State capture is a form of corruption in which businesses and politicians conspire to influence a country’s decision making process in order to advance their own interests. Most democracies have laws to prevent this from happening, but state capture also involves weakening or neutralizing any enforcement agencies. The concept of state capture arose from a 2003 World Bank report regarding corruption in eastern Europe and Asia. This new term was needed to explain the extraordinary tactics that oligarch firms used to maintain their dominance. State capture extends beyond lobbying, as it is commonly thought of in the United States, to a situation where firms make private payments to public officials to shape the laws of institutions.
“State capture is not just about biasing public policy so that it systematically favors some corporations over others,” Abby Innes, Assistant Professor of Political Economy at the London School of Economics, advised. “It’s also about strategically weakening that part of the state’s law enforcement mechanism that might crack down on corruption.”
This article concerns Mosilo Mothepu, a South African whistleblower who exposed the state capture of South Africa under former President Jacob Zuma. Zuma held the reins of power in South Africa from 2009 until his resignation in February 2018.
Mothepu was born in Free State, South Africa and raised by a mother and father who had met at National University of Lesotho. Mothepu was the second born of three children and raised in Lesotho. Her mother was “an incredible woman, highly educated, independent, highly ethical, an economist, and she received a posting in Brussels, Belgium as a Deputy Ambassador.”
Mothepu spent seven years in Belgium, from 1988 to 1993, and attended the British School of Brussels where she considered herself an “outlier because I was the only Black person at the school, I was chubby and I could not speak English properly and I have never actually belonged anywhere.” Mothepu feels that this may explain her “contrarian attitude.” Her mother has told Mothepu that she is stubborn, and Mothepu knows once she sets her mind to something “she will do it.” Mothepu was a bright student, always in the “top three,” but it came from working hard.
Mothepu found her love in commerce and corporate finance and received a Bachelor of Commerce-Accounting at the National University of Lesotho. She went on to receive a postgraduate degree in corporate finance and investment, and completed the majority of work on her master’s degree.
Mothepu started her career in wealth management in 2001 and worked her way up to roles in international banking, corporate banking, asset management, and advisory for large infrastructure projects. To counteract the effects of apartheid, the Broad-Based Black Economic Empowerment Act (B-BBEE) was introduced in South African law in 2003. B-BBEE aims to increase the participation of Black people in the management, ownership and control of South Africa’s economy. An entity has to prove that ownership is in the hands of Black people and that there are Black people in the top, senior, middle and junior management positions. Therefore, there are Black firms that are relatively new compared to old firms like KPMG (a firm providing audit, tax and advisory services). Mothepu started working at Regiments, a Black firm that was an advisor on asset management and corporate finance. It is here where Mothepu got “a seat at the table.” What Mothepu eventually found out, however, was “that loyalty was more important than merit or hard work.”
The government in South Africa is the largest procurer of goods in the country, and advertises for service providers who can provide it goods or services. This is where the corruption starts, as “palms are getting greased.” Mothepu stated that there is an expression, “their time to eat,” which meant some politicians felt it was their time for self-enrichment after apartheid.
A powerful business family used its friendship with the South African president to manipulate Cabinet appointments, compromise the judiciary, and bribe politicians. Eventually, they captured the state. The Gupta family – Ajay, Atul, and Rajesh – were small-time businessmen in India, but when they arrived in South Africa, they befriended Jacob Zuma before he became President. They put Zuma’s son, Duduzane on their payroll, which allowed them to present their companies as Black-owned. The moment Zuma became President, the Guptas started pillaging the South African government on an incredible scale. The Guptas were the third-party that allowed government corruption to flourish as they provided a facade of legitimacy.
Under President Zuma, many of the people shuffled into government jobs were unqualified, ill-equipped, or corrupt. Zuma drew widespread criticism in 2016 when he dismissed a reputable finance minister, Nhlanhla Nene, and tried to install a former mayor of a small municipality with little experience in finance.
In 2007, Mothepu accepted the job of associate director of Regiments Fund Managers, a Black-owned boutique advisory firm. In 2010, Regiments was awarded a contract to raise the capital required to build a new stadium, with Mothepu leading the team. In 2011 Mothepu went to Transaction Capital, then KPMG, but Regiments called her back in 2015. Regiments was working with McKinsey (a global management company) and blue-chip state-owned companies, and had a business development partner, Salim Essa. Essa was noted as a well-connected operator with a relationship with President Zuma, government ministers and powerful CEOs, CFOs and treasurers. Essa was considered the “fourth Gupta brother.”
In December of 2015, the Regiments directors announced that the company would be split at the end of February 2016 into Regiments and Trillian. Mothepu decided to go with Trillian Financial Advisory after being appointed CEO with Salim Essa as her boss. All of the contracts, staff and assets were to be moved from Regiments to Trillian, but this never happened. Trillian was simply part of the state capture. The company had been created to get advisory work from state-owned enterprises (SOEs) using the contacts of the politically connected Essa and inside information on tenders. Mothepu stated that “the advisory work was often unnecessary, in that the SOEs had the capacity to do the work internally, and it was done at highly inflated rates, some of the work, we later discovered, was not done at all, merely invoiced.”
Trillian was looting massive advisory service fees with no contracts. Mothepu stated that “alongside the constitutional state, with its elected officials and legitimate appointed employees, there existed a shadow state comprised of corrupt officials and their cronies, whose intent was to channel funds from the state coffers, money that belonged to taxpayers, into the hands of certain connected individuals, one being Salim Essa.”
Mothepu stated: “It was classic BEE fronting, I was CEO in name only at Trillion. As an executive director I was obliged to exercise fiduciary duties and bear the liability and risk of directorship. The real powers, the people making the operational and strategic decisions, were majority shareholder Salim Essa and three white guys: Stan Shane, Clive Angel and Marc Chipkin of Integrated Capital.” Mothepu actually saw brown paper envelopes full of cash being exchanged for favors and loyalty.
