MAC: Mines and Communities

South Africa: Gupta's corporate capture of Zuma clique

Published by MAC on 2016-11-03
Source: GZ.com, Pambazuka News (2016-11-03)

Calls for president to resign grow louder

Allegedly criminal links between president Zuma and the Gupta family have been revealed in an official report, published this week. Outraged protestors took to the streets in some force.

Much of the story was already rehearsed in a special report on MAC, posted earlier this year: South Africa's unholy mining marriage

What the “State Capture” report tells us about Zuma, the Guptas, and corruption in South Africa

Lynsey Chutel and Lily Kuo

http://qz.com/825789/state-capture-jacob-zuma-the-guptas-and-corruption-in-south-africa/

November 03, 2016

It’s the report that confirms South Africa’s worst fears about corruption: that the state has been captured. In 355 pages, former public protector Thuli Madonsela and her team of investigators outline in detail just how much control the Gupta family, a wealthy Indian immigrant family, has over South Africa’s resources. The Guptas’ close friend, president Jacob Zuma, as well as two ministers implicated in the report, went to court to stop its release. But it was finally released on Nov. 2, after protests and a court battle.

The report (pdf) is potentially damning for Zuma, offering proof that he sanctioned the use of state companies for personal enrichment. But now the real reckoning begins, as a web of corruption around Zuma, the Guptas, and at least three ministers begins to unravel.

Hiring and firing ministers in the Guptas’ house

The report contains a detailed interview with deputy finance minister Mcebisi Jonas, who alleges that the Guptas offered him the finance minister’s post weeks before Zuma was to shuffle three finance ministers in one week. Jonas was driven to the Guptas’ home by the president’s son Duduzane Zuma, where he was met by Ajay Gupta.

Ajay Gupta allegedly told Jonas they’d been keeping tabs on him and wanted him to be their man in the treasury. Ajay Gupta revealed that they’d already made 6 billion rand ($443 million) from dealings with the government, and wanted to make at least 2 billion rand more (about $147 million). When Jonas refused, they tried to sweeten the deal with 600 million rand (about $44 million) and an extra 600,000 rand ($44,318) in cash, right there. Jonas declined the money, and months later became the whistle-blower that launched this investigation when he revealed his story in March.

Vytjie Mentor, who came out after Jonas with an account of how the Guptas tried to offer her the job of minister of public enterprises, in charge of state-owned companies, also details her exchange with the family. According to the report (p.89), Mentor was told during a meeting in October last year at the Guptas’ home that she would go from an ordinary parliamentarian to cabinet minister in a week. All she had to do was make sure South African Airways dropped their route between Johannesburg and Mumbai, making way for the Gupta-linked carrier Jet Airways. Mentor declined. She was surprised to see the president himself emerge from an adjacent room, who said “it’s okay girl…take care of yourself,” as he personally escorted her out.

According to the report, the Guptas also have the power to fire ministers seen as stumbling blocks to their plans. Former finance minister Nhlanhla Nene’s insistence on sticking to the rules cost him his job. As did Barbara Hogan, former minister of public enterprises, who refused to allow outside influence in appointments of board members of state-owned South African Airways, Transnet, the national rail, and Eskom, the state power utility (p. 89, 90). On an official visit to India, Hogan said she was shocked to find the Guptas running proceedings. She was relieved of her duties a few months later.

Des van Rooyen, the unknown parliamentarian who became finance minister for a few days after Nene, went to court in a bid to delay the report, fearing it would implicate him. And it has. His phone records show that van Rooyen visited the Guptas’ home seven days in a row before he was appointed as finance minister. He was later moved to a less prominent ministry. Van Rooyen has denied any wrongdoing.

