“This is the beginning of the end,” says Ben Theron, OUTA’s Chief Operating Officer. “We can definitely see the tide turning in the way companies, once respected, are being exposed for being party to corruption even if it is just through their silence,” says Theron.
On 26 September, OUTA won a significant legal action, obtaining an urgent interim interdict against the Bank of Baroda which preserved the R1.75 billion mine rehabilitation funds for the Gupta-owned Optimum and Koornfontein coal mines. This is believed to be the first freezing order against Gupta assets, a crucial step in ending state capture. This matter is back in court on 7 December for finalisation.
“The Bank of Baroda interdict specifically speaks to preserving the mine rehabilitation fund for the purposes intended and it cannot be taken by the Guptas for selfish reasons,” says Theron.
In July, OUTA wrote to the South African Reserve Bank (SARB) and the Financial Intelligence Centre, calling on them to cancel the banking licences of the Bank of Baroda and the Bank of India following revelations of problems with the Guptas’ bank accounts. Within days, the Guptas told their staff that the Bank of Baroda – the last bank to do business with them – was closing their accounts. The Guptas took the Bank of Baroda to court in a desperate attempt to keep their accounts open, but lost. OUTA watched this case and, hours after that judgment, brought the urgent application to freeze the funds.
The extent and depth of state capture was exposed by the #GuptaLeaks initially by investigative journalists AmaBhungane and Scorpio. The information #GuptaLeaks has also been a crucial part of OUTA’s actions against state capture, starting with the dossier delivered to Parliament in June and continuing with charges against implicated individuals.
Opposition to state capture is now coming from a broader section of society, following the increasing exposure of big brand companies as implicated in state capture, through direct pay offs (like management consultants McKinsey and Trillian), through helping the Guptas cover up (like PR company Bell Pottinger) or by helping manipulate inconvenient financial legalities and turning a blind eye (like auditors KPMG).
During September, Business Leadership South Africa kicked out first KPMG then Eskom and Transnet over their involvement in state capture. Auditors SizweNtsalubaGobodo finally cut ties with the Gupta family’s business Oakbay which it took on last year, with CEO Victor Sekese saying their involvement was contrary to standards set by the Independent Regulatory Board for Auditors (IRBA). “It was a professional consideration,” Sekese told eNCA. SizweNtsalubaGobodo founder Nonkululeko Gobodo, who is no longer with the firm, questioned why the government is still silent on state capture, telling Moneyweb: “Their silence is actually quite audible”.
On 28 September, civil society activists picketed the National Prosecuting Authority’s offices in Cape Town, calling on National Director of Public Prosecutions Shaun Abrahams to take action against state capture, reported GroundUp.
On 27 September a heated debate at Wits University involving former finance ministers Pravin Gordhan and Nhlanhla Nene and economist Iraj Abedian strongly criticised auditing and financial firms like KPMG for their complicity in state capture and costing South Africa billions of rand. “We are grateful that our economy is growing by 0.3%‚ when we should be furious. The damage these professionals‚ like those from KPMG‚ are doing is not just financial damage. It is impacting on unemployment,” says Abedian, reported The Times.
Abedian has spoken out strongly against the businesses – like auditors – who have facilitated state capture. “Ever since the advent of the #GuptaLeaks, and a growing body of evidence implicating KPMG, Bell Pottinger, McKinsey and SAP, it has become clear that corruption is not confined to the public sector, political leaders and the executives of state-owned companies,” Abedian wrote in BizNews. “In fact, it has become clear that in today’s complex and globalized financial markets, no serious corruption can be sustained without an intricate and close working relationships among sophisticated and competent private sector professional firms and those who hold high offices – whether in public or in the private sector.”
OUTA is now looking to the auditing industry to take a hard introspective look at their conduct.
“We’re currently looking at how the auditing firms have become complicit in state capture by purely ticking boxes,” says Theron. OUTA is arranging meetings with organisations that oversee the auditing industry, such as the South African Institute of Chartered Accountants (SAICA), the Independent Regulatory Board for Auditors (IRBA), the Auditor General of South Africa and Parliament, to discuss ways of halting state capture.
Theron says the main focus of state capture has been in the state-owned entities (SOEs), which have massive budgets and are targeted by the corrupt as cash cows: Eskom, Transnet, Prasa, SAA and SABC.
“Virtually all SOEs are affected,” says Theron.
“How it affects the person in the street is that Eskom has colluded with the Guptas and other companies to siphon off billions of rand. That missing money now reflects in the 20% increase in tariffs that Eskom requested, because they’ve got to recoup their losses. They caused the losses and they’ve got to recoup it,” says Theron.
“So there’s a direct link between Eskom’s corruption and my pocket.
“What we’ve been doing is to identify the money flows, because corruption thrives on money flows. We’ve started shutting the cash taps. We’ve shut down their bank accounts. We’ve frozen the R1.75 billion mine rehabilitation funds. On a day-by-day basis we are identifying where else we can stop the corruption.”
The PIC has also come under the spotlight, with concerns that it may be used to “invest” in the disintegrating SOEs. “We are protecting the future of ordinary citizens by making sure that the PIC does not invest in bankrupt or poorly managed organisations,” says Theron.
“We will leave no stone unturned to arrest corruption and to put South Africa on a path to achieve the moral high ground that we once had. OUTA will pursue all people involved in corruption, because that affects our taxes and South Africa’s future.”
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