STATE CAPTURE INQUIRY
PARKTOWN, JOHANNESBURG

31 AUGUST 2018
DAY 8
SESSION 1 – 3.

FRIDAY 31 AUGUST 2018

Contents
Session 1 ................................................................................................................................. 3
Session 2 ............................................................................................................................... 38
Session 3 ............................................................................................................................... 79

Page 2 of 113

FRIDAY 31 AUGUST 2018

Session 1
CHAIRPERSON: Good morning everybody, good morning Ms Hofmeyer.
ADV KATE HOFMEYER: Morning Chair.
CHAIRPERSON: Thank you.
ADV KATE HOFMEYER: Chair, if I may begin. Today we have the evidence of Ms
Williams. There are a few housekeeping matters I would like to deal with if I may with
your leave before we swear the witness in.
The first is just in relation to the bundle of Ms Williams’s evidence. With your leave Chair I
propose that we number it F1 in the sequence.
10

CHAIRPERSON: It will be marked F1.
ADV KATE HOFMEYER: Ms Williams, as I make reference to the bundle, I will on
occasion call it F1 for the purposes of the record and so you know that is the bundle in
front of you that you should make reference to.
Chair, the second housekeeping matter is that there is one document which has been
omitted from the bundle, which I have taken the bold move of pagination for the Chair in
the interest of efficiency. I propose that we paginate at 39.1 and 39.2 because that will
ensure that it inserts in the correct place in the chronology. If I may beg leave to hand that
up.
CHAIRPERSON: Thank you.

20

ADV KATE HOFMEYER: My learned colleague should have copies of the bundle
themselves and then that additional document which will be inserted between the existing
pages 39 and 40 of the bundle.

Page 3 of 113

FRIDAY 31 AUGUST 2018

CHAIRPERSON: Has that been done to the witness’s bundle?
ADV KATE HOFMEYER: It has indeed Chairperson:.
CHAIRPERSON: Thank you. It will come after page 40?
ADV KATE HOFMEYER: After page 39 Chair.
CHAIRPERSON: Well, the page letter has got page 39 has something on both sides so
the one side is page 39, the other one is page 40.
ADV KATE HOFMEYER: Chair, there were two copies of the bundle prepared. The copy
that went to you yesterday should have been not double-sided and so it could have been
inserted between the two. The one that is subsequently been prepared for this morning is
10

double-sided. Maybe I can make an arrangement with your Registrar to give you the copy
that is not double-sided as it will aid your movements through the papers today.
CHAIRPERSON: Okay, for now I will keep this, I won't put this in, this 39.1 and 39.2 but
when you refer me to it, I will have regard to it.
ADV KATE HOFMEYER: Thank you Chair, I expect won't get to it before tea and so
maybe at tea we can make the arrangement for you. Thank you Chair.
The second housekeeping matter is just in relation to the notices to implicate persons
arising from Ms Williams’s evidence. Chair, I can confirm to you that those notices were
sent timeously and that as matters currently stand, there have been no applications
received in relation to Ms Williams’s evidence, I mean from those notices. The only thing

20

that we have received was a request from Mr Manyi who was one of the implicated
persons to attend today and be accredited and that was facilitated yesterday.
CHAIRPERSON: Well, I don’t know what it means to be accredited. You know that he or
anybody else may attend and that might be of no significance for now.
Page 4 of 113

FRIDAY 31 AUGUST 2018

ADV KATE HOFMEYER: No indeed Chair.
CHAIRPERSON: Okay.
ADV KATE HOFMEYER: Just something to keep you up to date on where that process
is. Chair, those are the housekeeping matters. If I may then request the witness to be
sworn in.
CHAIRPERSON: Please swear the witness in?
REGISTRAR: Morning. Please state your full names for the record?
MS PHUMLA WILLIAMS: I am Miriam Phumla Williams.
REGISTRAR: Do you have any objections taking the prescribed oath?
10

MS PHUMLA WILLIAMS: I have no objection.
REGISTRAR: Do you consider the oath to be binding on your conscience?
MS PHUMLA WILLIAMS: Certainly.
REGISTRAR: If so, and if you swear that the evidence you shall give today shall be the
truth, the whole truth and nothing but the truth, please raise your right hand and say, I do.
MS PHUMLA WILLIAMS: I do.
CHAIRPERSON: I am not sure that that oath was properly said. Please just say it again,
have you got the written thing? I am sorry Ms Williams, the Registrar will just administer
the oath afresh to you.
REGISTRAR: Do you swear that the evidence you shall give today, shall be the truth, the

20

whole truth and nothing but the truth, so help you God?
MS PHUMLA WILLIAMS: Yes, I swear.

Page 5 of 113

FRIDAY 31 AUGUST 2018

REGISTRAR: Thank you.
CHAIRPERSON: Thank you.
ADV KATE HOFMEYER: Thank you Chair. Ms Williams, I made reference to the bundle
in front of you which will be referred to as Exhibit F1 in the course of the proceedings.
May I ask you to turn up page 1 of that document? The first two pages are simply an
index and then following that are paginated pages of the bundle. Ms Williams, you will
see at page 1 is a document entitled, “Witness Statement for Ms Phumla Williams” and it
runs from page 1 to page 11. Can you confirm that that is your witness statement?
MS PHUMLA WILLIAMS: Yes Chair I can confirm.
10

ADV KATE HOFMEYER: And can you confirm that the contents of that statement are
true?
MS PHUMLA WILLIAMS: Yes, I can confirm.
ADV KATE HOFMEYER: Thank you. Ms Williams what I propose to do is to follow the
sequence of your statement in the course of your evidence this morning. I don’t propose
to ask you to read from it, on occasion I might, where there is some significance but in
general we would like you to tell us your story, not based on the written word but on the
events as you recount them. If I may then begin, what is your current position?
MS PHUMLA WILLIAMS: I am currently the Acting Director General of GCIS.
ADV KATE HOFMEYER: And when did you first enter Government?

20

MS PHUMLA WILLIAMS: I joined Government in 1994 in the Provincial Office in
Gauteng.

Page 6 of 113

FRIDAY 31 AUGUST 2018

ADV KATE HOFMEYER: And thereafter, can you give us a sense of your passage
through Government since that date of 1994?
MS PHUMLA WILLIAMS: In 1994, I joined Government as an administrator and
subsequently I got promoted to an Assistant Director and I was then later on promoted to
Deputy Director which all those ranks I did whilst I was in Gauteng Province and
subsequently I got a post as a Director of Finance in the GCIS, that was in 1998 and
subsequently I was promoted to a Chief Financial Officer in the GCIS and in 2009 I was
then appointed as a Deputy Director General at the time. It was called, the Deputy CEO.
ADV KATE HOFMEYER: Was that also of GCIS?
10

MS PHUMLA WILLIAMS: Of GCIS, yes Chair.
ADV KATE HOFMEYER: Ms Williams, could we just pause a moment about GCIS? We
heard testimony yesterday from Mr Maseko who was there as the CEO until early 2011,
can you tell the Chair about GCIS, what is it as an institution in the State?
MS PHUMLA WILLIAMS: Thank you very much Chair. The Government Communication
Information Systems, I will start with the Information part because it draws its mandate
from the report that was done by a group of experts which were commissioned by the
President and one of the first area of the GCIS’s information and I remember when I
joined, one of the first things that we have had to do is to address the information deficits
particularly to the vulnerable communities. I remember Chair that one of the first things

20

that we did was to employ what we called GIEC, which is Government Information
Officers. With that mandate we were able to unearth others who never had birth
certificates, we were able to unearth others who didn’t even see a need to have an ID
and with our information officers in the rural areas, we were traversing throughout the
rural areas trying to uncover some of those South Africans and in particular kids that were
Page 7 of 113

FRIDAY 31 AUGUST 2018

even looking after cattles because the parents didn’t see a need for school and we have
had to do that and we drove the multi purpose centres because we have had to do this
job together with the relevant departments, I think the credit goes also to Home Affairs
who had those mobile trucks and were able to go to those communities and try and
educate them the need to register. In fact, not only to educate but to also make sure that
they do benefit from registering birth certificate and also having ID. We were able to
uncover people who have ended up in rural areas who were injured whilst they were
working in the big cities and they didn’t know what exactly is expected when you are
injured at work and that is some of the work that we were doing and I think if I can maybe
10

summarise, I think it will appropriate if I move on to the other, Chair, one of the things that
we have had to do with the Government information officers is to begin to demystify what
is the purpose of a budget vote, what is the purpose of the State of the nation, we have
had to hire big screens in those rural areas and at those days I think, the State of the
nation was during the day we have had to do that. If I move Chairperson to the
communication, I think maybe the last parting point on interfacing with communities, the
Cabinet, I think in 2004, gave us the mandate to do a publication, a newspaper if I may
say, a newspaper called Vuku Zinzele in all the languages because we had uncovered
that there was a need to also have that kind of a product that is meant for communities in
those areas. To this day that publication is the one we started it Chairperson. It was once

20

every two months and it was also coming up in the format of a braille also to
accommodate the disabled, those who were not able to process the print word and we
were able to do that and it started as a two months but now it is fortnightly. What is
pleasing Chairperson is that it is produced by journalists within those communities and
they then talk that whole product that interfaces also with Government and that’s what
GCIS still does today.

Page 8 of 113

FRIDAY 31 AUGUST 2018

The second area Chairperson of the GCIS is around communication. My understanding
of GCIS a Director General, the Director General serves as the face of Government, he
or she sits in cabinet, communicates the decisions that come from Cabinet, the Director
General in GCIS also manages the messaging of Government and co-ordinates because
I think the GCIS is a system that co-ordinates the messaging of Government. The GCIS
Director General ensures that there is that coherence of the messaging. The view that the
context was having in mind is that when you are working as a Government
communicator, irrespective of whether you are in health or what, members of the public
would expect you to know and I think what we stick to do with the co-ordination is that,
10

even if you work and asked, at least you should know what Government’s position is on
health matters. So that co-ordination and getting all those communicators in those
departments, they have to have a sense, yes, there is an acknowledgement that the half
other expects, they keep the content but on a high level GCIS’s role is to co-ordinate and
make sure that that messaging is happening.
And the last of the Director General is also around communicating the issues that cut
across. If it is a matter that involves more than one or two departments, Government
voice is driven from the GCIS. And Chairperson, if I may also say the production side of
the GCIS, the GCIS is responsible for the corporate identity, the look and feel of
Government. If I can then remember that the current code of arms of Government was

20

commissioned through the GCIS, the current look and feel of all the Government
departments, they were commissioned from the GCIS and lastly Chair, we are
responsible for archiving and most probably even some of the staff that is coming here
will end up being archived through the GCIS. We are archive the video footages, we
archive the photographic material, we archive any material that is of historic significance,
particularly for Government. We collaborate with the national archives to package and
Page 9 of 113

FRIDAY 31 AUGUST 2018

keep it and we have the material dating far back as even before our time because we
inherited it from the South African Communication Service and lastly Chairperson, we are
responsible for the media buying on behalf of other departments.
ADV KATE HOFMEYER: Thank you Ms Williams. Ms Williams, at paragraph 2 of your
statement, at page 1, in the second sentence you refer to, well, what’s reference to the
first, that you were later appointed in 2002 as the GCIS Chief Financial Officer and then
you stated, the accounting officer at the time was Mr Joel Netshitenzhe and later Mr
Themba Maseko. I think it is uncontentious but I would like you confirmation on this that
the accounting officer is the Director General position that you have been referring to in
10

your evidence to the Chair?
MS PHUMLA WILLIAMS: Certainly Chair, the Directors General that I have served under
at that time was Mr Joel Netshitenzhe who was the first Director General of the GCIS and
subsequently Mr Themba Maseko who was the Director General at that time.
ADV KATE HOFMEYER: Ms Williams, can you tell us about the leadership of GCIS and
what it was like serving under them?
MS PHUMLA WILLIAMS: Chairperson, these are the Directors General that I would
credit my knowledge of what it is about. Mr Netshitenzhe was the most ethical and
credible Director General because at that time I was a CFO. Mr Themba Maseko was
already a DG but I have memories when I got to GCIS there were no systems. We had to

20

put together the systems, we had to struggle along and Mr Netshitenzhe was incredibly
useful in saying how we should deal with some of the issues and I think in this case I
would like to also give credit to the Auditor General. I think the Auditor General has held
our hand, I think as I recall when I joined GCIS, there was no clean audit but with the

Page 10 of 113

FRIDAY 31 AUGUST 2018

leadership that we received from those two Directors General, together with the Auditor
General, we have enabled to get a clean audit as a department.
ADV KATE HOFMEYER: Ms Williams, in paragraph 4 of your statement, also at page 1,
you are referencing the GCIS and in light of the description you have just given to the
Chair, you conclude with the statement, it was to be a communication system that was to
give effect to the constitutional right of access to information. Can you explain to us how it
was supposed to achieve that?
MS PHUMLA WILLIAMS: Chair, what they indicated in my opening remarks is having the
poor in the most rural of areas because I think we did realise, the most important and
10

vulnerable people where we have found that there is an information deficit, is in the very
poor and that to us talked to the constitutional mandate that we have that we need to
ensure that South Africans have access to information. Yes, the urban areas we were
servicing them through the mainstream media which I didn’t mention that we have a full
division of the mainstream media but I think the areas that we have had to service, are in
rural areas and we have 9 provincial offices but not only that, we have got districts where
our communicators, and I think Chairperson, I should also indicate, one of the things that
was key to us is that when we hired this information officers, they must come from those
communities. We invested in training them and to make sure that they understand the
dynamics and we educated them about the policies of Government and that’s how we

20

were then tackling the issue of information that should empower those communities.
ADV KATE HOFMEYER: Ms Williams, you ended your original discussion of the role of
GCIS with reference to media buying. I would like to focus on that in a bit more detail with
you because it’s key to some of the remainder of your testimony. What is media bulk
buying for Government? Can you explain that concept to us?

Page 11 of 113

FRIDAY 31 AUGUST 2018

MS PHUMLA WILLIAMS: Chairperson, the media bulk buying also emanates from the
Comtas Report. One of the first tasks that we have had to do is to pull together all the
Government media spending, consolidate it, so that we can derive the economies of
scale and when we started with that, that was in 1998 because we didn’t have an internal
capacity, we outsourced that service and we were doing that through the bid process and
I remember, those days the bid process was still done at National Treasury. We were
advising on the tender and we were appointing companies which were then doing the
media buying on behalf but departments essentially would brief us and then in turn we
would brief the company that we have commissioned through the bid process and later
10

we then had to do it in-house, that is 2010.
ADV KATE HOFMEYER: Ms Williams, if I may take you to that place in your statement, it
is over the page at page 2. As I understand your evidence, up to the period of 2010 there
was a bid process in respect of a media agency would be appointed and that agency
would make the selection from the various media platforms of where to place the
Government advertisements, is that correct?
MS PHUMLA WILLIAMS: That’s correct.
ADV KATE HOFMEYER: And then, if you go to paragraph 7 on page 2. You say there, in
August 2010 when the last agency contract expired, GCIS moved the function in-house
so that media buying would now be run from capacity within GCIS. Can you give us

20

insight as to the reason for that change?
MS PHUMLA WILLIAMS: Chairperson, the system that we had in the GCIS, any contract
when it expires, we review it. In fact, we review it 6 months before and one of the things
that we had picked up at that point was that we were not living to the mandate that was
given to us deriving the economies of scale, i.e. when we were doing it with the agencies,

Page 12 of 113

FRIDAY 31 AUGUST 2018

we would have to pay the handling fees from the agency which was I think at the time,
16%. They were charging, sharing with us the discount which they were deriving and at
that point we felt that it’s a saving that we could be ploughing back to the State. We rather
invest in doing it in-house and we then worked towards when it expires, we will not renew
it, we will do it in-house and that would have enabled the State to save that 16.5%
handling fees from agencies, it would then have ensured that the negotiated discounts
with the media houses is ploughed back into the State and that was the main reason for
us to bring it back in-house.
ADV KATE HOFMEYER: Ms Williams, could you give us a sense of how the
10

procurement process of media buying worked after the change in August 2010 when you
moved the media buying function in-house. Take us step by step if you will, for the
edification of the Chair, how that media buying worked from that point onwards?
MS PHUMLA WILLIAMS: Chairperson, one of the things that we have had to manage
because the procurement as it’s defined in the National Treasury, did not have provision
for media buying e.g. if you want to place an advert in Sowetan, the three quotation was
not going to work for us so we have had to engage with National Treasury to say we are
going to save the State the tool that exists, it doesn’t allow us to do that and we were then
given the permission to use a special delegation, 16.4, which was the basis of what we
were doing. How we were then performing Chairperson is that we would receive a written

20

request from the department, it then comes to GCIS, we had invested in the software
which media agencies were using anyway themselves, we then invested in buying it, that
software Chairperson allows you to know which is the best platform to use to place that
advert so what we were then doing, we would take the brief from the client, we will then
populate it into the system, the software which was called Telmar and on the basis of
that, we will then derive what exactly are the best platforms to be used and we then cost
Page 13 of 113

FRIDAY 31 AUGUST 2018

them and we send it back to the client and the client signs it off and then they transfer the
money and we then had to deal with the compliance of National Treasury. One of the
important thing were the delegations that we were using, which, if I can just summarise it,
it’s an emergency delegation. The requirement is that the section has to write a
motivation why they have chosen that particular platform and why they think it is a cost
effective platform and on the basis of that, the Supplier Chain would then effect the
transaction.
ADV KATE HOFMEYER: Ms Williams, you made reference to the choice of the best
platform to answer the brief that you received from the department. I would like to ask two
10

questions in relation to that. First of all, the departments, which are those departments?
Were they national, provincial or were they confined?
MS PHUMLA WILLIAMS: Chairperson, I think at the beginning, in fact up to now, we still
confine ourselves to national for a simple reason that our view is that we can create
capacity within the provinces so that the economy of those provinces can so that when
we then do the procurement, we don’t do it on behalf of the provinces. There will be
exceptions there and there but in the main, we service all the national departments/
ADV KATE HOFMEYER: And then the second question, what informs the choice of the
best platform to meet the needs of the brief that you receive from the National
Department?