Negotiating on behalf of the Guptas

Mining minister Mosebenzi Zwane also tried to have the report delayed, saying it was hastily prepared and that he had not been given time to respond. According to the report (p. 124, 125), Zwane travelled to Switzerland on behalf of the Guptas to smooth over their acquisition of a troubled coal mine from multinational commodity trader Glencore, helping the Guptas become one of the main coal suppliers for state utility Eskom. Zwane allegedly helped facilitate the deal by accompanying delegates from a Gupta resources company, Tegeta, to Zurich, according to a flight itinerary obtained by the public protector. Zwane could not be interviewed in time for the report, but should be allowed to give his version in subsequent investigations, the report says.

Eskom, accused of overly cozy ties with the Guptas featured heavily in the report, with 916 mentions. Lynn Brown, who became the minister in charge of South Africa’s state owned enterprises, is implicated in the report for allowing the appointment of a lame-duck board that turned a blind eye to murky deals made at the energy monopoly.

But it’s Eskom’s chief executive, Brian Molefe, who comes out looking the worst. According to cell phone records, Molefe had 58 phone calls with the eldest of the Gupta brothers, Ajay Gupta, between August 2015 and March 2016, just before the Guptas purchased South Africa’s Optimum coal mine for 2.15 billion rand ($160 million). Eskom, which prepaid the Gupta’s Tegeta Exploration and Resources 600 million rand for coal, had been accused of helping to finance the Guptas’ coal mine deal through preferential treatment.

The report concludes (p, 20), “it appears that the sole purpose of awarding contracts to Tegeta to supply Arnot Power Station, was made solely for the purposes of funding Tegeta and enabling Tegeta to purchase all shares in OCH [Optimum Coal Holdings]. The only entity which appears to have benefited from Eskom’s decisions with regards to [the Optimum coal mine deal] was Tegeta.”

Cellphone records also put Molefe in the Saxonwold area, where the Guptas live, 19 times between August and November 2015 and phone calls between Molefe and Ronica Ragavan, head of the Gupta’s holding company, Oakbay Investments. Justifying these calls and visits, Ajay Gupta told Madonsela in an interview last month that Molefe is his “very good friend” who often visits the Gupta compound.

But Madonsela says these records show “a distinct line of communication between Molefe of Eskom, the Gupta family and directors of their companies… These links cannot be ignored as Mr Molefe did not declare his relationship with the Guptas.” Eskom has refuted any allegations of wrongdoing. “We do believe everything that we’ve done so far was above board,” spokesman for the utility, Khulu Phasiwe, told a local radio station.

Themba Maseko, former chief executive of government’s communications agency, in charge of a media buying budget of 600 million rand a year, said he was pressured by the Gupta family to place government ads in their newspaper the New Age. Maseko was also one of the whistleblowers who took his story to the media in March.

In an interview with Madonsela in August, Maseko said he was on his way to a meeting with the Guptas in late 2010 when the president called him on the phone to say, “The Gupta brothers need your help, please help them.” During the meeting with Ajay Gupta, Gupta told Maseko that he wanted government advertising channeled to his new newspaper, the New Age. According to Maseko’s account, the government official told Gupta that he could not decide where government departments advertise. Gupta responded that this was not a problem. He would instruct the departments to advertise in the newspaper.

According to Maseko’s account, Gupta instructed Maseko to tell him “where the funds are and inform the departments to provide the funds to you and if they refuse, we will deal with them. If you have a problem with any department, we will summon ministers here.” Later when Maseko refused to take a meeting with a New Age staff, Gupta told Maseko, “I will talk to your seniors in government and you will be sorted out.” Maseko was fired a few months later.

The report shows how the Guptas’ plans were repeatedly thwarted by officials in the treasury (p. 131, 132, and 94). The National Treasury, in charge of approving deals linked to state-owned enterprises, stuck to the rules of procurement and public finance. Treasury officials questioned the Eskom coal deal with Tegeta. Unable to stop the initial deal, they succeeded in blocking an extension of the Tegeta contract. These obstructions appear to have frustrated the Guptas and cost Nene his job. Many speculate that current finance minister Pravin Gordhan’s ongoing legal battles are related to the treasury’s resistance to the Guptas influence.

