Inside Cabinet during Zuma’s Nkandla scandal

8 Apr 2021

In his memoir, ‘Towards a New Deal: A Political Economy of the Times of My Life’, published by Jonathan Ball, former Trade and Industry minister Rob Davies looks back on the inner workings of the South African government in the democratic era, not least the evolution of tenderpreneurs and how the Nkandla scandal played out — and why those in government were inclined to give Zuma the benefit of the doubt.

The ANC-led government entered its fifth term with an own goal: an electricity crisis. This was long in the making. It dated back to decisions taken in the 1990s that there was no need to invest in new power stations as there was “overcapacity”, and perhaps also to a sense in some quarters that Eskom, the national electricity supplier, would be privatised and private investors would come in. The process of awarding tenders, and the vested interests that emerged from this, together with a failure to carry out proper preventive maintenance, on top of outright bad management at Eskom, led, by the end of 2014, to both planned and unplanned power outages (known euphemistically as “load shedding”).

The R1-trillion infrastructure build programme undertaken during the fourth term came to be recognised as one of the main reasons why South Africa managed to escape the fate of several peer countries (such as Brazil) that fell into recession after the end of the commodity supercycle. Certainly, the infrastructure build programme — for all the weaknesses of some of its projects — had operated countercyclically and the discipline created by the establishment of the Presidential Infrastructure Coordinating Commission (PICC) was beginning to have positive results. However, the major drivers of this programme were investments by state-owned companies (SOCs). The 2014 Eskom crisis was but a harbinger of what became the defining feature of president Zuma’s second term — a gathering crisis of corruption and State Capture — that would impact profoundly on the performance of many public institutions, particularly SOCs.

Corruption had, of course, become a significant issue long before Zuma’s presidency. The interface between government and the private sector in the area of government procurement (significantly expanded in many countries with the adoption of neoliberal policy prescripts favouring “outsourcing” of an increasing range of services previously performed by public institutions) had in South Africa been characterised since apartheid days by high levels of rent-seeking. Levels of concentration and centralisation were widely recognised as being extreme in South Africa, compared even to the high global norms.

This meant that there were generally only a small number of established suppliers in each sector, initially linked to conglomerates. These suppliers demonstrated a significant propensity to engage in collusive practices. This was underscored by the investigation by the competition authorities that uncovered extensive collusion and tender rigging in contracts for the building of stadia for the hosting of the 2010 Fifa World Cup.

After 1994, a new element was added — not, as some would have it, BEE per se, but BEE of a certain kind, and more particularly BEE fronting. While there were many black people who entered business as farmers, miners, industrialists or service providers, exceptionally high levels of concentration and centralisation erected formidable barriers to entry and required much persistent effort by new entrants.

At the same time, many established white-owned companies saw the imperative to change their appearance and began to embark on BEE deals. While not true of all, many of these involved some element of BEE fronting (see Chapter 10). This generally took one of two forms.

The first saw the recruitment of black people (preferably with some “Struggle credentials”) into nominally high-profile public relations positions in established white-owned companies seeking tenders.

The second involved the formation of black-owned or black-led companies with the specific goal of acquiring tenders. The element of fronting crept in when these companies developed no real capacity to produce the goods or services tendered for, but merely served as intermediaries between government procurers and established white-owned or foreign suppliers who actually delivered the goods or services procured. At their worst, some of these companies sought to position themselves as intermediaries for absolutely any tender — giving rise to the term “tenderpreneur”.

Even at the time, some of us doubted whether it was wise for the president to refuse to offer to make any repayment, but Zuma argued strongly that any move of this sort would be tantamount to admitting guilt. As the media storm erupted, a government investigation was initiated. This concluded that there was indeed extensive corruption and overpayment in the project, but that neither the president nor any sitting member of the executive was culpable in this regard.

Government procurement, instead of being an opportunity for the negotiation of discounts for large purchases, became instead a reality of overpriced acquisition of goods and services, as excessive mark-ups were added to often monopolistic prices. Over time, instances emerged of purchases by government departments at prices many times higher even than high street shop prices, involving, among other items, computer equipment, furniture for offices or official residences, and even bottled water and drinking glasses hired for state dinners. All of this was compounded by numerous instances of officials and political leaders seeking and obtaining significant bribes and kickbacks to grant or receive tenders.

In other words, the exceptionally concentrated and centralised character of South African capitalism, with a strong resident white bourgeoisie, gave “primitive accumulation” by an aspirant black bourgeoisie a particular character. It led some, but not all, to limit their horizons to the rent they could extract by becoming intermediaries in, and/or facilitators of, access to state tenders.