20

MS PHUMLA WILLIAMS: Chairperson I did indicate that the brief normally directs the
media buyers to populate in the software and the software would then say if you want the
audience that is in Nongoma, this is the publication that you should use. If you need a
community in Soweto, this what we would propose. It proposes a whole suite of platforms

Page 14 of 113

FRIDAY 31 AUGUST 2018

that you need to use and we then send it back to the clients and I should indicate the
client signs it off. At times it might not but I think most of the time they would sign it off.
ADV KATE HOFMEYER: Ms Williams, we heard evidence from Mr Maseko that key to
this selection of the appropriate media platform was the consideration of the message
that the National Department wanted to convey and then the target audience that they
wanted to reach. Would you agree with that summary?
MS PHUMLA WILLIAMS: Certainly I would agree with that, that’s why I was been saying
that in Nongoma, the software will tell us, this is the audience and this is there kind of
publication you would use.
10

ADV KATE HOFMEYER: Ms Williams, at paragraph 8 on page 2, you move to another
aspect of the procurement processes within GCIS. What you say there that as Head of
Corporate Services, you were appointed as the Chairperson of the Bid Adjudication
Committee. Can you tell us about the function of the Bid Adjudication Committee within
GCIS?
MS PHUMLA WILLIAMS: Chairperson, the process I think I should also take a step back
that previously all departments were depending on National Treasury, what we used to
call State Tender Board and they then decided to devolve that function. They provided
what we call a circular that guides how a bid committee should be put together and what
it should be doing. The composition of the GCIS bid committee at the time was guided by

20

the circular from National Treasurer but firstly, it must have a CFO for starters, it must
have senior people within the organisation, it must have a cross functional representation
of the department. The bid committee, that’s how it was formed, the one that I am talking
to is the one that was formed at aligning to how National Treasury wanted it. What it was
doing, firstly, we were processing the submissions for the bid that had gone out and then

Page 15 of 113

FRIDAY 31 AUGUST 2018

processed through the evaluation committee and we would receive submissions from the
Chair of the evaluation committee, that’s one function. The second function we were
responsible for is to deal with any material deviation, maybe a compliance issue, a
section didn’t get three quotation or whatever, we insisted that we wanted them to be
tabled in the bid committee and that function Chair, is we would receive reports on the
progress of the contracts that we have already awarded and I think if I have to say, when
we took the decision that we need to bring it in-house because the sections and supply
chain will come, brief us on the process of what the contract was. In some cases they
would tell us that no, the company is not delivering what it had said to deliver, then we
10

would give instructions to say, go and engage them, write to them and whatever and
lastly, I think we would also receive reports even on those thresholds that do not strictly
fall within the bid committee, for instance, transactions that happened within R30,000 to
R500,000, they don’t necessarily belong to the bid committee but we would insist that
once a month we are given that kind of a transaction for a simple reason that we wanted
to have a sense of where the budget is going in terms of small upcoming companies we
wanted to have a handle of that. So that’s basically what the bid committee was doing.
ADV KATE HOFMEYER: Thank you, if I may then ask you to refer to page 3 of your
statement. Page 3 of the statement begins from paragraph 9 and the following
paragraphs deal with an event in or about January 2011 which for convenience purposes

20

I will refer to as the removal of Mr Maseko as the CEO of GCIS at the time. Can we begin
at paragraph 9? You say, in or about January 2011, now Ms Williams, you wouldn’t have
had the benefit of Mr Maseko’s evidence yesterday but in the course of his evidence, he
indicated to the Chair that he was able with reference to some of his diaries, to establish
that his removal had actually taken place in February 2011. You talk about on or about
January 2011, are you satisfied with the date of February 2011 for Mr Maseko’s removal?
Page 16 of 113

FRIDAY 31 AUGUST 2018

MS PHUMLA WILLIAMS: Sorry Chair, I missed the question.
CHAIRPERSON: The question is that is whether you are comfortable to talk on the basis
that Mr Maseko’s removal happened in February, Counsel is asking you that in the
context of the fact that in your statement you say on or about January 2011 is when he
was removed so she is asking you whether she says Mr Maseko said it happened in
February, after looking I think at his diary and Counsel wants to find out whether you
would be comfortable to say it happened in February or whether you would say it was on
January.
MS PHUMLA WILLIAMS: Chairperson, the reason I said it was around January is
10

because I remember very clearly that Mr Maseko came in that morning and he was
meant to go to the World Economic Forum which was meant to be around the 25 th, it was
towards the end of the, and he said to me, I am no longer going. That was after she had
briefed the staff and she says, Phumla, can you take over and attend that World
Economic Forum so I know I did attend the World Economic Forum on behalf of Mr
Maseko.
CHAIRPERSON: Maybe I can just say Ms Hofmeyer that I also may be wrong but my
recollection was that Mr Maseko spoke about him having been removed in January, I
think towards the end of January but he did say at some stage during his evidence that
he wished he could have access to I think his diaries which would help him. I don’t know

20

whether it was in regard to that or in regard to other dates but if he did say Februa ry, I
might have missed that part as well.
ADV KATE HOFMEYER: Indeed Chair. With the Chair’s leave, we will confirm the record
of the transcript over the break. As I have it, there were references to a conversation with

Page 17 of 113

FRIDAY 31 AUGUST 2018

Minister Chabane that took place on the 30th and the 31st January but we will confirm that
for the purposes of a follow-up question with Ms Williams.
CHAIRPERSON: Well, I do seem also to remember the 31 st January being mentioned but
that is fine, you will check and then you will let us know.
ADV KATE HOFMEYER: Indeed, we will check the transcript, absolutely. Let’s move to
those events Ms Williams early in 2011. You mentioned Mr Maseko coming to you with
an announcement about his removal. Can you tell us how that happened?
MS PHUMLA WILLIAMS: Chairperson, I recall it because Mr Maseko’s office was next to
mine and I remember him coming into my office and saying that could you please
10

facilitate the Management Meeting and he didn’t say what it was, he just simply says, can
you quickly arrange the Management Meeting which I did and he said that they should
come to my Board Room and we all went into his Board Room and in that meeting, it was
a very brief meeting, only to tell us that he was leaving and obviously, all of us were
shocked because I think we didn’t see it coming and we said, but why, and she said but I
am being transferred to the DPSA. You know, she couldn’t offer anymore explanation
despite all of us in the Board Room almost shocked and then she was just saying, thank
you very much and she was dismissed. So we all dismissed but because I was next to his
office, I just thought, let me go and find out because it just didn’t make sense and I
remember, when I got into his office and I found him bending the head on the desk and I

20

could see that he is not going to speak to me and I left and I came back to the office
because I could see that and the next she then came out and on his way out because I
think what then transpired is that his staff started packing his stuff in the office and then
on his way out, he came into my office and he said that I am going to call off that process
of buying a house because I was responsible for the Human Resources and obviously

Page 18 of 113

FRIDAY 31 AUGUST 2018

when you are buying a house as a public servant, there are some forms that you
complete and he had already started that process and he said, Phumla, I am going to call
it off, it’s not going to happen and he left and that was the last we saw Mr Maseko on that
day.
ADV KATE HOFMEYER: Were there any advertisements to fill his post that preceded his
removal?
MS PHUMLA WILLIAMS: Chairperson, I don’t remember an advert, in fact, on the same
day that Mr Maseko left, Mr Zwanele or Jimmy, that time we called Jimmy, Mr Zwanele
Manyi came and arrived and I remember him asking me to call a staff meeting because
10

he is now the new Director General and we then organised that staff meeting.
ADV KATE HOFMEYER: Ms Williams, do you know what Mr Manyi was doing before he
joined GCIS?
CHAIRPERSON: I am sorry Ms Hofmeyer, I am sorry. Just before that question, around
what time was it do you think when Mr Maseko left the building or left the Department?
MS PHUMLA WILLIAMS: Chairperson, it was on that same day. He arrived in the
morning, I would have to check the exact date because I think we can check that. It w as
on that same day when he called the staff meeting, packed, the staff assisted to pack the
things, left. The moment he left we then got to be told that Mr Manyi was at the basement
in our building and he came up and then she requested to say, she actually introduced

20

himself which is something that is unusual because we generally are used to people
being, we are told well in advance but she came on that same day and he said to us, we
must call a staff meeting, she wants to introduce himself as the new Director General of
GCIS.

Page 19 of 113

FRIDAY 31 AUGUST 2018

CHAIRPERSON: Well, you have almost answered the next question. I wanted to see
how much time lapsed between Mr Maseko’s departure and Mr Manyi’s arrival but from
what you are saying, it’s like quite immediate. Within an hour maybe? Within two hours?
MS PHUMLA WILLIAMS: I think I would be lying but I think the spacing was so short
because the meeting did not even take long and the packing, if I recall, I don’t even think
everything of Mr Maseko was taken, it was almost like the few personal things that were
taken and that same day, I think I would even say, two hours or so but I would have to
verify that.
CHAIRPERSON: Okay thank you.
10

ADV KATE HOFMEYER: Ms Williams, I asked you about Mr Manyi and whether you had
any knowledge from whence he came when he arrived at GCSI at the beginning of 2011.
Do you know whether he was serving in Government at the time, what his position was?
MS PHUMLA WILLIAMS: Chairperson, when Mr Manyi came, he was a transfer, I
believe he was a Director General of the Department of Labour.
ADV KATE HOFMEYER: Do you know whether he was serving in that capacity at the
time?
MS PHUMLA WILLIAMS: He was serving as a Director General of the Department of
Labour.
ADV KATE HOFMEYER: Ms Williams, at the bottom of page 3, paragraph 13, you say

20

that Mr Manyi arrived and introduced a number of changes in the organisation and then if
you turn over the page, those changes begin to be referenced from paragraph 14. Before
we move to those changes, I would like you to move to page 75 of your bundle because
the speed with which this change between Mr Maseko and Mr Manyi took place appears

Page 20 of 113

FRIDAY 31 AUGUST 2018

not to be in compliance with the relevant regulatory requirements that exist within the Act
and the Regulations and so I would like to take you to some of those sections for the
purposes of placing this event in its proper context. If we begin at page 75, Ms Williams
that is a section of the Public Services Act which begins at page 62 of the bundle, just to
orientate you and at page 75 of the bundle, you will see the issue of appointments of
heads of department and career incidents is dealt with. What the section does in
summary and then I will go to the text, is it identifies who is responsible for appointing the
heads of department of the various State departments and just to clarify that GCIS is one
such State department, if you would turn to page 86 of the bundle, you will see two-thirds
10

down the page a heading, Schedule 1, National Departments and offices of Premier and
heads thereof, and if you turn over the page to page 87, you will see almost four-fifths of
the way down, the Government Communication and Information System is listed as a
National Department under Schedule 1 in the left-hand column and in the right-hand
column, the head of that department is signified as the Director General of what we are
now colloquially referring to as GCIS, do you see that?
MS PHUMLA WILLIAMS: Yes.
ADV KATE HOFMEYER: So if we can go back to Section 12, that was just to confirm for
us that when Section 12 is talking about heads of department, it is indeed referring within
its domain to GCIS. Now 12 (1) says: “Notwithstanding anything to the contrary contained

20

in this Act, but subject to two sections that aren’t pertinent for present purposes, the
appointment and other career incidents of the Heads of Department and Government
component shall be dealt with in the case of (a) a Head of a National Department or
National Government Component by the President.”
understanding of how the GD of GCIS is appointed?

Page 21 of 113

Is that consistent with your

FRIDAY 31 AUGUST 2018

MS PHUMLA WILLIAMS: Certainly, the appointment of the Directors General is done by
the President of the country.
ADV KATE HOFMEYER: Thank you.
CHAIRPERSON: I am sorry Ms Hofmeyer. Do you know whether that was the position as
well as around 2010, 2011? In other words, was that the position at the time as well. I am
just asking that question because the evidence given by Mr Maseko, I leave out the
question of appointment, was that the contract that would be signed by the DG would be
a contract, the DG, that person who will be DG and the Minister responsible for the
department if I recall correctly. So I just want you to be able to say whether your
10

understanding is that this position also obtained at that time or not?
MS PHUMLA WILLIAMS: Chairperson, yes my understanding is that the appointment of
Directors General is the President. The performance contract is signed by the Director
General together with the relevant Minister.
CHAIRPERSON: So the contract that is signed is called the Performance Contract?
MS PHUMLA WILLIAMS: Yes.
CHAIRPERSON: And do you know whether it would contain essentially all or most of the
terms and conditions that one would expect in a normal contract of employment?
MS PHUMLA WILLIAMS: I would imagine Chairperson but what I can confirm is that the
performance contract does spell out the areas that should be the focus of the Director

20

General but the letter that should have the contract itself, I will not be able to ascertain
exactly what it says.
CHAIRPERSON: And normally would the performance contract be concluded after the
appointment of the person by the President?
Page 22 of 113

FRIDAY 31 AUGUST 2018

MS PHUMLA WILLIAMS: Certainly Chairperson.
CHAIRPERSON: So you could be appointed by the President and for a certain period
you don’t have a performance contract until one has been concluded between your
Minister and yourself as a DG.
MS PHUMLA WILLIAMS: My understanding Chairperson, in fact it goes with almost all
the public servants. When you are appointed you will get your letter which indicates of the
Director General, they will get that letter from the President. Within three months they
must have completed that performance contract. They are normally given three months.
CHAIRPERSON: Okay, thank you.
10

ADV KATE HOFMEYER: Chair, if I may just in the light of your questions, direct you to a
few further sections of the bundle. Chair, your question about whether the same position
applied in 2011, we can be answered with reference, we are dealing with the Public
Service Act, you would have seen on page 62 which is an amended version from about
2014. In anticipation of today, I have searched the Government Gazettes which I want to
do and established for the Chair, that the operative Section 12 to which we have made
reference, was introduced in an amendment Act at 30 of 2007 so it preceded the dates
that are pertinent and that was the amendment that introduced this very Section 12 that
we are making reference to.
CHAIRPERSON: Thank you very much, that is very helpful.

20

ADV KATE HOFMEYER: Chair, and then in addition, this question about the contract.
Attached as an annexure to the Public Service Act is actually the standard form
agreement that will be executed between heads of department, appointed under Section
12 but it anticipates that the contract is signed, notwithstanding the appointment by the
President with the Executive authority who is the Minister and if I can just draw the
Page 23 of 113

FRIDAY 31 AUGUST 2018

Chair’s attention to that contract, the standard form contract appears at page 202 of the
bundle. What you will see at page 202 is that it is a contract prescribed in terms of
Section 12 of the Public Service Act 1994 for heads of department. That was the section
that we were looking at moments ago and it specifies that it is entered into by the
Government of the Republic of South Africa herein represented by, a space is left in the
brackets appears full name of executive authority or his or her delegate. Chair, to avoid
the cumbersome backwards and forwards in the papers, I can confirm for you that at
page 65 of the bundle, Executive Authority is defined and it is defined as the relevant
Minister. So that should tie up the regulatory scheme in which these appointments take
10

place. Ms Williams, we were at page 75 and we were dealing with what Section 12 of the
Public Service Act says about the appointments of heads of department. That was in subsection 1 but I would like us also to look, if we may, at sub-section 3(a), that is also on
page 75. You will see there that the legislation provides that, “the President may transfer
the head of a National Department or National Government component before or at the
expiry of his term or extended term to perform functions in a similar or any other capacity
in a National Department or National Government component in a post of equal, higher or
lower grading or additional to the establishment as the President considers appropriate”.
So Section 12, sub 3 is dealing with transfers of heads of department. What I have read
there is sub-section 3(a). If we turn over the page to 76, you will see that the manner in

20

which that transfer must take place is also prescribed. At (d) on page 76, it says, “a
transfer in terms of this sub-section may only occur if one of two things happen. The first
is that the relevant head of department consents to the transfer or secondly, after due
consideration of any representations by the head, the transfer is in the public interest.” Is
that consistent with your experience of transfers in the Government service?

Page 24 of 113

FRIDAY 31 AUGUST 2018

MS PHUMLA WILLIAMS: I will speak with the lower ranks. It’s very consistent, the
transfers there’s got to be some kind of engagement with the officials who generally
would not just transfer, you wake up one morning and we say to the staff normally there
is an engagement and I would imagine Chair, it should have been the case also with the
Directors General.
ADV KATE HOFMEYER: In your experience, are you aware of any such rapid
replacement previously in the history of GCIS that a DG would be removed on the
morning of one day and replaced by someone the same day?
MS PHUMLA WILLIAMS: Chairperson, I have never seen it, I was in Public Service from
10

1994, it was the first time I saw it.
ADV KATE HOFMEYER: And what was the impact of the repitidy of that change on
GCIS?
MS PHUMLA WILLIAMS: Chairperson, it was massive. The level of demoralisation in the
organisation that had a Director General who was accessible to the lowest of an
organisation, a cleaner was accessible, a Deputy Director was accessible and it was
completely a culture shock within a day and we find ourselves heads spinning trying to
make sense and nobody was willing to give us an explanation of what this was all about.
It did impact on the moral of the staff.
ADV KATE HOFMEYER: Are you aware whether there was any change over that took

20

place between Mr Maseko and Mr Manyi?
MS PHUMLA WILLIAMS: Chairperson, I think there were quite a number of changes that
were also not consistent with the culture of our organisation.
CHAIRPERSON: I am sorry, did you mean handover?

Page 25 of 113

FRIDAY 31 AUGUST 2018

ADV KATE HOFMEYER: I meant handover indeed, I was running ahead of myself for
the changes that Mr Manyi introduced. Ms Williams, the force of my question was, were
you aware of any handover to ensure consistency in the transition between Mr Maseko
and Mr Manyi?
MS PHUMLA WILLIAMS: Chairperson I am not aware of any. They might have had it as
one on one over a cup of coffee but we are not aware of that kind of a handover that
could have happened in the department.
ADV KATE HOFMEYER: I would then like to move to the topic of changes if I may and
those commence Ms Williams at page 4 of your statement. Ms Williams from paragraph
10

14 on that page to paragraph 16 at the bottom, you talk about a series of changes that
were introduced after Mr Manyi took up the position of DG of GCIS. Rather than have you
read, I propose to you that they are grouped into two topics. The first of those relate to
the Bid Adjudication Committee and the changes he implemented there. Would you
please take the Chair through what those changes involved?
MS PHUMLA WILLIAMS: Chairperson, the first change, particularly as it affect my area, I
was the Chairperson and I think I should also indicate, I had been appointed by him, Mr
Manyi, I think in my letter I am stating that it was June 2011 which is consistent with how
we normally do it on an annual basis we review and we re-appoint and I was being reappointed basically and at the time she was already in the Department, appointed me as

20

the Chairperson of the Bid Committee and obviously with all the members as they existed
at the time. I think it was three, four months later, she then completely woke up one
morning and we were told that she has changed the Bid Committee and appointed a
completely new people with no CFO which is what National Treasury recommends and
she appointed if I may say, it was Mr Michael Currin…

Page 26 of 113

FRIDAY 31 AUGUST 2018

ADV KATE HOFMEYER: Ms Williams, sorry to interrupt, if I may, we will go to that part in
the statement in a moment but you did make reference to your letter of appointment.
Could we go there just in the sequence. You will see it appears at page 12 of the bundle.
As I understand the testimony you have just give, you confirm that in June 2011 Mr Manyi
appointed you or re-appointed you in the position of Chair of the Bid Adjudication
Committee. If you look at page 12 of the bundle and over the page it’s 13, you will see
that that a letter signed by Mr Manyi as the Chief Executive Officer as I understand he
was referred to at the time and the date there is the 3 rd. The second two digits on the
printed copy Chair and Ms Williams, looks like it might be a 01 but I can assure you from
10

the electronic copy which is clearer it is the 6 th June and it must be because Mr Manyi
was not in GCIS on the 3 rd January, nor do I think people would have been doing such
matters on the 3rd January in 2011, nonetheless, if we turn back over the page, what this
is if you read under paragraph 1 is your formal appointment as the Bid Adjudication
Committee Chairperson in terms of the PFMA as well as the Treasury Regulations. If you
go down to paragraph 3 could you please read into the record that first paragraph under
3.
MS PHUMLA WILLIAMS: “In pursuit of the vision of Government communication (GCIS)
in becoming a leading organisation in financial management in public finance, it is
imperative that competent and committed officers are appointed.”

20

ADV KATE HOFMEYER: And then if you move over the page at page 13, there are a list
of functions of the Bid Adjudication Committee listed there. Would you please take us
through those functions.
MS PHUMLA WILLIAMS: I think the first one, should I read as written or should I just talk
to them?

Page 27 of 113

FRIDAY 31 AUGUST 2018

ADV KATE HOFMEYER: Talk to them indeed.
MS PHUMLA WILLIAMS: The bid committees functions Chairperson, in the main is to
process submissions of bids that had been processed through the Evaluation Committee.
They then get presented to the Bid Adjudication Committee, we deliberate on them, we
check whether they have been consistent with the terms of reference whether the scoring
is correct, whether the company will address what we are trying to cure with procuring
those services and it’s basically what the Bid Adjudication Committee does and I should
indicate that the Bid Committee gets the full bundle of the submissions a week before so
that we familiarise ourself so that we can engage and that’s what’s in the main we do.
10

ADV KATE HOFMEYER: And is there training of the Bid Committee members to perform
those functions?
MS PHUMLA WILLIAMS: Chairperson, all of us at that time when the process we went
through a five days training from National Treasury which it took us through what’s the
procurement regulations of Government are all about, what the PFMA is all about, how to
process a bid submission, how to even calculate the scores because I think there was
that 80/20 and 90/20 for functionality and the waiting, we had to be taken through that
whole process that even when they submit the score, then we should be able to also
double check it ourself so we did go through that training for five days.
ADV KATE HOFMEYER: If I may then take you back to your statement at page 4 when I

20

interrupted just so that we could look at that letter of appointment. You were about to tell
us about the new members who were appointed to the committee when your committee
was disbanded. With reference to paragraph 15, please can you tell us who those new
members were and what your knowledge is about what they were doing prior to their
appointment to the Bid Adjudication Committee?

