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Contributors
- Ivor Chipkin, University of the Witwatersrand, Mark Swilling, Stellenbosch University, Haroon Bhorat, University of Cape Town, Mzukisi Qobo, University of Johannesburg, Sikhulekile Duma, University of Stellenbosch, Lumkile Mondi, University of the Witwatersrand, Camaren Peter, Mbongiseni Buthelezi, University of Cape Town, Hannah Friedenstein, Nicky Prins
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- Shadow State
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- 17 May 2019
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- 01 July 2018, pp 145-148
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Index
- Ivor Chipkin, University of the Witwatersrand, Mark Swilling, Stellenbosch University, Haroon Bhorat, University of Cape Town, Mzukisi Qobo, University of Johannesburg, Sikhulekile Duma, University of Stellenbosch, Lumkile Mondi, University of the Witwatersrand, Camaren Peter, Mbongiseni Buthelezi, University of Cape Town, Hannah Friedenstein, Nicky Prins
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- 01 July 2018, pp 149-159
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Acronyms and abbreviations
- Ivor Chipkin, University of the Witwatersrand, Mark Swilling, Stellenbosch University, Haroon Bhorat, University of Cape Town, Mzukisi Qobo, University of Johannesburg, Sikhulekile Duma, University of Stellenbosch, Lumkile Mondi, University of the Witwatersrand, Camaren Peter, Mbongiseni Buthelezi, University of Cape Town, Hannah Friedenstein, Nicky Prins
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- Shadow State
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- 01 July 2018, pp vii-viii
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Contents
- Ivor Chipkin, University of the Witwatersrand, Mark Swilling, Stellenbosch University, Haroon Bhorat, University of Cape Town, Mzukisi Qobo, University of Johannesburg, Sikhulekile Duma, University of Stellenbosch, Lumkile Mondi, University of the Witwatersrand, Camaren Peter, Mbongiseni Buthelezi, University of Cape Town, Hannah Friedenstein, Nicky Prins
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- Shadow State
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- 01 July 2018, pp v-v
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Chapter 3 - Power, Authority and Audacity: How the Shadow State Was Built
- Ivor Chipkin, University of the Witwatersrand, Mark Swilling, Stellenbosch University, Haroon Bhorat, University of Cape Town, Mzukisi Qobo, University of Johannesburg, Sikhulekile Duma, University of Stellenbosch, Lumkile Mondi, University of the Witwatersrand, Camaren Peter, Mbongiseni Buthelezi, University of Cape Town, Hannah Friedenstein, Nicky Prins
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- Shadow State
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- 01 July 2018, pp 59-100
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Summary
Uyangithengisa [you are selling me out]. Why did you let her know that u knew where she [Dudu Myeni, chairperson of SAA] was going. U will compromise the mission.
According to the amaBhungane Centre for Investigative Journalism, this text message was sent by Siyabonga Mahlangu, special legal adviser to then Public Enterprises Minister Malusi Gigaba, to then CEO and chairperson of SAA Vuyisile Kona, in December 2013. It followed a meeting at the Gupta family's Saxonwold compound, attended by Mahlangu and Kona, at which Kona was reportedly offered a R500 000 bribe, seemingly linked to a controversial Airbus fleet deal.
The text, according to amaBhungane, probably referred to a discussion Kona had with Dudu Myeni subsequent to this meeting; Myeni was appointed chairperson of SAA a week later, and her appointment, it appears, had been discussed at the Saxonwold meeting. At the time an SAA source, speaking in confidence to amaBhungane, said, ‘The “mission” was clearly this contract, all of these contracts.’ With hindsight, it is clear that ‘the mission’ became a much bigger, more ominous and carefully orchestrated long-term plan, which would unfold over the next seven-plus years, culminating in what we now know as the capture of the state.
Nearly three years later, in July 2016, Jacob Zuma, in a speech in isiZulu that received very little media coverage but which was captured in a YouTube clip, said:
If it were up to me, and I made the rules, I would ask for six months as a dictator. You would see wonders, South Africa would be straight. That's why, if you give me six months, and allow Zuma to be a dictator, you would be amazed. Absolutely. Everything would be straight. Right now to make a decision you need to consult. You need a resolution, decision, collective petition. Yoh! It's a lot of work!
