Targeting Treasury, SA’s crown jewel – How predictions in the Project Spider Web report came to pass

21 May 2018

In August 2015, shortly after a secret September 2014 agreement was struck with Russia as a preferred bidder for South Africa’s outrageously costly nuclear deal, a bizarre “intelligence report”, Project Spider Web, surfaced in government circles. Riddled with deliberate red herrings, it sought to smear senior Treasury officials. Nearly three years later, almost all those named in the report are gone.

In the aftershock of cleaning up the industrial-scale corruption of the Zuma years, mostly under the guise of British public relations firm Bell Pottinger’s catchy “white monopoly capital” rhetoric and which is now contained under the umbrella term “State Capture”, a particular modus operandi has emerged.

For now, the brain(s) behind the hugely successful but ruinous strategy, which allowed political elites to capture and abuse state resources for extraordinary private gain, remain(s) unknown.

Almost three years after it first blipped onto the public radar, Project Spider Web – an alleged intelligence report charging that the “white establishment” and the private sector had “huge influence” over Treasury through a dastardly plan titled “Project Grapevine” – nothing much has happened with regard to investigating the source or author(s) of the report.

However, since its surfacing and by casting only a cursory glance at the status of those named in the anonymous report it is clear that almost all of the individuals named have either resigned or been removed from the Treasury in a staggeringly short period of time.

In August 2015 Nhlanhla Nene, who was still Minister of Finance before he was unexpectedly fired by Jacob Zuma that December to be replaced by Des Van Rooyen, seemed unsettled by the report.

At the time Nene issued a media statement condemning the “dossier”, describing it as “baseless and vexatious” and stating that Treasury had “passed it on to relevant authorities to investigate its source and will be transparent about the outcome of that process once completed”.

Responding to questions by Daily Maverick this week Treasury contradicted the minister’s original statement, saying, “Minister Nhlanhla Nene did not institute a formal investigation into the spider web allegations.”

Treasury said that the matter had been discussed by the National Treasury Executive Committee and that “the allegations were found to be spurious. It was also decided not to investigate the matter.

“With regard to executives and senior officials who have since left the employ of the National Treasury, it is public knowledge that the majority of them noted that they were leaving in order to pursue career growth, while others left for personal reasons,” Treasury informed Daily Maverick.

Senior officials who were mentioned in the Project Spider Web report and who have either been squeezed out or who have resigned include Nene, who has since returned to the key position in the era of Ramaphosa’s “New Dawn”.

Pravin Gordhan was parachuted in to replace Van Rooyen which is more or less when the pushback against State Capture at Treasury and SARS – the proverbial cookie jars, or at least the country’s fiscal crown jewels – began.

A ghastly war of political attrition followed, with midnight Cabinet reshuffles and a rush to push through the Russian nuclear deal by former Minister of State Security David Mahlobo, in the hot seat at the Energy Ministry. And while the destructive internal struggle in the ANC might have reached some denouement in February 2018 with the stepping down of Jacob Zuma as President and the appointment of Cyril Ramaphosa, the massive clean-up is still in progress.

Those who also left or resigned from Treasury in the State Capture fallout are deputy Minister of Finance Mcebisi Jonas; the highly respected Director-General, Lungisa Fuzile, who left Treasury after requesting a “redetermination of his contract”; Kenneth Brown, chief procurement officer; Michael Sachs, veteran Deputy Director-General for Budget Office; senior technocrat Andrew Donaldson (who took early retirement after 20 years’ service) and who was acting head of the key Government Technical Advisory Centre (GTAC); Avril Halstead, chief director for state-owned entities oversight (and who was opposed to the nuclear deal) who was seconded to German bank Kreditanstalt für Wiederaufbau (KFW); Dr Kay Brown, Chief Director for Expenditure and Planning who spent 16 years at Treasury, and Marissa Moore, chief director Urban Development and Infrastructure.

Sachs’ departure was described by colleague Richard Poplak as “ institutionally catastrophic” as he served for a decade as Deputy Director General for the Budget Office.

In January 27 2017, Shahid Khan, a treasury stalwart, was appointed as acting head of GTAC but stepped down on 5 February this year and was replaced by Lindiwe Ndlela as acting head.

