Pravin Gordhan gives ex-ministers cause to quake at state capture inquiry

Public enterprises minister Pravin Gordhan will draw former cabinet colleagues Lynne Brown and Ben Martins into the state-capture matrix when he tells the Zondo commission on Friday how they tried to push the government into mega-deals that were ultimately blocked by the National Treasury.

Gordhan will also testify that in 2013, during his first term as finance minister, former president Jacob Zuma made it clear to him that the nuclear deal had to go ahead.

Gordhan will be the second serving cabinet minister to give evidence at the inquiry after finance minister Nhlanhla Nene's dramatic testimony on Wednesday when he admitted meeting the Guptas seven times. Gordhan's evidence will be preceded on Wednesday by that of former public enterprises minister Barbara Hogan.

Gordhan has been asked by the commission to give evidence about his dismissal in March 2017, when he and his deputy Mcebisi Jonas were removed from the finance ministry in a midnight reshuffle.

Gordhan will inform judge Raymond Zondo about the issues that caused a breakdown in his relationship with Zuma and hostility towards the Treasury, according to members of his team.

These include an application by Martins, when he was energy minister, for Treasury to issue a guarantee of between R18bn and R20bn to PetroSA for the purchase of a majority stake in Engen from Malaysian company Petronas. PetroSA would have partnered with Angolan parastatal Sonangol.

The Treasury was concerned that the price was inflated to almost double the value of the company and was reluctant to issue the guarantee.

There was also concern that the risk would be borne by the South African government though Sonangol would acquire a 49% stake in the petroleum company. The Angolan state-owned company was chaired by Isabel dos Santos, the daughter of then president José Eduardo dos Santos.

Gordhan will testify that when Martins could not secure the guarantee from the Treasury, Zuma intervened and attempted to force him to facilitate the deal.

Gordhan met Martins to explain why due diligence had to be conducted before the participation with Sonangol could be approved and the guarantee issued.

Gordhan will also testify how Brown, his predecessor, tried to push through the joint venture between state-owned arms company Denel and Gupta-linked VR Laser Asia.

VR Laser Asia was owned by Gupta business partner Salim Essa and its only shareholder was VR Laser RSA, whose directors were Duduzane Zuma and Rajesh Gupta.

The joint venture, which was to be known as "Denel Asia", would have seen a takeover of Denel's intellectual property. Denel Asia could then have made billions of rands by selling on the proprietorship of military weapons systems.

Brown issued a pre-approval for the deal in October 2015, while Nene was still finance minister. Nene would not issue an approval and guarantees for the deal.

During Des van Rooyen's brief spell as finance minister, the application was again submitted to the Treasury. Van Rooyen did not have time to approve it before he was removed and Gordhan reappointed to the finance ministry within four days.

Gordhan refused to sign off on the deal, leading to a court battle and public exchanges with the then chair of Denel's board, Daniel Mantsha.

Mantsha is now representing Zuma at the state capture inquiry, and will probably have to respond to Gordhan's testimony about his rocky relationship with the former president.

This includes a claim Gordhan is expected to make that one of the reasons for his axing was that he snubbed the Guptas by cancelling a post-budget business breakfast in 2016.

Gordhan refused to speak at The New Age Business Breakfast scheduled for the morning after his budget speech and withdrew the sponsorship for the event. The New Age breakfasts were broadcast on SABC and drew millions of rands in funding from state-owned companies. Zuma as well as his cabinet ministers headlined the events.

Gordhan caused a stir when he spoke at an alternative breakfast briefing and gave the broadcast rights to eNCA and the SABC.

Gordhan's testimony, like Nene's, will also run through the events surrounding the nuclear-build programme and the Treasury's clashes with former SAA chair Dudu Myeni.

The nuclear deal remained a hot potato for Gordhan when he returned to the finance ministry after Nene's dismissal.

Nene told the commission last week that the cabinet had approved the deal based on an inaccurate calculation of the costs by the department of energy, to underplay the real financial burden on the country. Nene was fired on the same day.

Gordhan will tell Zondo how he was forced to retain Myeni as the SAA chair despite his efforts to dismiss her and the entire board in September 2016 before issuing a bail-out for the troubled airline.

Gordhan will also give details of the investigation by the Hawks against him and attempts by the National Prosecuting Authority to charge him with fraud.