But clearly the necessary work had been done because the shadow state was, by then, fully fledged. Referring to its emergence, Pravin Gordhan said at the press conference after his removal as minister of finance, ‘We have failed to join the dots.’
To ‘join the dots’ it is necessary to start with the emergence of the Gupta network, which has become the lynchpin of the relationship between the constitutional and shadow states.
Introduction
- Ivor Chipkin, University of the Witwatersrand, Mark Swilling, Stellenbosch University, Haroon Bhorat, University of Cape Town, Mzukisi Qobo, University of Johannesburg, Sikhulekile Duma, University of Stellenbosch, Lumkile Mondi, University of the Witwatersrand, Camaren Peter, Mbongiseni Buthelezi, University of Cape Town, Hannah Friedenstein, Nicky Prins
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- 01 July 2018, pp 1-18
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Summary
The new struggle for democracy: how civil society fought back against state capture
In the classical texts, tyranny, as opposed to despotism, refers to a form of government that breaks its own rules. This is a useful starting point for discussing political developments in South Africa in the past ten years and the civil society response to it. The ANC government under Jacob Zuma became more and more tyrannical as it set itself up against the Constitution and the rule of law in an effort to capture the state.
In moves reminiscent of events in the 1980s, independent journalists, social movements, trade unions, legal aid centres, NGOs, the churches and some academics have helped mobilise South African society against state capture. A new and varied movement has arisen, bringing together awkward partnerships between ideologically disparate groups and people. What they have nonetheless shared is a broad support for the Constitution, for democracy and for a modern, professional administration, and they are all, broadly speaking, social democratic in orientation.
The publication of the Betrayal of the Promise report, on which this book is based, constituted a key moment, helping to provide this movement with a narrative and concepts for expressing a systemic perspective on state capture that helped its readers to, in the words of former Minister of Finance Pravin Gordhan, ‘join the dots’.
The particular instance of so-called ‘state capture’ that we discuss in this book is part of a familiar and recurring pattern in the history of state formation in South Africa. It is, in fact, impossible to understand the evolution of South African politics and statecraft without understanding the deeper dynamics of what we refer to today as state capture. There is a clear and direct line of sight from the origins of the state in the Cape Colony, when it was ‘captured’ by the Dutch East India Company, through to the era of Cecil Rhodes and ‘Milner's Kindergarten’ – the name popularly given to the young British civil servants who served under High Commissioner Alfred, Lord Milner – in post-Boer War South Africa.
The world that the first generations of mining magnates, the so-called Randlords, built on the Witwatersrand provided the foundation for the election victory of the National Party in 1948.
Chapter 1 - Structuring the Capture of the State
- Ivor Chipkin, University of the Witwatersrand, Mark Swilling, Stellenbosch University, Haroon Bhorat, University of Cape Town, Mzukisi Qobo, University of Johannesburg, Sikhulekile Duma, University of Stellenbosch, Lumkile Mondi, University of the Witwatersrand, Camaren Peter, Mbongiseni Buthelezi, University of Cape Town, Hannah Friedenstein, Nicky Prins
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- 01 July 2018, pp 19-28
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Summary
The nexus between the constitutional and shadow states depends on the integration of a range of skills similar to those present in most international corporations. The composition of the Zuma-centred power elite is, in many respects, highly organised, following the structure of what, in academic terms, is called a ‘war economy’. In a war economy the ‘shadow state’ establishes a number of informal structures which produce systems of ‘profit, power and protection’ that, in turn, serve to further their operations, making possible continued preferential access to resources and power through an exploitative economic system. The cycle can, therefore, continue.
One of the key requirements in establishing these shadow structures is the ability to secure a system of command and control over the way the resources are accessed, moved and distributed. At the outset, control must be established over the sources of extraction, including the ability to respond flexibly to any changes in the operating environment. Once access to the source of extraction is secured, networks of middlemen or brokers must be established that can move resources externally, usually transnationally, to sustain loyalty (this is critical to ensuring the survival of the network). The ability to transact within this network is facilitated by establishing political marketplaces where support is traded through the provision of access to resources.
The skills of this patronage network are localised within a number of groups. The networks consist of three elements: the controllers, the elites and the entrepreneurs (also known as brokers), as shown in Figure 1.1.