What next?

Zuma, the ministers, and the Guptas have yet to respond to the damning allegations in the report. Madonsela has since left office, with state capture report serving as her parting shot in a seven-year battle against corruption. Still, she’s left instructions on how to use with her findings. Her successor, who has already started, should bring potentially criminal accusations in the report to the National Prosecuting Authority and the police’s Directorate for Priority Crime Investigation, better known as the Hawks.

Madonsela has also recommended that the report be taken further by a commission of inquiry, headed by a judge appointed by the chief justice of South Africa’s constitutional court, Mogoeng Mogoeng. There are concerns that the prosecuting authority and the Hawks have been compromised. (They have spearheaded the fraud case against finance minister Gordhan.) But the public’s hopes lie in the chief justice, who has spoken out harshly against the abuse of power before.

“Public office bearers ignore their constitutional obligations at their peril. This is so because constitutionalism‚ accountability and the rule of law constitute the sharp and mighty sword that stands ready to chop the ugly head of impunity off its stiffened neck,” Mogeng said in March when he ruled against the president over his use public funds used to renovate his personal compound in Nkandla.


South Africa’s deprivations and depravations revealed in Jacob Zuma’s meltdown

Patrick Bond

http://www.pambazuka.org/democracy-governance/south-africa%E2%80%99s-deprivations-and-depravations-revealed-jacob-zuma%E2%80%99s-meltdown

Nov 3, 2016

President Zuma has suffered two major legal defeats: a fumbled state attack on Finance Minister Pravin Gordhan which was humiliatingly withdrawn by an incompetent prosecutor following a national outcry, and the release of the Public Protector’s report on the Zuma family’s corrupt relationships. Will enough pressures from below be mobilised to generate non-violent regime change in South Africa?

This week could well be remembered as South Africa’s most important political inflection point since the September 2008 ousting of sitting President Thabo Mbeki by his own party, the African National Congress (ANC). His main tormenter then was Jacob Zuma, who – following a brief handover period – has ruled the country in an increasingly dubious manner since May 2009.

But several contradictions have exploded in Zuma’s face. Political opponents from across the spectrum, radical university students and his own party’s establishment smell the blood, as Zuma’s fabled patronage system is now in the spotlight, apparently in tatters.

Zuma just suffered two major legal defeats: a fumbled state attack on Finance Minister Pravin Gordhan which was humiliatingly withdrawn by an incompetent prosecutor on Monday following a national outcry, and Wednesday’s release of the public protector’s “State of Capture” report on the Zuma family’s corrupt relationships, a report the president and two cabinet colleagues unsuccessfully attempted to quash.

Zuma loses his political grip while liberals and radicals gain momentum

While Zuma tried delay tactics, rumblings at the base have grown louder. The leftist Economic Freedom Fighters (EFF) party and the centre-right Democratic Alliance (DA) both held anti-Zuma marches in the capital city Pretoria on Wednesday, with the former’s leader Julius Malema clearly distancing himself from a third event – a ‘Save South Africa’ meeting at the nearby Anglican cathedral with scores of notables from civil society and big business.

Malema told a crowd of many thousands, “A CEO will speak at that small church there, not Church Square. Let them speak there. Small churches are for CEOs. Only the EFF has the potential to collapse the ANC.” The threat of EFF activists marching to occupy Zuma’s offices at Pretoria’s Union Buildings offices was deflected by police, but the red-shirted marchers took over much of the capital city’s central business district.

Prior to the 355-page “State of Capture” report, Malema’s deputy Floyd Shivambu had written the most thorough analysis of the Gupta brothers’ influence, and the EFF regularly refers to the network of state and Gupta cronies as the ‘Zuptas.’ The Gupta influence includes mass media (a newspaper and TV network), mining (especially exceptionally controversial links to the Eskom parastatal and its top manager) and provincial ANC leaders.

