Terms of Reference on State Capture allegations involving former Minister of Mineral Resources

Mineral Resources

14 March 2018

Chairperson: Mr S Luzipho (ANC)

Terms of Reference on State Capture allegations involving former Minister of Mineral Resources

Meeting Summary

Documents Handed Out: Preliminary Draft Terms of Reference [available under Tabled Committee report once adopted]

This meeting was called following a resolution by the Committee on 21 February 2018 to institute an inquiry to probe the role of the former Minister of Mineral Resources Mr Mosebenzi Zwane in allegations of state capture at the Department of Mineral Resources. At the centre of the allegations are perceived illegalities in the sale of the formerly owned Glencore mines, especially Optimum Coal Mine, to Tegeta Explorations and Resources which is a group of companies owned by the Gupta family. The House Chairperson had written a letter to the Committee in June 2017 requesting the Committee to probe the allegations. The Committee in a heated meeting following receipt of the letter was divided on whether to include Mr Zwane in its investigations. After consulting the parliamentary Legal Services, the House Chairperson advised the Committee to afford Mr Zwane an opportunity to state his case regarding the allegations. After meeting Mr Zwane on several occasions and asking him questions regarding the allegations, the Committee members were still not satisfied with his answers and they sought a further meeting with him on 21 February 2018, a meeting which he failed to attend. His failure to attend the meeting prompted the Committee to resolve to institute an inquiry into the allegations of maladministration at the Department of Mineral Resources. The parliamentary Legal Services were requested to draft the terms of reference that would guide the Committee in conducting the inquiry and this meeting was meant to review them. However, there were no members from the parliamentary legal department present to guide the members on some legal questions. Among the questions raised by the members was whether instituting this inquiry would not clash with the work of the commission of inquiry that had been established by the former President Jacob Zuma to probe allegations of state capture in January. Despite the absence of the legal personnel, the Committee resolved to proceed with the inquiry and gave itself 60 days to complete the process beginning immediately after Easter.

Meeting report

The Chairperson welcomed everyone and said the Committee was going to deal with two issues: namely, processes regarding the oversight inquiry and the minutes of the last meeting. He was expecting the legal services to join the Committee later in the meeting and he requested the Committee Content to guide the meeting on the contents of the draft terms of reference regarding the inquiry into state capture.

Presentation on the Preliminary Draft Terms of Reference for the Proposed Inquiry on State Capture

Mr Nkosinathi Kweyama, Committee Content Advisor, said the draft terms of reference contained five sections:

  • Section A provided the background to the inquiry which was the former Public Protector Advocate Thuli Madonsela’s State of Capture Report, Report No: 6 of 2016/17, which was released on 14 October 2016. The report contained prima facie findings into possible governance failures and maladministration within the Department of Mineral Resources with special reference to the former Minister of Mineral Resources Mr Mosebenzi Zwane
  • Section B outlined the provisions in the Rules of the National Assembly that were relevant to the inquiry particularly section 227 (1)(c) which states: ‘A Portfolio Committee may monitor, investigate, inquire into and make recommendations concerning any such executive organ of State, constitutional institution or other body or institution, including the legislative programme, budget, rationalisation, restructuring, functioning, organisation, structure, staff and policies of such organ of state, institution or other body or institution’.
  • Section C dealt with how the inquiry came about. On 21 February 2018, the Committee held a meeting to continue questioning Mr Zwane on allegations against him pertaining to state capture. However, he tendered an apology and could not attend. Therefore, the Committee agreed that the allegations of state capture were serious and, therefore, resolved to institute an inquiry to further and fully consider the matter in line with the mandate of Parliament as articulated in section 55 of the Constitution read with Rule 167 of the National Assembly.
  • Section D contained the terms of reference that were proposed by the legal department. The Committee will inquire into alleged government failures and maladministration issues within the Department of Mineral Resources. The inquiry will take the form of question and answer sessions during which Mr Zwane as well as any relevant person will be required to testify before the Committee. The Committee will focus, among other things, on the following issues and matters related thereto:
  1. The role of Mr Zwane and the Department of Mineral Resources in facilitating the sale of Optimum Coal Mine to Tegeta Explorations and Resources (Pty) Ltd
  2. Alleged non-compliance with the Public Finance management Act resulting in fruitless and wasteful expenditure relating to travel arrangements made by the department on behalf of Mr Zwane
  3. Alleged breach by Mr Zwane of section 96(2) of the Constitution and section 2 of the Executive Members Ethics Act regarding conflict of interest
  4. The handling of mining rehabilitation funds by the Department of Mineral Resources and alleged non-compliance regarding the Minerals and Petroleum Development Act, the National Environmental Management Act and the Income Tax Act
  5. Whether the appointment and dismissal of officials in the Department of Mineral Resources was subject to any external and undue influence, including the dismissal of the Mpumalanga Regional Manager, allegedly without sufficient cause
  • Section E outlined the procedures that would be followed by the inquiry. The Committee shall conduct the inquiry as follows:
  1. Witnesses identified by the Committee shall be subpoenaed to attend at designated times and places as provided for in section 14(2)(b) of the Powers and Privileges and Immunities of Parliament and Provincial Legislatures Act
  2. Witnesses will be afforded the opportunity to make written submissions for consideration but such submissions shall not absolve the witnesses from attending the inquiry in person and answering questions put to them
  3. Witnesses will be permitted to be accompanied by legal representatives but such representatives shall not answer questions on behalf of witnesses
  4. Witnesses will not be allowed to cross examine other witnesses but must be afforded an opportunity to make representations on the draft committee report before it is adopted by the National Assembly. The principle of natural justice shall apply to the proceedings of the inquiry
  5. After deliberating on the issues but before the Committee tables its report in the National Assembly, witnesses will be given a further opportunity to make representations on the draft committee report, including its findings and recommendations to the extent that they are affected by it.