Page 28 of 113

FRIDAY 31 AUGUST 2018

MS PHUMLA WILLIAMS: Chairperson, the first one was Mr Michael Currin who at the
time was the Chief Director responsible for the Provincial Chapter of the Department
liaising with the communicators in the provinces. He was appointed as a chairperson.
Then there was a Ms Penelope Mtuli who had more or less joined around the same time
with Mr Manyi, she also was from the Department of Labour and moved in with Mr Manyi
to the GCIS. Then there was Ms Matupe Thusi who had just been appointed to GCIS as
a Human Resource Director. The last one was Ms Zuki Zwapotye who was in the GCIS
as a Chief Director, Strategy Planning and those were the officials that were appointed by
Mr Manyi.
10

CHAIRPERSON: I am sorry, maybe Counsel was going to ask you this but I want to ask
you, did that represent a complete replacement of the previous Committee which you
chaired or were there some members of the previous Committee who remained?
MS PHUMLA WILLIAMS: Thanks Chair, I think all of them were new.
ADV KATE HOFMEYER: And you mentioned previously the requirement that there not
only be the CFO that sits on the Bid Adjudication Committee but that there be a
representivity across the organisation. Did the new Bid Adjudication Committee satisfy
those requirements?
MS PHUMLA WILLIAMS: Chairperson, as I look at the names, there was one section
that was not represented. In our bid we had a representative from the Division of

20

Research, Writing in that whole programme we had a representation from the Provincial
stakeholder, Ms Lebo Legwabe, we also had a representation from Corporate Services
and importantly we had a representation of the CFO which was how the National
Treasury suggested.

Page 29 of 113

FRIDAY 31 AUGUST 2018

ADV KATE HOFMEYER: And are you aware whether any of these new members went
through that training that your previous committee had received?
MS PHUMLA WILLIAMS: Chairperson I am not aware of any training.
CHAIRPERSON: How many of those new members of the committee as far as you know,
came from outside GCIS?
MS PHUMLA WILLIAMS: Ms Matupe was from another department, Ms Ntuli came with
Mr Manyi from the Department of Labour but I think also I should indicate that they had
been working together at Tiger Brand so when Mr Manyi went to Department of Labour,
Ms Ntuli moved there when Mr Manyi moved to GCIS she moved also with Mr Manyi.
10

ADV KATE HOFMEYER: If we move to paragraph 16 on page 4. This is where you talk
about another change that Mr Manyi introduced. Just to orientate you, paragraphs 14 and
15 deal with the change to the Bid Adjudication Committee that we have been discussing
and then at paragraph 16, you reference a further change that Mr Manyi introduced, can
you tell about that second change?
MS PHUMLA WILLIAMS: Yes Chairperson, during the period of Mr Maseko and during
Joe Netshitenzhe, the processing of tenders got completed at a Chairperson of the Bid
Adjudication Committee. When Mr Manyi came, that changed. It had to be completed by
Mr Manyi.
ADV KATE HOFMEYER: And Ms Williams, any further changes that you are aware of

20

that Mr Manyi introduced over and above the reconstitution of the Bid Adjudication
Committee and that processing of submissions going directly to him. Were there any
changes that you would like to tell the Chair about after his entry to GCIS?

Page 30 of 113

FRIDAY 31 AUGUST 2018

MS PHUMLA WILLIAMS: Chairperson, additional to this, Mr Manyi facilitated that the
media buying unit must directly report to him. Prior to that the media buying was at a
Directorate level reporting to a Chief Director. He then moved that unit and suggested
that it must report to him directly. Secondly, Mr Manyi removed the internal audit which
was reporting in my division and suggested that the internal audit must report to him
directly.
ADV KATE HOFMEYER: Who held the position of Chief Director of Media Buying at that
time?
MS PHUMLA WILLIAMS: Chairperson, I should indicate that in 2010 when we decided
10

to bring it in-house, that division was headed at a Director level by a lady who
subsequently resigned and Mr Manyi then, we advertised the post as we normally do
after she resigned and Mr Manyi then participated, wanted to Chair the interviews, we
didn’t get a suitable candidate and she then decided that he will headhunt himself and
yes, he did headhunt Mr Donald Diphoko whom we interviewed and was then appointed
at a Chief Director level to report directly to Mr Manyi.
ADV KATE HOFMEYER: At this point, I would like to spend a moment about the
hierarchy within GCIS because it is going to become relevant in relation to questions I will
address to you later. Can you tell us about the hierarchy within GCIS of the positions of
Chief Director, Deputy Director General and Director General. How did they stack up in

20

terms of hierarchy?
MS PHUMLA WILLIAMS: In GCIS which I probably it’s the same with most of the
Government departments unless it’s a specialised post, the Directors generally report to
the Chief Director, the Chief Director reports to the DDG which is a Deputy Director
General and the Directors General report to the DG.

Page 31 of 113

FRIDAY 31 AUGUST 2018

ADV KATE HOFMEYER: Thank you. If we can then move over page 5 of your
statement.
CHAIRPERSON: I am sorry Ms Hofmeyer. What you have just said now understood
together with what you said earlier in regard to media bulk buying namely you said Mr
Manyi introduced a change in terms of which media bulk buying would be dealt with by
people who would report directly to him so does this mean that the people who dealt with
media bulk buying would have to actually jump over a Deputy Director General that
otherwise they were supposed to report directly to the DG.
MS PHUMLA WILLIAMS: Chairperson, that’s how he had packaged it but under normal
10

circumstances, that whole process was done through the Chief Director and the DDG of
the branch.
ADV KATE HOFMEYER: Chair, I see that we are just before the tea break and I am
going to move onto a new topic. I am happy to take the break now with your leave or
proceed and then we can come back, what would be more suitable?
CHAIRPERSON: Maybe we should try and use the 5 minutes thank you.
ADV KATE HOFMEYER: Certainly. On page 5, Ms Williams, you begin at paragraph 17
with a reference to the TNA SABC Breakfast sessions and I would like to explore those in
some detail with you but to begin with, can you explain to us what those Breakfast
sessions were?

20

MS PHUMLA WILLIAMS: My understanding Chair was that the SABC together with the
New Age, they were doing this breakfast and ja, that’s how much I can say.
ADV KATE HOFMEYER: And what happened at the breakfast.

Page 32 of 113

FRIDAY 31 AUGUST 2018

MS PHUMLA WILLIAMS: I think Chairperson, there were various experts normally that
were invited. Some Ministers were invited but I remember some of the sports fraternity
where they then have this breakfast and round table and they discuss what their policies
or their issues were and I think that’s my understanding that there was just that kind of
exchange and sharing of what the matter was and ja, in the breakfast.
ADV KATE HOFMEYER: At paragraph 17 you say, during my 10 year as Acting DG, I
was never involved in any procurements of the TNA, SABC Breakfast Sessions. You go
on and see, it has since come to my attention that the Supply Management section, this I
assume is of GCIS may have had dealings with TNA SABC Breakfasts. There are a few
10

questions that flow from that statement. Ms Williams, how did that come to your
attention?
MS PHUMLA WILLIAMS: Chairperson, it came to my attention after I had been
interviewed by the Hawks and genuinely because of our delegation, I said there has
never been a TNA Breakfast in GCIS that we process because our delegations are very
clear, they don’t have TNA Breakfasts and I said to them there has never been and they
insisted and they were adamant and they were saying that we know that GCIS did do it.
Now when they left, I then took the trouble of going to call the head of Procurement and
she confirmed that yes, that happened and they were bullied into doing it.
ADV KATE HOFMEYER: Let us unpack that to some extent. The first thing you said in

20

your answer for the Chair was that TNA Breakfasts were not within the delegations of
GCIS. Can you explain what that means?
MS PHUMLA WILLIAMS: Chairperson, the delegations that we had agreed on, was for
broadcasting, was for print, nowhere in our delegation did we have breakfast and I think
that has been the issue by the Supplier Chain to say this does not find into the Telmar

Page 33 of 113

FRIDAY 31 AUGUST 2018

software which we were using, It falls with any other roundtable breakfast meetings that
are done and it must follow the normal procurement process and that’s why it never really
occurred to me that it would have been because the procurement guidelines of our print
and broadcasting were very clear/ It didn’t have breakfasts.
CHAIRPERSON: Ms Hofmeyer, I don’t know if I have missed this somewhere, I know
what SABC stands for, I don’t know TNA, what does it stand for? Maybe the witness can
help us?
MS PHUMLA WILLIAMS: TNA means, The New Age, that’s the newspaper that was
owned by the Guptas.
10

CHAIRPERSON: I would ask you NA would be New Age and T? Do you know what T is?
MS PHUMLA WILLIAMS: The New Age.
CHAIRPERSON: Oh, The New Age, oh okay so it wasn’t New Age, it was The New Age,
thank you.
ADV KATE HOFMEYER: Thank you Chair. You have explained to us that media bulk
buying didn’t have a delegation to deal with breakfasts. Are you aware of advertising that
took place in relation to those breakfasts.
MS PHUMLA WILLIAMS: I am not with you? Just say that again?
ADV KATE HOFMEYER: Let me rephrase it. As I understand media bulk buying within
GCIS as your testimony has explained. You would receive a brief from a department with

20

a message to go out and a target audience to reach and your software, the reference you
made to Telmar a moment ago, can you confirm is that the software that is used to
identify the media platform to communicate that strategy for that department, is that
correct?
Page 34 of 113

FRIDAY 31 AUGUST 2018

MS PHUMLA WILLIAMS: That’s correct Chair.
ADV KATE HOFMEYER: Now if I understand your testimony, Telmar is identifying
advertising space in order to communicate that message from the National Department,
is that correct.
MS PHUMLA WILLIAMS: That’s correct Chair.
ADV KATE HOFMEYER: As I understand it therefore, media buying is about identifying
advertising space for the communication of these messages from National Departments,
is that accurate?
MS PHUMLA WILLIAMS: That’s accurate Chair.
10

ADV KATE HOFMEYER: My question then is, are breakfasts an obvious place where the
communication strategies of departments can be advertised?
MS PHUMLA WILLIAMS: Chairperson I think as I am told by the Supplier Chain that was
their point of difference is that their understanding it doesn’t fall within the delegated
authority. Their view was that it should go through the normal procurement so that any
other media that wants to also pitch in and say, we want to do this round table, they
should be afforded to that opportunity. It was not a sole service provider as I had
indicated earlier that they so attended you can't get another but the point of Supplier
Chain was that that particular service should have been put to the market and complete
with all others who want to run the thing and that’s where the issue was that they were

20

refusing to do that advertising because Supplier Chain was saying, take it out to the
market and let everybody else pitch who want to pitch if you think it is such an effective
tool for marketing advertising.
CHAIRPERSON: And what was the purpose of this breakfast, do you know?

Page 35 of 113

FRIDAY 31 AUGUST 2018

MS PHUMLA WILLIAMS: Well the paperwork that I have seen when they were trying to
convince the Supplier Chain was that it is advertising and the officials were then saying
but how is breakfast and advertising and it is at that point that they were told you are not
experts, you are supposed to do it.
CHAIRPERSON: So the advertising on the side of TNA I guess and SABC, because they
were party to it, was it that the advertising that was being done was for the benefit of
Government departments, was that what they were saying?
MS PHUMLA WILLIAMS: The explanation we were given was that it was meant to
advertise and our argument or rather the Supplier Chains argument is that if it is TNA, it
10

competes in the software like everybody else, we put the proposal. If the department
wants to promote its policies, let’s follow the normal processes in the same way that
SABC, SABC if it wants to promote and it wants to come with that proposal, let them pitch
like everybody else but I don’t think we did have a package that was like TNA and SABC,
there wasn’t something like that and it’s at that point when they were told that it will
happen.
CHAIRPERSON: And for that kind of advertising to happen, who would normally have
been expected to make the decision whether it should happen or not?
MS PHUMLA WILLIAMS: Well, according to the Supplier Chain they were told by the
CFO that it will happen of the GCIS.

20

CHAIRPERSON: And the CFO at the time was who?
MS PHUMLA WILLIAMS: Mr Zwele Momeko.
CHAIRPERSON: So your understanding is that he made the decision or he made this in
regard to some of them.

Page 36 of 113

FRIDAY 31 AUGUST 2018

MS PHUMLA WILLIAMS: Yes and because the correspondence that I have seen that is
from him, it’s the one where she uses words like, you are ahead of yourself, you are not
experts and this has to happen.
CHAIRPERSON: Okay thank you.
ADV KATE HOFMEYER: Chair, I see we are at the tea time, I do have a number of
follow up questions but with your leave Chair, I propose dealing with them after the tea
break.
CHAIRPERSON: Ja, that’s fine. We will take the tea adjournment now and we will
resume at 25 to 12.
10

Page 37 of 113

FRIDAY 31 AUGUST 2018

Session 2
CHAIRPERSON:

Thank you Ms Hofmeyr.

ADV KATE HOFMEYER:

Chair before I continue with my questions, I’ve learned that over the break

CHAIRPERSON:

Thank you.

MS PHUMLA WILLIAMS:

Chairperson I got a test message from Mr Manyi who is saying, that I must

CHAIRPERSON:

Thank you Ms Williams for sharing that with us. The legal

team and the investigators must just apply their mind to what the implications are of that
text message to the witness and do the necessary.
ADV PAUL PRETORIUS SC: We will do Chair.
10

CHAIRPERSON:

Thank you. Thank you, it’s something very serious.

ADV KATE HOFMEYER:
CHAIRPERSON:

Indeed Chair.
Thank you. Thank you Ms Williams for sharing that

information with us; it will be followed up by the legal team and the investigators. It is
something very serious.
ADV KATE HOFMEYER:
MS PHUMLA WILLIAMS:

Yes, yes.

ADV KATE HOFMEYER:

Ms Williams when did this occur?

MS PHUMLA WILLIAMS:

20

Thank you Chairperson. Ms Williams before the adjournment, we were dea

Chairperson, sorry the text email that I saw, it’s dated the 7 th August 2014.

ADV KATE HOFMEYER:

And who did the bullying?

MS PHUMLA WILLIAMS:

It’s the CFO which is Mr Swelli Momeko(?)

MS PHUMLA WILLIAMS:

Thank you. I would like just unpack how that bullying occurred in the opera
Page 38 of 113

FRIDAY 31 AUGUST 2018

understand internal workings of GCIS, and it is very important that the extent of the
bullying, and its nature becomes clear for the evidence before the Commission.
CHAIRPERSON:

I sorry Ms Hofmeyr it may be prudent if it has not already

been done, that Ms Williams makes or sends that text message that she has told me
about, to somebody within the legal team or the investigators so that, even if her
cellphone, even if something were to happen to her cellphone, there would be somebody
who has the text message.
ADV KATE HOFMEYER:
CHAIRPERSON:
10

ADV KATE HOFMEYER:

Indeed Chair.
Thank you.
We will make sure that that takes place. I understand it

might have already but we would clarify over lunch.
CHAIRPERSON:
ADV KATE HOFMEYER:

Thank you.
So to understand the context in which this occurred Ms

Williams, you make reference to the Telmar System which relates to media buying. Can
you tell us a bit more about how that system works?
MS PHUMLA WILLIAMS:

Chairperson can I have some water, I think my throat…?

Chairperson I indicated earlier, that when we agreed with National Treasury that we
would like to bring it in-house, there was an acknowledgement that we can use A
delegation 16(a) 6 4, which essentially, it’s a delegation that is given to departments if it’s
20

something that is beyond your control which you need to do.
However, the issue there is that you can use it but, you must write a motivation
why you think this medium is the correct one, whether it is cost effective and whether it
Page 39 of 113

FRIDAY 31 AUGUST 2018

will get to those audiences that you want. Now our understanding is that the Telmar was
assisting us do to that. It would, we would a briefing from the client, load that in the
briefing into the system and the system would then say this is the most cost effective and
effective in terms of the audience that you want. And the media buying people had to
write that down and submit it to us. Now in the case of the TNA, we battled with how do
you load that and that’s when we… and I should say Chair that it became… the supply
chain became aware of it after one of the submissions said TNA breakfast.
They immediately raised an alarm to say what exactly is this and that when the
issue….because it was saying TNA breakfast and the Telmar would not actually respond
10

to something like that. It’s either it’s printed or broadcasting. So they had to then deal
with it from that perspective. It was not fitting into the procedure that was agreed upon
with National Treasury because remember, that’s what we were trying to do whilst we
trying to development a process; a procedure that will fit the media buying system.
ADV KATE HOFMEYER:

And so just to clarify: Supply chain management received

the recommendation from media buying as I understand your testify, that included the
TNA, SABC breakfast. Is that correct?
MS PHUMLA WILLIAMS:

That’s correct.

ADV KATE HOFMEYER:

And what was supply chain management’s response to

Receiving that proposal from media buying?
20

MS PHUMLA WILLIAMS:

Chairperson they declined it and they said that it doesn’t

fit into our understanding of media buying and they it sent it back. It’s at that point when it
the media buying people then raised it with the CFO, who is the overall head of that
section and that’s when she wrote to them to say, why are you refusing, because this is
Page 40 of 113

FRIDAY 31 AUGUST 2018

media buying and you are not experts.
This fits in and this is addressing the audience and the supply chain was saying,
how, you need to assist us, what is unique about it because a media briefing… anybody
can pitch and they were not even saying that are not going to do it. They were saying
let’s do it properly and allow the other media houses that want to do it, to also pitch,
because basically that’s what it was.
That it can’t be a unique service because you need to prove that it is unique.
And they were arguing that it’s not unique. Allow other media houses that want to pitch to
pitch and that’s where the dispute was all about.
10

ADV KATE HOFMEYER:

And what was the response from the CFO?

MS PHUMLA WILLIAMS:

The CFO said you are getting ahead of yourself, you have

to do it and people are getting irritated with your rigidity in this organisation, and I think he
himself was getting impatient with them and they have to do it.
ADV KATE HOFMEYER:

Chair there will be evidence in the course of next week in

relation to the payments that went from GCIS in particular to TNA media and Infinity.
There will be a representative from National Treasury who will address that for the
Commission, but in anticipation of that I can record for the Chair at the moment that
between the period 2011 and 2018, R55 million were paid from GCIS to TNA media and
Infinity, that will clarified by our witness next week.
20

CHAIRPERSON:
ADV KATE HOFMEYER:

Okay, thank you.
Ms Williams if we can then proceed at page 5. We have

dealt with the question of this bullying the CFO against the processes that the supply

Page 41 of 113

FRIDAY 31 AUGUST 2018

chain management section of GCIS were trying to hold faithful to. And we move from that
to paragraph 18, where in the chronology, you are dealing with Mr Manyi’s exist from
GCIS which you record at paragraph 18 happened in August 2012, can you confirm that?
MS PHUMLA WILLIAMS:

Yes, Chairperson I can confirm that.

ADV KATE HOFMEYER:

And what happened after his departure? What position did

you then hold?
MS PHUMLA WILLIAMS:

Chairperson after Mr Manyi left the then Minister Chabane

appointed me to be the Acting Director General of the GCIS.
ADV KATE HOFMEYER:
10

Ms Williams for how did you occupy that position as Acting

DG from August 2012?
MS PHUMLA WILLIAMS:

Chairperson I’ve been Acting DG from 2012, 13 and 14 and

in October 2014.
ADV KATE HOFMEYER:

Thank you. In relation to that period of acting, you say…

(intervenes)
CHAIRPERSON:

I am sorry Ms Hofmeyr, did you say ending October 2014

or 2015.
MS PHUMLA WILLIAMS:

20

2014.

CHAIRPERSON:

2014, okay thank you.

ADV KATE HOFMEYER:

Ms Williams if we can just go to paragraph 18, your second

line there in relation to this lengthy period of acting, states:

Page 42 of 113

FRIDAY 31 AUGUST 2018

‘My acting role was renewed every six months…”
and on the third renewal Minister Chabane raised a question with you. Can you tell the
Chair about that?
MS PHUMLA WILLIAMS:

Yes, Chairperson on the third renewal, I think the first six

months he renewed it to the second six months, on the third one. He then said to me
now what will happen if I just go ahead and appoint you and confirm you, and I indicated
that it would be irregular, why doesn’t he follow the process and advertise, I mean I can
apply and like the process should be fair. And he said to me he has been told not to
appoint me.
10

ADV KATE HOFMEYER:

Do you know more about that instruction?

MS PHUMLA WILLIAMS:

Unfortunately, Chairperson he didn’t tell me who, he just

simply said I have been told not to appoint you.
ADV KATE HOFMEYER:

Ms Williams you then move in paragraph 19 to what happened

after the general election in May 2014, and you make the point there that Ms Faith
Muthambi was appointed as Minister responsible for GCIS, and you thereafter make
reference to the proclamation by the President that facilitated that.
I would like to take to that proclamation for your confirmation. It’s at page 235.
You will see the proclamation begins at page 235 and you will see that it records that it is
in terms of Section 97 of the Constitution, that there is a transfer of the administration of
20

various powers and if you go over, to page 242 you will see the relevant change that was
made in respect of GCIS.
MS PHUMLA WILLIAMS:

You said 242?

Page 43 of 113

FRIDAY 31 AUGUST 2018

ADV KATE HOFMEYER:

Yes.