Other proletarian elements are also growing restless. One of the three most important trade unions still backing Zuma, the nurses (with more than 200 000 members – in the same league as teachers and mineworkers who have been Zuma’s main labour backers), announced on Tuesday that they now want the president to resign. The largest union, the metalworkers with 350 000 members, did so in late 2013. But more recently, so too have scores of major ANC leaders, along with what seems to be nearly the entirety of centre-left and centrist civil society and the media commentariat.

As a former guerrilla fighter with no formal education, Zuma, 74, is a genius at maintaining not only talk-left walk-right ideological flexibility, but also membership loyalty within his Zulu ethnic group and the country’s eastern and northern provinces (KwaZulu-Natal, Mpumalanga, Free State, North West and Limpopo). Although in August municipal elections it lost 8% of the vote compared to the 2011 vote, the ANC won handily in most of these areas.

But for the first time since liberation, the ANC surrendered rule of the economic heartland of Johannesburg, Pretoria and the fifth largest city of Nelson Mandela Bay (Port Elizabeth) to what is sure to be a fleeting right-left alliance of DA and EFF. The second city, Cape Town, has been run by the DA since 2006, while third-largest Durban is safely pro-Zuma. Huge ANC patronage power dissipated with the loss of the three metro areas.

Zuma himself is also being battered again by 783 corruption charges relating to bribery in a late 1990s French military deal. The infamous arms deal unravelled the ANC’s liberation mystique even during Nelson Mandela’s 1994-99 rule. As a result of a colleague’s jailing on the same charges, Zuma was fired as Mbeki’s Deputy President in 2005. He then won acquittal in a high-profile 2006 rape case. The (HIV+) victim – daughter of a former ANC guerrilla who was a close family friend of Zuma, Fezikile Kuzwayo – died in Durban last month, again reviving memories of his misogyny. Zuma, who has four wives and more than twenty children, claimed during the trial, “in Zulu culture, you don't just leave a woman,” a stance Kuzwayo eloquently rebutted as she was forced into exile for several years by Zuma’s manic supporters.

Until now, Zuma has kept dissident tendencies within the ANC’s big political tent, in part by using divide-and-conquer patronage skillfully. But the day of reckoning is here because the Gupta family – three immigrant Indian brothers who became ostentatious tycoons over the past two decades – have been winning massive state deals and using alleged bribes to get even wealthier, as revealed in “State of Capture.”

For example, the respected Deputy Finance Minister Mcebisi Jonas accused the Guptas of offering him $45 million a year ago, if he agreed to become finance minister in an informal putsch, because his then boss Nhlanhla Nene had balked at airplane and nuclear deals favourable to Zuma’s retinue. After Jonas forcefully declined, the subsequent firing of Nene and offer of the job to a political ingénue – Des van Rooyen – left the country shocked last December. Within four days, amidst a panicked currency crash, a business uprising led by three white bankers forced Zuma to shift the hapless Van Rooyen over to the local government ministry and replace him with Gordhan, who had served in the same job to corporate applause from 2009-14.

But throughout 2016, Gordhan’s stance became increasingly untenable, thanks to the economic downturn and repeated attempts by Zuma allies to prosecute him for what appear to be either nonsensical claims or relatively trivial misdeeds in his prior role in the tax authority. As the country barely dodged a recession, Gordhan’s 2016 budgetary manoeuvres were also complicated by rising popular dissent – especially university students who demanded around $2 billion in new funding to achieve “free, decolonised, quality higher education” in the #FeesMustFall campaign, as well as angry black communities denied decent levels of municipal services – and threats of a junk bond rating downgrade.

