#UnrestSA: let's compare the cost with that of the "invisible looting" during the state capture years

Our communities are reeling from the impact of the visible looting and plundering during the recent South African unrest. But have we ever considered the cost of the  "invisible" looting that took place because of corruption and state capture? OUTA's state capture expert Rudie Heyneke says it may be hundreds of times more than what the unrest cost our country.

Two weeks ago, South Africans (and the world) watched unprecedented unrest and plundering taking place in parts of our country. We were horrified - and rightly so – to see pictures and video footage from KZN and parts of Gauteng, showing how thousands of people looted and vandalised shops, warehouses, offices and even schools and medical facilities. Nothing and nobody were spared, and billions of rands in damage were recorded. 

In KZN alone, experts estimate that more than 150 000 jobs are on the line after 161 malls, 11 warehouses and 8 factories were extensively damaged. More than 200 shopping centres and about 3,000 stores were looted and damaged.  

The visible looting and plundering took place for the world to see, and as South Africans, we had front row seats to the destruction. 

The President ordered the National Defence Force to assist the South African Police Services to restore law and order. But even before they were deployed, ordinary people decided to protect and safeguard what they could.  Communities, business owners, civil society groupings and even taxi associations joined forces with law enforcement agencies to protect what was left. When it was safe, everybody jumped in to clean up and start rebuilding.  

As shocking as the last week was, it should serve as a reminder of the grand scale “invisible looting” that took place in South Africa for more than a decade. State capture was no different from the looting during the unrest – except for the scale on which the corruption and looting from the fiscus robbed South Africans.  

Sadly, like we often saw during the unrest, those meant to protect us against the looters, just stood by and watched without trying to stop the plundering. Not only law enforcement agencies like the SAPS and the Hawks, but also our country’s then President, Jacob Zuma, ministers and MPs, the NPA and SARS. 

Just like the unrest, the “invisible looting” during state capture robbed us of too much to quantify. It deprived South Africans of quality education, health care, housing, infrastructure, security and much needed jobs. Poverty will increase even more. 

Here’s a reminder of what was lost due to corruption, collusion and tax abuse during the Zuma years (not forgetting the estimated R2.2 billion that was looted to pay bribes and kickbacks in the Arms Deal, in which former president Zuma also played a key role). Just think what difference all these billions could have made to our country.

  • In 2015 the Competition Commission found construction companies Group Five, WBHO, Basil Read, Murray & Roberts, Aveng and Stefanutti Stocks guilty of colluding when building the 2010 FIFA World Cup stadiums. This added R14 billion to construction costs.

  • Group Five, WBHO, Basil Read, Murray & Roberts, Aveng and Stefanutti Stocks also overcharged SANRAL by R760 million on road construction contracts.  A fine of R1.4 million (for roads and stadiums) was paid into the National Revenue Fund.  The rest of the loot was never recovered.

  • In 2009 SANRAL awarded an e-tolls collection contract to Kapsch, an Austrian company.  The tender was for R6 billion,  but the contract was signed for R11 billion.  In 2020 OUTA exposed a R10 million “sweetener” paid to award the contract to Kapsch. We reported this to authorities, but nothing was recovered yet.

  • In 2012, SASSA awarded a contract to Cash Paymaster Services (CPS), a Net1 subsidiary, for distributing social grants. A variation agreement was found to be illegal, and the court ordered CPS to repay R316 million. CPS liquidated in 2020 and SASSA is still battling to recover the loot.  

  • From 2004 to 2018, contracts from the Department of Correctional Services (DCS) worth R12 billion were awarded to Bosasa. Millions of rands of our taxes were used to pay kickbacks and bribes to the ANC, ministers, MPs and DCS officials. Nothing has been recovered to date.

  • Millions were paid to EOH for contracts with the Department of Water and Sanitation as well as the Department of Defence, NPA and Johannesburg City Council. Investigations by ENS Africa found EOH could not account for R700 million (apparently there was no work done). A further R160 million of taxpayers’ money was paid for dubious work. Bribes (or so called “loans”) were looted from tax- and ratepayers and paid to a Deputy Minister, a former ANC mayor and the ANC.

  • The PIC was the fund manager for the Government Employees' Pension Fund (GEPF) that lost R21 billion due to the Steinhoff corruption scandal. Nothing has been done yet by the PIC to hold Steinhoff and its directors accountable or to recover the lost billions. Up to date, there has not been any prosecution of Steinhoff or its directors by the NPA. OUTA says criminal corporates should pay back the money they looted from South Africa.

  • Iqbal Survé

    ’s Sekunjalo Group received R5 billion from the PIC with the help of the PIC’s ex-CEO Dan Matjila. This was “invested” in Survé’s ventures at massively overvalued share prices that are now almost worthless. Again, pension funds money were looted with little chance to recover the loss.

