House of cards: Is Hermione Cronje hiding an ace?

Exactly a week after the first phase of the investigating directorate’s state capture prosecutions were launched, ANC secretary-general and former Free State premier Ace Magashule — who presided over alleged multibillion-rand looting of that province’s coffers during his tenure — gave a strange interview.

Magashule told Independent News’s online arm, IOL, that he was "aware" that a warrant of arrest had been issued for him in relation to the R250m Estina dairy project scam. The project had seen Free State government funds, earmarked for the empowerment of poor black dairy farmers, allegedly flow instead to the Gupta family’s network.

"I’m aware. I’m aware," he said. "It’s going to be a Hollywood-style type of thing."

According to IOL, Magashule would be charged "for his alleged ‘failure to exercise oversight’ relating to the Vrede dairy farm investigation".

After the National Treasury and the auditor-general raised significant concerns about serious irregularities in the Free State government’s contract with Estina, it was cancelled in August 2014. Despite this, Estina reportedly received a further R130m in payments from the provincial government between December 2014 and May 2016 — all on Magashule’s watch.

Within hours of the news breaking of Magashule’s imminent arrest, however, the Hawks had denied it.

Magashule’s lawyer, Vincent Nkhwashu, went onto multiple news platforms to stress that his client was not the source of the IOL story, but was merely "responding" to it.

Clement Manyathela, host of 702’s mid-morning talk show, asked the obvious question: "So why is he [Magashule] responding to something that may not even be true?"

Nkhwashu’s answer was telling.

"You would have seen in the recent past that there have been such Hollywood-style types of arrests … our client was within his rights to respond to such allegations of such a breach of the constitution, particularly your right to have your decency preserved by the constitution," he said, later adding that he would be "seeking clarity" from law enforcement about Magashule’s rumoured arrest.

In other words, Nkhwashu suggested, Magashule was entitled — on the basis of unsourced rumours that he appeared to treat as established facts — to pre-emptively attempt to discredit his potential arrest as a violation of his constitutional rights.

Magashule’s description of that mooted arrest as "Hollywood-style" also harked back to a time, well over a decade ago, when that exact phrase was repeatedly used to undermine what was democratic SA’s most effective corruption-busting law enforcement unit: the Scorpions.

When asked about what she makes of the Magashule arrest warrant claims, Hermione Cronje, head of the investigating directorate of the National Prosecuting Authority (NPA), makes it clear that she has no intention of responding to the ANC secretary-general’s thinly veiled attack on the legitimacy of any possible criminal process against him.

"To be drawn out on this now is a distraction," she tells the FM in an interview.

"As I have said before: the only responsible way to answer the question ‘are we investigating someone’ is to go to court, get a warrant, serve it on the person and then when they are before court, we can tell you why. That is why we take the policy approach of saying it is inappropriate for us to comment on who we are investigating and what we are investigating."

She pauses.

"So that’s my comment on that. If you’re going to ask me who is in my charge sheet, you’ll have to wait to find out."

What Cronje does confirm is that prosecution of the Estina scam, launched under the leadership of former prosecutions boss Shaun Abrahams in February 2018 and later withdrawn because of gaping holes in the state’s financial evidence, will definitely be revived.

But it will almost certainly be brought back to court in a very different form, with some new names on the state’s criminal indictment. This, Cronje says, is largely due to the evidence uncovered by the Zondo commission of inquiry into state capture.

"It’s a very different indictment, a very different charge sheet and there are additional accused listed, who are both local and foreign," she says.

While the first Estina indictment laid the blame for the scandal at the door of Gupta lieutenants and mid-level Free State government functionaries, Cronje has repeatedly said her directorate’s job is to establish who was truly responsible for state capture corruption and the devastation it caused.

"There is a reasonable suspicion, based on the evidence led and uncovered by the Zondo inquiry, that so many crimes were committed," Cronje says. "So we have to assess, and keep asking the question: why was this done — to what end was this crime committed — so that we ultimately answer the question, who orchestrated it?

"When we have a suspicion that this was orchestrated by X, Y and Z, now can we prove it? Can we amass enough admissible evidence to be assured of a reasonable prospect of a conviction of those people?"