Credit rating threats and student demands

That junk rating has long been threatened by the local managers of three agencies: Moody’s, Fitch and Standard&Poor’s. But while Gordhan goes to great lengths to appease them and the financiers they front for, the three agencies are so often so spectacularly wrong (e.g. with AAA ratings for Lehman Brothers bank and IAG insurance in 2008), and so apparently biased towards the prejudices of western banks, that in Goa last month, the Brazil-Russia-India-China-South Africa economic alliance pledged to introduce their own.

The neoliberal financial elites in the BRICS machinery ensured, however, that the wording for such an agency’s mandate emphasised “market-oriented,” so as with the BRICS New Development Bank and Contingent Reserve Arrangement, there would logically be no difference with existing institutions. And as with Brazil and Russia which were also given junk status recently, South Africa pays a 9% interest rate on its now dangerously high $135 billion foreign debt, which indicates that the markets already de facto consider South Africa to have junk status.

With those three agencies firmly in mind, on October 25, Gordan revealed his latest budget in parliament. At the time, 16 of the country’s 25 universities had been forced by student protesters to temporarily close down, in the activists’ attempt to raise national pressure on the government. Though valiant, and though 600 students were arrested and around $80 million in damage done by protesters to their campuses, neither Zuma nor Gordhan gave in.

On October 25, several thousand furious university students met Gordhan for a talk at parliament’s gates before the budget speech, but then after being attacked by police, began violently protesting throughout central Cape Town. They were then heartbroken by Gordhan’s decision to offer only $420 million in new funds, following more than a year of intense social debate and student protest, in the wake of a legacy of university underfunding by Gordhan’s predecessor, the famous neoliberal Trevor Manuel who now works for Rothschild. And they were infuriated by yet another heavy-handed police clampdown.

But the students should not have been surprised. Gordhan did after all signal divide-and-rule budget politics during a New York interview amidst his last investor road-show, on October 5: “We have a solution which will meet the needs of the poor students, and the so-called missing middle as well, and it’s important that students who understand the calculations, who understand the trade-offs that we need between student fees being subsidised on the one hand, and housing and welfare and health and other issues being paid for on the other hand, that they should be part of a constructive conversation.”

Across South Africa, #FeesMustFall had rejected that ‘solution’ when it was proposed by Higher Education Minister Blade Nzimande – who also leads the SA Communist Party – two weeks earlier. They well understand that state subsidies provided 50% of university income in 2000, but steadily fell to 40% today, with students covering the bulk of the shortfall.

On October 25, Gordhan again told them to borrow more – he offered $670 million – in order to pay for their undergraduate education. The National Student Financial Aid Scheme’s extremely low repayment rates ($1.5 billion out of $1.8 billion in outstanding debt remains uncollected) reflects how that strategy is working. Adding household debt is usually only a short-term salve, as demonstrated by the ratio of South African borrowers whom the National Credit Regulator deems ‘credit impaired’: still in the unsustainable region of 45%, barely lower than the 2008 high.

Importantly, a report by Nzimande’s 2012-13 Commission on fees-free education was covered up until its findings were leaked in 2015. Nzimande’s spokesperson Khaye Nkwanyana had explained, “It is a public document, but due to the nature of the report, we decided not to make it public. Obviously we would have been setting the Finance Minister [Gordhan] up against the public if that decision and report was released.”

Gordhan’s neoliberal bias

The choices Gordhan made last month necessarily set him against the public. For example, his February budget provided a mere 3.5% nominal increase to foster care providers (who play a vital role given the catastrophic AIDS orphan rate) and a 6.1% rise for mothers of many millions of Child Support Grant recipients. While old-age pensions are not increasing, the extra $0.75/month he offered to the latter – up to a tokenistic $27/month – brings the child grant’s overall increase this year to 7.5%.

However, inflation for poor people will likely exceed 10%, due to a 15% rise in basic food costs, Eskom’s 9.4% electricity price increase and higher transport expenses. Reflecting the gap between Pretoria’s conscience and society’s hunger, the poverty rate (for food and necessities) is now an excruciating 63%. But South Africa has the fifth lowest social spending rate amongst the 40 largest economies (half that of Russia and Brazil).