Project Spider Web in 2015 predicted Fuzile’s departure, albeit prematurely.

“Lungisa Fuzile, the current DG for National Treasury, will not be extending his contract at the end of August 2015. He will be joining the faculty of economics at the University of Stellenbosch. His departure will be a catalyst for some big changes inside National Treasury.”

As it turned out, Fuzile was appointed CEO of Standard Bank South Africa.

Anthony Julies, Deputy Director General of Assets and Liability Management, codenamed “the Jackal” in the report, remains at treasury tasked with financing government's borrowing requirements and managing the financial position of State Owned Companies (SOCs). The Project Spider Web report explains that the “team” is “still searching for the CV. This is one member of the spider web who is the most secretive and extra careful.”

Ismail Mononiat, codenamed “The Bull” in the report is head of Head of Tax and Financial Sector Policy at The National Treasury, and central figure in Treasury’s policy planning mechanism. While he was expected to leave in the slipstream of Sachs’ resignation he is still at treasury but “under pressure”.

Others who were not named but who have been shuffled include Tumisang Moleke, chief director of Treasury’s public-private partnership (PPP) who was seconded in September 2017 as acting head of the New Development Bank. His job was filled in an acting capacity by Strover Maganedisa. The functions of the Transaction Advisory Services and PPP include planning support, feasibility studies, procurement and negotiation support. Maganedisa, according to Treasury, has 16 years of working experience with Government and Municipalities of which 10 years has been with the Treasury’s PPP unit since 2007. He specialises in project management and the structuring of commercial projects.

Mmakgoshi Phetla-Lekhethe ended her tenure as Deputy Director-General International and Regional Economic Policy in June 2016 while Landon McMillan resigned as Chief Director: Microeconomic policy in October that year.

In August 2017 (after Malusi Gigaba’s appointment as Minister of Finance) both Lindy Bodewig, Chief Director Integrated Financial Management System, and Jayce Nair, Accountant General, were removed from their positions.

In November 2017 Nicky Prins resigned from her hugely influential post as GTAC’s Chief Director: Capital Projects Appraisal.

Prins, according to a February 2015 GTAC newsletter , “heads a select, determined unit in GTAC. This small team, consisting of four economists (one with a CFA qualification), an engineer and a development finance expert, interrogates large proposed national infrastructure investments to inform investment decisions by the state. They do this by independently assessing, on behalf of National Treasury, feasibility and other studies that have been undertaken for envisaged large capital investments in infrastructure.”

For “large capital investments infrastructure” read the nuclear deal as well as former Minister of Water and Sanitation Nomvula Mokonyane’s R12.5-billion Umzimvubu Dam project in the Eastern Cape. Mokonyane demanded that Treasury cough up the money which it refused to do. Mokonyane then sought funding for the dam in China.

The anodyne response from Treasury to Daily Maverick this week with regard to Project Spider Web and the mass exodus of institutional memory amounting to at least 116 years comes across as an attempt not to attract any more public attention. Markets are skittish at the best of times.

National Treasury has been known as a space where public officials could embark on long-term careers, particularly economists and accountants. It is not uncommon for senior managers to have over 10 or 15 years of experience, joining, for example, as a Deputy Director and then promoted to various units within Treasury.

This provides staff with a breadth and depth of experience which brings institutional stability and should inspire public confidence. Officials are also notoriously media shy and you would be-hard pressed to get any of those who have left or who have been purged to go on record. The pursuing of “career growth” or the leaving for “personal reasons” blankets the real picture.

The point is, Project Spider Web was passed on to be investigated.

How do we know?

Well, former Minister of State Security, and later conveniently but mercifully briefly Minister of Energy, David Mahlobo, classified parliamentary replies to questions about Project Spider Web as “top secret” in November 2016.

It was DA MP David Maynier who originally asked questions about the 27-page “intelligence” report. Maynier told Daily Maverick that he had been attempting to make an appointment to meet the new chairperson of the Joint Standing Committee on Intelligence, Charles Nqakula, since at least 2 May 2017.

“I have pursued this matter for years and have confirmed via a series of parliamentary questions on ‘Project Spider Web’ that an investigation was requested, that an investigation was conducted, and that the investigation was conducted by the State Security Agency,” Maynier told Daily Maverick.

