Joint Press Release by The Helen Suzman Foundation and Magda Wierzycka, 14 December 2017

State Capture: Eskom

1. The facts surrounding mismanagement and corruption at Eskom are of paramount public interest and constitutional significance, and involve the rule of law at its most fundamental levels. This mismanagement and corruption affect each and every South African at the very basic level, with electricity tariffs increasing by 350% over the past decade by a state-owned enterprise (SOE) which supplies, as a monopoly, a crucial commodity to the country’s economy. Eskom’s 2018/19 tariff increase application for an average of a further 19.9% (but 27.5% to municipalities), is currently being considered by the energy regulator. 

2. In the absence of action by the relevant organs of state and law enforcement agencies to address the clear evidence of corruption and maladministration at Eskom, the Helen Suzman Foundation and Magda Wierzycka have today jointly approached the High Court in Pretoria, to set aside a series of unlawful, improper and/or corrupt exercises of public power and to recover all of the proceeds of this activity, totalling several billion Rand, for the benefit of the South African fiscus. 

3. Relief is also sought for the failure to report these instances of corruption, as required under the Prevention and Combating of Corrupt Activities Act, 2004. Such acts of corruption have to be reported to the Directorate for Priority Crime Investigation (commonly referred to as “the Hawks”) and the National Prosecuting Authority (NPA) for action through the criminal justice system. Finally, the application seeks that the respondents, including members of the National Executive, Eskom officials and the Gupta family and businesses, account fully and properly to Court for all funds or other benefits which have accrued to them or others as a result of the unlawful and corrupt conduct set out in the application, and to pay all amounts unlawfully obtained to Eskom or the State.

4. State capture is a real and pressing threat to South Africa’s democracy. Over the course of several years, officials at the highest echelons of state have been doing the bidding of a powerful family and its business associates, in disregard of their constitutional and other legal duties. Key officers of state have systematically been unlawfully removed from their positions and replaced by persons who owe their allegiance to the Gupta family and its business interests. The Gupta family has developed extensive links with the President of the Republic, several of his family members, members of the National Executive and national administration, and a multitude of officials at SOEs.

5. The evidence of state capture is most clearly evident in SOEs, and in particular the largest SOE, Eskom. Following on from the Public Protector's report into state capture (released at the end of 2016), the emerging evidence in the public domain shows that certain SOEs have been and are being repurposed to serve the private interests of a small powerful elite. This deepening corrosive culture of corruption within the state, with an evident focus on illegitimate private wealth accumulation, shows a complete disregard, not only of individual constitutional duties, but also the economic prosperity of South Africans. 

6. The leaked Gupta emails and documents, which have been published in South Africa in recent months, have revealed clear evidence of unlawful, improper and corrupt activities by a state capture network which includes numerous government officials, many of whom hold high ranking positions. This is particularly alarming in light of the critical importance of South Africa's state institutions, including that of its SOEs, to the elimination of poverty, inequality and discrimination and to development and transformation. 

7. We believe that facts surrounding the capture of Eskom by the Gupta family and their political associates represent a classic case of state capture and corruption. Benefits and payments in the order of billions of Rand have unlawfully accrued to benefit the Gupta family and its associates from 2014 to date.

8. Parties against whom relief is sought include, amongst others, Eskom, President Jacob Zuma, Minister Mosebenzi Zwane, the Director General of Public Enterprises (Mogokare Seleke), Duduzane Zuma, Gupta family members and their businesses and associates, and former members of the Eskom Board, including Mark Pamensky, Anoj Singh, Brian Molefe and Ben Ngubane.

9. The unlawful and corrupt conduct to which the application relates, includes:

9.1 the decisions by Eskom, its Board and its officials, to award Gupta-related entities, including Tegeta Exploration and Resources (Pty) Ltd ("Tegeta"), coal supply and emergency coal supply agreements worth billions of Rand without just and proper cause, any procurement process and with the unlawful objective of benefitting the Gupta family and its businesses; 

9.2 the unlawful and corrupt conduct by Eskom's officials, Mr Seleke, Minister Zwane and the Gupta family and associates in forcing the sale of Optimum Coal Holdings (Pty) Ltd and its subsidiaries ("Optimum") to Tegeta;

9.3 the issuing of guarantees and making of prepayments worth billions of Rand unlawfully and corruptly to benefit the Gupta family and its business interests, including the financing of the purchase of Optimum by Tegeta;

9.4 the unlawful and corrupt conclusion of sponsorship agreements worth over R43 million between Gupta's TNA Media (Pty) Ltd and Eskom;

9.5 the corrupt and unlawful gratification, including appointments, payments and other benefits given to various public officials, including Minister Zwane, Mr Collin Matjila, Mr Anoj Singh and Mr Mark Pamensky; and

9.6 the unlawful appointments of Mr Seleke as the Director General of the Department of Public Enterprises and Mr Zwane as the Minister of Mineral Resources.

10. We are seeking, in the public interest, the recovery of all unlawfully obtained benefits which resulted from corrupt and unlawful conduct. To the extent that the information about illicit benefits is incomplete, we ask the Court to order a full and proper accounting to be delivered by all relevant parties. 

11. This application intends to hold all those responsible for corruption to account, in accordance with the Constitution and the rule of law. Civil society has been forced to take these steps in the public interest as a result of the inability or unwillingness of law enforcement agencies to take any action.

12. Given the substantial public interest in this case, we are making electronic copies of our Court papers available online. These can be accessed here.

Issued by the HSF, 14 December 2017