Former South African president Jacob Zuma pressured his finance minister to sign an illegal letter that would have guaranteed that Russia would receive a nuclear energy contract of up to US$100-billion, the minister has testified at an inquiry into state corruption.
Finance Minister Nhlanhla Nene told the inquiry that Mr. Zuma wanted to give the letter to Russian President Vladimir Putin at a summit in Russia in 2015. He said the project would have benefited Mr. Zuma’s friends, the Gupta family, which owned a uranium mine in South Africa and had a business partnership with Mr. Zuma’s son.
The testimony on Wednesday, the first to be given by a cabinet minister at the inquiry, is the latest explosive revelation of how Mr. Zuma used his influence to help the Guptas, even when the cost to the country would have been huge.
At the time of Mr. Zuma’s meeting with Mr. Putin, the South African government was publicly insisting that the nuclear contract would be awarded through an open tender with bidders from many countries. But the testimony by Mr. Nene made clear that the fix was in: Mr. Zuma wanted the lucrative contract to go to Russia’s state-controlled nuclear energy company.
The letter handed by Mr. Zuma to Mr. Nene was illegal because it meant that South Africa wouldn’t be following its own rules on open tendering and feasibility studies for the nuclear contract, Mr. Nene said.
He said the cost of the 9,600-megawatt nuclear project would have been “astronomical” – the most expensive public contract of any kind in South African history.
He said the one-page letter would have guaranteed that Russia would win the nuclear contract, as long as it provided the initial financing for the construction as it had promised.
The letter would have amounted to a “binding financial commitment” to the Russian control of the massive nuclear energy project, which would have been financially risky and could have required electricity-rate increases for many years, Mr. Nene said.
Mr. Zuma wanted to give the letter the following day to Mr. Putin at the annual summit of the BRICS countries – Brazil, Russia, India, China and South Africa – in the Russian city of Ufa, he said.
Mr. Nene refused to sign the letter, and the meeting with Mr. Zuma became tense and hostile, he said. He later heard that Mr. Zuma was angry with him.
Five months later, in December, 2015, Mr. Zuma fired Mr. Nene from the Finance Ministry and replaced him with another minister who was widely seen as an ally of the Guptas. The public backlash was so fierce that Mr. Zuma was forced to dismiss the pro-Gupta minister, Des van Rooyen, and replace him with a more respected minister, Pravin Gordhan, just three days later.
At the inquiry, Mr. Nene testified that he believes he was sacked from cabinet because he refused to “toe the line” on the nuclear deal and other decisions that would have benefited the Guptas. The former president was “very close” to the Gupta family, he said.
A former deputy finance minister, Mcebisi Jonas, told the inquiry last month that the Guptas offered him a cash bribe and the promise of a promotion to the finance minister’s job if he agreed to co-operate with them.
Mr. Nene testified that Mr. Jonas approached him in October, 2015, to tell him about the bribe offer. Because of their fear of electronic surveillance or other forms of bugging, they spoke on the balcony of a building, Mr. Nene said. “Even when you look at a flower pot, you’re not sure,” he said.
At the time, there were clear signs that Mr. Nene’s department, the Treasury, was facing attack from those who wanted easier access to government money. An anonymous “intelligence report” claiming that the Treasury was riddled with “apartheid agents” and that Mr. Nene himself was being controlled by a private bank executive, was circulating within the government at the time, Mr. Nene said.
Interestingly, he said, Mr. Zuma made the same allegation in a meeting with Mr. Nene, telling him that the Treasury was filled with “apartheid spies.”
The Treasury denounced the “intelligence report,” but it was still widely seen as one of the reasons for Mr. Nene’s dismissal from cabinet.
In December, 2015, Mr. Zuma excluded Mr. Nene from a cabinet meeting during which the nuclear deal was approved, with no Treasury input and the costs grossly underestimated, Mr. Nene said. A day later, he was dismissed from cabinet.
Earlier this year, as the corruption allegations were mounting, Mr. Zuma resigned the presidency. The inquiry into state corruption began its public hearings last month.
The nuclear project has never been formally killed, but it fell off the priority list after Mr. Zuma left office. Mr. Zuma’s successor, President Cyril Ramaphosa, has said that the nuclear project is unaffordable and not currently needed.