While the investigating directorate has answered "yes" to those questions in a growing number of cases — including the prosecutions of those implicated in the so-called Free State asbestos heist, the once "untouchable" businessman Thoshan Panday and former ANC MP Vincent Smith — there are more hard-hitting and far-reaching cases that it has yet to take to court.

In many respects, the cases against Smith, Panday and those accused of the asbestos looting are "low-hanging fruit" — there appears to be such overwhelming evidence that the state’s prospects of securing convictions would seem to be, in a normal world, pretty well assured.

But, as Cronje repeatedly says, her directorate was established to take on the "most serious" forms of corruption, and expose and hold to account the masterminds behind it.

One of the cases that most needs that high-level form of investigation and prosecution is the Estina dairy project scam. It is also the case likely to have the largest political ramifications, given the possible implication of the ANC’s secretary-general.

Magashule’s behaviour so far leaves little doubt that he will mobilise as much political support as possible to fight any threat.

Already, many in the pro-Jacob Zuma faction of the ANC have swarmed to protect Magashule, implying that a probe would be "politically motivated".

As a pre-emptive move, his supporters are pushing for the ANC to hold its long-postponed national general council, which they hope to use to weaken President Cyril Ramaphosa and "recapture" the ANC.

Any arrest of Magashule would certainly test the party’s resolve to fight corruption. But the political battle brewing around Magashule is nonetheless going to significantly harm an already limping ANC.

Estina and Magashule

If you thought Magashule’s "arrest warrant" claims had a sense of déjà vu about them, you’d be right.

Within days of the Hawks arresting Gupta family members and associates in connection with the Estina scam on Valentine’s Day 2018 — just hours before Zuma resigned as president — law enforcement agencies were forced to deny reports that Magashule was about to be arrested.

The "source" of the story was a WhatsApp voice note, which stated that Magashule had been arrested in Cape Town on the Sunday after the Estina arrests.

Free State NPA spokesperson Phaladi Shuping dismissed the reports as "fake news on steroids" and Magashule’s spokesperson denied any knowledge of the arrest.

Nkhwashu would allude to this 2018 "arrest" claim in his interview with Manyathela, but hastened to add "those issues died down".

However, given the curious way in which the NPA structured its Estina prosecution two years ago, it would have been decidedly odd for Magashule or former Free State agriculture MEC Mosebenzi Zwane, also a key player in how the scam unfolded, to feature anywhere in that case.

The prosecution was focused almost entirely on Gupta family business associates and the Free State agriculture officials directly involved in allegedly making the clearly unlawful project a reality.

In the end, former Oakbay CEO Nazeem Howa, his successor Ronica Ragavan, the Gupta brothers’ nephew Varun Gupta, Estina’s sole director and former sales manager at Gupta-owned Sahara Computers Kamal Vasram, Sahara Computers CEO Ashu Chawla and former Free State agriculture department officials Peter Thabethe, Takisi Masiteng and Seipati Dlamini faced charges of fraud, theft and conspiracy to commit fraud and theft. They also stood accused of violating the Public Finance Management Act, Companies Act and Prevention of Organised Crime Act.

Hawks spokesperson Hangwani Mulaudzi said at the time the authorities were also on the hunt for Ajay Gupta in connection with the scam. He claimed Gupta was on the run, and dramatically announced, on the steps of the Bloemfontein magistrate’s court, that "there is a search party out for him".

"Now we have made it public: Mr Gupta is a wanted man."

In what would turn out to be a telling statement, then-NPA spokesperson Luvuyo Mfaku admitted the same day that the Estina arrests had been rushed because law enforcement officials feared that crucial suspects might go on the run.

"On the basis of that risk analysis that was done, we realised there are accused people who were a flight risk, so we had to arraign them," Mfaku said.

Anyway, the case was then postponed for six months for "further investigation".

In the end, the NPA never even sought Ajay Gupta’s extradition for the Estina charges. It soon became apparent that six months would not be sufficient to deal with a serious deficiency in the prosecution: an absence of evidence to show how money given by the Free State government to Estina to run a dairy project had allegedly ended up in the Gupta network’s pockets.

That absence of evidence detailing the mechanics of the alleged money-laundering caused attempts by the Asset Forfeiture Unit (AFU) to freeze R250m in Gupta assets as the "proceeds of crime" to repeatedly collapse in the Bloemfontein high court.