MS PHUMLA WILLIAMS:

Okay.

ADV KATE HOFMEYER:

You will see under paragraph 3.1 there is a heading before

the table: Government Communication and Information System and you will see that
column 1 designates what was transferred and that all powers and functions of the
executive authority of the department and you will see that column 2, references from
whence it was transferred and then column 3, to whom it was transferred. Can you read
for us from where it went and to whom it went?
MS PHUMLA WILLIAMS:
10

It moved from the Minister in the Presidency to the Minister

of Communication.
ADV KATE HOFMEYER:

And who was the Minister of Communications after the general

election in May 2014?
MS PHUMLA WILLIAMS:

It was Minister Faith Muthambi.

ADV KATE HOFMEYER:

If we can then turn page 5 of your statement.

CHAIRPERSON:

I am sorry Ms Hofmeyr, all along the minister responsible

for GCIS was the Minister in the Presidency, is that right?
MS PHUMLA WILLIAMS:
CHAIRPERSON:

That’s correct.
And at this time was Minister Faith Muthambi as Minister

of Communications, Minister responsible for GCIS, or was it just a question of moving
20

some function that had belonged to GCIS and moving it away from the Minister in the
Presidency and moving it to a minister responsible for another department?
MS PHUMLA WILLIAMS:

It was moved to a new minister because it was a completely
Page 44 of 113

FRIDAY 31 AUGUST 2018

new portfolio. It moved out of the Presidency and it was moved to Minister Muthambi
who was new in the executive.
CHAIRPERSON:

Yes, but what I am trying to find out which I might have

missed earlier on, is whether the minister responsible for GCIS, remained the minister in
the Presidency or whether GCIS was moved to being under another minister, when
Minister Muthambi came into the picture.
MS PHUMLA WILLIAMS:

Okay. In that executive change, Minister Chambane who

was the Minister in the Presidency, was moved to the DPSA and the new minister
became Minister Jeff Radebe, Minister in the Presidency.
10

CHAIRPERSON:

Yes.

MS PHUMLA WILLIAMS:
CHAIRPERSON:

Yes.
And Minister Muthambi was Minister of Communications.

MS PHUMLA WILLIAMS:
CHAIRPERSON:

Minister of Communications.
So is the position therefore that something was moved

that used to be under the Minister in the Presidency, was moved to another minister
responsible for something else. Is that correct?
MS PHUMLA WILLIAMS:

20

The Minister Muthambi was completely a new portfolio.

CHAIRPERSON:

Yes, okay.

MS PHUMLA WILLIAMS:

But it was a combination of a number of entities, it was the

GCIS, it was the Fillerman(?) Application, it was MDDA. They were belonging in different
ministries, but it was all brought into one which is the Minister of Communication.
CHAIRPERSON:

Thank you very much.
Page 45 of 113

FRIDAY 31 AUGUST 2018

ADV KATE HOFMEYER:

Thank you Chair and just to clarify, after that change GCIS

no longer fell under the Minister in the Presidency, is that correct.
MS PHUMLA WILLIAMS:

That’s correct Chair.

ADV KATE HOFMEYER:

Thank you. You then go on back at page 5, Ms Williams

about what happened immediately after Ms Muthambi’s appointment as Minister of
Communications and you reference there in paragraph 19, that she told you she wanted
to finalise the recruitment process within GCIS, for the Director General. Can you tell us
about what happened after that?
MS PHUMLA WILLIAMS:
10

Chairperson indeed she did confirm that I had been acting

for too long, she wants to finalise, she wants to advertise the post and indeed, I think it
was hardly a week or so, I did get a call from the Head of Human Resources, indicating
that they are arranging the interviews for the post, and I have been shortlisted. And I then
prepared because my understanding was that I was going to be called for the date of the
interviews.
CHAIRPERSON:

Okay.

ADV KATE HOFMEYER:

What happened with those interviews?

MS PHUMLA WILLIAMS:

Chairperson I think in my testimony, I didn’t put the date but

I have since been able to locate. It was on the 17th June in the evening of 2014 that I
received the same call from the head of HR who indicated that I am sorry, Ms Williams
20

the interviews have been cancelled indefinitely. There was no reason give.
CHAIRPERSON:
MS PHUMLA WILLIAMS:

Just give the date in June 2014 again?
It was 17th because I was in Cape Town, 17 th June 2014.
Page 46 of 113

FRIDAY 31 AUGUST 2018

CHAIRPERSON:

Thank you.

ADV KATE HOFMEYER:

You then reference that at the top of page 6 of your statement

and you go on at paragraph 21, to say after these cancellations my relationship with the
minister became strained for reasons unknown to you. And you make reference then to a
letter of the 18th June 2014. I would like to take you to that letter. It’s at page 14 of the
papers. In the chronology, just to confirm, this is the day after the day that your interview
was cancelled, is that correct?
MS PHUMLA WILLIAMS:
ADV KATE HOFMEYER:
10

That’s correct Chair.
This is a letter addressed… if you turn to page… addressed

to yourself at page 16, from the Honourable Faith Muthambi is that correct?
MS PHUMLA WILLIAMS:
MS HOFMEYER:

That’s correct Chair.
And can you confirm that you received this letter from the

minister?
MS PHUMLA WILLIAMS:

I can confirm that I did receive it.

ADV KATE HOFMEYER:

Please can you read into the record the first sentence of

the letter?
MS PHUMLA WILLIAMS:

‘This letter serves to bring to your attention

my unhappiness with regards to the service you are providing to my
office.’
20

ADV KATE HOFMEYER:

And if you move to page 16, the concluding part of that letter.

Will you also please read into the record the penultimate paragraph which begins… in
various other correspondences…
Page 47 of 113

FRIDAY 31 AUGUST 2018

MS PHUMLA WILLIAMS:

The last two lines?

ADV KATE HOFMEYER:

That whole paragraph that begins… in various other

correspondences…
MS PHUMLA WILLIAMS:

Okay all right.

‘In various other correspondences, I have made inputs in, it seems
you have no capacity to implement changes I require or the desire
to take my input seriously, a situation that has become untenable. I
would want to know in writing, how you intend to remedy the
situation on an urgent basis, in order for me to take appropriate
10

action in this regard.’
ADV KATE HOFMEYER:

Ms Williams would you say it is fair that this is a letter that

records a serious dissatisfaction with your performance in your work?
MS PHUMLA WILLIAMS:

Chairperson I think, for me genuinely it was a shock,

because Minister Muthambi was inaugurated on the 26th May and on the 17th around
that… two weeks, three weeks she was full of praises of my professionalism. She was so
keen such that she wanted to fast track the interviewing of my, the post and filling the
post. So on the 18th I receive a letter of an aggrieved minister, complaining about
unprofessionalism, complaining about things that were just completely new to me. I think
I was shocked.
20

ADV KATE HOFMEYER:

Well lets go if we can, to some of the complaints that she

levelled against you in this letter, appearing at 14. The first heading is: Unprofessional
Conduct and Correspondence. She says in the first paragraph under that heading:

Page 48 of 113

FRIDAY 31 AUGUST 2018

‘As a basic courtesy, I expect you to make time to brief me on
numerous matters that relate to our work to get my portfolio going. I
found it impossible to correspondent and keep in touch with you,
you have chosen corresponding through memoranda, your
preferred way of conducting business.’
She goes on and says:
‘Having said that, I have sent an inordinate amount of time
correcting various memoranda sent to my office from you
including the incorrect and interchangeable use of the
10

letterheads of the Ministry and GCIS, as well as documents
that have not been cross-checked for spelling and
grammatical errors, amongst others. At your level of seniority
this is an unacceptable state of affairs.’
Can we go back to the letterheads? What was the issue with the letterheads?
MS PHUMLA WILLIAMS:

Chairperson we were dealing with a new department,

didn’t exist, three weeks into the minister’s portfolio, necessarily there would have been a
change because people were still trying… we still had letterheads of GCIS, there was no
way we could’ve thrown them away and she had prioritised creating letterheads for
herself, and the point of dispute there, was that we should’ve moved very fast in making
20

sure that the staff uses those letterheads and that’s what the point of her unhappiness
and that I was not using letterheads that she prefers.
ADV KATE HOFMEYER:

Thank you if we can then go to her second complaint, on

page 15, under the heading two: Improper and Inconsistent salutation in letters: The
minister records there:
Page 49 of 113

FRIDAY 31 AUGUST 2018

‘Please familiarise yourself with how a minister ought to be
addressed, in both internal and external memoranda and
apply this consistently in all letters addressed to me in future.
It is clear to me that you delegate this task to junior staff
resulting in your signing off and passing on purely structured
memoranda to my office.’
Well let’s talk about the salutation, what was Minister Muthambi concerned about in
relation to how she was addressed?
MS PHUMLA WILLIAMS:
10

Chairperson the issue is Minister Muthambi, wanted to

be addressed as Honourable, Honourable Muthambi addressed in writing, Honourable
Muthambi in any circumstances, I needed to address her as Honourable Minister.
ADV KATE HOFMEYER:

And then if we move to paragraph 3 on that page 15, there

is a heading: Correspondence regarding the structuring of the Department of
Communications. I don’t want to go through… it’s quite a lengthy section of the page to
15, but I would like to pick up one particular complaint, that she makes there, because we
will soon move to your response to these concerns raised by the minister. At paragraph
3.2, the minister refers to a specific instruction that was given to you and I quote:
‘I have given you a specific instruction to include Ms Gift
Buthelezi, who is a DDG seconded from the erstwhile DOC.
20

Your correspondence makes no reference to his involvement.
This is in direct defiance of my instruction, giving an
impression that you do not want to represent my interests in
that inter-governmental interaction.’

Page 50 of 113

FRIDAY 31 AUGUST 2018

Ms Williams, can you explain what you understood that complaint to relate to?
MS PHUMLA WILLIAMS:

Chairperson Mr Gift Buthelezi was appointed, she was

working as a deputy director general in the previous Department of Communication.
Minister Muthambi wanted me to involve Mr Gift Buthelezi in the work of GCIS, with no
paper trial whatsoever. And I had done what I normally know is done in terms of
governance.
I had written to the Director General of the DOC, requesting that Mr Gift
Buthelezi be transferred or sent on secondment because that is how it works, and I was
still awaiting that response. That’s how fast things were moving, I was still awaiting for
10

that response because you cannot second a person without any paper trail.
ADV KATE HOFMEYER:

Thank you. And then if we move to your response to that

letter which you see… (intervenes)
CHAIRPERSON:

I am sorry Ms Hofmeyr…

ADV KATE HOFMEYER:
CHAIRPERSON:

Apologies Chair.
At that stage of this letter from the minister you were still

acting DG for GCIS.
MS PHUMLA WILLIAMS:
CHAIRPERSON:

That’s correct Chair.
And that made you acting DDG of Ms Muthambi

department.
20

MS PHUMLA WILLIAMS:
CHAIRPERSON:

That’s correct Chair.
And as Acting DG you were the accounting officer, is that

right or not?
Page 51 of 113

FRIDAY 31 AUGUST 2018

MS PHUMLA WILLIAMS:
CHAIRPERSON:

That’s correct Chair.
And if anything went wrong, you would have to account?

MS PHUMLA WILLIAMS:

Certainly Chairperson.

CHAIRPERSONS:

Thank you.

ADV KATE HOFMEYER:

Thank you Chair. If we then move to page 17 which is the

first page of your response to Ms Muthambi’s letter. Your will… if you move to page 19
you will see that that was dated 23 rd June 2014, can you confirm that that was the letter
you sent on that day?

10

MS PHUMLA WILLIAMS:

That’s correct Chair.

ADV KATE HOFMEYER:

I would like to take you back to page 17, and I would like to

ask that you read into the record the second paragraph of that letter. It begins… I should
start…
MS PHUMLA WILLIAMS:
CHAIRPERSON:

Okay.
Well before the witness does I just note that in this letter

she did address her as Honourable.
ADV KATE HOFMEYER:

Yes (laughter). Chair you will see there is an explanation for

that in letter.

20

CHAIRPERSON:

Thank you.

MS PHUMLA WILLIAMS:

‘I should start by indicating that I was

shocked when I read the letter given that you have always be
commending us on the support we were giving you to your

Page 52 of 113

FRIDAY 31 AUGUST 2018

office. Also, it has always been my belief that from the time
you were sworn in on the 26rh May 2014, my office together
with the whole staff of GCIS, has sought to make your coming
into your office as comfortable as possible. In fact, I can go
so far as to say, both yourself and the Deputy Minister were
our number one priority.’
ADV KATE HOFMEYER:

Thank you Ms Williams. And then if we move to your

response to the allegation of unprofessional conduct and correspondence. Rather than
read your response, can you tell us what you said in relation to the charge that you were
10

using the wrong letterheads as evidence of unprofessional conduct?
MS PHUMLA WILLIAMS:

Chairperson I think what I responded to is that, there was

never any intention of undermining the fact that she wants to use her own letterheads and
I will go on to explain that we have made arrangements that her office is able to give us
those letterheads and I subsequently told the whole staff, because some of the
correspondence, generally comes from different sections and I alerted to them that they
need to use the letterheads that the minister will prefer.
ADV KATE HOFMEYER:

You also addressed the question of grammatical errors

in your correspondence. You will see that in the last paragraph, after the heading number
1, feel free to refresh your memory about what your response was there, but could you
20

summarise for the Chair what you said in relation to the allegations of typographical and
other errors in your correspondence.
MS PHUMLA WILLIAMS:

I trying to look for that paragraph.

ADV KATE HOFMEYER:

It’s just before the bold paragraph 2 and if it’s convenient
Page 53 of 113

FRIDAY 31 AUGUST 2018

you can just read that paragraph into the record. I will follow up with my office… it
begins.
MS PHUMLA WILLIAMS:

Okay, okay. I then addressed that and say:

‘I will follow up with my office and yours to manage and better
coordinate to the dates in the correspondence sent to your
office. In the attached sample correspondence in the letter, I
could not any circled grammatical mistake, I therefore
assume it might have been in other documents.

I will

continue as I always try to quality control my language.’
10

ADV KATE HOFMEYER:

Thank you Ms Williams. You then address under the

heading 2 on that page, the improper and inconsistent salutations in letters. Ms Williams
what did you say in response to Ms Muthambi, in relation to that allegation that you were
using the incorrect salutation?
MS PHUMLA WILLIAMS:

Should I read or should I just say.

ADV KATE HOFMEYER:

Whatever is preferable to you.

MS PHUMLA WILLIAMS:

Okay. Chairperson Minister Muthambi is correct that she

did say she wants to be addressed as Honourable, and I took the trouble to check what
the protocol was from the Presidency. I was then assured that ministers cannot expect to
be called Honourable if they are outside of parliament. That terminology is only used
20

when they are inside parliament. So there was nothing wrong that I was doing to address
her as Minister Muthambi.
ADV KATE HOFMEYER:

Thank you and then if you go over the page to 18, just to

Page 54 of 113

FRIDAY 31 AUGUST 2018

follow up on the point made by the Chair in relation to how you address the letter. You
will see you record before paragraph 3, the undertaking that and I quote:
‘In the meantime we will adhere to your request in respect of
your salutation’
Does that explain why you address the letter to the Honourable Minister Muthambi?
MS PHUMLA WILLIAMS:

Yes, yes Chairperson that’s reason.

ADV KATE HOFMEYER:

Thank you. And then under 3, you deal with the questions

of the communication with the minister and you particularly deal with the question of Mr
Buthelezi. And you have already given us in anticipation of your response, what the
10

essence of your reply to the minister was in relation to that question.
If you go 3.4 on page 18, you will see that you reference the fact that you wrote
a letter to the Department of Communications, now referred to as the Department of
Communication and Postal Services, to request his secondment. You did that on the 4 th
June 2014 and then you record what you have already indicated to the Chair. Is that you
could not continue the involvement of Gift Buthelezi, pending the approval from his
department.
Should I have formerly involved him in the work of the department without the
formal letter from his department; it would have constituted an irregularity by his
department. Is that consistent with what you indicated to the Chair earlier was your

20

response?
MS PHUMLA WILLIAMS:

That’s correct Chairperson.

ADV KATE HOFMEYER:

And Ms Williams I would like you finally to go to the

Page 55 of 113

FRIDAY 31 AUGUST 2018

conclusion of this letter. And if you go over the page, to page 19, you say in the first…
you say in the first paragraph of that page, for the benefit of the record, I will read it in.
You say and I quote:
‘I may make mistakes in my journey but I want you to be assured
that there is no disrespect on my part. It is in my interest to ensure
you manage a clean administration as necessarily it becomes a
clean and effective government to serve our people’.
Ms Williams why did you emphasis the need for a clean administration to Minister
Muthambi?
10

MS PHUMLA WILLIAMS:

Chairperson I had to raise, I had to put that paragraph for

a simple reason that the minister wanted me to do an illegal thing. You can’t take an
official from other department without any paperwork and I had to remind the minister that
it is my job, as an accounting officer, to make sure that we run a clean administration.
ADV KATE HOFMEYER:

Thank you Ms Williams. If we can then return to your statement;

Before we do so, can I just ask, you reference a clean administration in relation to serving
our people, what do you see as that link?
MS PHUMLA WILLIAMS:

Chairperson I want to believe when we are public servants

and public representatives, we are not here in personal capacity, we are here to serve the
people of South Africa and that is why I had to remind the minister that we are not here in
20

our personal capacity, we are here to serve the people of South Africa.
ADV KATE HOFMEYER:

Thank you Ms Williams. If we then go back to page 6 of

your statement, we were ad paragraph 21, where you reference the shock that you

Page 56 of 113

FRIDAY 31 AUGUST 2018

experienced when you received this letter of the 18 th June, a matter of weeks after
Minister Muthambi took up her position. And then in paragraph 22, you reference an
approach to the President arising from this interaction with Minister Muthambi. Can you
please tell the Chair about that interaction?
MS PHUMLA WILLIAMS:

Chairperson I think I should indicate that after that letter,

the behaviour of Minister Muthambi got worse. I then took the liberty of contacting the
President to request that he intervenes on my behalf, because for the life of me, I couldn’t
understand what is it that is wrong that I’ve done. And yes, with fairness she gave an
opportunity to talk to him.
10

And I explained and I remember even mentioning the issue of the honourable,
that it’s not a matter that warrants a person to be charged and given a letter and I
remember him laughing about it himself. And he then said no, no Phumla I will attend to
it, and that’s how we left and I left with real confidence that the President is going to
address the matter.
ADV KATE HOFMEYER:
MS PHUMLA WILLIAMS:

And when did that meeting occur?
Chairperson I may not no know the date, but I do remember

that one of the cabinet meeting, because I still attending, I went to him and I said I would
like to meet and I remember getting a call to say yes, the President says you can come
and I went to Mshlambanlovu(?) to go and meet with the President and I don’t remember
20

the date, but I know that I did meet the President at his official guest house.
ADV KATE HOFMEYER:

Even if you can’t remember the exact date, was is a matter

of months after the letter, weeks after the letter. Remember the letter you received was
the 18th June 2014, your response was on the 23 rd June 2014. Can you just give is a
Page 57 of 113

FRIDAY 31 AUGUST 2018

sense of the amount of time thereafter that you raised it with the President?
MS PHUMLA WILLIAMS:

Chairperson to be honest I raised it almost immediately.

However I think I was called probably three weeks or four weeks later, I think it must have
been around July, but I did raise it personally with him in one of the cabinet meetings.
But I think the exact call to say come, I think it must have been around July.
ADV KATE HOFMEYER:

And Ms Williams if we then go to paragraph 23, on page 6,

that paragraph begins with the following and I quote:
‘By October 2014, the relation have got to a point where I
received another letter informing me of the withdrawal of my
10

acting responsibility.’
Please can you tell Chair how you were informed of the withdrawal of acting position?
MS PHUMLA WILLIAMS:

Chairperson from June I should say up till October the

situation had got so bad that Minister Muthambi was interacting with the staff directly,
without even involving me and I had already become quite stressed about it. I then
requested to take leave which was on the 6 th October, and I then applied to take leave. In
my application I attached the proposed person to do… to act whilst I was away which was
Mr Gitto Menzakani(?) who was the most senior in the organisation.
In fact, even myself, I joined GCIS, I found him there. He was the most senior
chief director and she was acting DDG in my position. I then attached that proposed
20

acting person. She approved it, and I left. And ja, and when I left she then started
making changes and removing the person that I had proposed and she then appointed
Mr Donald Lepoko(?) as the acting Director General of GCIS, who was a chief director in
the department.
Page 58 of 113

FRIDAY 31 AUGUST 2018

ADV KATE HOFMEYER:

I would like to go back for a moment to your leave, but

you have referenced Mr Lepoko, so it’s pertinent for me to ask how did Mr Lepoko come
to GCIS originally?
MS PHUMLA WILLIAMS:

Chairperson I did indicate that Mr Lepoko was head hunted

by Mr Manyi. When he came into GCIS he was brought in as a media buyer. As I recall
he from the private sector in the media buying space, so it’s made sense for us to get
somebody who has experience in that area. So she was brought in as a media buyer
and she was a chief director of media buying.
ADV KATE HOFMEYER:
10

And I made reference earlier to the hierarchy within the

system of GCIS. Can you confirm at that time as you reference at paragraph 23, that
when Mr Lepoko was appointed as acting director general, notwithstanding your
recommendation, that that position be given to Mr Semekane who was the deputy
director general at the time. He held the position of chief director, is that correct?
MS PHUMLA WILLIAMS:

That's correct Chair.