After two decades in office, such practices were having a major deleterious effect on the ANC as an organisation. This had in fact been foreseen in many documents as one of the potential perils of incumbency. To my knowledge, at least from the time of the report of then secretary-general Kgalema Motlanthe to the ANC’s Stellenbosch Conference, held in 2002, successive secretaries-general had warned that branch activities were becoming increasingly corrupted by ambitious individuals forming factions and cliques with the precise intention of using political position to secure personal access to state resources and tenders. It was not that opposition-led government institutions were immune. Several instances of corruption came to light in various non-ANC municipalities. But the fact was that, with its greater control of government in all three spheres, the ANC was the main target.

Compounding this was the reality of systems operating (or not operating) in ways that made attempting to fight corruption far from easy. Individuals implicated could count on slow procedures by an overstretched criminal justice system. This made the chances, if discovered, of ending up behind bars much less likely than simply losing a position, with a prospect of being able to find another somewhere else in government.

As indicated earlier, shortly after my appointment in 2009, I cancelled an ICT tender in the then Companies and Intellectual Property Registration Office that was manifestly out of order. This resulted in a lengthy court process, during which a host of hostile articles appeared in sections of the press. The easier route, much more travelled, was simply to reach a settlement, involving a payout of yet more government money.

It was on this terrain that it emerged in 2012 that R246-million had been spent on upgrades at president Zuma’s family residence at Nkandla in KwaZulu-Natal. Some R70-million of this was within the perimeter of the property, and the remainder was earmarked for the construction of facilities for police and other support personnel outside.

At first, many of us in government and the ANC were inclined to give president Zuma the benefit of the doubt. He strongly asserted that he had not asked for the upgrades and that these had been insisted on by officials from various government departments. We all knew of instances where officials, particularly in the Department of Public Works, drove overpriced repairs and renovations to the official residences assigned to us as tenants without our knowledge or concurrence. Officials in the security cluster also assured us that all upgrades had been undertaken as matters of security. For example, I recall a briefing in which we were told that the “fire pool” had no shallow end and could not possibly be used as a swimming pool (something that later proved to be untrue).

Even at the time, some of us doubted whether it was wise for the president to refuse to offer to make any repayment, but Zuma argued strongly that any move of this sort would be tantamount to admitting guilt. As the media storm erupted, a government investigation was initiated. This concluded that there was indeed extensive corruption and overpayment in the project, but that neither the president nor any sitting member of the executive was culpable in this regard.

The matter was then referred by the Opposition to the Public Protector, Thuli Madonsela, who conducted her own investigation culminating in the issuing of a report, titled “Secure in Comfort”, a few months before the 2014 election. The report found that there had indeed been extensive corruption and overpayment, and while it made no findings that directly implicated the president, it did conclude that he and his family had benefited from upgrades that were not in fact security-related. It accordingly recommended that the minister of police identify what non-security upgrades had been made, and that the president make a reasonable contribution towards the cost of these.

As is well known, president Zuma referred the question of the status of the Public Protector’s findings and recommendations to the Constitutional Court, whose ruling was still pending as the fourth Parliament and fourth administration ended their terms.

The Nkandla issue had a significant impact on campaigning for the 2014 election, and not just among urbanised middle-class voters. I recall many ordinary poor people raising it in door-to-door engagements, and we were all provided with speaking notes on the matter. Not surprisingly, it was seized on in opposition party campaigns. Nkandla, indeed, provided the DA with something of a lifeline after what might otherwise have been an electorally damaging internal conflict over the issue of the 2013 B-BBEE Act (see Chapter 10). The Nkandla matter also allowed the fledgling EFF to deflect attention from some very real, and still unanswered, questions about its leadership’s alleged role in dodgy deals in Limpopo province.

After the elections, and with the Constitutional Court ruling still pending, the then Minister of Police, Nathi Nhleko, treated us to a “bioscope” to demonstrate that all the upgrading at Nkandla was indeed security-related. I recall a scene where the local Nkandla fire service (a bakkie with a small hose) was shown to be unable to generate sufficient water pressure to quench a potential fire. A pump accessing the water from what appeared to be a regular swimming pool was presented as the answer. DM

Rob Davies became a Member of Parliament in 1994 and served as Minister of Trade and Industry from 2009 to 2019. He worked as a professor and co-director of the Centre for Southern African Studies at the University of the Western Cape (UWC). During this period, he undertook policy research for the ANC and the Southern African Development Community (SADC). He holds a DPhil in Political Studies from the University of Sussex and an MSc in International Relations from the University of Southampton, both in the UK. Towards a New Deal is published by Jonathan Ball.

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