank you, Hon Shivambu, evidence is done under oath and that will be done by a court of law. Thank you, Minister.
Non appearance of Witnesses
Chairperson: Honourable Members do you have all the three submissions by the lawyers of the three witnesses that were supposed to come. The BDK Attorneys, the letter from Myeni and those coming from Duduzane Zuma’s lawyers. Do you have the three letters? They were part of the pack you were given. Let us start with the letter from Ms Myeni. We have invited Ms Myeni three times to come to the Committee; she then wrote a letter.
Mr Tseli: As you have indicated, Chair, we’ve got the letters, we read the letters, we know the content of the letters. Let’s discuss the way forward and what it is we want to see out of the letters we received. This information should not unnecessarily go out, it is for us. Let’s discuss the way forward.
Chairperson: Thank you, Hon Tseli, I was not going to read it. I was asking Members if they have read all of the letters. What do we do with Ms Myeni?
Ms N Mazzone (DA): Firstly, we have received no sick letter from Ms Myeni. She claims to be sick but no court of law ‘sick leave’ to say she is sick. The nature of the letter is written in such an aggressive and disparaging manner towards a constitutionally mandated Committee of Parliament that I find appalling in every which way possible. I would not want to stoop to the same level that Ms Myeni stooped to explain how unfortunate I think her letter is. Ms Myeni thinks she does not have to appear before this Committee. She makes comments in the letter that are completely unfounded and I find them personally insulting as a Member of Parliament as well as a member of this Committee. The disdain in which she treats Parliament as well as this Committee cannot be accepted.
None of us would want to do this [summons] but we should have done it last week already. We are now forced into a position where we have to summons Ms Myeni to appear before us. We have heard more than once of her involvement in the state capture issue. Minister Gigaba himself mentioning her in quite strong terms. So, it’s not a joke, it’s a very serious issue. Certainly one hopes that we will be finishing up this Committee Inquiry soon. Chair, it is impossible for us to finish without having the testimony of Ms Myeni. We offered people the opportunity to come and defend themselves so why anyone would hide themselves from this Committee, I don’t know. If you are innocent there is nothing to hide. Chair, I must insist that now we issue a summons and that we do that as a matter of urgency so that first thing tomorrow morning the summons goes out. I still think we will be able to produce the document before the Parliament end of term rising but the summons must now be issued.
Mr Dlamini: If you read the content of this letter, it’s beyond her being sick. She is already saying that this Committee is treating her like a criminal and we are insensitive and everything. This is not a person who is genuinely sick so let’s issue the summons and get her here. If genuinely she was sick, she would not be saying these ‘freedom’ things. Already she is pre-empting that this Committee will call her a suspect and criminal. And she wants to force us to accept a written submission which is not what we are interested in.
Mr Tseli: I think it is becoming clear, Chair, she is not ready to cooperate with the Committee. Merely looking at the letter, to me it’s a declaration of war and I don’t think she will finish what she started. Over and above the information we want to assist the Committee, we had wanted to give her the opportunity to clear her name, it’s in her best interest as well. Seemingly, she is not ready to come and clear her name. If after we have summoned her to come and clear her name and still there is no response, we will conclude on the basis of her not appearing before the Committee. We can’t be held up by one person before we conclude this work. We want to finish this. South Africans are waiting for the recommendations of this Committee in the work we’ve been doing the last three to four months. I agree with those that are saying we have reached the stage where we need to issue a summons and let’s take it from there.
Mr Shivambu: Part of the letter refers to health practitioners who have to confirm their fitness and capacity to come to the Committee. Even if we have to issue a summons, we need to confirm who are these practitioners that said she is sick and then have an independent evaluation of Ms Myeni to check if she is truly sick. This is because sickness may be fake, a convenient sickness meant to avoid this particular process. This means that those that have been aiding her to fake this sickness will face consequence in terms of relevant legislation and rules that govern health professionals. If we found out that it is fake, then we will take action against people who are deliberately misleading this Committee (he then outlined the consequences of misleading the Committee).
Mr Swart: I’m in agreement with the previous speakers. What is of concern to me is that to date, we have no medical certificate. (He reads a part of the letter). How much longer must we wait for her medical report? One would have expected that with the telephone conversation you had with her, Chair, that she would have received a medical report. I want to warn any medical practitioner as Mr Shivambu has said, if there is anything concocted we will be holding them accountable as well.