The Chairperson clarified that the draft was done by the legal services unit in Parliament even though they were not there at the meeting. Regarding the inquiry, he did not want to lead the Committee and that his duty was not to take decisions on its behalf but to facilitate discussions that would lead to a collective decision. He urged the Committee members to disagree but not to be disagreeable. The members could differ, but differing did not mean being disrespectful.

Mr J Lorimer (DA) proposed amending point 10A of the terms of reference. He suggested expanding the scope of the inquiry from just probing the role played by Mr Zwane in the sale of Optimum Coal Mine to the Tegeta group of companies but the sale of all Glencore assets. He further suggested including matters to do with logistics and emphasised the need for a timeline to the investigation.

Mr M Matlala (ANC) said the Committee had had some meetings before 21 February 2018, some of which had been attended by Mr Zwane where issues were raised and addressed. However, some members felt that the issues had not been addressed to their satisfaction and they requested for a further meeting with Mr Zwane but, unfortunately, he did not attend the meeting. It was then agreed that the process should go ahead. There was a danger, however, of going round in circles since there was a new minister in the ministry. He asked whether the law allows a former minister to be called to account. He confessed that he was a little confused because the President had appointed a judicial commission of inquiry to look at all the issues that had been raised by Advocate Thuli Madonsela’s State of Capture Report. Law enforcement agencies like the Hawks had also swung into full action with many people that had been implicated in the report having already been arrested and charged. He wondered what the Committee would achieve with this inquiry and feared that they would just be going around in circles.

The Chairperson replied that it was important to start from scratch. He read a letter dated 20 June 2017 from the House Chairperson Mr Cedric Frolick to the Committee with the heading ‘Allegations of State Capture in Organs of State’. The letter stated that some of the allegations involved the Minister of Mineral Resources and the Committee was requested to investigate the allegations as a matter of urgency within the parameters of the Rules of the National Assembly. He clarified that the letter did not restrict the investigations to the Minister of Mineral Resources but included organs of State. He recalled that the Committee convened a meeting which was heated because the members differed on whether to involve the Minister in the investigations or not. As a result, the Committee wrote a letter back to the House Chairperson who upon conferring with legal advisors counselled that before any investigations were instituted, the Minister needed to be given a fair hearing. When that was done, members still had other questions.  He stressed that the onus was on the Committee to investigate as the inquiry was about fact finding and that there was nothing wrong with it as it would simply probe the tenure of office of the former minister.

Mr N Mandela (ANC) said there were so many allegations connected to state capture, but that the Committee needed to restrict itself to issues related to its mandate. He made reference to Mr Lorimer’s proposal to expand the probe to the sale of all former Glencore assets and agreed with it. He recalled that when they met the former minister, Mr Zwane, they did not restrict themselves to issues regarding mineral resources and that they needed to identify specific issues to investigate, otherwise they risked getting lost in the sea of allegations. He asked whether the Commission of Inquiry that the President had established did not take precedence over the inquiry of the Committee. He also questioned whether the Committee was empowered to carry out an investigation. Regarding the terms of reference, he cited point 10E which spoke about appointments and dismissals. He argued that employees had other platforms through which grievances could be channelled and that the power to appoint and dismiss lay with the executive.

Mr Lorimer said the duty of the Committee was to find out what went wrong and to ensure that it does not happen again. There was a need to identify instances when the Department of Mineral Resources did not perform according to expectations and to find why they failed to perform. It was important to establish whether officials that were appointed to the department were given those jobs with a view to ensuring that the Gupta companies were advantaged in the purchase of the Glencore assets. There was a further need to establish whether pressure was exerted on other companies that were bidding to buy the Glencore-owned mines.

Mr Luzipho interjected saying that it was important not to prejudice the outcome of the allegations. He added that when the Committee met with the former minister, they were not investigating him but they were simply according him the courtesy of saying anything he had to say. An inquiry is done under oath and Mr Zwane did not take any oath. He agreed with Mr Mandela that there was a need to take out the last part of point 10E of the terms of reference. He asked how they were going to proceed in closing the terms of reference and whether there was a need for an evidence leader. An evidence leader was needed to close the terms of reference and to help with the collection of evidence. A specific timeframe needed to be set for the inquiry and that the evidence leader needed to be an impartial person free of any political influence.

Mr Mandela expressed the need for the Committee to have areas of agreement by outlining the boundaries of the inquiry. He asserted that the only field of inquiry before them was the Optimum Coal Mine together with the other mines that were bought from Glencore by Tegeta as there were no other entities under the department that had been implicated in the allegations.

Mr Lorimer agreed that there was a need to have an evidence leader and that the Committee required legal advice before proceeding further.

The Chairperson said he would write to the House Chairperson requesting for an evidence leader who needed to be a person with a legal background and that three names needed to be proposed. The evidence leader would compile the list of witnesses.

Mr Mandela said it was important to prioritise the matter of the evidence leader.

Mr A Pikinini (ANC) who seemed exasperated with the turn the discussion had taken said the reason he had kept quiet was because the discussion was merely repeating what had already been agreed upon and that the minutes from the previous meetings showed that it had already been agreed that an evidence leader would be required. It was important to go to the House Chairperson and request the resources needed for the exercise. The Committee could give itself 60 days to complete the inquiry and that they could even be meeting on weekends.

The Committee resolved to begin the process immediately after Easter.

The meeting was adjourned.