ADV KATE HOFMEYER:

And chief director of media buying.

MS PHUMLA WILLIAMS:

Media buying, yes.

ADV KATE HOFMEYER:

And that jump from chief director to acting director general is

that usual?
MS PHUMLA WILLIAMS:
20

Chairperson also my understanding is that when the deputy

director general, the normal thing for DG is to appoint amongst the three DDG’s because
at that time there were three DDG’s, Ms Nable Mgwape(?), Mr Herold Maluka and myself,
but at that time in my position Mr Sitko Metsamekani(?) was acting. So it was really
Page 59 of 113

FRIDAY 31 AUGUST 2018

unusual that the three DDG’s were overlooked and they went to take the new person who
didn’t even… was not part of the institution, so it was unusual.
ADV KATE HOFMEYER:

Thank you I said I would return to your leave. How were you

notified of this demotion from your position, as acting DG when you were on holiday?
MS PHUMLA WILLIAMS:

Chairperson I remember getting a letter which was dated

the 18th, remember Chair I was on leave up until the 26 th – 27th October. The letter was
sent to me which I even saw when I was at home because they managed to get it
scanned and sent while I was at home.
ADV KATE HOFMEYER:
10

Thank you. Let us go to that letter if we may, it’s at page 20

of the bundle. Can you confirm that this is the letter that you received from Minister
Muthambi on the 17th October 2014?
MS PHUMLA WILLIAMS:
ADV KATE HOFMEYER:

That's correct Chair.
I would like us to turn over the page to page 21. The second

paragraph records and I quote:
‘You are also aware that with the abolishment of the GCIS
and in line with the proclamation…
Just to pause there, what proclamation is that?
MS PHUMLA WILLIAMS:

I think she was referring to the proclamation that was

signed by the President of creating the new department.
20

ADV KATE HOFMEYER:

She goes and she says:

‘The position of Deputy Chief Executive Officer of GCIS now
Page 60 of 113

FRIDAY 31 AUGUST 2018

becomes Deputy Director General for the new Department of
Communications.’
and then she goes on in the second paragraph thereafter to say and I quote:
‘In line with the proclamation, you are hereby informed to
revert to your position as the Deputy Director General,
Corporate Services with effect from the 17 th October 2014.’
Ms Williams what does that mean, in line with the proclamation you must be demoted?
MS PHUMLA WILLIAMS:

Chairperson it may sound funny, but that’s how painful it was.

You are on leave and you come back and you find your salary has been adjusted, you are
10

then told you owing… I remember it was R35 000.00 that had been paid to you, whilst
you are on leave and you have to pay it back. One would have expected that there
should have been a bit of a discussion, especially because the proclamation was a
process and had to painfully look for that R35 000.00.
ADV KATE HOFMEYER:

Ms Williams can I just understand though, did the proclamation

say anything about your demotion?
MS PHUMLA WILLIAMS:

Chairperson the proclamation as I understand it, there was no

indication that it has to almost like now, and as I know proclamations as they work, there
has to be a process, because there is a lot that has been put in place. There is the
question of the assets of the department, there is the question of the budget that has
20

been voted for by the treasury. You certainly cannot just midstream deal with abolishing
the budget that’s appropriated through parliament.
midstream deal with the issues of changing assets.

Page 61 of 113

You can’t deal with… in the

FRIDAY 31 AUGUST 2018

There has to be some kind of a transition and as I know, generally in
government there is transition, there was absolutely no basis whatsoever for Minister
Muthambi to do that.
CHAIRPERSON:

Sorry Ms Hofmeyr, I see that this letter from Minister

Muthambi was dated 17 October 2014, on the front page and that she also signed it on
the same date. And earlier on your attention was drawn to the fact that it was saying that
this change in your status in the department was happening with immediately effect.
When did you get the letter? Did you it on the same day, did you get a few days later
or…?
10

MS PHUMLA WILLIAMS:

Chairperson as I indicated that I was on leave and the pay

day in government is on the 15 th. I was on leave and obviously my salary had gone
through and that’s why it went through, because the understanding was that I am still the
acting director general. And I found myself, when I came back on the 27 th with salary
saying I must pay back R35 000.00, because it has been paid erroneously because they
had not seen the letter of Minister Muthambi. They hadn’t even had the decency to send
it to salaries. It was just scanned and sent to me.
CHAIRPERSON:

But when did you receive it?

MS PHUMLA WILLIAMS:

I can’t remember the date because the only that I can confirm

Chair, is that I remember that, I think it was on the 18 th or 19th, I did respond and
20

acknowledged receipt which I think I hadn’t, but acknowledged receipt but I also
responded to the last paragraph Chair.
CHAIRPERSON:

And the demotion that we are talking about here, is that of

being removed from the position of acting DDG of the department.

Page 62 of 113

FRIDAY 31 AUGUST 2018

MS PHUMLA WILLIAMS:
CHAIRPERSON:

Certainly.
Yes but before that acting appointment, you were at the

level of deputy director general.
MS PHUMLA WILLIAMS:

Certainly.

CHAIRPERSON:

Okay thank you.

ADV KATE HOFMEYER:

Thank you Chair and just to clarify on that date issue, if you

go over the page to page 22, Ms Williams. That as I understand is, your response to
Minister Muthambi dated the 18th October 2014, is that correct?
MS PHUMLA WILLIAMS:
10

ADV KATE HOFMEYER:

That's correct.
I would like to go back to page 21 and you will forgive incredulity,

I was posing with you the explanation that Minister Muthambi gives for removing you from
the position of acting director general. You will recall that in the second paragraph on that
page, she references the proclamation and she explains in fairness to her, consistent with
that proclamation, that pursuant to the proclamation, and I am paraphrasing now, but I
would like your confirmation as to whether you agree with the paraphrase. What had
previously been the position of deputy chief executive officer of GCIS, was now becoming
deputy director general for the new Communication Department. Is that right?
MS PHUMLA WILLIAMS:

Chairperson the deputy CEO in GCIS was a deputy director

general, the only reference that she is making here, is that you are no longer the deputy
20

director general of GCIS, you are now the deputy director general of the new department.
ADV KATE HOFMEYER:

And the person who replaced you, spring boarding from the

position of chief director, to now your superior as acting director general was Mr Lepoko,
Page 63 of 113

FRIDAY 31 AUGUST 2018

is that correct?
MS PHUMLA WILLIAMS:
ADV KATE HOFMEYER:

That's correct Chair.
I would like then to go to the last paragraph of that letter. And

before we do so, I would like you to explain for the benefit of the Chair, what the role of
the cabinet spokesperson was, insofar as the director general position within GCIS was
concerned.
MS PHUMLA WILLIAMS:

Chairperson the position of the director general of GCIS includes

being a cabinet spokesperson, and that’s how it has been from its early days up till now, it
is still that.
10

ADV KATE HOFMEYER:

But you will see in paragraph, on page 21 in the last paragraph,

Minister Muthambi proposes a variation of that consistent position. Can you explain for
the Chair’s benefit what she was proposing in that last paragraph?
MS PHUMLA WILLIAMS:

Chairperson, I have no idea what Minister Muthambi was having

in mind because my understanding... we’ve always been a department that leads cabinet
decision. Minister in the Presidency has never been a spokesperson. It may be reading
there in the statement, but she has been a spokesperson of the… and which is what I
was trying to point to her, that the minister in the Presidency. is not the spokesperson. He
is a minister responsible for the GCIS, but the DG of GCIS is expected to communicate
the decisions of cabinet.
20

CHAIRPERSON:

Umh (affirmative).

ADV KATE HOFMEYER:

To be clear Ms Williams, as I understand the last paragraph

of page 21 and you will confirm if this is an accurate description. What Minister Muthambi
Page 64 of 113

FRIDAY 31 AUGUST 2018

was in essence saying, was that you would no longer hold the role of acting director
general, you would revert to your position as deputy director general, but that you would
continue to provide support to the minister in the Presidency on secondment basis as
cabinet spokesperson. Is that accurate?
MS PHUMLA WILLIAMS:

That’s what she was suggesting.

ADV KATE HOFMEYER:

And what your attitude to that?

MS PHUMLA WILLIAMS:

Chairperson I have been consistent in saying that what I did

for cabinet, I did it as an acting director general of the GCIS. It was therefore not correct
that you could second a job that resides in that department. It was completely incorrect.
10

ADV KATE HOFMEYER:

And if we can go to page 22, because that your response to

Minister Muthambi where you take up this issue. And if I may just direct you to the last
sentence of the penultimate paragraph on that page, you will see there and I quote.
You’ve raised this issue with her in the proceeding parts and then you say:
‘As such the newly appointed acting director general by virtue
of holding that office, automatically becomes the government
and cabinet spokesperson.’
And then you go on and record:
‘In view of the above and in line with your directive that I
revert back to my substantive position as deputy director
20

general, I will not be able to provide support to the minister in
the Presidency on a secondment basis, because my position
is a full time position, which entails the governance oversight,
which require my full attention.’
Page 65 of 113

FRIDAY 31 AUGUST 2018

Can you confirm that Minister Muthambi received this letter?
MS PHUMLA WILLIAMS:
ADV KATE HOFMEYER:

I certainly delivered it in her office.
And as I read your response there, it was in effect a refusal to

take up that position because you were now going to be consumed with your deputy
director functions, is that accurate?
MS PHUMLA WILLIAMS:
ADV KATE HOFMEYER:

That's correct Chair.
Thank you. If we can then return to page 7 of your statement:

Your statement has now progressed to February 2015, so just orientate ourselves in time.
Your demotion occurs in October 2014, Minister Muthambi requests that despite the fact
10

that you are now only going to be deputy director general, you should continue as cabinet
spokesperson and you have refused that, is that correct?
MS PHUMLA WILLIAMS:
ADV KATE HOFMEYER:

That's correct Chair.
So what happens if you can elucidate for the Chair in February

2015?
MS PHUMLA WILLIAMS:

Chairperson in February 2015, I then received a phone call

from the secretary cabinet, Secretary Dr Lumbesi, and he was asking where I was
because on that day it was cabinet Lekgotla. And he asked me where I was and I said
no. no, no I am on my way to the office because it was in the morning. And he said no,
no, no you are expected to be here in cabinet and I then had to remind him that I have
20

been removed and Mr Lepoko is the one who is supposed to be joining the cabinet as the
acting director general. And he insisted that it would be me, I should come. I then
insisted that it should be put in writing because I was not going to do it.
Page 66 of 113

FRIDAY 31 AUGUST 2018

ADV KATE HOFMEYER:

And can I then refer you to page 25. Is this the writing so to

speak that you demanded be provided?
MS PHUMLA WILLIAMS:
ADV KATE HOFMEYER:

That's correct Chair.
And can you tell us pages 24 and 25 contain insofar as your

request for a written delegation of this responsibility to yourself.
MS PHUMLA WILLIAMS:

Chairperson this was the letter that appoints me to be the acting

cabinet spokesman with all the functions that relate to cabinet, sitting in cabinet
committees, sitting in cabinet. Drafting the statement of cabinet and also speaking on the
issues of the cabinet, so that’s the letter I received.
10

ADV KATE HOFMEYER:
MS PHUMLA WILLIAMS:

Why were you concerned to get this letter?
Chairperson I am governance person, it wouldn’t have made

sense to be told verbally that I must go and execute a job that cannot be tracked. So I
insisted that it has to be given to me in writing, in the same was that I was given in writin g
October, that I must revert back to my job.
ADV KATE HOFMEYER:

Ms Williams may I suggest that your fidelity to governance

went further, because if you turn over to page 26, you will see there a agreement that was
prepared between you and Minister Radebe, who I understand was Minister in the
Presidency at the time, is that correct?

20

MS PHUMLA WILLIAMS:

That's correct Chair.

ADV KATE HOFMEYER:

And it relates to you under your name of that page (Acting

Cabinet Spokesperson position). Is that correct?

Page 67 of 113

FRIDAY 31 AUGUST 2018

MS PHUMLA WILLIAMS:

That's correct Chair.

ADV KATE HOFMEYER:

Who drew up this agreement?

MS PHUMLA WILLIAMS:

Chairperson I should indicate that after I have received the

letter from Minister Muthambi, I wrote an acceptance and I drew her attention that I would
request that she appoints somebody in my position so that I can be able to focus on the
job, and I then subsequently drafted the performance agreement. Also in consultation
with herself, I then tried to establish how … where the lines of

authority… because I

think that whole period was really confusing.
The cabinet work and the GCIS, the new ministry: She then suggested that
10

because I will not be doing cabinet, I suggest we do a performance agreement that will be
signed by the two of us, the minister in the Presidency and herself. And I need to also
remind the commission that at that point, which was 2015, they had already reserved the
abolishing of which she says, which was in November 2014. So she then suggested that
the performance agreement will have to be signed by two people, that’s herself and the
minister in the Presidency.
ADV KATE HOFMEYER:

If I can take you page 30 just to confirm those two signatories

to your performance agreement. Can you please identify for the Chair who signed your
performance agreement as acting cabinet spokesperson?
MS PHUMLA WILLIAMS:
20

It was Minister Jeff Radebe, Jeffrey Radebe and it was also

signed by Minister Faith Muthambi.
ADV KATE HOFMEYER:

Thank you. If we return to page 7 of your statement,

Ms Williams…. Ad paragraph 26 on that page, you commence with the following. You

Page 68 of 113

FRIDAY 31 AUGUST 2018

say:
‘The public service regulations, prescribes that when a public
servant acts on a higher portfolio, that is funded and vacate,
he or she needs to be compensated after six weeks.’
Can you explain for us what the relevant of that is? So you know taking up the acting
cabinet spokesperson position, when your official title, prior to that was deputy director
general?
MS PHUMLA WILLIAMS:

Chairperson position as a deputy director general, which

was a level 15. Cabinet spokesperson is at level 16 which is a director general and
10

necessarily, when you are acting in that position the Public Service Regulation stipulates
that if you have worked for six weeks, you are then entitled to be paid that difference of
the acting role in senior position.
ADV KATE HOFMEYER:

And what did Minister Muthambi say to your request that you

be paid at the level 16 level, because you had assumed that position?
MS PHUMLA WILLIAMS:

Chairperson she refused and said that I was helping and therefore

I don’t deserve to be paid.
CHAIRPERSON:

Umh (affirmative).

ADV KATE HOFMEYER:

20

And what did you in response?

MS PHUMLA WILLIAMS:

Chairperson, I escalated the matter to the HR and the HR that wrote to her.

ADV KATE HOFMEYER:

I would like to take you to the ruling that you received from the Public Servi

MS PHUMLA WILLIAMS:
ADV KATE HOFMEYER:

That's correct Chair.

And it was received on the 1 st, well dated the 1st February 2016, can you co
Page 69 of 113

FRIDAY 31 AUGUST 2018

MS PHUMLA WILLIAMS:
ADV KATE HOFMEYER:

That’s the date I received it Chair.

It is a fairly lengthy document and I don’t propose to deal with all of its con

Commission that resulted in this ruling?
MS PHUMLA WILLIAMS:

Chairperson my grievance was them to intervene that I be compensated, b

ADV KATE HOFMEYER:

Thank you. At page 47 in this section of the ruling, the Public Service Com

general, from the 1 st April 2015 and that is a reference to his replacement of your
occupying that position.
If you go to the final paragraph under 8, before the new paragraph starts,
number 9, the Public Service Commission makes a comment that the reference in that
10

letter to Section… this is the letter that Minister Muthambi wrote in relation to Mr Lepoko’s
elevation. The Public Service Commission as I read it there, says that the referral to
Section 42 of the Act is incorrect; they say that it’s a Section 32 matter and then they go
on, and if I may ask you just to read into the record, what is recorded there from the
second sentence, which starts…it should….
MS PHUMLA WILLIAMS:

‘It should be noted that there are three

positions of the deputy director general in the GCIS but none
of them was appointed to act as a director general, which
created a lot of challenges in terms of executing duties in that
a Chief Director would be appointed to act in Mr Lepoko’s
20

position, while he will have to double up and perform the
functions of the deputy director general, corporate services,
over and above the functions of the director general.’
ADV KATE HOFMEYER:

Thank you and then if you will read the next sentence as well.

Page 70 of 113

FRIDAY 31 AUGUST 2018

MS PHUMLA WILLIAMS:

‘The appointment of Mr Lepoko further

created challenges in the reporting lines as the deputy
director generals in the GCIS now had to report to the chief
director.’
ADV KATE HOFMEYER:
MS PHUMLA WILLIAMS:
amongst

the

Okay and then the next sentence.
‘Potential instability and dissatisfaction
members

of

the

senior

management,

management service is created through this arrangement.
The arrangement also creates challenges in that a person
10

appointed to act in the post of the chief director, could not be
paid an acting allowance because the position is not vacate.
If paid, the payment would’ve been irregular.’
ADV KATE HOFMEYER:

Ms Williams this is the recordal of the Public Service Commission. Does it

MS PHUMLA WILLIAMS:

Certainly Chairperson.

ADV KATE HOFMEYER:

What was it like in GCIS after he was elevated over the three DDG’s to the

MS PHUMLA WILLIAMS:

Chairperson I think the situation got quite bad in the GCIS. You will note in

general despondency in the organisation and as such that some people we lost quite
good people, because of the situation that was existing at the time.
ADV KATE HOFMEYER:
20

Thank you. And then I would like to ask you to go page 52, which is furthe

Because there the Public Service Commission makes reference to that reversal. I would
like to read to you what they record there and then you to explain your understanding of
that reversal.
Midway through that bullet point the Public Service Commission records the
Page 71 of 113

FRIDAY 31 AUGUST 2018

following:
‘The President reserved the decision in November 2014 and
re-established the GCIS in its original form.

Minister

Muthambi was also advised by the DPSA to advertise the
post of DG and cabinet spokesperson.’
Can you explain to us happened in November 2014?
MS PHUMLA WILLIAMS:

We were advised that the Presidency has reversed the decision and re-es

instruction to the Minister Muthambi, to act on a decision and advertise the post. And if I
recall they even gave a deadline that by the 1st April 2014, the post should have been
10

20

filled.
ADV KATE HOFMEYER:

Would that have been April 2014 or 2015?

MS PHUMLA WILLIAMS:

2015.

ADV KATE HOFMEYER:

Thank you. What happened, did Minister Muthambi advertise and then fill t

MS PHUMLA WILLIAMS:

What I remember Chairperson is the post was advertised but nothing happe

ADV KATE HOFMEYER:

Who remained in the position?

MS PHUMLA WILLIAMS:

Mr Lepoko remained in the position.

ADV KATE HOFMEYER:

And for how long did he remain in the position?

MS PHUMLA WILLIAMS:

Mr Lepoko has been in that position until 2017, April.

ADV KATE HOFMEYER:

And what changed in April 2017?

MS PHUMLA WILLIAMS:

In 2017 there was change of guard and we got a new minister, Minister Aya

ADV KATE HOFMEYER:

And who did Minister Ayanda Dlodlo appoint in that position?