Whether due to sheer incompetence or, as some believe, as part of a more sinister plan to deliberately subvert the effective prosecution of Estina, it appeared that AFU investigators had relied on transactions conducted through Bank of Baroda’s Nedbank pool account, which served 700 clients, to make an evidentially unsustainable case that Atul Gupta and various Gupta-owned companies had received Estina funds.

The state was forced to withdraw the criminal case a few months later.

Enter Cronje’s investigating directorate. Unlike the earlier bungled case, the directorate has contracted some of SA’s best legal minds — including advocates Wim Trengove, Geoff Budlender, Tembeka Ngcukaitobi and Janice Bleazard — to ensure the effective prosecution of state-capture kingpins.

Those lawyers have already formulated an argument for why the so-called Gupta leaks e-mails, which document communications between members of the family and its network, can be admitted and used as evidence in criminal proceedings.

This is due, in part, to the painstaking way the Zondo inquiry accessed a hard drive containing the e-mails and then sought to ensure, by documenting how that drive was obtained and stored, that there was an established "chain of evidence" that could be defended in court.

It was necessary to do this: previous Gupta lawyers have suggested the e-mails may have been tampered with. Proving this was not possible will be key to any successful use of the leaks as evidence.

It is also understood that the Zondo inquiry has gone through a separate process to authenticate the e-mails.

With recent amendments to the inquiry regulations now allowing for greater co-operation between the NPA and inquiry officials, any such authenticated evidence will be available to prosecutors who wish to use the leaks (which contain troves of information about the Estina project) as evidence.

Speaking in parliament last week, Cronje told the justice portfolio committee that she is intent on ensuring members of the Gupta family will face the music over Estina, which she has described as a "vehicle" for the looting of Free State government funds.

While the directorate has encountered difficulties in accessing documents it requested from the United Arab Emirates to prove the flow of Estina funds, its ability to use the Gupta leaks as evidence could help show how money was laundered.

"We are going to try, no matter what, to get the Gupta leaks admitted as evidence," Cronje has said previously.

Beyond holding the Gupta family accountable for the Estina looting, however, is there any real basis to pursue a criminal prosecution against the politicians who had the power to stop it, but didn’t?

Magashule, it’s worth remembering, was an outspoken proponent of the Estina project, which was meant to be based in the small Eastern Free State town of Vrede. He’d proudly announced in his 2012 state of the province address that it would "create an additional 150 jobs".

It was also Magashule who, in 2011, authorised the dairy project — despite the fact it was never budgeted for, was not preceded by any form of feasibility study, did not involve a competitive bidding process and was defined by materially fraudulent representations and nondelivery. He then delegated authority for the project to the then MEC for agriculture, Mosebenzi Zwane.

According to evidence led at the Zondo inquiry and provided to investigators by UK-based corruption watchdog Shadow World Investigations, Zwane took a gospel choir from Vrede, his home town, on a R500,000 all-expenses-paid trip to India, funded by Gupta companies, in 2012.

In 2013, Magashule again highlighted the "Vrede project" in his state of the province address, describing it as an "integrated dairy project ... under the Mohoma-Mobung initiative in partnership with the private sector".

He said the "initial targeted milk intake" of the project would be "40,000l per day" and claimed it would produce "liquid milk, UHT milk, cheese and other products".

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But the cracks in the success story he was trying to sell were already starting to show. In September 2013, DA MP Roy Jankielsohn lodged a complaint with then public protector Thuli Madonsela about the lack of transparency in how the project was being operated.

It got worse. Former head of the Free State agriculture department Thabethe, who was later one of the eight people criminally charged, told the provincial legislature that the provincial government’s private-public partnership with Gupta-linked Estina was "confidential" — a bizarre claim, given that state finances were spent on the scheme.

Magashule is alleged to have authorised Thabethe’s February 2012 "research trip" to India, funded by a Gupta company, alongside Gupta associate Ashok Narayan.

According to evidence provided to the Zondo inquiry, Magashule formally appointed Narayan as a member of his "advisory panel" on the Estina project the next day.