However, Maynier added, any further information about the progress of the investigation had been buried “by employing the curious practice, not provided for in the rules of parliament, of submitting replies to parliamentary questions, directly to the Joint Standing Committee on Intelligence, which, of course, meets behind closed doors.”

Maynier said he had, in the meantime, been in contact with Nqakula, “who has agreed to consider scrutinizing the investigation, conducted by the State Security Agency, into “Project Spider Web”, which in the end caused so much damage to National Treasury.”

Focusing only on these two vital government financial institutions, SARS and Treasury, a particular modus operandi to clear out ethical and committed public officials swims to the surface.

It goes something like this: single out officials likely to stand in the way of those needing to penetrate the shield of good corporate governance and ethics and launch an often multi-pronged attack.

The attack could take on several forms including, as was the case with the purge of SARS top officials, the lodging of a complaint by State Security triple agent, attorney Belinda Walter.

Walter’s “complaint” sparked several tailored “investigations” (four in the case of SARS, one by KPMG, the findings of which have since been withdrawn), during which evidence against those fingered is not tested but merely included in the final reports.

These reports name specific officials who are then targeted by the government department, either with bogus disciplinaries or on trumped-up charges.

What has also become evident is the significant role respected and private sector firms such as law firm Hogan Lovells (in relation to the investigation into SARS no 2 Jonas Makwakwa), auditing giant (well, once upon a time) KPMG, and Nkonki have played in the destabilisation of the South African state.

It was recently revealed that Walters had been contractually employed by one of KPMG’s senior managers in the auditing firm’s forensic unit but that this had not been declared when now suspended SARS commissioner, Tom Moyane, contracted KMPG to conduct a forensic report into the “rogue unit”.

“At the present moment the Spider Web suffered a huge setback when their top members were suspended by the new commissioner. This unit was regarded as the enforcers of the spider web,” reads the intelligence report.

It is of course referring to the appointment by Jacob Zuma of Tom Moyane to head SARS and the subsequent loss of 39 senior managers since then.

In April 2014 Moyane announced that since his appointment 279 staff members had left and 321 new employees had been employed.

SARS’s weakened investigative capacity and the upheaval Moyane caused in restructuring SARS, once a hugely efficient tax collection agency, resulted unsurprisingly in a R30-billion shortfall in the 2016 budget projections.

When Malusi Gigaba was appointed Finance Minister in March 2017 he brought with him to Treasury around 20 advisers. Soon after his arrival he immediately removed three senior staffers at National Treasury including Schalk Human, acting chief procurement officer (he was replaced by Wilile Mathebula), Bodewig and Nair.

At present the biggest concern is the number of senior management roles that have been left vacant. Currently four out of 10 Deputy Director General positions have acting heads.

These are: Head of Budget Office, Office of the Chief Procurement Officer, Economic Policy and the Accountant General as well as the Head of the Government Technical Advisory Centre (GTAC) which is an entity of the Treasury that reports to the Minister of Finance and which also has an acting head.

The Head of Public Finance (appointed in October 2017) and the Head of International and Regional Economic Policy (appointed in March 2018) are recent appointments and the incumbents will still be finding their feet in these positions.

A storm has raged through the South African state in the disastrous Zuma years and while there is much cause for optimism and stability with his exit and Ramaphosa’s speedy mopping up of the mess, extraordinary damage has been done, lives have been thrown into turmoil and great institutions like Treasury have been weakened.

Project Spider Web? Just a silly bit of nonsense?

Circumstantial evidence would point otherwise. Someone had inside knowledge of the “plans” and while the report is badly written it proved rather accurate. Maynier will no doubt continue to ask questions with regard to the “top secret” investigation. South Africa deserves answers about those who have worked in the shadow to destroy the democratic state from within.

Remember, it was an “intelligence report” titled “Operation Checkmate” which Jacob Zuma used to recall Pravin Gordhan and Mcebisi Jonas while on an investment roadshow in London in March 2017.

Perhaps the commitment by Nqakula, as the new chairperson of the Joint Standing Committee on Intelligence, will help to shed some light onto the authors or the hand behind the report that so destabilized the country’s crown jewel. DM

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