Page 72 of 113

FRIDAY 31 AUGUST 2018

MS PHUMLA WILLIAMS:

She then appointed me on the 8th May 2017 and appointed me to be the ac

ADV KATE HOFMEYER:

So just for clarification, despite this instruction from the DPSA, that the pos

replaced him in May 2017?
MS PHUMLA WILLIAMS:

Certainly Chairperson because I think Mr Lepoko was appointed if you reca

ADV KATE HOFMEYER:

I would then like to take you to paragraph 2 on that page 52. You will see th

‘That several attempts to obtain a response from the Minister
of Communications and to meet with her were unsuccessful.’
Ms Williams can you tell us, do you know did Ms Williams participate… did Ms Williams,
did Minister Muthambi participate in this process at all?
10

MS PHUMLA WILLIAMS:

Chairperson what I do know, is that they did struggle to get

her response and at some point the Public Service Commission was of the view that
there are guided by their own procedures. If Minister Muthambi is not responding they
will proceed and finalise the report and I know that at some point, she finally gave them
an appointment.
ADV KATE HOFMEYER:

Ms Williams if I could take you to page 58 because I would

like your comment on my sense from reading this ruling, that the Public Service
Commission was concerned by Minister Muthambi’s failure to respond at all in the
process. If you look at the first paragraph on that page, almost half of the way down, this
is in concluding section of the PSC’s ruling. They record, and I quote:
20

‘The failure by the minister to respond to the Public Service
Commission is in contravention of Section 196(3) of the
Constitution, the Public Service Commission therefore, has

Page 73 of 113

FRIDAY 31 AUGUST 2018

no alternative but to report the minister’s failure to cooperate
with the commission to the relevant delegated authority in the
Presidency.’
Do you regard it as accurate to say they took it seriously, that Minister Muthambi failed to
engage with them at all in the process?
MS PHUMLA WILLIAMS:
ADV KATE HOFMEYER:

I agree Chairperson.
Do you know what happened with that report to the Presidency

about her breach of Section 196(3) of the Constitution?
MS PHUMLA WILLIAMS:
10

My understanding is that nothing was done because Chairperson

even the ruling that I should be compensated, my acting, she never implemented it. So I
don’t think she was ever reprimanded, save to say that I also made another attempt of
engaging the President on this report.
CHAIRPERSON:

Umh (affirmative).

ADV KATE HOFMEYER:

Indeed and we will deal with that in your further testimony.

Chair I see that we are just before 1, and I am aware that there might need to be
arrangements made for the continuation of Ms Williams’ evidence, given the need to see
the experts evidence this afternoon. May I hand over to my learned friend Mr Pretorius
about those arrangements?
CHAIRPERSON:
20

Maybe before you do that, let me just ask one question to

Ms Williams because I don’t want to forget it. Did you sense that for some reason there
was some reluctance in making Mr… is it called Lepoko or Depoko.
MS PHUMLA WILLIAMS:

Depoko.
Page 74 of 113

FRIDAY 31 AUGUST 2018

CHAIRPERSON:

Depoko, a spokesperson, government spokesperson.

I

am asking that because I think what I understood from your evidence and Mr Maseko’s
evidence, is that Mr Maseko in his position as DG of GCIS, was government
spokesperson and that Mr Mentensa(?)…
MS PHUMLA WILLIAMS:
CHAIRPERSON:

Yes.
…had also been government spokesperson in the position

of DG of GCIS when you were acting as DG of GCIS where you were also acting
spokesperson for government and now there was a new acting DG for this
communication department, but he was not being made acting, a government
10

spokesperson as well, that they wanted you to be acting government spokesperson. Do
you know why he wouldn’t have been made acting government person, Mr Depoko?
MS PHUMLA WILLIAMS:

Chairperson I wouldn’t know al, expect that the cabinet

secretary called me and insisted that they want me and my view was that it’s the minister
who can instruct me and he assured me that they have told the minister, that they want
me.
CHAIRPERSON:

Okay thank you.

ADV KATE HOFMEYER:
CHAIRPERSON:

Thank you Chair.
Okay, you may hand over to Mr Pretorius.

ADV KATE HOFMEYER:
20

MR PAUL PRETORIUS SC:

Thank you Chair.
Thank you Chair. May I address you on one matter before

we talk about the change in the program this afternoon, or the slight change in the
program? You gave instructions earlier that the matter raised shortly after the short
adjournment be investigated.
Page 75 of 113

FRIDAY 31 AUGUST 2018

CHAIRPERSON:

Yes.

MR PAUL PRETORIUS SC:

I have spoken to one of the Commissions investigators,

the several communications of Mr Manyi to an official or officials of the Commission will
be collated and provided to you in due course. With regard to communications to the
witness, during the course of her testimony, these will be preserved and also provided to
you. But maybe draw your attention to Regulation 12(1) and Regulation 10(6).
Regulation 12(1) makes it clear that it is an offence to prejudice the enquiry or
it’s proceedings.

10

CHAIRPERSON:

Yes.

MR PAUL PRETORIUS SC:

And regulation 10(6) as you will know Chair, entitles you

or empowers you to call people to appear before you.
CHAIRPERSON:

Yes.

MR PAUL PRETORIUS SC:

So to the extent that you may find, after investigation that

it is appropriate to do so, you may consider summonsing Mr Manyi to appear before
you…
CHAIRPERSON:

Yes.

MR PAUL PRETORIUS SC:

… to explain such conduct as you might find unlawful or

appropriate.

20

CHAIRPERSON:

Yes.

MR PAUL PRETORIUS SC:

Possibly unlawful or appropriate. For the legal team’s

part, Chair we think it is, or we believe it is very important to take every step to protect
witnesses who come to testify and to ensure that they feel free to do so without fear.

Page 76 of 113

FRIDAY 31 AUGUST 2018

CHAIRPERSON:

Yes. Maybe I should just say something about that. I

would ask the legal team to prepare documentation for me that would enable me to take
a decision on this, or authorise the taking of some action, whether it is summoning Mr
Manyi or whatever… documentation that will include the text message that was sent
because obviously I haven’t seen it. So that in due course then a decision can be made.
You are right, that the protection of witnesses who come before this Commission
is very important. I have on a number of occasions called upon members of the public
and people within government service, including ministers, members of executive in
general and former directors general, to please come forward, if they have got
10

information that is relevant to what the Commission is investigating. And if those who
heed this call, are going to be intimidated or interfered with, I think the Commission needs
to look into that very seriously.
So I would request the legal team to, in due course, prepare some
documentation that would place before me all information that I may need in order to
make a decision.
MR PAUL PRETORIUS SC:

We will do so Chair.

CHAIRPERSON:

Thank you.

MR PAUL PRETORIUS SC:

In relation to this afternoon’s proceedings, the video

conference has been brought forward to half past two. It is necessary to set up the
20

communication protocol and equipment, and for that reason, may we adjourn now and
then resume at half past two?
CHAIRPERSON:

Yes. Okay thank you. Ms Williams we are going to

adjourn now. We are not going to be able to continue with your evidence this afternoon.
You have not finished giving evidence, that is simply because there is an arrangement
Page 77 of 113

FRIDAY 31 AUGUST 2018

that has been made for certain expert witnesses to give evidence via video link this
afternoon. We will adjourn and you must please come back on Monday, at 10 o’clock
when we will then try and finish with your evidence. Is that all right with you?
MS PHUMLA WILLIAMS:
CHAIRPERSON:

It’s okay, thank you.
Thank you. Mr Pretorius did you want to remind me about

the other announcement?
MR PAUL PRETORIUS SC:

Yes, I was intending to do so.

CHAIRPERSON:

Okay thank you. With regard to Monday, I just want to

confirm that all counsel or lawyers who saw earlier this week here in my temporary
10

chambers about applications that have been submitted, for permission to cross-examine
witnesses, that is applications from or by implicated persons. I arranged with them that
they should be back here on Monday morning so that, at that stage, I could give
directions as to what should happen to those applications and when those applications
would be heard.
So I am repeating this so that everybody is reminded that that is what will
happen on Monday. So those counsel or lawyers representing those parties, should be
here in the morning on Monday. We will then adjourn until half past two for the hearing of
the evidence of expert witnesses. We adjourn.
HEARING ADJOURNS

