Charge Zuma Foundation and Myeni with corruption – Zondo says in state capture report

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Raymond Zondo hands part 1 of the state capture report to President Cyril Ramaphosa.
Raymond Zondo hands part 1 of the state capture report to President Cyril Ramaphosa.
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National carrier South African Airways (SAA) tanked under former board chairperson Dudu Myeni’s tenure and former President Jacob Zuma cheered her on, the State Capture Commission has found.

In the final report (full report below) presented to President Cyril Ramaphosa at the Union Buildings on Tuesday, Commission chairperson Deputy Chief Justice Raymond Zondo has recommended that Myeni and the Jacob Zuma Foundation be investigated for possible corruption in the alleged looting of millions of rands from SAA.

A further charge of fraud has been recommended against Myeni in relation to the delays in the Airbus transaction with the company, Pembroke, that would have cost SAA R800 million.

READ: Opposition to block Ramaphosa from receiving state capture report is ‘ill-conceived and legally untenable’

In the first part of the commission’s report released publicly on Tuesday, Zondo found that SAA declined during Myeni’s tenure and that despite Myeni’s mismanagement of the national carrier, Zuma retained her as the SAA board chairperson “well beyond the point at which she should have been removed”. This was the reason why Zuma ran away from the commission, he said.

He said two former finance ministers, Pravin Gordhan – now public enterprises minister – and Nhlanhla Nene – “explained to the commission that this was because of the personal preferences of former President Zuma”.

This is the antithesis of accountability, said Zondo, adding that “President Zuma fled the commission because he knew there were questions that would be put to him which he would not have been able to answer”.

The report reads:

He could not have justified his insistence that Myeni be retained at SAA nor could he have credibly denied Gordhan’s and Nene’s evidence that he wanted Myeni retained at SAA.

The commission was set up in 2017 to investigate state capture, corruption, and fraud in the public sector. Its terms of reference enjoined Zondo to investigate, report on and make findings regarding any bids that benefited family, individual, or corporate interests.

READ: Five key take outs from Ramaphosa’s testimony at Zondo commission 

Investigators sought to uncover not only what had happened, but also why it happened. Thus, the investigation was broad to understand why the public sector was vulnerable to state capture, corruption, and fraud.

Two more parts of the report are due to be released by the end of January and in February.

Ramaphosa is expected to outline how he intends to implement the commission’s recommendations by June this year at the latest.

PERSONAL GAINS

Zondo said in his first report that: 

the appointment of individuals to boards of SOEs must be justifiable based on their skills expertise, experience, and knowledge. Functionaries within SOEs must be held to the highest standards of accountability because they use public funds to manage the businesses they oversee.

He said those responsible for governance at SAA, SAA Technical, and SA Express “displayed a wanton disregard for these standards”. Rather than acting in the entities’ best interests, he said, “they were motivated by their own personal interest [and] this should never be allowed to occur again.”

Zondo said the commission had already laid a criminal complaint against Myeni for her disclosure of the identity of the witness named Mr X during her testimony and “this matter needs to be brought to finality by law enforcement agencies and the National Prosecuting Authority.”

READ: Who was the Zondo commission's worst witness?

The report reads:

The evidence of Mr X also merits further detailed investigation and possible charges of corruption being laid against all the individuals involved in the scheme to securing millions of rands for the personal benefit of Myeni and the Jacob Zuma Foundation.

Regarding the Pembroke transaction, Myeni “knowingly misrepresented to the Minister of Public Enterprises that the board of SAA had taken two decisions when it had not.”

“Those misrepresentations caused financial losses to SAA. It is likely that her conduct constitutes the crime of fraud.”

READ: ‘I came here knowing I was a culprit, criminal’: Myeni tells Zondo

“The commission recommends that the National Prosecuting Authority considers, subject to such further investigation as may be considered necessary, whether Myeni should be prosecuted for fraud.”

DELINQUENT DIRECTORS

During her appearance before the commission, Myeni declined to answer questions on the Pembroke transaction, saying that:

May I not respond chairperson so that I don’t incriminate myself?

However, she blamed the collapse of SAA on former CEO Coleman Andrews, “who sold the fleet of South African Airways, putting it into the deepest challenge.”

Zondo said that both Myeni and Yakhe Kwinana deserved to be declared as delinquent directors but they have since left SAA.

“This time bar may be amended by parliament in order to permit applications to be brought even after two years, on good cause shown.”

