Deputy chief justice Raymond Zondo. Picture: VELI NHLAPO
Deputy chief justice Raymond Zondo. Picture: VELI NHLAPO

The government spent R49bn on contracts with entities linked to members of the Gupta family, who allegedly exploited their close ties to former president Jacob Zuma to win suspect deals, a study has found.

The price tag was calculated by Shadow World Investigations, Paul Holden, a researcher at the London-based nonprofit organisation, told the commission of inquiry into state capture on Monday.

Many contracts scrutinised by Shadow World deviated from procurement rules and contained other serious irregularities, Holden said. He described how money had flowed from state entities to firms linked to the Guptas, information that was gleaned from leaked bank statements.

The government estimates that more than R500bn was stolen from its coffers during Zuma’s nine-year term, which ended in 2018. The Guptas, who have left the country, and Zuma deny any wrongdoing. 

Holden is a co-founder of Shadow World Investigations, together with former ANC MP and arms deal whistle-blower Andrew Feinstein.

The Gupta brothers are friends of Zuma and business partners of his son Duduzane. They are said to have secured billions of rand in tenders and contracts from the government using their political connections.

Holden detailed those transactions that ended up with the Gupta family enterprise getting paid millions of rand via several contracts awarded by the provincial governments of the Free State, the North West and Mpumalanga, as well as state-owned enterprises.

He described the contracts as tainted by state capture because of the involvement of the Gupta brothers and their associates. The contracts were found to have a number of irregularities in their awarding.

“We have identified those contracts where there are payments made to what we call first-level laundries, where those first-level laundries cannot be conceived of always performing any legitimate businesses but were instead conduits to making payments to the benefit of Gupta enterprises,” Holden said.

The contracts cited by Holden included the Estina dairy farm deal, advertisements in The New Age newspaper paid by the state and several deals with Eskom and Transnet. In other instances the state paid monies to the Gupta enterprise which did not make any real attempt to deliver value to the state.

Payments of R254m to The New Age for advertising and marketing and the Estina project were examples of payments that were not meant to benefit the state, Holden said.

Price inflation related to the Gupta-linked contracts was also a factor in the losses  made by the state from state capture, he said.

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