The controllers, or patrons, of resources sit at the apex and are usually the strongmen directly responsible for predation and exploitation. Their function is to secure access to and maintain control over resources. A patron or controller typically favours one group over another (or others), resulting in the exclusion of those who are out of favour. This sets up a competitive set of nodes around the patron or controller, which has the ultimate effect of rendering elites (the next layer down) unable to cooperate effectively as they fear being ousted by their partners, or falling out of favour with the patron. Jacob Zuma and the Guptas have been controllers.
Acknowledgements
- Ivor Chipkin, University of the Witwatersrand, Mark Swilling, Stellenbosch University, Haroon Bhorat, University of Cape Town, Mzukisi Qobo, University of Johannesburg, Sikhulekile Duma, University of Stellenbosch, Lumkile Mondi, University of the Witwatersrand, Camaren Peter, Mbongiseni Buthelezi, University of Cape Town, Hannah Friedenstein, Nicky Prins
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- 01 July 2018, pp xv-xvi
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Chapter 5 - Conclusion
- Ivor Chipkin, University of the Witwatersrand, Mark Swilling, Stellenbosch University, Haroon Bhorat, University of Cape Town, Mzukisi Qobo, University of Johannesburg, Sikhulekile Duma, University of Stellenbosch, Lumkile Mondi, University of the Witwatersrand, Camaren Peter, Mbongiseni Buthelezi, University of Cape Town, Hannah Friedenstein, Nicky Prins
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- 01 July 2018, pp 133-138
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Summary
State capture by shadowy elites has profound implications for state institutions. It destroys public trust in the state and its organs, it weakens key economic agencies that are tasked with delivering development outcomes, and it erodes confidence in the economy.
When there is no trust in public institutions there is little incentive to pay tax; large companies sit on cash rather than reinvest profits towards productive use; criminality proliferates, exploiting weaknesses in intelligence and crime enforcement authorities; and both capital and skills flee the country. The majority of South Africans are bearing the brunt of these corrosive developments.
In the previous chapters we have documented the systematic repurposing of state institutions by the Zuma-centred power elite. These premeditated and coordinated activities are designed to enrich a core group of beneficiaries, to consolidate political power and to ensure the long-term survival of the rent-seeking system that has been built by this power elite over the past decade. To this end a symbiotic relationship between the constitutional state and the shadow state has been built and consolidated.
At the nexus of this symbiosis is a handful of companies and individuals connected in one way or another to the Gupta–Zuma family network. Decisions made within this nexus are executed by well-placed individuals located in the most significant centres of state power (in government, SOEs and the bureaucracy).
Former Deputy Minister of Finance Mcebisi Jonas told the public protector that he had been offered a place in this network with a R600 million bribe. This transaction reveals the clear modus operandi of those who operate within the shadow state, and how this has made it possible for them to gain control of the constitutional state.
Crucially, we have no idea how many others accepted these kinds of unimaginably enormous bribes. Those who resist are systematically removed, redeployed to other lucrative positions to silence them, placed under tremendous pressure, or hounded out by trumped up internal and/or external charges and dubious intelligence reports.
We have argued that the attempts by the Zuma-centred power elite to centralise the control of rents in order to eliminate lower-order rent-seeking competitors began in about 2012.
Chapter 2 - The Politics of Betrayal
- Ivor Chipkin, University of the Witwatersrand, Mark Swilling, Stellenbosch University, Haroon Bhorat, University of Cape Town, Mzukisi Qobo, University of Johannesburg, Sikhulekile Duma, University of Stellenbosch, Lumkile Mondi, University of the Witwatersrand, Camaren Peter, Mbongiseni Buthelezi, University of Cape Town, Hannah Friedenstein, Nicky Prins
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- 01 July 2018, pp 29-58
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Summary
The dawn of democracy in South Africa in 1994 delivered a promise that united the country. Nelson Mandela, at his inauguration on 10 May 1994, expressed this promise in the clearest terms. Speaking on behalf of the democratically elected ANC-led government, he vowed
to liberate all our people from the continuing bondage of poverty, deprivation, suffering, gender and other discrimination … [to] build [a] society in which all South Africans, both black and white, will be able to walk tall, without any fear in their hearts, assured of their inalienable right to human dignity – a rainbow nation at peace with itself and the world.
To deliver on this founding promise the ANC needed to use the state institutions it had inherited from the apartheid era. These institutions included national, provincial and local government administrations, SOEs, the judiciary, Parliament and the executive.
