home Economics, Featured, News Big questions around the Guptas resigning from Oakbay Resources and Energy

Big questions around the Guptas resigning from Oakbay Resources and Energy

By Pinky Khoabane

There’s perhaps no clearer example of capitalists’ use of economic power to muzzle opponents than the decisions by financial institutions and an auditing firm to cut ties with investment company, Oakbay Resources and Energy which, until last friday was owned by the Gupta family.

In the past week, ABSA, FNB and KPMG decided to close the company’s accounts and withdraw their services, respectively.

The auditing firm provided auditing services to all Gupta-owned companies and said the “association risk is too high to continue”. The financial institutions issued statements that they could not divulge their reasons to the public due to confidentiality clauses with their client. Ironically, they have also refused to divulge their reasons to their client.

The decision comes amid the controversy surrounding the Gupta’s relationship with President Jacob Zuma which is currently described as “state capture”. Allow me to digress a little as I deal with the definition of “state capture” before returning to the abuse of corporate power and how it uses its economic power to silence competition and dissenters.

The usage of the word is itself political and seeks to pit one section against another in a battle of ideas and consumption of commodities.

The word seeks to portray one group as pure and the other as villains.

State capture existed since the arrival of Jan Van Riebeek in 1652 when he landed in the Cape as a representative of the Dutch East India Company.

Just on the political meaning of words – Van Riebeek is said to have “settled” in the Cape when his arrival was a campaign of 350 years of violence, dispossession and exploitation.

The secret organisation, Afrikaner Broederbond, established to promote Afrikaner nationalism, was another formation which was able to infiltrate and influence the Nationalist Party to such a point that the phrase “state capture” aptly applies.

But back to the issue of the double standards in the decision by these organisations to withdraw their services to the Guptas. The decision once again lays bare the hypocrisy: for some it is influence or lobbying and for others, state capture and warrants the kind of action taken by the various institutions which have now decided to sever relations with the Guptas.

KPMP is clearly hypocritical when it mentions reputational damage as its reasons for cutting ties with the Guptas. It has continued to provide auditing services to JCI, a company that was listed on the JSE and has contravened the Companies Act by not providing annual reports for the years 2013, 2014, 2015. JCI is one of the most disreputable companies in SA having perpetrated the biggest unprosecuted series of frauds in SA.

The Guptas are yet to be charged with any wrong-doing despite the family’s request to have those with information to lodge charges with the criminal justice system.

Contrast this however, to the response by the financial institutions to the construction companies, which were exposed by the Competition Commission, to have looted state coffers to the tune of about R50bn in World Cup FIFA 2010 stadiums. They still have bank accounts. They most likely still have auditing firms.

Oakbay’s CEO, Nazeem Howa has been at pains to explain that the company had only 1 percent of business from government tenders and that they held only 5% of business from Eskom. Eskom’s top suppliers of gas are Air Products SA, Air Liquide, African Oxygen while those of coal are  Anglo, Exxaro, South 32 and Glencore.

So why would there be this obsession and questions about the Guptas influence on the executive,more so at this time? There are many reasons posited in this regard. Some have argued that it has everything to do with politics given the revelations by former ANC MP, Vytjie Mentor, and Deputy Finance Minister Mcebisi Jonas that the family had offered them cabinet posts. The timing of the revelations must be scrutinised given it was ahead of the ANC NEC meeting and at a time when Moody’s was in the country to investigate

My contention has been that the reasons stem from the battle for South Africa’s economy as capitalists fight to cling to economic power and align themselves with politicians who will advance the current neo-liberal economic policies. This at a time when South Africans have run out of patience of the slow delivery of economic freedom of the past 22 years.

South Africa’s current relations with Russia, China and the formation of BRICS will make many  uncomfortable. The relationship of these emerging markets challenges the  global economic system organised by the West and dominated by the dollar and the US. These countries are tired of their economies fluctuating back-and-forth based on the policies crafted in Washington DC. The establishment of the BRICS’ New Development Bank also threatens the domination of the IMF and World Bank and the Western influence in international finance.

The Guptas, whether you like them or not, have been able to penetrate industries previously in white hands specifically mining and the media.

Wealth dominates the dissemination of messages and this is a turf that is currently being fiercely fought as the old guard try and squeeze-out new entrants in order to sustain their anti-black message. The NewAge, ANN7 and other smaller publications are not immune to this pressure.

The massive concentration of corporate power shapes public discourse and consumption of commodities hence a debate on state capture, that brought in names of some of the richest people in this country, may have influenced the decisions by these companies and ultimately, the resignation of the Gupta brothers and Duduzane Zuma, from Oakbay.

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