READ: SAA’s Myeni under siege on multiple fronts

“This will mean that in cases such as this one, where the true extent of the board members’ breaches of duty are only uncovered a number of years later, steps can still be taken by the executive to ensure that such directors are declared delinquent and are thereby prevented from serving on the boards of companies in the future.”

Other recommendations include that:

  • Law enforcement agencies should further investigate the role of Swissport and Daluxolo Peter, Vuyisile Ndzeku, Lester Peter, and Advocate Nontsasa Memela for alleged kickbacks amounting to R28.5 million involving JM Aviation;
  • JM Aviation appears not to have paid VAT to Sars on the R28.5 million it received from Swissport prior to the ground handling contract being concluded with SAA. It is recommended that Sars should consider this matter further and take such steps as it may be advised to take;
  • Ramaphosa must take note of the involvement of the State Security Agency in security vetting and take such steps as may be necessary to ensure that services of the agency are not abused in the future to serve the interests or agenda of certain individuals;
  • Acsa take steps to recover from Regiments Capital, Phetolo Ramosebudi, Gavin Wood, and Niven Pillay and failing them, Nedbank and Standard Bank, the amounts paid to Regiments Capital under the interest swap contracts and any additional losses suffered by Acsa on those contracts;
  • The NPA look at prosecuting Ramosebudi, Wood, Niven Pillay, and Regiments Capital on charges under the Prevention and Combatting of Corrupt Activities Act;
  • The Asset Forfeiture Unit of the NPA recover the amounts paid to Ramosebudi by Regiments Capital and the amounts paid to Regiments Capital by Nedbank and Standard Bank;
  • The law enforcement agencies investigate the role of Moss Brickman, Mario Visnenza, and Nedbank in relation to these contracts;
  • The Asset Forfeiture Unit of the NPA recover Nedbank’s profits under the interest swap contracts unless Nedbank has a valid defence to such recovery claims;
  • The NPA look at prosecuting Indheran Pillay and Tewedros Gebreselasie on charges under the Prevention and Combatting of Corrupt Activities Act;
  • Where the evidence before the commission has revealed possible acts of corruption and fraud and has recommended that prosecutions take place, steps should be taken by the relevant authorities urgently to seek to recover the proceeds of these unlawful activities;
  • For the Prevention and Combating of Corrupt Activities Act to have any prospect of assisting in the fight against corruption, those who were duty bound to report corruption but failed to do so, must also be held accountable;
  • In her position as interim Chief Financial Officer (CFO), Phumeza Nhantsi held a position of authority within SAA. She ought, therefore, to have reported the BNP transaction and her suspicions concerning the true motives of Myeni and Masotsha Mngadi in pushing the transaction forward. Her failure to do so may constitute a crime. The commission, therefore, recommends that the law enforcement agencies including the NPA should give the matter further consideration with a view to her possible prosecution;
  • The Auditor General’s office should be further capacitated so that it can audit all public entities;
  • The South African Institute of Charted Accountants (Saica) should investigate whether Kwinana has the requisite knowledge and appreciation of her obligations as a chartered accountant and whether she is suitable to continue to practise the profession of a chartered accountant;
  • Kwinana’s auditing firm’s tax returns should also be investigated by Sars because there may have been a significant understatement of revenue (to the value of approximately R40 million) in the 2016 financial year. It is recommended that Sars should conduct its investigation in this regard;
  • SA Express’s dealings with the North West Department of Transport has revealed an elaborate scheme of corruption, designed to take money out of the state’s coffers for the benefit of those with power and influence who orchestrated the scheme. All of the government and state officials, as well as private individuals who were involved in this looting scheme, should be brought to justice;
  • Serious consideration be given by the NPA to charging Vivien Natasen with money laundering and the use of the proceeds of crime after such further investigation as the law enforcement agencies may conduct and if the further investigations reveals possible contravention of the relevant law; that his conduct be reported to the Saica and that Sars should investigate the numerous respects in which Neo Solutions appears not to have accurately and fairly reported its income to the authorities;
  • The Reserve Bank should also investigate whether Kalandra Viljoen’s Asset Movement Financial Services (AMFS) operation was, in fact, a cash-in-transit business. The current police investigation should also be extended to interrogate the role of AMFS in more detail. The question that needs to be answered is whether AFMS was providing general money laundering facilities to those who wished to have their proceeds converted to cash without the necessary checks required from the formal banking system.

State Capture Report Part 1


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Setumo Stone 

Political Journalist

+27 11 713 9001
Setumo.Stone@citypress.co.za
www.citypress.co.za
69 Kingsway Rd, Auckland Park
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