Instead of targeting social spending, Gordhan could instead have referenced the $17.3 billion in annual overcharging within Treasury’s $45 billion procurement budget. Treasury’s lead procurement official Kenneth Brown recently acknowledged, “without adding a cent, the government can increase its output by 30-40%. That is where the real leakage in the system actually is.”

Why has such fiscal wastage continued for so long? Gordhan himself admits that Treasury remains confounded by systematic ANC “rent-seeking. It means every time I want to do something, I say it is part of transformation. But in the meantime, it means giving contracts to my pals in closets.” (The “I” and “my” refer to the Zupta faction.)

But there are also other pals in other closets, who normally cheer on Treasury neoliberalism: the 1% of rich South Africans who have had an exceptional run since the early 1990s, according to a World Bank report released last month. Post-apartheid economic policies raised their income share from 10-12% of total income (excluding capital gains) in 1990-94 to 18-20% since 2009, nearly unprecedented in the world.

These are also the (mostly) men who take assets abroad illicitly. For in addition to around $11 billion in net profit, dividend and interest payments  that leave the country – the main reason South Africa’s current account deficit often reaches a dangerous 5% of GDP – there is $21 billion in annual average ‘Illicit Financial Flows’ (as counted by Global Financial Integrity over the past decade).

This threat continues unless Treasury and the Reserve Bank counter it by tightening exchange controls. They won’t. Apparently without any state regulatory friction, blatant tax dodging occurs at the biggest platinum companies, especially Lonmin with its Bermuda “marketing” arm, De Beers with its $2.8 billion in diamond misinvoicing over seven years, and MTN’s cellphone profit diversions to Mauritius from several African countries.

Society’s challenge

A strong, committed Finance Minister would attack such depravities, so as to find funding needed to eliminate society’s deprivations. Since Gordhan has failed, will society now ask what rearrangement of the balance of forces is required to finally construct a democratic, developmental state? The first stage of that (liberal) revolution is upon us: confronting the Zuma faction’s corrupt nexus of politicians, parastatal agency managers and public-private pilfering partners. The patronage apparatus may fall slowly, because Zuma will challenge the “State of Capture” findings and a sluggish official commission will only then be appointed to investigate more of the details.

But for the next stage, the ongoing prolific protests by opposition parties, university students, communities and labour, remains on the horizon as the political dust refuses to settle. The period ahead will not only clarify whether the liberals and their allies fighting on behalf of Gordhan and the anti-corruption cause can defeat the master of nationalist survival politics, Zuma. Just as importantly, we will learn what pressures from below can be mobilised to generate non-violent regime change in the interests of a post-Zupta, post-neoliberal budget next time Gordhan presents to parliament, in February 2017.

* Patrick Bond is Professor of Political Economy at the University of the Witwatersrand in Johannesburg. The third edition of his book, Elite Transition: From Apartheid to Neoliberalism in South Africa, was published by Pluto Press in 2014.


Zuma under pressure to quit as graft probe suggests crimes

President Zuma must set up commission of inquiry: Ombudsman.

Mike Cohen, Amogelang Mbatha and Antony Sguazzin

Bloomberg - http://www.moneyweb.co.za/news/south-africa/zuma-under-pressure-to-quit-as-graft-probe-suggests-crimes/

2 November 2016

Bloomberg - Calls for South African President  Jacob Zuma to resign grew louder after the nation’s graft ombudsman ordered an investigation into possible criminal activity by government officials following a probe into their dealings with the prominent Gupta family.

With thousands already protesting against state corruption in Pretoria, the capital, a 355-page report said Zuma and some ministers may have breached the government’s code of ethics. It called on the president to set up a judicial commission of inquiry to probe his relationship with the family, who are his friends and in business with his son. It details allegations that the Guptas may have influenced the appointment of cabinet members and received special treatment for a coal business linked to the family and Duduzane Zuma.

