Key questions the Zondo inquiry needs to pose about the nuclear deal

Deputy Chief Justice Ray Zondo looks into state capture in South Africa’s energy sector. EPA-EFE

South Africa is emerging from a debilitating period where politicians and their benefactors systematically placed pliable individuals into key positions at state institutions to gain undue influence and ultimately financial advantage. The ensuing malaise is called state capture.

A commission of inquiry to investigate state capture was initiated in January, headed by the Constitutional Court’s Deputy Chief Justice Raymond Zondo.

The first week of hearings ended with shocking testimony by former deputy finance minister Mcebisi Jonas. He reiterated his previous claim that a member of the influential Gupta family offered him a bribe of R600 million plus appointment as finance minister in return for favours. He also disclosed, for the first time, that his life was threatened should he fail to cooperate.

Jonas declined the bribe, and eventually went public about the offer – becoming the first and most senior person in government to lay bare the role being played by the Gupta family at former president Jacob Zuma’s behest. The fact that he worked at National Treasury was particularly significant as it was the department that vetted government expenditure.

The testimony of Jonas as well as that of subsequent witness Vytjie Mentor both also referred to the proposed nuclear build, and how this was influencing efforts to control state institutions.

The dismissal of Finance Minister Nhlanhla Nene in December 2015 precipitated a national currency collapse and public outrage that forced Zuma to remove his replacement after only four days and install Pravin Gordhan. But Gordhan’s tenure was marked by high tension and Zuma dismissed him in March 2017.

Jonas’s testimony reminded South Africans why Zuma was so keen to have a compliant ally as finance minister. He posited that the reason for the hostility towards Nene was that he was blocking the implementation of a nuclear deal with Russia.

The inquiry will be probing this further, a welcome development given that so many unanswered questions remain.

The nuclear deal

The construction of new nuclear power stations was first mooted around 2010 in response to electricity shortages and projected increased future demand. But the idea never gained traction when it became clear that electricity demand was growing less than expected. The hugely expensive new nuclear development was no longer financially defensible.

But Zuma’s government persisted with the idea. It soon became clear that Zuma favoured a Russian bid, and in 2014 the Russian nuclear company Rosatom stunned the country by announcing it had secured the rights to build the new South African plants.

It was a move with massive long-term financial implications for South Africa, and raised many red flags. The nuclear build soon came to be viewed as the most audacious example of state capture.

One of the questions the inquiry needs to try and answer is why, given that the programme was massively tainted by controversy and was deemed unaffordable, the ex-president doggedly pursued it.

The Shiva uranium mine acquisition

Some reasons are already known.

In 2010 a consortium that included the Gupta family and ex-president Zuma’s son Duduzane purchased the Dominion uranium mine near Klerksdorp in the North West province. The transaction baffled mining sector observers; in an era of weak global uranium demand, Dominion was considered a poor asset.

But the mine, soon to be renamed Shiva, would become exceptionally valuable if it was going to become the uranium supplier to South Africa’s new nuclear power plants. Mentor’s testimony specifically stated that the Guptas already considered themselves the exclusive uranium suppliers. Because of his family association, the former president had a vested interest in the nuclear build coming to fruition.

It was also odd that the transaction involved Rosatom’s mining subsidiary.

Because the buyers did not have the finance to conclude the purchase, they approached state-linked agencies to attempt to raise the funding. The mine was eventually purchased through a R250 million loan from the Industrial Development Corporation.

The questions that remain unanswered are:

  • What were the exact details surrounding the mine purchase, and what was Rosatom’s role in this transaction? And,

  • Did ex-president Zuma or other high-ranking officials unduly pressure funding bodies to grant a loan for the mine acquisition?

The Russian agreement

Zuma’s many meetings with his Russian counterparts resulted in the Russian bidders inexplicably receiving preferential status ahead of other potential bidders. This engagement produced an astounding intergovernmental agreement, signed by then Energy Minister Tina Joemat-Pettersson.

After a court challenge from civil society organisations, the Russian agreement was declared illegal. But this didn’t stop government efforts towards the realisation of a Russian-led nuclear build.

Here the unanswered questions are:

  • Why did Joemat-Pettersson sign an agreement she must have known to be unprocedural and irregular?

  • Which officials were instrumental in promoting this agreement, and who instructed them?

Ministerial reshuffles and redeployments

The last period of Zuma’s presidency was characterised by the drama of frequent cabinet reshuffles.

National Treasury was at the centre of the reshuffle storm. But the Ministry of Energy was equally afflicted by frequent transitions, with five ministers throughout Zuma’s presidency.

The unanswered questions to the finance and energy ministries are:

  • Were two finance ministers and a string of ministers dismissed because they were opposed to the nuclear build, or not pushing it vigorously enough?

  • Were these dismissals initiated by ex-president Zuma, or enacted at the request of other parties?

Connecting the remaining dots

The inquiry will undoubtedly investigate the infiltration and abuse of the national power utility Eskom, which also manages South Africa’s nuclear power facilities. In recent years the previously neutral entity had increasingly taken on the role of a nuclear lobbyist.

A key question here is:

  • Was the obsessive promotion of the nuclear build by several Eskom leaders driven by a genuine belief in the technology and its affordability, or by pressure?

It’s important to know what happened, and how, if South Africa is going to be able to put processes in place that ensure the entire energy sector never becomes compromised again.