  • In 2018/19, municipalities in Limpopo lost R1.2 billion after VBS Mutual Bank was liquidated. In the same report by the Auditor-General, irregular municipal expenditure across SA worth R32 billion was pointed out, up from last year’s amount of R26 billion. This is  money looted from residents and ratepayers by authorities!

  • More than R1.8 billion was looted from VBS. Hundreds of stokvels, burial societies and ordinary people were robbed from their savings. Also, 53 individuals or entities (including political leaders, mayors and CFOs at municipalities) got gratuitous payments from VBS for ensuring money from municipalities was deposited at VBS. Many towns were robbed in this way.

  • Paul Holden of Shadow World Investigations calculated that over R57 billion of our taxes was spent on state capture contracts associated with the Guptas. At least R16.2 billion ended up in Gupta pockets. The looting started in the Free State and spread to Transnet and Eskom.

  • The consulting firm Regiments didn’t stop at dodgy advisory contracts with Transnet, but as the fund manager of the TSDBF (Transnet pension fund), Regiments and Nedbank received millions on unexplained interest rate swap transactions. R5 billion in total was looted this way. The SIU is still trying to recover money from Nedbank.

  • Various local and international companies assisted the Guptas in their looting spree. For them to be awarded lucrative contracts, officials at several SOEs and government departments blatantly ignored prescribed procurement policies, procedures and the Public Finance Management Act (PFMA). There were no consequences for most of them.

  • International consultant firm McKinsey appointed Gupta-aligned companies like Regiments and Trillian as their local partners, who received millions from SOEs and then shared it with Salim Essa and a few Gupta companies. Regiments (under the management of Eric Wood and Niven Pillay) looted R1.2 billion from Transnet alone.

  • With the help of Transnet officials like Brian Molefe and Anoj Singh, the international locomotive manufacturer CRRC paid at least R5.6 billion in kickbacks to Salim Essa’s companies in Hong Kong. Most of the money went through bank accounts held at HSBC in Hong Kong. No refunds were made by CRRC yet, despite pressure by Transnet and OUTA.

  • Other international companies who were implicated in state capture and the looting of the fiscus over a decade, like KPMG, Bain, ABB, SAP, T-Systems, PWC etc, should also be named, shamed and forced to pay back the taxpayer funds they were paid with.

  • SAA bailouts are currently running at a total of R58.143 billion. This is the total of bailouts from 2003/04 to date plus bailouts already in the national Budget up to 2022/23. This includes the R10.5 billion for the business rescue plan (of which R2.7 billion was diverted to SAA subsidiaries) and R16.4 billion to pay off government-guaranteed debt. However, the business rescue plan still needs more funding: even considering the R3 billion promised by the equity partner Takatso, another R8.5 billion is needed.

  • At many other government departments and SOEs, like the SABC, Denel and SAA, billions of rands ended up in the pockets of connected individuals or entities. We are waiting for everybody involved in this looting of our country to be arrested, charged, prosecuted and jailed, and for the money to be recovered.

  • Let’s also not forget the huge PPE corruption scandal in 2020 that seriously hampered SA’s fight against Covid-19. Some of these looters are closely connected to political leaders and senior government officials. The SIU is currently battling to recoup money from them.

The “invisible” looting of state funds and taxpayers’ money over the past decade far exceed the damage we are currently seeing. Yet, at no time was any action taken while the looting took place. Maybe because the ruling party, government officials, politicians, ministers, big corporate companies, banks and international companies were in cahoots with each other. Nobody tried to stop the looting or to recover the stolen goods. No one, up until recently, got arrested, charged and prosecuted for the looting and corruption.

Also remember that those who enabled the state captors or looked away, are just as guilty as the looters themselves.

Returning what was stolen is not enough. The consequences of looting are devastating. Just as South Africans in the areas affected by the unrest will face a lot of hardship for many months to come, the “invisible” looting will affect SA for a long time. Quality schools and education, top-class healthcare, housing, public transport, safety and security, employment, economic growth – to name just a few – were opportunities lost because of the “invisible” looting.

It is time for us to do what communities did during the unrest. Let’s take hands and unite against corruption and the looting that is still happening in far too many SOEs, municipalities and government departments.

The OUTA team is committed to stop the tax abuse and corruption, but we need YOUR help. With more resources, we can do much more to hold politicians, government officials and SOEs accountable. We can put more pressure on them not to sidestep procurement legislation, policies and procedures when looters intimidate or bribe them. We can help stop government and municipalities from wasting our hard-earned taxes and apply pressure on law enforcement agencies and the NPA to do their job swiftly and without fear or favour.

Help OUTA help you.

      Our country needs to unite and demand action against invisible looting similarly to how we stood together over the past few weeks against looting.
      This is some of the important work OUTA does every day. You can help stop further looting by joining OUTA today. 

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