The allegations of corruption at the highest levels of government are the latest blow to Zuma’s presidency. The report was released on a dramatic day when Zuma abandoned his request to the High Court to block its publication and protesters demanding an end to state corruption demonstrated in Pretoria. Since taking office in 2009, he’s been implicated in a series of scandals, including a March 31 ruling by the nation’s highest court that he violated the constitution by refusing to repay taxpayer funds spent on his home.

“The report confirms the variety of allegations levelled against our president in the last year or two,” Daniel Silke, director of the Political Futures Consultancy in Cape Town, said by phone. “It further erodes confidence in President Zuma, who is reeling already. Having this report in black and white from a source like the Public Protector is the final straw in the curtailment of the Zuma era before his term ends in 2019.”

Bribe Allegation

Among the most striking revelations in the report are an allegation by Deputy Finance Minister Mcebisi Jonas that the Guptas offered to pay him R600,000 ($44,373) in cash and deposit 600 million rand into an account of his choice, if he took up the family’s offer to become finance minister and remove key treasury officials who were thwarting the family’s business ambitions. The Guptas have denied making the offer.

The ombudsman said Zuma’s failure to investigate Jonas’s allegation may have violated the executive ethics code. Zuma fired the respected Nhlanhla Nene as his finance minister in December and gave the post to little-known lawmaker David Van Rooyen.

“It is worrying that the Gupta family was aware, or may have been aware, that Minister Nene was removed 6 weeks after Deputy Minister Jonas advised him that he had been allegedly offered a job by the Gupta family,” the ombudsman said. It was “equally worrying” that Van Rooyen visited the Johannesburg suburb where the Guptas lived on seven occasions, including on the day before his appointment as minister was announced, she said.

The rand rallied to its strongest in 11 weeks after the High Court ordered the release of a report. It jumped as much as 2.2 percent to the strongest level since Aug. 18 before paring its advance to 0.7 percent at 13.5103 per dollar by 7:07 p.m. in Johannesburg, strengthening the most among 31 major and emerging market currencies tracked by Bloomberg.

Gupta Offer

The ombudsman says in the report that Brian Molefe, the chief executive officer of Eskom Holdings SOC Ltd., the state power company, and Ajay Gupta, called each other 58 times, while mobile-phone evidence showed that Molefe was in the vicinity of the Guptas household 19 times between Aug. 5 and Nov. 17 last year.

Molefe said by phone he was seeking legal advice. Gert van der Merwe, a lawyer for the Gupta family’s holding company, Oakbay Investments, said in an e-mailed statement the evidence in Madonsela’s report is “riddled with errors and is subject to rebuttal.”

Zuma’s office said earlier Wednesday that he would study the report to see whether “it should be a subject of a court challenge.”

Madonsela’s Regret

The ombudsman’s report was completed just days before Thuli Madonsela’s seven-year term as graft ombudsman came to an end and she was replaced by Busisiwe Mkhwebane, who didn’t oppose the court bid to halt the report’s release. Zuma and the Guptas have denied wrongdoing.

Madonsela said she should have taken a harder stance against Zuma in her report, and accused the president of breaking his word by failing to answer her questions and failing to show up for planned meetings. Zuma is legally bound to abide by her directives, she said.

“I regret listening to lawyers who represented the broader legal community that I should tread softly with this report mainly to avoid a successful court review of the report,” she said by phone from Johannesburg.

In her report, Madonsela said she had decided to direct that a judicial commission be set up to probe Zuma’s relationship with the Guptas because her office hadn’t been given sufficient funds to complete the job.

Mmusi Maimane, the leader of the main opposition Democratic Alliance, which originally asked the Public Protector to investigate his relationship with the Guptas, called on Zuma to resign.

“Given the scale of the state capture that is detailed in the report, which he has allowed and indeed fostered, he cannot continue in office,” he said in an e-mailed statement.

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