Unsurprisingly, transforming the core administrations and SOEs into vehicles for service delivery and development became a major challenge. Undertaking deep institutional reform in order to overcome the complex legacy of apartheid proved to be a daunting exercise that required extraordinary levels of dedication, technical capacity and a well-defined governance programme.
Although significant progress was made, there is now widespread dissatisfaction across society and within the ANC itself with the performance of these institutions. Whereas the promise of 1994 was to build a state that would serve the public good, the evidence suggests that state institutions are being repurposed to serve the private accumulation interests of a small, powerful elite. The deepening of the corrosive culture of corruption within the state and the efforts to graft a shadow state onto the existing constitutional state have brought the transformation programme to a halt.
It is clear that while the ideological focus of the ANC is ‘radical economic transformation’, in practice Jacob Zuma's presidency has been aimed at repurposing state institutions to consolidate a Zuma-centred power elite. Whereas the former appears to be a legitimate long-term vision to transform South Africa's economy in order to eradicate poverty and reduce inequality and unemployment, the latter – popularly referred to as state capture – threatens the viability of the state institutions that need to deliver on this long-term vision.
List of figures and tables
- Ivor Chipkin, University of the Witwatersrand, Mark Swilling, Stellenbosch University, Haroon Bhorat, University of Cape Town, Mzukisi Qobo, University of Johannesburg, Sikhulekile Duma, University of Stellenbosch, Lumkile Mondi, University of the Witwatersrand, Camaren Peter, Mbongiseni Buthelezi, University of Cape Town, Hannah Friedenstein, Nicky Prins
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Key terms
- Ivor Chipkin, University of the Witwatersrand, Mark Swilling, Stellenbosch University, Haroon Bhorat, University of Cape Town, Mzukisi Qobo, University of Johannesburg, Sikhulekile Duma, University of Stellenbosch, Lumkile Mondi, University of the Witwatersrand, Camaren Peter, Mbongiseni Buthelezi, University of Cape Town, Hannah Friedenstein, Nicky Prins
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- 01 July 2018, pp ix-xiv
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Frontmatter
- Ivor Chipkin, University of the Witwatersrand, Mark Swilling, Stellenbosch University, Haroon Bhorat, University of Cape Town, Mzukisi Qobo, University of Johannesburg, Sikhulekile Duma, University of Stellenbosch, Lumkile Mondi, University of the Witwatersrand, Camaren Peter, Mbongiseni Buthelezi, University of Cape Town, Hannah Friedenstein, Nicky Prins
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Prologue
- Ivor Chipkin, University of the Witwatersrand, Mark Swilling, Stellenbosch University, Haroon Bhorat, University of Cape Town, Mzukisi Qobo, University of Johannesburg, Sikhulekile Duma, University of Stellenbosch, Lumkile Mondi, University of the Witwatersrand, Camaren Peter, Mbongiseni Buthelezi, University of Cape Town, Hannah Friedenstein, Nicky Prins
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Summary
In mid-March 2017 Mark Swilling was travelling in business class to Johannesburg from Cape Town. He was in an aisle seat and Mcebisi Jonas, then the deputy minister of finance, was in the aisle seat on the opposite side. They had last worked together in the early 1990s when Jonas was active in the Eastern Cape, coordinating a forum focused on appropriate economic development strategies for that province.
After exchanging the usual ‘comradely’ greetings, Jonas gave Mark his iPad and said, ‘Read this and tell me what you think.’ He had already by then refused a R600 million bribe offered to him by the Gupta brothers, a move, knowing him, that came as no surprise to Mark. Mark then read a paper that in subsequent months would be read again and again by the research team – the first comprehensive overview of what all South Africans would soon come to call ‘state capture’. This was the paper that Mark gave to Ivor Chipkin at their first meeting to discuss the assembly of a team that would eventually produce the Betrayal of the Promise report. Needless to say, it was a paper that needed to be kept totally confidential.
Those who read this paper in those dark days of 2017 were all profoundly disturbed by it, and particularly frightened by the fact that it was written by a member of the Cabinet. Jonas candidly shared with Mark his deep pessimism about what was going on. He took down Mark's phone number, promising to call him. A few days later Mark got a call from Jonas asking to meet at the Sustainability Institute at Stellenbosch University.