In his first complaint to Madonsela, Jankielsohn asked that she investigate whether Estina’s alleged beneficiaries — 100 poor black dairy farmers — were getting an "equitable share" in the project.

Four months later, after investigative journalism outfit amaBhungane discovered the bodies of 30 cows in a ditch in Vrede, the stench surrounding Estina only got worse.

Jankielsohn then asked Madonsela to investigate evidence that the Gupta-linked Estina company was making no financial contribution to the dairy project — despite the project being sold as a "public-private partnership" in which Estina would hold 49%, in exchange for a R228m investment.

Finally, and perhaps most dismally, even though Estina got R280m from the Free State government, it delivered nothing — and no-one in the provincial government did anything to hold it accountable for that failure, or ensure the project actually delivered.

Jankielsohn said it appeared the dairy project’s facilities and components were being purchased or constructed at "grossly inflated prices". Those items included a security gate and guard house priced at R2.6m, a milk parlour and processing plant that cost more than R30m, and over R2.5m spent on tools such as spanners, shovels and grinders. This, despite the national agriculture department supplying the project with more than R40m of equipment.

In the end, Madonsela never finalised that investigation. This was largely because of her Free State office’s failure to secure phone records and bank statements for the key players — including Magashule and Zwane.

Her successor, Busisiwe Mkhwebane, would later claim she had not obtained these records and statements because she did not have the resources to analyse them.

Her report on the scam, which ascribed zero high-level political accountability, was later slammed as a "whitewash" and declared invalid.

Critically, however, the auditor-general alerted Magashule’s office to the clear irregularities in the Estina contract in early 2014.

Yet the government continued to pay millions of rands to a company that wasn’t providing it with any of the goods and services it was obligated to deliver. Even after the contract was cancelled, the Free State government paid Estina R130m — which suggests either profound ineptitude or a deliberate corrupt conspiracy.

Arguably, it’s a conspiracy that could only exist with the assistance of a politically powerful ally within the Free State government.

On those facts alone, Magashule has some explaining to do.

That’s not the end of it. He and Zwane also face serious questions about another scandal that took place on their watch: the so-called Free State asbestos heist.

That criminal case, now launched by Cronje’s investigating directorate, threatens to expose not only how politically connected people looted millions intended to rid homes in the Free State of asbestos, but also how some of that money ended up with the ANC.

The asbestos heist

Images and footage of AFU officials seizing a Ferrari and Porsche from the R85m luxury Bryanston home of businessman Edwin Sodi — one of seven business people and government officials arrested over the alleged R255m looting of Free State government funds — contrasts starkly with pictures of the decrepit homes his business was hired to fix.

As was the case with Estina, the true victims of the apparent theft of that money — earmarked to make safe houses that were leaking asbestos from their roofs — were the extremely disadvantaged people forced to stay in those homes.

Instead of the affected houses being safely rid of asbestos at a reasonable price, the state claims, Sodi and his co-accused essentially embarked on a "rent-seeking" scheme that led to a R230m tender being unlawfully obtained in October 2014, to complete work actually worth R21m.

After being paid R230m by the Free State department of human settlements, Sodi and his business partner, Ignatius "Igo" Mpambani — who was gunned down in broad daylight as he drove down Sandton’s Bowling Avenue in a R3m Bentley in June 2017 — allegedly paid more than R44m to Sello Radebe’s Mastertrade 232 to do the asbestos audit that they had been hired to complete.

Radebe allegedly helped himself to R23m and paid R21m to Kgotso Manyeki’s Ori Group to do the actual job.

In his book Gangster State, investigative journalist Pieter-Louis Myburgh reveals that, as soon as Sodi and Mpambani’s Blackhead/Diamond Hill Trading partnership received payments from the Free State government, large sums of money would soon flow to politically connected individuals.

Health minister Zweli Mkhize, who was listed on Sodi’s bank statements as having received more than R6m from him, has claimed the money paid to him constituted donations to the ANC.

It’s not inconceivable since, at the time the payments were made, Mkhize was serving as ANC treasurer-general.

Still, Mkhize’s statement makes it clear that Sodi was a significant benefactor of the ruling party.

And the scandal runs deep: deputy state security minister Zizi Kodwa, current ANC treasurer-general Paul Mashatile and labour minister Thulas Nxesi have all been listed as beneficiaries of Sodi’s largesse.