Mr Luyenge: This is tantamount to admission of guilt when one is provided with an opportunity to defend oneself and decides to behave in this manner. If one is genuinely sick, getting a medical report should not be difficult.
Chairperson: We are going to summon to the Committee. I also wanted to put for ward my own observation: I think that if she doesn’t want to come to the Committee then she has admitted that she is guilty. It also means that all the testimonies given by all the witnesses under oath against her are true. It’s just that I don’t know where we stand on that under the law. Are we on track?
Mr Swart: I’m not sure what your questions are but when we consider evidence, we do have evidence under oath. At the end of the day, we will balance the evidence and reach a probability of findings about what version we accept.
Chairperson: I am asking the legal team. You know we have been assigned a legal team by Parliament. We can give our legal opinion as Members, but the legal team must agree with our legal opinion.
Mr Tseli: We have taken a decision on this matter, let us close off now. Let us see what happens after we have issued the summons. After that we take it from there.
Chairperson: We will summon. Let’s look at the second letter. What do we say about the letter from the lawyers of Duduzane?
Ms Mazzone: Chairperson, same “WhatsApp group”. Again there is disdain and ignorance of the Constitution. We issue a summons in accordance with section 17(1) of the Powers, Privileges and Immunities of Parliament and Provincial Legislatures Act and we get him to come and testify. If he doesn’t answer our summons, they both get charged and we carry on with our work. We can’t allow this kind of behaviour unless we stand strong and show our commitment to this inquiry. We subpoena both of them, Duduzane and Myeni.
Chairperson: Do we agree with Ms Mazzone?
Mr Luyenge: Chairperson, we have no option, we are forced to behave in this manner. We are still within law, if they undermine Parliament, we must do something about that.
Chairperson: What are we going to do about these lawyers that are sending letters to us when they know we have acted in accordance with the law and our Constitution?
Mr Swart: I think at this stage they are advising their clients in accordance with what they perceive their rights to be. We should allow the legal department to respond to those letters. One lawyer has made the allegation of not getting a transcript, and that might be the reason they have not appeared. We need our legal department to answer this letter.
Chairperson: I hear you that it is within the lawyers’ rights to give legal guidance to their clients, but I’m worried about the language that they are using. We have the third letter, the Guptas are not in South Africa; they are outside the country.
Mr Swart: This letter needs to be looked into carefully. They changed the lawyer [he then reads paragraph 4 of the letter]. You act for a firm and then you say you are not prepared to accept any documentation on their behalf. Either they are acting for the client or they are not. They make very serious allegation against this Committee of unfair questioning. This is not a criminal investigation, it is an oversight inquiry. Let’s make that very clear. [he then reads the next paragraph]. They are outside the country because they are fugitives from justice. Summons must be issued without any further delay.
Ms Mazzone: [Reads a paragraph from the letter] If there are warrants of arrest against them then they are fugitives from justice. They will be summoned and then they will have two warrants of arrest.
Chairperson: The type of language they are using is undermining the work of this Committee.
Mr Shivambu: [Reads section17] we must not allow people to undermine Parliament like that. They must come here to be held accountable. Some of them are South Africans citizens whether they got it genuinely or not, they must be held accountable under the South African law maximally or there will be consequences.
Chairperson: As we make suggestions, let us suggest dates when we can invite these people to come to the Committee.
Mr Luyenge: We are systematically being undermined by people who thought they own this country. They never thought there will be a time when they have to answer for their conduct. Let’s summon them. The way these people behave, they think we are banana republic; we are not banana republic.
Mr Tseli: We rarely have time, we need to conclude this and report back to Parliament. If we are summoning them, obviously it is for next week. Failure of which, criminal processes will then be followed. We cannot afford to go beyond next week. Chairperson, after this meeting you will have to communicate to South Africans about the decision we have taken with these key witnesses because what we wanted from them is critical to the work we are doing. It’s important to have that statement from your office, telling South Africans of our decision and why we reached that decision.
Inquiry Chairperson: Honourable Members we have to look at the dates because there is public holiday next week. As for a media briefing, we always issue a statement after the end of every inquiry meeting. We will do that even today.
Committee Chairperson, Ms Mnganga-Gcabashe: When we come back from recess, I think it would be wise to fix dates for all the tasks we have remaining. We are behind in our committee work, unlike other Committees.