20

~~~~~~~~~~~~~~

Page 78 of 113

FRIDAY 31 AUGUST 2018

Session 3
ADV THANDI NORMAN SC: Mr Chairman we apologise for the delay, there was a slight
technical issue that we had which we overlooked, we didn’t realise that this small camera
doesn’t zoom in, so it only picked up my face and was not able to pick up the
Chairperson’s face, but the witnesses that we have who are reflected on the screen, they
are Dr Kaufmann and Dr Hellman, they are in Washington DC, they are experts that have
written extensively on state capture. They are aware that they will be sworn in for the
purposes of this hearing. May they be sworn in one at a time?
CHAIRPERSON: Yes.
10

ADV THANDI NORMAN SC: Thank you.
REGISTRAR: Dr Hellman, please state your full names for the record?
DR JOEL HELLMAN: My name is Joel Stark Hellman.
REGISTRAR: Do you have any objection in making the prescribed oath?
DR JOEL HELLMAN: No I do not.
REGISTRAR: Do you consider the oath to be binding on your conscience?
DR JOEL HELLMAN: Yes I do.
REGISTRAR: Do you swear that the evidence you shall give to today, shall be the truth,
the whole truth and nothing but the truth, so help you God?
DR JOEL HELLMAN: I do.

20

REGISTRAR: Dr Kaufmann, please state your full names for the record?
DR DANIEL KAUFMANN: Daniel Kaufmann.

Page 79 of 113

FRIDAY 31 AUGUST 2018

REGISTRAR: Do you have any objection to taking the prescribed oath?
DR DANIEL KAUFMANN: No.
REGISTRAR: Do you consider the oath to be binding on your conscience?
DR DANIEL KAUFMANN: Yes.
REGISTRAR: Do you swear that the evidence you shall give today shall be the truth, the
whole truth and nothing but the truth, so help you God?
DR DANIEL KAUFMANN: Yes.
REGISTRAR: Thank you.
CHAIRPERSON: Thank you very much Registrar, good afternoon Doctors Hellman and
10

Kaufmann. I just want to welcome you to this hearing and to express the Commission’s
gratitude for making yourselves available to assist the Commission with regard to matters
relating to state capture. I understand that the two of you have done extensive research
and have a lot of experience in different countries with the phenomenon of state capture.
We appreciate the fact that you have made yourselves available, thank you very much.
DR JOEL HELLMAN: Thank you, it is our privilege to be here.
CHAIRPERSON: Thank you.
ADV THANDI NORMAN SC: A copy of the statement of both the experts which they had
compiled jointly was made available to the Chairperson, but that copy was not paginated
and indexed. I beg leave to hand up the copy that is properly paginated and indexed and

20

that will be marked Exhibit G1. I had sent the index to the witnesses as well so they
would have regard to the same pagination and same indexing.
CHAIRPERSON: Thank you.
Page 80 of 113

FRIDAY 31 AUGUST 2018

ADV THANDI NORMAN SC: Chairperson before I start, I need to relate the evidence of
these witnesses to the terms of reference and whether their evidence is relevant,
because I am required to do so in terms of the rules. The two witnesses are actually the
witnesses that came up with the whole concept of state capture and they have written
extensively and they deal with the issue of state capture, they deal with corruption in their
articles which are many as I will demonstrate later and in our view, the fact that they have
dealt with these matters extensively, their evidence will be relevant to Paragraphs 1.1 to
1.9 of the terms of reference and if the answer at the end of the day after all the evidence
has been received by the Commission, is yes to all the questions that are asked in those
10

terms of reference, then it would mean that their evidence would become even more
relevant.
Then the question is, the terms of reference, the regulations and all the documents or the
instruments we are working on, do not describe what state capture is and Mr
Chairperson, I have taken the liberty of downloading a You Tube clip, a video clip which
ENCA published a while ago, where various South Africans were asked as to what does
state capture mean and it is just one minute long, before I lead the evidence of these
witnesses, I would like to play that clip.
CHAIRPERSON: Thank you.
[YOU TUBE VIDEO CLIP IS PLAYED]

20

ADV THANDI NORMAN SC: Thank you Mr Chairperson, we had agreed with Dr
Kaufmann last night that Dr Hellman will handle the first session of the proceedings.
They have a joint statement, but because they do not really implicate anyone in their
evidence, then when it is convenient for Dr Kaufmann to take over, then he will take over.
CHAIRPERSON: Thank you.
Page 81 of 113

FRIDAY 31 AUGUST 2018

ADV THANDI NORMAN SC: Dr Hellman could you please for the record, so that I can
qualify you as an expert in the field in which you are testifying to, would you please just
state your qualifications please, your academic qualifications?
DR JOEL HELLMAN: I am currently Dean and distinguished Professor at the School of
Foreign Service at Georgetown University.

For the last 25 years, I have been a

researcher on governments and political economy issues, first as a professor at Columbia
and Harvard Universities and then as a researcher and staff member at the European
Bank for Reconstruction and Development and then at the World Bank and my last
position at the World Bank, was Chief Institutional Economist.
10

ADV THANDI NORMAN SC: Thank you, where are you currently based and as what?
DR JOEL HELLMAN: I am currently based in Washington DC and I am the Dean of the
School of Foreign Service at Georgetown University.
ADV THANDI NORMAN SC: Dr Kaufmann I would like to do the same with you so that
when the time comes for you to switch in terms of the content of your statement, then we
don’t have to start afresh and try and place your academic qualifications on record.
Could you please do that?
DR DANIEL KAUFMANN: I am currently the President and CEO of a natural research
government institute and international policy IFPA in the extractive governance area. We
deal also with matters of corruption. I am also right now, a non-resident senior fellow at

20

the Brookings Institution where I used to also work as a full staff and senior fellow and I
am also in the International Board of Extractive Industry Transparency Initiative currently.
I worked also for a long time at the World Bank where I was in many positions, including
management as well as research and lead economist and I have also been a visiting

Page 82 of 113

FRIDAY 31 AUGUST 2018

lecturer and researcher at places like Harvard University and lectured also in many other
places, including at Oxford.
ADV THANDI NORMAN SC: Thank you, back to you Dr Hellman, I sent you the
paginated documents, I believe you have them, that is those that came from us with
numbering on the top right hand side corner, do you have those documents?
DR JOEL HELLMAN: Yes.
ADV THANDI NORMAN SC: Thank you, we will be working from those. If you turn that
document, you will find that your CV appears from Pages 1 up to Page 3 and then up to
Page 5 has your qualifications, do you confirm that?
10

DR JOEL HELLMAN: Yes.
ADV THANDI NORMAN SC: Thank you. With you Dr Kaufmann, your CV appears from
Pages 6 and then from Page 7 up to Page 30, those are all your publications, am I
correct?
DR DANIEL KAUFMANN: Yes.
ADV THANDI NORMAN SC: Thank you, back to you Dr Hellman, I am now going to start
leading you on your statement that you have prepared, but can you just confirm, if you go
to Page 4, I have counted between Page 4 and Page 5, that you have written about 22
articles on the issue of state capture, on the issue of corruption, on economics and all
that, but out of those, I have counted that at least 5 of those you co-authored together

20

with Dr Kaufmann, is that correct?
DR JOEL HELLMAN: That’s correct.
ADV THANDI NORMAN SC: Thank you, now can we then go to the statement or maybe
before we do that, maybe let me just do the same exercise with Dr Kaufmann so that we
Page 83 of 113

FRIDAY 31 AUGUST 2018

don’t come back to the publications. Dr Kaufmann, as indicated your bibliography as you
have termed it, begins from Page 7 up to Page 30 and all these publications, they also
relate to corruption, state capture, economics and various other issues that affect various
countries on foreign policies and all those matters, is that correct?
DR DANIEL KAUFMANN: That’s correct.
ADV THANDI NORMAN SC: Thank you, now if you could please turn to Page 31, you
have both prepared this statement that is entitled State Capture in Transition. Do you
believe that you are both qualified to express an opinion on this issue?
DR JOEL HELLMAN: Yes.
10

ADV THANDI NORMAN SC: Have you ever testified in any court on the issue of state
capture?
DR JOEL HELLMAN: No I have not.
ADV THANDI NORMAN SC: Thank you, I would like you to read the preamble because I
know it is very important to you from the telephonic conversations we have heard, could
you just read the preamble to your statement into the record?
DR JOEL HELLMAN: Yes. “We would like to begin our statement by commending the
Commission for undertaking this comprehensive investigation of the phenomenon of state
capture as it relates to South Africa. Though state capture is a significant challenge
across both the develop and developing world, we know of no other country that has

20

taken such a systematic approach to understanding the routes, forms and implications of
state capture. We believe that this is a critical foundation for developing effective
strategies to combat state capture. We look forward to the conclusions and
recommendations of those Commission which we hope will have residence well beyond

Page 84 of 113

FRIDAY 31 AUGUST 2018

the South African context. At the outset it is important to emphasise that our statement
and testimony here will not comment upon the nature or extent of state capture in South
Africa. Neither of us have studied in our experience the phenomenon of state capture in
the South African context, We acknowledge the work of many highly qualified South
African authors including individual scholars, prosecutors and public affairs institutes
where expertly acquired our conceptual framework to the complex realities of South
Africa. We appear before the Commission as authors of the initial analytical studies of
state capture and observers of the phenomenon of state capture across many countries
over nearly twenty years of research and policy engagement. Thank you.”
10

ADV THANDI NORMAN SC: Thank you. I am going to ask you to start off by defining for
the Commission the whole concept. What does state capture mean in your own words?
DR JOEL HELLMAN: Thank you very much. So we define state capture very specifically
as the efforts of individuals or firms to shape the formation of laws, policies, rules and
regulations of the state to their own advantage by providing elicit private benefits for
public officials. That’s the definition of state capture that we advanced now nearly twenty
years ago in our initial research on this issue. If I may I would like to give some
background to how we came to that concept and that definition and how it distinguishes
itself from other forms of corruption.
So the concept of how it was rooted in our research on the transition from communism to

20

market economies and democratic systems in the former Soviet block including the
breakup in the Soviet Union and the fall of the Berlin wall that created a transition process
in that region which was a critical political and economic phenomenon globally beginning
in the late eighties. The analysis and investigation of those political and economic
transitions, we understood that the concept of corruption which played an important role

Page 85 of 113

FRIDAY 31 AUGUST 2018

in those transitions and was a great concern in those transitions had enormous variation
across the 27 different countries that were created from the downfall of the Soviet Union
and the Soviet block and we tried to develop a better understanding of corruption by
trying to unpack the concept of corruption into a more sophisticated, more subtle and
more useful set of definitions that would be a guide to policy recommendations to combat
corruption more broadly. In that spirit we identified two forms of corruption and state
capture was one of them. I want to differentiate state capture from a more common form
of corruption that would be very well known to most people who think about the problem
of corruption which we termed, administrative corruption. We defined administrative
10

corruption as the attempts by individuals and firms, the author, the implementation of
laws, policies, rules and regulations to their benefit through the provisions of elicit private
benefits to public officials. What we mean by that of course is that there is a law, there is
a rule, there is a regulation of that sets a policy, a standard or principle that everyone
must uphold and people and individuals or firms might use bribes or the provisions or the
provision of other benefits to public officials in order to get an exception to those laws,
rules and regulations to have the implementation of those laws and rules and regulations
implemented to them differently than it would be to everyone else.
In contract, we saw a different form of corruption, one that did not focus on the
implementation of laws and rules and regulations but that affected the very formation of

20

the laws, rules and regulations themselves so that the laws, rules and regulations were
shaped to the advantage of individuals or firms and they were using their close
relationship to politicians and public officials in order to actually shape the legal system
and indeed the very nature of the state to their advantage. We saw that as a
fundamentally different form of corruption. We believe that that form of corruption had
much greater capacity to instil harm on the broader public good than classic forms of
Page 86 of 113

FRIDAY 31 AUGUST 2018

administrative corruption and we saw significant variation in the extent of state capture
across the countries of the former Soviet Union and the former Soviet block and we tried
to development measurements of those forms of corruption so that we can actually
compare and contrast across different countries the nature of state capture and use that
as a basis for developing strategies to combat corruption and state capture.
ADV THANDI NORMAN SC: Yes, thank you, I like the fact that in paragraph 7 of your
statement, you make reference to petty corruption and you make an example about a
bribe to a public official, a traffic officer. If you look at state capture in a broader sense,
how does that petty corruption contribute to that?
10

DR JOEL HELLMAN: Well, to the extent that corruption was differentiated in the past
before the work that Dr Kaufmann and I did, it was often differentiated into two
categories, petty corruption and grand corruption. Those are two terms you might be
familiar with and the broader public might be familiar with. Those two terms usually refer
to the size of the bribe so petty corruption is small corruption, everyday for someone once
referred to it as everyday forms of corruption. The things that the common man and
woman might face in their daily lives and might pay small bribes to whomever it is
impacting them in order to have some rule changed to their benefit or to avoid some
penalty and grand corruption was just seen as much higher levels of bribes at higher
levels of the political system so the key distinction was low levels of the political system,

20

small bribes versus high levels of the political system and high bribes. We felt that that
distinction was not really helping us understand some of the complex realities of
corruption and how they work in systems and what the implications of that were. So for us
the relevance is not the size of the bribe or where it is catering the political system, for us,
the distinguishing feature is whether or not the bribe is paid at any part of the political

Page 87 of 113

FRIDAY 31 AUGUST 2018

system in order to avoid an existing law or regulation and how it is implemented to you or
whether it something that’s done to shape that law in your advantage.
Now, having said that, these small forms of corruption, petty forms of corruption,
administrative forms of corruption, we do feel that that creates a broader canvas of which
the public begins to see corruption as a normal part of the political and economic system
and to the extent that that administrative corruption or petty corruption is widespread, we
feel that it does create a foundation which essentially creates an openness or even an
acceptance of forms of corruption as that is how business is done in our country and I
think that creates a very pernicious atmosphere for all forms of corruption to take place so
10

there is a link between these forms of corruption that I think is important to understand.
DR DANIEL KAUFMANN: If I can compliment, Ms Norman, just very briefly. These are
important comments and two aspects just mentioned by Dr Hellman. One is the fact in
heavy corruption as was just said, [indistinct] in general, it’s usual one aspect of
administrative corruption, however, administrative corruption can also be not petty at all
and large bribes can be associated with the implementation of the law or contracts and
basically the corruption that happens while this is being implemented as opposed to
shaping the laws, the policies and the regulations which is we are labelling state capture.
Second, in as just summarised and as now our statement in the earlier part of our
statement, the focus was earlier on in the source of the game in terms of the law

20

responses in relation how they were captured, how they were shaved by this so-called at
the time, it was called [indistinct] but that ought not rule out and we expand it a bit later
that this shaping and effecting and their rules of the game also implies weighing in into
the control and allocation over public finance and over public assets so take for instance
the case of procurement and contracts. It could be that in some cases the whole system
has been capture, has been shaped to benefit the few or it could be that they are bribed
Page 88 of 113

FRIDAY 31 AUGUST 2018

and could be large, they just relate to the implementation of their contracts. So just to
clarify that the shaping of the rules of the game while we mention all the time laws,
policies and regulation, it can also be extended the concept over the control and
allocation of public assets and public finance, that’s including the tax system, our
expenditures are allocated and so on and it varies from country to country which one is
more prevalent.
ADV THANDI NORMAN SC: Yes, and that’s what you deal with from paragraphs 9 up to
13 which you regard as regulatory state capture, am I correct?
DR DANIEL KAUFMANN: Yes.
10

ADV THANDI NORMAN SC: And then, in paragraph 14 of your statement, you
categorise state capture as a form of corruption because of the nature of the distortion of
the state’s assets or the state itself, the laws and everything else, so I want to
understand, I guess it is easier for one to identify state capture when you are dealing with
implementation as Dr Kaufmann has mentioned procurement, because you are looking
whether or not policies were followed. But how do you then identify state capture where
the laws, the regulations, the policies, are being shaped to the advantage of the
corruptor?
DR JOEL HELLMAN: Yeah, that is a very good question and we look at a few different
aspects of this question. So first of all, state capture is really about violating the laws by

20

which groups try to influence the policymaking process so every country has laws related
to what enables groups to provide influence, to try to influence the political process and
state capture at root is a violence of any country’s existing legal framework that regulates
how actors try to influence the political process. So one could imagine for example,
explicit bribes to law makers to break laws in the advantage of particular individuals, firms

Page 89 of 113

FRIDAY 31 AUGUST 2018

or groups. One could imagine a violation of political party financing rules in order to
influence how the political party supports particular rules, laws and regulations to the
advantage of groups. One could also imagine for example even more subtle forms in
which not a direct bribe is paid but an implicit offer of when the public official steps down
from office, they will have a position in a firm that gains from their influence on laws, rules
or regulations what is known as a revolving door between the public and the private
sector. So there are many forms in which individuals and group try to influence the policy
process. There are laws in place in each country that shape how that process should
work and we see violations of those laws and principles to that the advantage of
10

particular firms, groups or individuals that have an impact on how those rules and
regulations are form. We also want to emphasis that the implications of state capture
versus other forms of corruption are qualitatively different because if you think about a
bribe that is paid just to alter the implementation of a law, that now actually creates a
certain number of pressures or problems but it is really about an exception to an existing
law. Much more serious is if those advantages to particular firms, groups or individuals
are essentially built into the very structure or formation of that law which we believe has
the potential to cause much greater harm to the overall public good because, of course
as you know, laws are generated to try to achieve the best results for the broadest
common good. If those laws are shaped to the benefit of individual firms or individual

20

groups, they could have significant pernicious influence on the public at large and actually
we collected evidence to that case to show that in the former Soviet Union, in those
countries where state capture was significant, we found that there were firms engaging in
state capture that had extraordinary financial advantages while all other firms were
growing at much lower rates. We also found that there were significant consequences for
the overall success of their economic reform programmes from state capture that

Page 90 of 113

FRIDAY 31 AUGUST 2018

benefitted individual firms but hurt every or other firms in the country that were not
enabled to have the some kind of influences these powerful firms that were able to
engage in state capture.
DR DANIEL KAUFMANN: If I can complement again, this was the case of course in
those countries in transition, the former Soviet Union which were labelled as highly
captured versus quite a number of particularly from Eastern Europe that are now part of
the new Europe which were not subjected to such high capture or were low captured, you
know, terminology and in fact they transited to market well and they are these firms
captured by the captured firms, they had bad benefits so they only benefit privately in the
10

high capturing environment at a huge cost to their whole economy. As you know Ms
Norman, the rest may not know, in preparing for this we have agreed that they will also
have the opportunity and honour of being before you in person in mid September to
follow up and do things. I would be prepared to discussing some detail in this interest, the
emblematic case nowadays in Latin America of the scandal “colabagato” or car wash
related to Brazilian’s largest state on company in all and the constraints of a
conglomerate of Odebrecht which had implications for all of Latin America, not just for
Brazil but in short and related to your first question regarding contracts, sub-contracting
and procurement, that’s an emblematic case study of how their whole system of
procurements are contracted was rigged from the very beginning and the rules of

20

application of all those contracts were rigged in the benefit of the few potentates in the
construction industry and I can go into much more detail. It is something that has been
labelled and you showed a video earlier on, perhaps when I am South Africa with you, we
can show snippets of an excellent series that has been issued from Brazil that has
created a lot of interest in Latin America and others which is called “O mechanismo” in
Portuguese or “the mechanism” in English where they show how this mechanism which is
Page 91 of 113

FRIDAY 31 AUGUST 2018

essentially a mechanism of state capture has worked out. So there are cases in other
places that could be of interest. Brazil is one and the other countries which I will be
prepared to discuss in more detail.
ADV THANDI NORMAN SC: Yes, maybe whilst you are mentioning the countries Dr
Kaufmann, maybe you could just give us just an example of what happened in Peru
because this question was put to one of the witnesses yesterday about the Peruvian state
capture where it started with the head of state and then the media. So have you also
investigated some of cases that would have experienced state capture in that format?
DR DANIEL KAUFMANN: Are we prepared of course to discuss that in detail also when
10

we follow up and where there in Peru has been a very interesting case. It’s another
country that has had its very important transitions and that’s something we had stressed
from the very beginning with the work with Joel Hellman about the particular
vulnerabilities and aspects of countries in transition. Of course we started the work with
the former Soviet Union countries which was an remarkable historic transition for the
world from the late 80’s onward but that’s not unique to only the former Soviet Union.
Other countries have been in transition. It’s for you to decide the case of South Africa, of
course apartheid and so on but in the Latin American cases which of course I come from
that part of the world, being from Chilli, there have been a number of very important
transitions and in that transition in Peru, the whole different form of state capture have

20

evolved significantly as well. From a very collusive type of state capture during the late
90’s when President Fujimori with his Chief of Intelligence, Montesinos, engaged on a
very particular form of corruption with part of the media and not only the enterprise sector,
there was also many other important sectors involved, there has been involvement also
of different Mafias and so on to more subtle forms of capture over time. The fact is that
virtually every President, even before Fujimori and subsequently, had been subject to
Page 92 of 113

FRIDAY 31 AUGUST 2018

legal processes in one for or another and one recently had to leave his post, President
Kuczynski, due to the scandal that was related to the Brazil Odebrecht scandal
“colabagato” which I just mentioned and related to that and that’s the type of thing that I
can provide much more detail that happened and that illustrate that these countries on
transition and their fragility and ability regarding to state capture is there, not only in the
former Soviet Union but in other parts of the world and it does change over time to take
different forms, different characteristics but to finish with that and related to the point
made that we did do that research in the former Soviet Union about the cost, the enormity
of the cost of state capture, by now and recently, I mean part due to these cases in Latin
10

America and Brazil, large international organisations like the International Monetary Fund
or we may have in the past have been very careful of not weighing in on those issues.
Nowadays, these issues of capture and corruption and part and parcel of the work
because they consider it as I call it, macro critical in the sense that it has a huge cost
from a macro economic standpoint aside from the social and other cost where discussed
which is different than traditional administrative corruption that we were discussing before
which is also costly and can effect the issue of state capture but it was never regarded by
any of these organisations as macro critical.
ADV THANDI NORMAN SC: Thank you and then you deal in paragraph 21 going
forward with some of the empirical evidence that you had in relation to some of the

20

countries where you had conducted research but what I find interesting is in paragraph
21, at the bottom of that paragraph where you believe that in order for any country to try
and at least minimise state capture, that country must boost competitiveness in its
economy. Can you just elaborate on that?
DR DANIEL KAUFMANN: I just started abated them to Joel because it is also related to
the latter section of our statement which is what to do about which is what to do about
Page 93 of 113

FRIDAY 31 AUGUST 2018

that so we are getting into the concrete aspects and of course experts and their
corruption on governments typically and historically who have always liked to have
hundreds of measures with [indistinct] and so on but it is also critical to prioritise and after
ourselves what are, excuse me for the expression, the elephants in the room, the most
important aspect and we found in our own research when we asked the data which we
collated. What does this relate to? Countries that have high capture, what characteristics
are they related to in the social economic political literature and the date that we have
from other sources as opposed to countries which are not subject to high capture, low
capture and we found very potent link between those countries that had very low
10

competition or by contestability in the political sense it was both autocratic and not only
autocratic countries but those that had few political parties and without competition and
so on as well as no levels of economic competition without the ability of having a level
planned shield for a medium and high level enterpriser without sufficient liberalisation and
openness of the economy. Those two factors and political openness and the economic
openness were absolutely critical. Within the political openness it is not only about the
formal political sense, the extent of voice and democratic accountability in a country and
when we relate to it a variable that totally separately we have developed regarding both
and democratic accountability was seen as affecting very significantly the level of capture
or lack thereof and there I would like to mention the very important aspect which place in

20

those variables, in that research but also in our experience independent media as part of
thriving civic space, voice and demographically accountability of those country that places
where there is a thriving media, there is civic space and uncivil liberties, not only political
competition but civil policy having much better chance of being able to address over time
the challenge of state capture so in essence it is a political and civil liberties contestability
and openness as well as on the economic realm.

Page 94 of 113

FRIDAY 31 AUGUST 2018

DR JOEL HELLMAN: If I could just add to that. I put it even in very simple terms. I think
that there is not a single firm in any country in the world that wouldn’t want to try to
influence the rules of the economic game they invented. That is not a surprising thing and
it’s a motivation that most firm have. If you are able to shape the rules of the game and
the plans to advantage your firm, you are going to try to do it. What prevents that from
happening? Well, first there are laws, rules and regulations that countries have that try to
influence and limit the impact of any individual firm or individual person or group and
prevent them from using illegal forms to shape those rules but also there is a lot of
competition across the many firms in any individual country that limits the ability or tries
10

[indistinct] the ability of politicians to favour one firm or one group over others and the
more contestability there is in the political system, the more avenues there are for groups
and firm and individuals, the more opportunities there are, not only for firms but for NGO’s
and for the media and for other groups to influence the political process of shaping laws
and rules and regulations. It will limit the ability of any one firm or any one group on to
shape those laws in their advantage so our thinking is essentially, the more contestability
there is in the system, the more opportunities there are for different individuals, firms and
groups to give inputs into the political process, the more regulation there is to ensure that
whatever inputs are given or done transparently and through proper public channels and
the more transparency and openness there is in the whole process, the more difficult, if

20

not impossible it is for any single individual firm or group to shape a law or rule or
regulation that impacts the entire country to thereon advantage at the expense of the
whole country.
ADV THANDI NORMAN SC: Thank you, and then in paragraph 31 of the statement.

Page 95 of 113

FRIDAY 31 AUGUST 2018

CHAIRPERSON: Just before you proceed, from your definition of state capture, it seems
that it is essential that the captors or potential captors should be seeking to change the
laws and policies of government to suit them. Am I correct?
DR JOEL HELLMAN: Yes you are Deputy Chief Justice.
CHAIRPERSON: With the result that if they succeed in having the laws and policies
changed, then their conduct which otherwise would have been in breach of the law, had
the law not been changed, would somehow be seen to be lawful but there is underneath
it a motive that has nothing to do with public interest and has everything to do with
illegality, is that right?
10

DR JOEL HELLMAN: Yes, and you raise I think a very important issue because we are
talking about the efforts to change laws and rules and regulations and as you say, if you
are successful in changing the laws and rules and regulations to your benefit, then you
may create a legal environment that makes legal the activities that you are trying to do to
your particular benefit. So I think that is an important point that they can ultimately then
be entirely legal forms of influence that have been shaped by these, you know, pernicious
intents to reshape the rules and laws and regulations of the state to the advantage. We
do think and we raise the fact that underlying the initial sin if you will, the original sin is
often based on some form of illegal activity in the sense that it is using illicit means of
some form of insolence that process, it’s often in contrast or contravention to the

20

country’s existing laws on how political influence should be channelled. Most countries
have laws about campaign finance, most countries have laws about the provision of
individual benefits deprived of politicians, most countries have laws about conflict of
interest between politicians and private sector and often the capture transaction will
violate those existing laws or principles but I will say that in the case of the transition in

Page 96 of 113

FRIDAY 31 AUGUST 2018

the former Soviet Union, many of those laws themselves were not formulated because
they were in the early stages of the transition so precisely your point, they were creating
laws, rules and regulations that advantaged them and then made their activities legal
when they were ultimately about trying to distort the shape of the state to their advantage.