Mothepu noted: “The bottom line being that when I moved across to Trillian as a director there were no contracts but we were invoicing the clients. I had been in the industry for several years and had spent most of that time dealing with DOEs. I understood the PFMA [Public Finance Management Act] and the supply chain regulations. It was a proposal, an unsolicited bid, subject to certain regulations. It was not billable. To invoice for it was a blatant fraud. I was terrified, I did not want to go to the police, I knew the police were captured and would do nothing. If I did go to them, someone could leak the information to the Guptas and they might have me killed.” Mothpu visualized two endings for her possible whistleblower journey, one ending in her mother laying a wreath on her coffin, and the other ending up in jail with her mother visiting her with tampons and contraband.
“Be loyal to me and I will reward you,“ her boss advised Mothepu. “At the time, I had no idea that loyalty would mean being complicit in impropriety and corruption and keeping his dark secrets about state capture,” Mothepu said. “It seemed like a great honor at the time. Of course when I look back on it now, I feel cold. As it turned out, what he really wanted was for me to be Black and a woman, and complicit in his corruption. Once I connected the dots and realized that I was being used for something perverse, illegal and possibly treasonous, I left Trillian.”
Mothepu is a Christian, and she knew God was extremely important to her, but most of her life she had a lukewarm relationship with God. After she left Trillian, in September, she and her partner went to Sharm el-Sheikh, a resort town on the southern tip of the Sinai Peninsula along the Red Sea. Checking her computer, Mothepu saw news reports from South Africa and was shocked to see coverage on state capture and the Public Protector. She knew that she was connected to what was going on in South Africa, and that it was blatant corruption that siphoned off millions of South African rands. Trillian was an extension of the Guptas, and Mothepu was part of the problem. At first, Mothepu felt that someone else might come forward with the information, as she did not want to get involved, but then she thought about the famous saying attributed to Irish philosopher Edmund Burke: “The only thing necessary for the triumph of evil is for good men to do nothing.” Mothepu wondered: “Or in my case, good women. Am I a good woman?”
In 2017, global credit rating agencies downgraded South Africa’s debt rating to junk. State-owned enterprises piled up debt, requiring repeated bailouts. The finance minister warned that electricity provider Eskom was in such bad shape that it could topple the entire South African economy.
When it came time to leave the Red Sea, Mothepu likened her time there to the Biblical journey that Saul took. On his way to Damascus to persecute Christians he was converted and became a follower of Christ. Christians refer to this as the Damascene conversion, and Mothepu realized the Red Sea was her Damascene conversion: she was going to have to blow the whistle. Mothepu knew that when you see fraud and corruption you report it, and she decided to do what the law required her to do. But Mothepu sighed: “The moral deficit in South Africa and globally was that people were so used to leaders, corporations and politicians turning their eyes or actually stealing.”
On Saturday September 17, 2017 Mothepu went to Pretoria to see the Public Protector and provided documentation of corruption at Trillian. Mothepu felt she had to contribute to the rooting out of South African corruption and the survival of South African democracy. “Nelson Mandela had fought for this democracy and it was being stolen by three Indian brothers and some corrupt comrades who had sold their souls for cash,” Mothepu noted.
Mothepu’s former boss was relentless in his vindictive efforts to use the law to bankrupt her after she blew the whistle. Mothepu suspected that his partners had told him: “‘Look what your girl had done. Deal with her decisively so that if any one else thinks to follow in her footsteps they will see the wrecking ball that will tear through their lives.’”
Mothepu had nine criminal charges filed against her by corrupt judicial officials, and she noted that it was a “classic example of how state institutions are used to bully and silence whistleblowers.” The stress of her whistleblowing has resulted in psychological trauma and exorbitant health bills: half her income goes to medical bills. She suffers from chronic depression,anxiety, PTSD, and insomnia. She fears for her personal safety.
On April 17, 2018, Mothepu met with three FBI agents at the American embassy in South Africa who were investigating the Gupta brothers and others, in relation to violations of the Magnitsky Act. She provided the FBI with documentation and receipts.
For the second half of her life, Mothepu intends to lobby for whistleblower reparations and legislation for whistleblowers that mimic American law. She has already been on the speaker circuit and intends to do more. They do not have rewards for whistleblowers in South Africa, and Mothepu wants that changed. Mothepu was looking at economic ruin during her ordeal and was shocked when the Platform de Protection de Lanceurs d’alerts en Afrique (PPLAAF) opened their first South Africa office and paid her legal fees and mortgage.
PPLAAF was founded in France by William Bourdon, who represented Julian Assange, Edward Snowden, Antoine Deltour and others. Bourdon noted that “regimes [in Africa] are sometimes held in an iron grip by kleptocrats who siphon public money and resources to satisfy their megalomania, and all too often government anti-corruption commitments are merely a front for eradicating political opponents.”
The Guptas may have drained the national treasury of South Africa of $7 billion, and they did this with the help of President Jacob Zuma and international firms like KPMG, McKinsey and SAP. It was a successful takeover of a country, waged with bribery instead of weapons. The Guptas fled to Dubai, and so far, no one has faced a court of justice.
“I won’t downplay my daily reality,” Mothepu said. “I have sacrificed so much and live with the consequences to this day. I see those corrupt guys swanning around town in their Aston Martins, and I feel like I need another few hours of counseling. But one’s own integrity doesn’t require other people’s accountability. It is an internal thing. I did what I had to do.”
Mothepu has written a book on her story. Uncaptured: The True Account of the Nenegate/Trillian Whistleblower is available now.