By Franz Wild, Bloomberg on Business Day Live
Photo: Sunday Times
AS SOUTH Africans endure the deepest economic crisis since 2009, it is not just President Jacob Zuma they blame. There is a family whose name is increasingly the target of protest: the Guptas.
As tens of thousands marched in October in South Africa’s biggest wave of nationwide anti-government protests since the African National Congress came to power, one poster, broadcast on the nation’s television channels, captured the public anger: "SA: Gupta Farm".
Since Atul Gupta arrived in SA from Uttar Pradesh, India, in 1993, a year before the election of Nelson Mandela marked the end of apartheid, he and his brothers Rajesh and Ajay have built on a computer business to amass stakes in uranium, gold and coal mines, a luxury game lodge, an engineering company, a newspaper and a 24-hour news TV station. This month they agreed to take control of two coal mines from Glencore.
Having employed or been in business with at least three of President Zuma’s immediate family, including his son Duduzane, the family drew increased scrutiny in September as opposition parties and local newspapers raised the question that they may have influenced the appointment of a minister to manage the embattled and important mining industry.
"They are the chieftains of patronage. They get extraordinary privileges from the president," said Democratic Alliance leader Mmusi Maimane, on Tuesday. "Zuma is controlled by the Guptas. Once you have a weak institution like the ANC and a government that is institutionally captured, you only have to win control over a few individuals like Jacob Zuma, and you control everything."
"It’s a deeply troubling relationship between the Gupta family and the president’s family," said Nic Borain, an adviser to BNP Paribas Securities South Africa. "There are a multitude of documented relationships and there is a very widespread acceptance and assumption that this goes beyond undue influence. This goes close to capture of political authority by a group of foreign businessmen."
A spokesman for the Gupta family, Gary Naidoo, declined to comment on the story. So did President Zuma’s spokesman Bongani Majola and ANC spokesman Zizi Kodwa. In an interview with Business Day in 2011, Ajay and Atul said they received no preferential treatment because of their relationship with the president and that their computer business specifically avoided government work to protect their relationships.
Their newspaper, the New Age, regularly hosts ministers at televised events that have been sponsored by state-owned companies, while Duduzane and Gupta family members are directors of at least 11 of the same companies, publicly available documents show. When the New Age launched in 2010, its then editor, Henry Jeffreys, wrote in a first edition editorial that "We will generally support the government of the day at all levels" while saying the paper had no links with the ANC.
With one of the world’s highest levels of economic inequality and a 25.5% unemployment rate, public anger is mounting against the ANC, which has won more than 60% of the vote in every general election since 1994. That anger was exacerbated this month when President Zuma fired a respected finance minister and replaced him with a relatively unknown lawmaker, only to change his decision four days later when he reappointed a former finance minister, Pravin Gordhan. The rand weakened as much as 10% against the dollar, and bonds and bank stocks plunged before paring their declines when Mr Gordhan was appointed.
The police documented 2,289 violent demonstrations by communities demanding better housing, education and other services in the year to March, up from 1,907 the year before.
Recurring themes at recent protests are white domination of the economy, ineffectual government and, increasingly, corruption. In South Africa, 83% of people believe that corruption is on the rise, compared with 58% across the continent, according to a Transparency International survey this month.
Some of those who have done business with the Guptas say they have kept companies open and safeguarded jobs.
Head of mining and metals at South Africa’s state-owned Industrial Development Corporation (IDC) Abel Malinga said the corporation in 2010 lent R250m to the Guptas’ Oakbay Resources and Energy Ltd to buy a uranium and gold mine they now control along with Duduzane Zuma, because it was about to be closed under previous management at the cost of 2,400 jobs. The IDC converted the loan into a stake in Oakbay.
"The jobs are still there, they are still producing gold," Mr Malinga said. "There is no preferential treatment from our side. No political pressure."
The Guptas have been friends with President Zuma from about the turn of the century, Atul Gupta, the 47-year-old chairman of Oakbay who pioneered the move to SA, said in an interview with the Daily Maverick in 2011.
Mr Zuma’s wife Bongi Ngema-Zuma worked for Gupta-controlled JIC Mining Services as a communications officer. His daughter Duduzile was a director at Sahara Computers, the Guptas’ main computer business, for more than a year ending in 2009. And Duduzane has worked with the Guptas for 11 years, initially starting as a 22-year-old trainee at Sahara.
President Zuma’s son
The Guptas live in a complex of several houses a few blocks away from Duduzane in Johannesburg’s upscale Saxonwold suburb, behind a row of purple-blossomed Jacaranda trees and a 4m high wall adjacent to the city zoo. A giant roof-top chess board and cricket nets are spread across the grounds and one three-storey house has an elevator, seven balconies and a dome, publicly available blueprints of the property and Google Earth maps show.
"The Guptas continued their work relationship with me despite not knowing what the future held for my family," Duduzane said in a letter published in the Gupta’s New Age in September. Communications staff from his office at Sahara Computers didn’t respond to three requests for comment.