Sodi has told the Zondo inquiry there was nothing unlawful about these payments, as he was entitled to support the party of his choosing. But that’s only half the story: the money he made came, in part, from the government — and the "donations" were made while he was benefiting from state tenders.

As with Estina, there is no evidence the Free State government exercised any real oversight over the asbestos project.

Former economic development MEC Mxolisi Dukwana last year told the Zondo inquiry that Magashule had been heavily involved in the "asbestos heist" — a claim that Magashule has denied.

Again, the auditor-general alerted the Free State legislature that the asbestos audit tender had been irregularly awarded in August 2015. Again, despite this, the Free State department of human settlements kept paying for that contract.

Among Sodi’s co-accused are former Free State human settlements head Nthimotse Mokhesi and former national human settlements director-general Thabane Zulu, who allegedly engaged in conduct that allowed the cost of the tender awarded to Sodi and Mpambani to escalate well beyond the cost of the work delivered.

Both allegedly scored personally too. The Zondo inquiry has heard that Sodi paid R600,000 to a car dealership where Zulu bought a Range Rover, and made a further R650,000 payment towards a property purchase by Mokhesi.

The state’s indictment against Sodi and his co-accused places repeated emphasis on the legal and Treasury prescripts that define lawful tender processes — and demonstrate, again and again, how the asbestos audit tender failed to adhere to these standards.

This shows that the state is now able to focus its prosecutions not just on manifest acts of corruption, but on clear violations of proper procurement practices.

And that should make a number of state officials very, very nervous.

Low-hanging fruit: the cases against Thoshan Panday and Vincent Smith

In the days that followed the arrests of the Free State asbestos heist accused, the investigative directorate finally launched two of its most long-awaited cases.

The first related to the alleged corruption of the once highly regarded ANC MP Smith, who served as chair of parliament’s portfolio committee on correctional services and chaired some of parliament’s most far-reaching inquiries.

It is the state’s case that Smith took bribes from Bosasa (now trading as African Global Operations), in exchange for doing nothing about the serious evidence of corruption against the facilities management company, which had been uncovered by an SIU probe.

Smith admitted to the Zondo inquiry that he received R600,000 for his daughter’s university fees from former Bosasa COO Angelo Agrizzi — but insisted the money was a legitimate loan and not a bribe.

What makes it tricky for Smith is that Agrizzi, who has been charged too, has dismissed that argument.

Nor, damagingly, did Smith declare these payments to parliament. He also failed to inform parliament that he was the sole director of a "property development company" that allegedly received millions of rands in payments while not declaring any income or paying tax — an issue that will surely interest the SA Revenue Service.

The second case has been a decade in the making and, in many respects, illustrates the devastating consequences that apparent political capture had on the NPA.

Once described as "untouchable", Panday — a former business associate of Zuma’s son Edward — is accused of corruptly securing police tenders valued at R47m during the 2010 Soccer World Cup. He was charged with fraud, corruption and forgery earlier this month.

The investigating directorate alleges that Panday and former police procurement officials Col Navin Madhoe and Capt Aswin Narainpershad created a series of sham procurement processes that ensured Panday’s business entities scored police tenders at hugely inflated prices.

Former KwaZulu-Natal (KZN) police commissioner Mmamonnye Ngobeni also stands accused of repeatedly trying to shut down KZN Hawks boss Johan Booysen’s investigation into the suspected tender fraud. And, weeks later, Panday allegedly paid R20,000 for Ngobeni’s husband’s birthday party.

Backed by a 400-page forensic report and mountains of evidence, the case against Panday and his police co-accused appears compelling. The fact that it was the subject of inexplicable efforts to shut it down, including by former KZN NPA head Moipone Noko, will mean Panday’s trial will be as much about the state’s failure to hold a politically powerful individual to account as it is about the charges against him.

In the final analysis, all these cases are joined by one powerful thread: a push for genuine accountability. It’s easy to be sceptical about the odds of success in these cases, given the abysmal performance of the NPA in recent years, but after an age of impunity, that in itself is a breakthrough.

Poor people were the victims as millions of rands were passed on from one tenderpreneur to the next, with no significant results

—  What it means: