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Peace for the World
First democratic leader of Justice the Godfather of the Sri Lankan Tamil Struggle: Honourable Samuel James Veluppillai Chelvanayakam

Monday, May 15, 2017

This Is What Happens When a Family of Business Moguls Takes Over a Country

The Gupta family’s shadowy business empire is a symbol of all that’s wrong with South Africa.
This Is What Happens When a Family of Business Moguls Takes Over a Country

No automatic alt text available.BY ERIN CONWAY-SMITH-MAY 15, 2017

JOHANNESBURG — When thousands of South Africans took to the streets last month to demand President Jacob Zuma’s ouster, an unprecedented show of popular discontent in a country where Zuma’s party has ruled uninterrupted since 1994, some took their frustrations to what they consider the real seat of power: the Gupta family.

Outside the cluster of mansions owned by the notorious business family, in the leafy Johannesburg suburb of Saxonwold, hundreds of protesters waved signs — “Puppet masters must go!” — and chanted a portmanteau slogan that has become a rallying cry against patronage politics: “Zupta must fall!”

The Guptas, an extraordinarily wealthy family led by three brothers from northern India — Atul, Ajay, and Rajesh — have become a lightning rod for South Africans fed up with a president who is widely perceived as corrupt. The brothers have lived in South Africa for just over two decades but have come to own stakes in multiple media properties, an engineering firm, and coal and uranium mines — a business empire that has risen in tandem with the political fortunes of the Zuma family, with whom the Guptas have cultivated a close relationship. Now, having risen together, both families risk falling together amid a groundswell of popular discontent.

More than two decades after the end of apartheid, corruption remains a pervasive problem in South Africa and the Achilles’ heel of the ruling African National Congress (ANC). Still, the brazenness of the Guptas’ alleged influence peddling, and Zuma’s involvement in it, has been extraordinary enough to cut through the daily barrage of headlines about dodgy government contracts and business dealings.

Atul Gupta arrived in South Africa from India in 1993, as the country was preparing for its first democratic election. A small-time businessman, he sold shoes from a flea market stall before starting a computer equipment company, which he and his brothers — who by then had followed him to South Africa — ran from a rented house in the Bedfordview area of Johannesburg. Business boomed, and by 1999 the company’s annual turnover was roughly $9 million. Atul and his brothers went on to expand their interests to mining, engineering, media, and a safari lodge through the holding company Oakbay Investments, which they formed in 2006.

Much of the family’s success has hinged on successful dealings with the government. Gupta-linked companies have proved adept at landing lucrative government contracts, while the family’s newspaper, The New Age, has raked in government advertising. Tegeta Exploration and Resources, a mining company controlled by the Gupta family, is currently facing allegations that it received preferential treatment on contracts to supply coal to Eskom, South Africa’s state power utility, as well as help from Eskom and Mineral Resources Minister Mosebenzi Zwane in purchasing a coal mine last year. The Guptas, Eskom, and Zwane have all denied any wrongdoing.

As the Guptas’ empire has grown, so has the family’s network of close relationships with politicians and government officials. As early as 1998, Atul Gupta was bragging about “having an ANC guy in his pocket,” according to a new book by journalist Pieter-Louis Myburgh. “Atul said that when this guy eventually becomes president, their [the Guptas’] ship was going to come in big time,” a source who had worked with the Guptas told Myburgh.

The guy in the Guptas’ pocket was Zuma, according to Myburgh, and the family had indeed hit it big by the time he became president in 2009. In December 2016, Atul Gupta was ranked as the seventh-richest South African — his personal wealth was valued at some $735 million — in a list based on the disclosed holdings of directors of Johannesburg Stock Exchange-listed companies. Oakbay Investments, the main holding company of the Guptas’ empire, in September declared revenue of $192 million for the year ending in February 2016.

The Zumas, for their part, stand accused not only of enabling the rise of the Gupta family but also indulging in its success. The president’s son, Duduzane Zuma, who began working for the Guptas in 2003, has numerous business links to the family, including a stake in the Gupta-controlled Tegeta Exploration and Resources, and is thought to be a multimillionaire.

