Ajay, Atul and Rajesh Gupta, South Africa’s power brokers


Just before Jacob Zuma survived the eighth parliamentary bid to fire him, one moment this week summed up the source of national fury at both the South African president and the decline of his once-mighty African National Congress. It centred on the three portly middle-aged brothers of an Indian family.

“We are rising against the Guptas, who are reshuffling cabinet . . . who are appointing the boards [of big state-owned companies] . . . who ensure that our economy is downgrading, and that our economy is in recession,” Julius Malema, the firebrand leader of the radical Economic Freedom Fighters, an ANC breakaway, shouted at his former comrades in parliament.

The subjects of his fiery attack were the businessmen Ajay, Atul and Rajesh Gupta who came to South Africa in the 1990s just as the country was emerging from the grim decades of apartheid. From small beginnings — they started with a shoe shop, then a computer business — the brothers built a mighty mining-to-media empire.

It might be easy to characterise their ascent as symptomatic of the new age of majority rule in Africa’s most sophisticated economy, one open to opportunity as it reconnected with the rest of the world. In fact the very private Guptas are now widely seen as masters of a “shadow state” and the symbols of the flaws in the transition from apartheid to a democracy struggling with racialised economic inequality, raising fears that South Africa is more a Russian-style oligarchy than rainbow nation.

At the heart of the criticism of the brothers is their strong links to the political elite, in particular Mr Zuma, with whom they have close ties since before he became president in 2009 and, more recently, with his son Duduzane.

- Our Sponsors -

“What started off . . . as collusion in relatively low-level corruption between the Zuma family and the Guptas has evolved into state capture and the repurposing of state institutions,” concluded a recent report by a group of academics for the Public Affairs Research Institute think-tank.

Through Mr Zuma’s appointments, the family have allegedly positioned ministers and officials to bring in policies that favour their business, undermining ANC ambitions of a “radical economic transformation” through the empowering of the country’s black majority. “Connect the dots,” says Pravin Gordhan, a former finance minister who was fired this year by Mr Zuma. Mr Gordhan’s Treasury opposed alleged infiltration of state-owned companies. His deputy claimed last year that the Guptas offered him 600m rand ($45m) to take the top job in 2015.

The president and the Guptas deny the allegations against them. The family add that they would welcome a full investigation and that only 8.9 per cent of their group’s revenue comes from state contracts directly. In a rare interview Atul Gupta told the BBC that white-owned “monopoly capital do not want us to do business in the country” and promote attacks on the family.

The political attacks and public protests are taking their toll on the family and their allies, fuelling speculation the Guptas’ grip on power may be weakening. The controversy is undermining Mr Zuma’s plans to exit the political stage on his own terms when his mandate ends in 2019. A leak this year of some 200,000 emails from a Gupta company server exposed the family’s alleged influence in more detail than ever before. The family denies the emails are authentic. But the British PR firm Bell Pottinger deemed them real enough to make an “unequivocal” apology over work it did for the Guptas, after a probe sparked by evidence in the emails.

Scrutiny of the Guptas’ international financial dealings is also increasing. The amaBhungane Centre for Investigative Journalism says that cash from state contracts has been washed offshore in a “Dubai laundromat”, a claim that the Guptas have denied. Last year South Africa’s biggest banks closed Gupta company accounts. “No one’s going to clear a cent of Gupta money,” says a senior banker in Johannesburg. “We’d be risking millions of dollars in fines.”

Such public examination is highly uncomfortable for a family that guards its privacy behind the walls of its four-mansion compound in Johannesburg. “We come from families that do not show or expose their business to others,” Atul Gupta told South Africa’s Sunday Times in 2011. “It is considered showing off.” That said a star-studded wedding for their niece in 2013 showcased their taste for bling and their apparent desire for recognition in their homeland. Guests were flown in from India on to a South African government air base, again enraging taxpayers.

That is a world away from Saharanpur, northern India, where Ajay, 51, Atul, 48 and 45-year-old Rajesh (“Tony”) grew up in a small block of flats. From there their father, a trader in soapstone powder and spices, urged his sons to make their own fortunes abroad.

When 23-year-old Atul Gupta arrived in South Africa in 1993 the country was still under white-minority rule and many believed civil war was imminent. Instead, a peaceful transition put power in the hands of ANC freedom-fighters fresh from exile and with little knowledge of business. One of them was Mr Zuma, the ANC’s deputy president, whom the Guptas encountered in 2001 in what was to prove a fateful meeting. As he rose to the presidency, the family edged into the spotlight too.

But now the biggest danger to the family may be their greatest friend, who might yet sacrifice them so he can quell ANC unrest and smooth his exit.

“There’s a quiet effort going on to wrestle Zuma away from the Guptas,” says Peter Bruce of the Tiso Blackstar media group. Mr Zuma, he adds, is a ruthless political survivor who “eventually throws everyone under the bus”.

The writer is the FT’s Southern Africa bureau chief

Source link