Jonas arrived and the first thing Mark noticed was that he gave his phone to the driver before entering the building. The two hours that followed were among the most remarkable and surprising Mark had experienced since 1994. Jonas spoke about what he thought was going on. Mark desperately wanted to tape what he was saying, or take notes, but he had no idea why Jonas was there and what he needed done. Mark just absorbed what he could, describing the experience to Ivor a few days later as the sum of all fears.
When Jonas finished briefing him, Mark asked why he had come to see him. Jonas wanted to know what the academics were doing about the situation.
Shadow State
- The Politics of State Capture
- Ivor Chipkin, Mark Swilling, Haroon Bhorat, Mzukisi Qobo, Sikhulekile Duma, Lumkile Mondi, Camaren Peter, Mbongiseni Buthelezi, Hannah Friedenstein, Nicky Prins
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- Published by:
- Wits University Press
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- 17 May 2019
- Print publication:
- 01 July 2018
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The 2017 publication of Betrayal of the Promise, the report that detailed the systematic nature of state capture, marked a key moment in South Africa's most recent struggle for democracy. In the face of growing evidence of corruption and of the weakening of state and democratic institutions, it provided a powerful analysis of events that helped galvanise resistance within the Tripartite Alliance and across civil society. Working often secretly, the authors consolidated large amounts of evidence from a variety of sources. They showed that the Jacob Zuma administration was not simply a criminal network but part of an audacious political project to break the hold of white business on the economy and to create a new class of black industrialists. State-Owned Enterprises (SOEs) such as Eskom and Transnet were central to these plans. Shadow State is an updated version of the original, explosive report that changed South Africa's recent history. It introduces a whole new language to discuss state capture, showing how SOEs were ‘repurposed’, how political power was shifting away from constitutional bodies to ‘kitchen cabinets’, and how a ‘shadow state’ at odds with the country's constitutional framework was being built.
Chapter 4 - Repurposing Governance
- Ivor Chipkin, University of the Witwatersrand, Mark Swilling, Stellenbosch University, Haroon Bhorat, University of Cape Town, Mzukisi Qobo, University of Johannesburg, Sikhulekile Duma, University of Stellenbosch, Lumkile Mondi, University of the Witwatersrand, Camaren Peter, Mbongiseni Buthelezi, University of Cape Town, Hannah Friedenstein, Nicky Prins
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- 01 July 2018, pp 101-132
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Summary
From conviction to ideology
The Polokwane revolt in the ANC was informed by a conviction that economic transformation as pursued after 1994 had produced an anomaly, if not a perversion: a small black elite beholden to white corporate elites, a vulnerable and over-indebted black middle class and a large African majority condemned to unemployment and dependent on welfare handouts to survive. The rise in the Gini coefficient between 1994 and 2009 lends credence to this view.
Most people in the ANC and the Tripartite Alliance believe that the RDP was jettisoned when the Gear strategy was adopted in 1996. ‘Few,’ noted Ben Turok in 2008, ‘seem to have accepted arguments such as those advanced by Minister of Finance Trevor Manuel, immediately before the [Polokwane] Conference, that “Gear was the ANC government's macro-economic programme to implement the RDP”’. Gear was widely slated as a self-imposed programme of structural adjustment. As a Cosatu briefing document from 2002 put it: ‘The movement … sharply warned against the danger of promoting the interests of a new elite over and above that of the majority who stood to benefit from national liberation.’
The repudiation of the Thabo Mbeki administration at Polokwane was absolute. All six of the most senior ANC and government officials lost their positions. After Polokwane the earliest expressions of this conviction as a set of policy proposals came from the ANCYL. Articulating a vision of ‘Economic freedom in our lifetime’ – an adaptation of the famous ANC slogan from the 1940s, ‘Freedom in our lifetime’ – Julius Malema, then president of the Youth League, recalled the Freedom Charter's categorical imperative: ‘The national wealth of our country, the heritage of South Africans, shall be restored to the people.’ At the Youth League's National General Council in August 2010 he explained that ‘Nationalisation of mines is but one of the components of realising economic freedom in our lifetime, and we should never compromise on that principle’.
Nationalisation was not the only alternative to the market-friendly approaches pursued after 1994. Cosatu, for example, was exploring how the economy could be reconstructed using an investment strategy that differentiated between six types of capital: publicly owned fiscal resources, publicly owned resources in the hands of parastatals, public-sector financial institutions, socially controlled resources, retirement funds and private capital.