How the Guptas were subsidised
More testimony emerges on how Gupta media companies received millions of rands from the government, but it remains to be seen whether anyone will be held accountable
The government spent a total of R260m on the Gupta-owned New Age newspaper and ANN7 television news channel, the commission of inquiry into state capture heard this week.
National Treasury official Jan Gilliland described to the Zondo commission how money was funnelled to the Guptas through the Government Communication & Information System (GCIS), national and provincial government departments and the offices of provincial premiers.
Gilliland tracked payments made to The New Age and Infinity Media — the company that housed ANN7 — through the basic accounting system used by national and provincial government departments.
He said the system had found 11 bank accounts linked to the companies and 1,783 transactions.
These transactions revealed that Infinity Media, which was established in 2014, received R12m, while The New Age, launched in 2010, got R248m.
The accounting records showed that small payments started as early as 2004, became more substantial in 2014 and 2015 when Faith Muthambi was communications minister, and started tailing off in 2016.
It was in 2016 that former deputy finance minister Mcebisi Jonas revealed the Guptas offered him a R600m bribe and the job of finance minister. It is alleged that Duduzane Zuma, son of the then president Jacob Zuma, and businessman Fana Hlongwane, who were also present when the offer was made, had facilitated the meeting.
The Guptas started receiving larger sums of money in 2011 after Mzwanele Manyi was appointed head of the GCIS to replace Themba Maseko.
Maseko has told the commission he was axed after he rejected a demand by Ajay Gupta that he should channel the GCIS’s R600m spending budget to Gupta companies. Maseko further alleged that Jacob Zuma had called him and told him to help the Guptas.
Manyi, a Gupta ally and staunch supporter of Zuma, bought the Guptas’ media assets last year.
The Guptas started receiving the real larger substantial sums of money in 2011 This was after former GCIS head Mzwanele Manyi was appointed head of the GCIS
According to the information collected by Gilliland, the Gupta media companies received about R6.1m from the government in 2011. The next year they got R29.46m and in 2013 they received R30.2m.
In 2014, the amount paid to The New Age and Infinity Media combined jumped to R51.1m and the following year to R66.2m.
The DA raised the issue in parliament at the time. The party’s then shadow minister of communications, Gavin Davis, sent written parliamentary questions to Muthambi asking for the total government advertising budget for each month between January 2013 and July 2014.
Muthambi’s response revealed that the department of communications had spent 11.2% of government adspend on Gupta media companies.
Davis said a comparison with the biggest newspapers showed "just how skewed" government adspend was towards The New Age, despite its small readership.
For example, The Sowetan at the time had a readership of about 1.6-million compared with The New Age’s 153,000, yet similar amounts of just over R10m were spent on advertising in them by the government. The Daily Sun had 5.3-million readers but only received R7.8m.
In 2016 state spending on the Gupta outlets dropped more than R20m to R43m. The figure last year was R27.3m and this year it was R4.75m.
In July The New Age was placed under provisional liquidation and the following month ANN7 went off air.
Gilliland’s information showed that the biggest contributors to the Gupta media companies were the offices of provincial premiers and the GCIS. The provinces that spent the most were those whose leaders were in the so-called premier league, a once-powerful lobby group within the ANC that supported Zuma.
What it means
The government subsidised the newspaper and TV channel launched by the Guptas
The Free State government channelled about R79m into the Gupta-associated companies while it was headed by Ace Magashule, who was linked by the Sunday Times over the weekend to an alleged plot to oust President Cyril Ramaphosa.
National government departments paid a total of R99.6m to the Gupta media companies.
As the state capture inquiry continues, more and more information is coming to light about the Guptas’ modus operandi and how they siphoned billions of rands from state coffers.
It is yet to be seen, however, who will be held accountable and whether the country can ensure the same thing does not happen again.