DR DANIEL KAUFMANN: In fact, if I can add, this is such an important point and it is
then elaborated a bit more in our statement but also we will be prepared to follow up
when in front of you in person. In fact, as a follow up in the extinction of the work of state
capture in the former Soviet Union and having recognised the very aspect you just
mentioned Mr Deputy Chief Justice, we worked somewhat but we laboured and in fact it’s
10

part of the record and it is in a paper called Legal Corruption and that’s obviously a
complexed notion which may seem us countering intuitive for the legal profession but is
exactly in the vein you are discussing. It was just by Professor Hellman, it’s really
important to recognise that even the so-called legal corruption may have gotten there to
be legal because of extra legal of illegal activities in bribing or shaping those laws so it
may have been legal. Conversely, on the outside, on the constructive side, there are very
important implications for what to do in the future in where that has taken place because
if one recognises that one maybe consider as legal or cause a legal in a common context
in one country, that is in itself meaning ethical, that doesn’t necessarily mean indeed
they lead us and it can become illegal. In some sense, what happened after the capture,

20

the state capture of Tastad in the United States of a Wall Street crisis, initiative crisis ten
years ago that was this whole set of irregulating under the Obama administration in the
United States which I can discuss also further before you in September that led to the
stock hold Dodd-Frank a set of reforms of financial [indistinct] reform which essentially in
a number of them made illegal what before was illegal and because of that many of the
arguments of the defence and so well that was not illegal but then it become illegal so
Page 97 of 113

FRIDAY 31 AUGUST 2018

what is legal at the moment in time in any country as well as it means it is ethical and
doesn’t necessarily mean it has to stay that way. You would know much better than this
since you are the expert in a legal profession but there is also the grey area of extra
legality. They do the legal and they are legal and is taking advantage and specially in
countries of transition or weak institutions like we experience Russia, Ukraine and other
places where one takes advantage of loopholes combined with discretion at that place.
The difference between tax evasion and tax avoidance for instance in many cases they
have breached that so there is a whole much more deeper and complex discussion we
can go into it but it’s backstop the very important point that you have asked about.
10

ADV THANDI NORMAN SC: Thank you. Dr Kaufmann, you have dealt with the issue of
certain firms been favoured in all these state capture system that certain firms would be
favoured over other firms, you dealt with that but the head of legal, Mr Paul Pretorius
would like you to explain further as to the impact of that over the small and medium
economies or enterprises that would be in that particular country. I know you had
mentioned the issue that it becomes a very costly, at the end of the day becomes costly
to the economy of the country but he would like you to just specify on what does it do to
small and medium size enterprises.
DR DANIEL KAUFMANN: Okay in brief and backstopping but in the state manner and
what was said earlier, I am very focused on our research that we did to [indistinct]

20

Professor Hellman. I have already hinted in the statement and we found that in countries
where there was a subject of high capture. Yes, the captor firms benefitted significantly
as what said however, those captors by definition so they lead and it’s very much a
minority. The rest majority are not firms that are able or have the financial political clout to
capture. So the vast majority was 90, 95 or 98% when [indistinct]. Those countries we
found that the private sector grew at only half their way though their firms who only at half
Page 98 of 113

FRIDAY 31 AUGUST 2018

the rate that they grew in a more robust market economy that was not subject to capture
so that begins to suggest the enormity cost for those firms that happened in a variety of
forms, essentially they don’t have the same access obviously in a [indistinct] to cultures,
they don’t have the same access to resources, to state subsidies, they are given to only
the very well connected firms and so on and through that mechanism then they are
however we also found as we also hinted but no only they suffer significantly in terms of
our ability to have revenue profits and grow but also in their protection of their own
property rights. Their captor firms were able to in some sense [indistinct} facts, they are a
protection of property through their own property rights and secure them through
10

essentially through capture at the expense of the security or property right for everybody
else, for the medium and small firms the one’s that were not captured. There was a
difference of 5/1 interns of the extent of the protection of property rights between the
captor from a [indistinct] so that’s another very significant implication for the medium and
small scale. Now what has become also quite evident in the cases in Latin-America which
I have been able to discuss further with you is what I mentioned earlier, is the macro
economic implications and macro criticality. Some of these countries and Brazil is a
emblematic case but others in Latin-America are now in a recession as a result of this
state capture events that have taken place. The cost for the smaller entrepreneurs and in
view of the economy [indistinct] is enormous and their ability to bear that brunt is much

20

less and obviously and that elite that has been able to capture so there are a number of
dimensions by which this becomes American economists, we call it a capture has
become an enormous tax on the medium and smaller entrepreneurs, it’s enormous in tax
and their ability to innovate enter the market.
DR JOEL HELLMAN: If I can just add to that, what originally prompted this research as
we mentioned earlier in our statement was the transition process in the former Soviet
Page 99 of 113

FRIDAY 31 AUGUST 2018

Union and the former Soviet block and it is interesting to look at that process now with 20
years of hindsight. 27 Countries started at a very similar point in time to try to transform
their economies and their political systems from a Soviet style planned economy to a
market economy and move towards a more open and competitive political system. There
has been tremendous variation and the success of those countries that has had
tremendous implications for the wellbeing of their population and our argument and the
empirical analysis that we have done suggest that the extent of state capture in those
countries played a very significant role in determining the ultimate success of their
transition process. Countries that engage heavily in state capture often got stuck kind of
10

in the middle of their transitions with the very deformed set of economic property rights
and principles on regulating the market economy that produce enormous advantages,
staggering gains to individual firms but harmed all other firms in the economy and harm
their overall progress in their transition to a market economy which affected employment
rates, growth rates and security of property rights. So the harm that came from state
capture was very evident in these trajectories of these 27 countries over the last 20 years
or so and we think understanding the full implications of the harm and the way it shaped
their economies and political systems is really key to understanding of the costs they
capture.
ADV THANDI NORMAN SC: You are identifying paragraph 31 that as far as you

20

concerned, state capture is a product of systemic failure of governance but you don’t
regard it as a criminal issue but I must tell you that my learned friend, Ms Gcabashe is not
happy with that because she says well, as far as she is concerned everybody must be
criminally prosecuted who is involved in state capture. What is your comment to that?
DR JOEL HELLMAN: Well, let me start and I would hope that that is not an interpretation
that one would take from our statement in paragraph 31. As we said, first of all, that the
Page 100 of 113

FRIDAY 31 AUGUST 2018

very nature of the state capture transaction begins with some elicit provision of benefits to
public officials which is based on, depending upon the laws of the country, an illegal
transaction of some sort that violates either the country’s cuff of their interest laws,
financing laws, provision of private benefits of public officials of other forms that regulate
the way in which individuals or firms out engage with public officials so there are at root of
the state capture transaction, there are acts that depending upon the existing laws of the
country are one’s that could be considered criminal and of course that’s for each country
to examine based on its laws regulating the process of political influence to there is first of
all something that could potentially be prosecuted depending on what the [indistinct] laws
10

are. The other thing that we talk very much about and is relevant to what we were just
discussing that the harm created by state capture and in a legal process one often looks
at both the illegality of the act and then the consequences and the harm produced from
that act, the harm produced from state capture is almost fundamentally different from the
harm that we normally see in administrative corruption transactions which gives certain
advantages to individual firms and may have some implications for the economy at large,
but we feel that in state capture, the potential harm to the public at large, is much much
more sustainable of the harm created from this illegal action, is very very substantial.
DR DANIEL KAUFMANN: If I can complement because that is a very important
clarification. The fact that we did mention in our statement in that we do not necessarily

20

treat this as a criminal issue. First the focus should be on the notion of treatment because
our approach is to start first and foremost looking at the systemic and institutional
weaknesses in a country and recognise that it is paramount to address those as well but
that doesn’t mean in the act related to the shaping of its laws, regulations and policies,
illegal acts may not have been committed. That’s for you to determine. The other aspect
that is important to underscore, we don’t go into that in detail in our statement because it
Page 101 of 113

FRIDAY 31 AUGUST 2018

is much more in your realm of expertise but we would be happy to follow up in a couple of
weeks, is a distinction between, one distinction is legal and illegal which we have just
discussed thanks to the very good question of the Deputy Chief Minister but the other is a
distinction between what is illegal and what is considered criminal. We use a word of
criminality in a very strict sense but some of these may be illegal but nonetheless it is a
[indistinct] subject to criminal proceedings but certain proceedings still being considered
illegal and there may be various and immediate consequences as well. That’s for you to
determine the distinction. We just wanted to ensure that this is nothing purely as a
criminal issue but only that is not being ruled out and it depends on each case and that’s
10

for you to determine in which case it is criminal, in which case it may be illegal in the civil
sense but not in the criminal liable in which case it may have been legal and the loss of
that time but unethical I mean proper for other reasons, that’s what we are trying to say.
ADV THANDI NORMAN SC: Thank you for that Dr Kaufmann. You provide some
solutions starting with what I have already dealt with now in paragraph 31 and then you
move on which you have covered everything that you have said in paragraphs 31 and 32
and you did touch of course on the political and economic contestability because you
dealt with the issue of competitiveness and the economy but could you just deal briefly
with political finance as to how does that contribute to state capture and how can it be
addressed?

20

DR JOEL HELLMAN: I am happy to take that on. I just want to make one last comment
regarding the previous interaction and then go on to the political finance, I think it is
important. One of the reasons why in our statement we consistently talk about the
institutional and governance issues that create the vulnerability of the state capture is that
we want to emphasise that one may prosecute individuals that are engaged in state
capture and hold them accountable on both without tackling the institutional deficiencies
Page 102 of 113

FRIDAY 31 AUGUST 2018

that create the opportunities to engage in state capture, there will be more who will come
after that individual firm or groups that you prosecute. So it is not just a prosecution issue,
it is about underlying institutional and governance deficiencies that create the
opportunities to engage in state capture which we think are critical to understanding and
that’s why we made the emphasis in our statement.
Now, underlying the entire we believe, state capture phenomenon is the critical issue of
political financing because we recognise that politicians need to raise funds to finance
their political campaigns and to build support networks. This is common in every country
around the world, in all countries, politicians raise money in order to build their campaign
10

platforms, to strengthen their networks, to strengthen their parties. This is normal
phenomenon of political life in every country around the world. There are laws that shape
that process and we feel that paying serious attention to the laws that regulate how
politics are financed, is absolutely critical to prevent then state capture to reducing the
vulnerabilities of state capture. Some countries have very very restrictive rules on how
firms can participate in the political process, how much money firms can contribute, what
the disclosure rules are for contributing those funds, what types of benefits can be
provided or not provided to politicians and public officials in making decisions. Every
country has a legal corbies that regulates that interaction between public officials and
private actors who seem to lobby or influence their actions and therefore we feel that in

20

thinking on how to prevent state capture, in trying to tackle the institutional and
governance deficiencies that create opportunities to engage in state capture, a critical
component is looking seriously and deeply at the way in which political financing is
regulated. Some countries provide public financing of elections. Some countries create
and restrict the extent to which private individuals can engage in political financing. Other
countries just place an enormous aspect on transparency and disclosure so you can
Page 103 of 113

FRIDAY 31 AUGUST 2018

easily trace those donations even if they don’t regulate how much those donations are so
there are many different ways that countries have chosen to regulate this and we feel that
this a really critical set of issues that has not really been looked at as closely as deserves
in understanding how to reduce the vulnerability of the state capture.
ADV THANDI NORMAN SC: Thank you very much.
DR DANIEL KAUFMANN: And I will be able to elaborate if there is interest on cases from
other countries.
ADV THANDI NORMAN SC: Yes, when you come back in September, when you come
to South Africa rather in September.
10

DR DANIEL KAUFMANN: Including my own country that has undergone very interesting
reforms in that regard as a result of a Commission that had to do work under
recommendations because of a corruption scandal so that is a very interesting paralyse
that I have got.
ADV THANDI NORMAN SC: Thank you. You have already touched on public
procurement and could you just deal briefly with state owned enterprise reform. Maybe
before you answer, Mr Chairperson, I realise it is two minutes to four o’clock, will you
please allow me to continue beyond four o’clock.
CHAIRPERSON: Yes, I think at least the legal team is prepared to stay up to five or
thereabout. I am prepared to do so, I am sure my Registrar is prepared to do so.

20

ADV THANDI NORMAN SC: I am indebted to you, thank you very much. Could you
please then deal briefly with state owned enterprise reform as part of matters that need to
be looked into in order to address the whole issue of state capture?

Page 104 of 113

FRIDAY 31 AUGUST 2018

DR DANIEL KAUFMANN: I am definitely briefly, that is a complex topic which can
elaborate further later but it’s incredibly important to recognise the unfortunately their all
that state owned enterprises have to perform in the context of transition places capture
and it varies from country to country in what role that has taken place. To what extent it
essentially has been a [indistinct] for the allocation of resources and enabling essentially
the captor in the private sector and the politician to access what some have considered
an automatic teller machine and it’s considered [indistinct] context sees the state owned
enterprise of Venezuela this can ensure that but in other cases it has been given a
vehicle for the President to enable certain things. There is a distinction between the type
10

of reforms that appear to be necessary in many many countries that apply generally and
then the one’s that have gone have to be much more specific depending on the context of
each country and depending on the sector. A general recommendation do include the
corporate governance, the extent to which there should be an independent board, the
democratic the heads of state on enterprises are appointed through either committees
that are independently appointed, they do respond also to Parliament and not necessarily
with excessive inground from the executive and so on. Then the extent of
commercialisation of state owned enterprises mimicking the market and how it operates
in terms of operations is very important. The distinction that’s led state all on the mining
sector between being an operator or a regulator, very often that roads are [indistinct]

20

within the same enterprise and that creates distortions and inefficiency. There is set of
issues around that that are required. These are incredibly important macro critical actors
in an economy often and the case of Brazil with Petrobras illustrates that when it gets to
these particular sectoral issues where they can be all sectors, their mining, they extracted
the mining sector, the energies is sector. Each enterprise and sectoral issue has to be
looked in that particular context and their commendations and [indistinct] comes in, we

Page 105 of 113

FRIDAY 31 AUGUST 2018

have in the statement later on that the sectoral context and understanding what’s needed
in terms of reforms in the financial sector, they will vary from those that are needed in
they extract themselves in mining or in the energy sector just like we have that very clear
that the country context, political institution and vary and that’s why are not here as
experts on South Africa, saying what South Africa needs to do and I will be able to
elaborate further on some examples from other countries that have embarked on
interesting reforms vis a vis state owned enterprises like in Columbia Eco Petrol and so,
those are very interesting reforms in Moammar, Dorma or more insipid ones in Indonesia
and so on and then there is an unpragmatic case which in our recent report we just
10

produced and I say with some pride of our own largest state owned enterprise in Chile
which is Codelco in copper mining which comes out rated at the top in terms of its quality
of a governance transparency and accountability. Even I had some of the industrialists
country state owned enterprises like Statol which now remain as you may know which
also comes out highly but there case is that they also [indistinct] and so on which we
could showcase from.
DR JOEL HELLMAN: Can I also mention one other thing with regards to state owned
enterprises which is that the process of privatisation of state owned enterprises is often
one of the most significant arenas for state capture to take place and if you go back to the
work that we did 20 years on the former Soviet Union, the real prize that the captors were

20

seeking was the prize of privatisation because of course if you can structure the property
rights of significant assets of the state and you could influence how those property rights
were distributed, well, you are essentially baking into the very structure of the private
market economy advantages so I think one has to not only look at state owned
enterprises as they function but importantly the privatisation of state owned enterprise
can become this remarkable arena for state capture which will have tremendous
Page 106 of 113

FRIDAY 31 AUGUST 2018

implications for the way the market economy will be structured for the distribution of
assets for the unlevelled playing field for the unequal distribution of benefits of the state
which can have tremendous implications for a very long period.
DR DANIEL KAUFMANN: Sorry to add and interrupt because it is such an important
issue worth just mentioned yet. We are not necessarily ensure or interpret that
privatisation at all cost are to be avoided. Well we found in our work at the time is that in
many cases the cause of the whole game for privatisation were distorted and Russia is a
[indistinct] with their own regard it ended up being very capture with the High Court.
However and we did the homework throughout the former Soviet Union there were many
10

cases where it was done right particularly with small enterprises and so on where the
mass privatisation did indeed work out. It’s the way its done and it’s the method and how
to avoid capture that matters. Let’s face it, from our review and experience from around
the world there are some settings where the continuation of existent system of state
owned enterprises is unattainable and it is incredibly costly and considering very
importantly then non-marginal actions including divestiture and some forms of
privatisations on venture marketisation and so is incredibly important but as Dr Hellman
said it is really important going to be how this is done rather than interpreting what we are
saying is avoiding privatisation altogether from our lessons of experience.
ADV THANDI NORMAN SC: You have just dealt with the issue of the extractive factors. I

20

think in South Africa it’s quite important. Those are the sectors that are important in terms
of implementing transformative measures. I just want to understand whether you could
perhaps just deal with how these transformative measures can in essence or sometimes
be exploited to result into state capture instead of actually achieving the very goals that
they were intended for?

Page 107 of 113

FRIDAY 31 AUGUST 2018

DR DANIEL KAUFMANN: Well that’s another very important question Ms Norman that I
know that neither you don’t have until midnight and even though your [indistinct] you have
allowed for rather a few minutes which is very long but this is a critical issue because as
to the core of the work that we have done and the message in our statement and beyond
that essentially there is no escape to begin to tackle state capture but to address first very
honestly in terms of a diagnostic which has to be done within the country with the experts
of the country as to what are the main governance and institutional weaknesses in which
sectors and in which areas are most weak. Usually when in transition these capture
effects, many of these sectors and dimensions and whether it’s procurement, it’s public
10

finance, it’s a tax system and the judiciary but there are some differences some manage
to remain more independent are stronger than others, it’s like that in the case of South
Africa the judiciary system is a window of opportunity where to that can help in the next
stage to mitigate state capture. In other countries well the judiciary has been totally
captured, that’s not the place to start, it will work now because is a context in transition,
this evolution, this so-called policy and governance reforms can go in different directions
and it can go in the negative and also capture directions so one has to be very clear in
terms of what constitutes progress in addressing and trithing state capture versus what
would only perpetuate and in that context the issue that was discussed earlier, it’s critical.
Institutional deficiencies are the core of fighting corruption. Sorry quite in capture, in state

20

capture and one has to address the institution’s deficiency because the focus that we
would have given is a loss on preventative measures, prevention. That doesn’t mean and
I know how much importance some of you give to the enforcement and persecutorial
issues. Let’s face it, having a legal system that is not captured and therefore it does not
suffer from impunity, it’s crucial also for prevention. Just having transparency alone or
having some reforms of the procurement roles and having some more accountability, civil

Page 108 of 113

FRIDAY 31 AUGUST 2018

society and the media is absolutely crucial but in a system there would be full of impunity,
that also should be considered as part of an institutionalised overall aspect so we ought
not be construed as suggesting that there is such a total divide between the legal and
judiciary issues regarding prosecution thus is the preventative issue because it has to be
system where there is an assumption on an anarchy of having been engaged on these
undue influence on state capture.
ADV THANDI NORMAN SC: Thank you, you have just dealt slightly with conflicts of
interest and transparency but I like your quotation in paragraph 49 where you say sunlight
is the best disinfectant. Could you just briefly in a few minutes just tell us how you view
10

transparency in all of this on everything actually?
DR DANIEL KAUFMANN: In brief, transparency is absolute crucial, it’s absolutely
necessary but I will say more about the fact that in itself is not sufficient for the reason
that I just started mentioning as was mentioned before in a system where everything is
disclosed, everything that really matter is disclosed regarding contrast, enforcements of
laws, how the judiciary is making the decisions. I mean it is very much appreciated that
by now we understand hearings are happening in a totally transparent form so there can
be full accountability. The citizens and the media civil society play and actually key role
being able to use these disclosures. So disclosures have to be mandated and are crucial
on the financial aspects, on political transparency and disclosure aspects like all kinds of

20

issues regarding where there are conflicts of interest, assets in ownership, in enterprises
and so on and that’s why this whole movement recently around the world following the
Panama papers and their disclosure towards beneficiary ownership disclosures an
example of the type of initiative that make eminent sense on guard because one marries
and the media and fin times and academics can look essentially as to what’s happening
in terms of the links between politicians and their enterprise sector how are roads been
Page 109 of 113

FRIDAY 31 AUGUST 2018

made in Parliament, those that vote in Parliament, what kind of political finance, how
investigating company finances and from whom, total disclosure on that and that seems
our countries are very very transparent and then figure out who are the real owners of
these enterprises and if these are conflicts of interest in that context is crucial. Now
having said that, transparency doesn’t work in settings where there is insufficient
accountability in that civil society and endures in the media are not able to operate totally
freely. We have recently had to deal in the case of EIPI and certainly the difference policy
initiative we suspended the country of Azerbaijan for those reasons, there is no
accountability so they disclose reports but if a journalist tries to use it in a critical fashion
10

their [indistinct] so accountability with civic space being enforced is critical as well as a
working judiciary as mentioned where there cannot be impunity and sanction that state
place. So transparency is absolutely critical, it’s necessary but in itself and alone would
not suffice.
ADV THANDI NORMAN SC: So in other words, from what you have told us today, you
can have where there are no proper safeguards, checks and balances, you can actually
have a state capture system existing within a constitutional state?
DR JOEL HELLMAN: That’s correct.
ADV THANDI NORMAN SC: Yes, could you then just.
DR DANIEL KAUFMANN: We can tell of the other case of the Emirates States for

20

instance and what has happened with their campaign finance laws and how the CAT
system was reformed overnight in a non transparent fashion at the end of 2017 so there
are case studies in very advanced economies in their context that we can go further.
ADV THANDI NORMAN SC: I have not taken you through your statement, it is quite long
and I did that for a reason. As we all know, Dr Kaufmann, you would be coming back for
Page 110 of 113

FRIDAY 31 AUGUST 2018

more questioning on your statements because we cannot do that now on video
conferencing, it has to be done with you currently here present at the hearing. So for that
reason then, whatever questions that the Chairperson may allow in future, those persons
would want to put questions to you would have to be present in one room with you. So for
that reason then I am going to ask you to just deal with your concluding remarks in your
statement.
DR DANIEL KAUFMANN: Dr Hellman.
DR JOEL HELLMAN: Sure, once again, thank you very much. We appreciate this
opportunity to meet with the Commission. As I said earlier in the preamble, we do
10

recognise how important the work of the Commission is, obviously not only for South
Africa but in setting a model for other countries to seriously investigate the phenomenon
of state capture and how it relates and impacts the countries overall, growth and
development so we really do feel this is an important milestone. The work of this
Commission is an important milestone. We have emphasised in both our statements here
to this audience as well as in our written statement. We have tried to recognise that
though obviously there are corrupt individuals that engage in state capture and I know
that your job is to try to determine the extent of the activities of any individuals or
particular individuals. We have been emphasising the institutional and governance
deficiencies that create the vulnerability to state capture and we feel that adequately

20

addressing those vulnerabilities, undertaking serious institutional and governance
reforms, is really the best set of actions that will combat state capture, prevent state
capture and overall improve economic environment for the largest number of people
possible. So we have tried to list out the experience of countries around the world that
have engaged in reforms to reduce the vulnerabilities to state capture and tried to give a
menu for you to consider as you think through those deeper institutional issues that have
Page 111 of 113

FRIDAY 31 AUGUST 2018

to be addressed. So that was the purpose of our statement. We hope that by engaging in
the experience of other countries around the world, South Africa recognises that this a
problem that every country faces at every level of development. You know in the course
of our conversation here, we have talked about the United States, we have talked about
Peru, we have talked about Azerbaijan, Russia, Brazil, this is a problem that countries all
over the world are facing and yet few of them are investigating it as systematically as you
are so that’s why we are so pleased to be part of your thinking, your analysis an d your
deliberations.
ADV THANDI NORMAN SC: Thank you.
10

DR DANIEL KAUFMANN: Can I just add Deputy Minister briefly. It’s because I want to
commend what you all doing and that’s what we do in the statement too because this is
likely to be an historical opportunity not to just looking at the past and I will reading
between the lines that we were doing and we appreciate that we have been invited but
what can be done about it and can something be done and to address such a difficult
issue. Yes, this is very difficult however as

famously said, “yes, it can be done” and of

course it’s hard work and what I loved of leadership and audacity in the words of the
same President but yes, this can be done and this is one of the reasons we focused so
much on the institutional and governance and to see there are some aspects of that
because they are critical in looking ahead in a country that has a resolve to do something
20

about it. As Dr Hellman said and from my side it’s absolutely the case of many other
country cases but you are unique in having already frankly recognised that this is not
normal corruption, this is a very different type and it’s a state capture and we appreciate
that we have been invited to contribute to that. In other countries, it’s very sensitive still to
recognise it the way that you are doing it and because of that, the likelihood of progress is
different because implications of what needs to be done in the next stage as we have
Page 112 of 113

FRIDAY 31 AUGUST 2018

mentioned are very different if one recognises this is state capture, it’s a different type of
the typically administrating corruption and there are for where we may need to do
something different than more audacious a typical case of bribery. Thank you.
CHAIRPERSON: Thank you very much Dr Hellman and Dr Kaufmann. It is clear from
what you have told us that you have done very extensive research indeed in regard to
issues of corruption and state capture. I have a number of questions but I think that since
Dr Kaufmann or Dr Hellman would be coming, one of you will be coming soon to testify
here. I think that would be the time to engage further and ask questions but I have no
doubt that we are going to benefit immensely from your experiences and research. Thank
10

you very much.
ADV THANDI NORMAN SC: Thank you very much Mr Chairman. Then that concludes
the evidence from my side. I don’t know if Mr Pretorius has something to say?
CHAIRPERSON: I think I already announced earlier arrangements of plans for Monday.
We thank the legal team for making arrangements for these two experts to talk to us
about corruption and state capture in the context of the research that they have done
over a long period of time. They will come back or one of them will come and we will have
a chance to ask questions so we are going to adjourn now until 10.00 am on Monday and
I did indicate earlier on what will happen on Monday. One, I will deal with the issue
directions or give indications as to what will happen to applications that have been filed

20

by lawyers representing implicating persons who wish to have permission to crossexamine the witnesses and we will then continue with the evidence of Ms Williams so that
we can finish it. We adjourn.

Page 113 of 113