In 2010, Duduzane and the Guptas were part of a group of business people embroiled in a dispute with Anglo American Plc unit Kumba Iron Ore Ltd and ArcelorMittal SA after winning rights to part of Kumba’s concession at Africa’s biggest iron-ore mine. Although the courts ruled that Duduzane and the Guptas’ group were not the rightful owners, ArcelorMittal would have paid them R800m for the partial concession if they had won the case and also planned to sell a 26% stake in its business to groups that included Duduzane Zuma.
At the time of the announcement, in August 2010, ArcelorMittal and South Africa’s biggest labour union demanded the government intervene and cancel the deal, and Business Day, South Africa’s biggest finance newspaper, said in an editorial that it was "the most cynical empowerment deal ever constructed". A month later Duduzane Zuma said in a statement that he would give 70% of the proceeds of the deal that would have given him a stake in ArcelorMittal South Africa to groups including orphans and women in rural communities.
Early in 2011 Duduzane Zuma responded further to criticism of the deal.
"Anyone out there who believes that we’ve benefited in any of the deals politically, please come forward," he said in an interview with Johannesburg’s Talk Radio 702. "Drag us by our collars to a court of law. But if not, leave us the hell alone."
The incident that made the Guptas front-page news occurred in April 2013, when they flew 217 people in a chartered jetliner to the Waterkloof air-force base in Pretoria for their niece’s wedding. They were welcomed with music and dancing, and shuttled to the Sun City casino and resort in helicopters and black BMWs, according to a government report investigating how a commercial plane landed at an air force base. The police illegally used their blue lights as they escorted the party, it said.
When the airport manager of OR Tambo International Airport would not accommodate them, the Guptas approached the defence minister to use Waterkloof, even though it is classified as a top-security site and commercial use is prohibited, according to the report.
When that too failed they asked the Indian embassy to make it look like the visit was by an official delegation, according to the report, describing that as an abuse of diplomatic channels. The report concluded that the landing had been authorised because President Zuma’s name was falsely invoked. It also said some of the cars had false license plates and the security company used was unregistered.
Public Enterprises Minister Malusi Gigaba and Trade and Industry Minister Rob Davies attended parts of the week of celebrations. Attending the wedding did not reflect an improper relationship, Mr Gigaba’s spokesman Mayihlome Tshwete said. Mr Davies responded to a private invitation, his spokesman Sidwell Medupe said.
Atul said in an interview with the South African Broadcasting Corporation at the time that the wedding was held in the country to boost tourism and that the plane had permission to land. The family later apologised for the incident.
The Indian High Commissioner at the time, Virendra Gupta, who is not related to the family, then said in a statement that his country applied for permission to land the plane at the base because ministers and senior political figures were on board.
The landing stirred such an outcry that it became known by the press and government critics as "Guptagate". It attracted ridicule, including by comedian Trevor Noah, who has since become the host of the Daily Show in New York. Zapiro drew a sketch depicting the three Gupta brothers as welcoming bride and groom with a fleet of police cars and saluting officers, saying: "For your wedding gift we bought you a country and a president."
Zapiro was provided with new fodder when President Zuma appointed a new mines minister in September, even as mining companies and labour unions were in the middle of sensitive wage talks threatening to break into a strike in an already ailing industry.
When Mosebenzi Zwane, a newcomer to national politics, was appointed to take over as mines minister, the Mail & Guardian and Business Day newspapers said he was close to the Guptas. Zapiro then drew Atul Gupta, humming a tune as he does some online shopping. He adds Mr Zwane to his cart. Next to him is an item he has already purchased: the President.
The Economic Freedom Fighters Party sent out a press release entitled "Welcome to the Gupta Republic of South Africa: The New Minister of Mineral Resources is an Extension of the Gupta Family" after the appointment. In the statement, it said Mr Zwane wrote a letter inviting members of the extended Gupta family to South Africa at the time of the wedding, saying that they were coming for business purposes. Mr Zwane has not commented on this allegation.
Mr Zwane’s spokesman Martin Madlala said the minister’s appointment was "at the discretion" of the president and referred questions to his office.
"We are feeling the real effects of the state becoming captive to networks of patronage," Judith February, an analyst at the Pretoria-based Institute of Security Studies, said in an interview on Wednesday. "The Guptas seem to wield an enormous amount of influence over ministers. There’s a pattern here."
At an anti-government protest in Johannesburg in October, former Congress of South African trade Unions general secretary Zwelinzima Vavi told thousands of workers and unemployed people that South Africa now only serves big business and the ruling elite. The Guptas were one of his targets.
"The Guptas are continuously buying helicopter after helicopter," Vavi said. They once landed a helicopter in a park near their house, where children ride bikes around a lake and families barbecue on weekends, the Star newspaper said in 2010. "They want special permission to land on their homes. We’re up to here with our corruption," he said.
Asked later by a reporter why he had picked on the Guptas, Mr Vavi said: "They’re the shadow government. They’re a sign of what’s wrong with our country."