But the Guptas haven’t just reaped monetary rewards from Zuma’s ascension; they’ve also gained unprecedented access to the inner workings of the state. The family’s Saxonwold home has become an unofficial seat of government, hosting regular visits by cabinet ministers and, until increased public scrutiny made it too big of a liability, the presidential motorcade.

And few South Africans doubt that the family has Zuma’s ear on matters of personnel and policy. The former deputy finance minister has claimed that Ajay Gupta offered him the ministry’s top job, plus $45 million, after complaining that the treasury posed a “stumbling block” to his family’s business plans.

“The Guptas derive unprecedented advantage, power and influence from their relationship with the president and his family,” Myburgh writes in his book. “And the latter derive ample gratification from their ties with the Guptas.”
The Guptas’ ostentatious abuse of state privilege is the stuff of legend in South Africa
The Guptas’ ostentatious abuse of state privilege is the stuff of legend in South Africa. In 2013, the family chartered a jet for 200 wedding guests coming from India. The flight somehow received permission to land at the high-security Waterkloof military base near Pretoria instead of at a commercial airport. A government investigation later that found the visitors had bypassed normal immigration procedures and received an illegal blue-light escort to Sun City, a casino resort booked out for the wedding, which was attended by several cabinet ministers.

Zapiro, a well-known South African political cartoonist, drew the Gupta brothers welcoming the newlyweds to South Africa and telling them: “For your wedding gift we bought a country and a president.”
The Gupta family did not reply to two requests for comment but has repeatedly denied benefiting from its close ties with Zuma. “As we have said countless times, our primary focus is on business, not politics,” the family said in a statement last year.

But Zuma’s political rivals argue that the Guptas’ business interests and the president’s political office are increasingly indistinguishable. Last year, the country’s anti-graft watchdog, Thuli Madonsela, launched an official investigation into whether the Guptas had exerted undue influence over political appointments and government contracts. Madonsela’s report on alleged “state capture” by the Guptas, released in October, called for a judicial commission of inquiry with greater resources to determine the full extent of the problem.

Zuma has since succeeded in tying up the judicial inquiry in the courts. But he has had less success dampening the public outrage that has been building for months and that boiled over last month after he fired his respected finance minister in March as part of a cabinet reshuffle that was widely seen as a purge of his — and, by extension, the Guptas’ — enemies. Since then, a series of mass protests in South Africa’s biggest cities have featured slogans and signs denouncing both the Zumas and the Guptas.

As public opinion turned against the Guptas last year, the family hired the public relations firm Bell Pottinger, which has previously helped burnish the image of Asma al-Assad, the wife of the Syrian president, and various repressive governments. The firm allegedly launched a racially charged campaign in which political opponents of the Guptas were portrayed as agents of “white monopoly capital,” a clumsy PR effort that was extensively detailed by South Africa’s Sunday Times.

Public outrage over the campaign, which allegedly involved a network of fake Twitter accounts pushing a pro-Gupta narrative and identifying white business leaders as the real enemy, eventually forced Bell Pottinger to cut ties with Oakbay. (“To suggest that we would stoke racial tension in South Africa is both insulting and wrong,” the PR firm said in a statement denying “all the allegations made against it.”)

But if the alleged PR campaign was ugly, it arguably served its purpose. Inflammatory rhetoric around race has infected the ANC’s internal leadership contest, allowing Zuma to fend off internal party challenges even as his popularity plummets. As a result, the Guptas’ empire appears more entrenched now than ever. Ministers seen as friendly to the family’s business interests now hold key cabinet posts, and Zuma looks poised to bequeath his leadership role in the ANC to his ex-wife, a move that would all but ensure the Guptas remain an outsized force in South African politics even after his term as president ends in 2019.

“I don’t see them going anywhere anytime soon,” said Ralph Mathekga, the director of research at the Johannesburg-based Mapungubwe Institute for Strategic Reflection and the author of the book When Zuma Goes. “They are quite secure.”

Top image: GIANLUIGI GUERCIA/AFP/Getty Images