The dispute between the Hawks and Finance Minister Pravin Gordhan worsens as police "harassment" continues.
South African Finance Minister Pravin Gordhan’s complaint of police “harassment” signaled that a deepening battle over the independence of the Treasury is overshadowing his message of policy stability to investors.
The Directorate for Priority Crime Investigation, known as the Hawks, wants Gordhan to respond to questions by Monday about a unit in the tax agency that investigated political leaders and taxpayers, Hawks spokesperson Hangwani Mulaudzi said by phone. At the same time, the main opposition party the Democratic Alliance urged Gordhan to clarify whether his deputy was offered the finance ministerial post by friends of President Jacob Zuma. The rand was the second-worst performer of 24 emerging-market currencies monitored by Bloomberg.
“Investors and the ratings agencies are observing every development in South Africa with a keen eye,” Gordhan said in a statement on Sunday. “Once again the Hawks, and those who instruct them, have no regard for the economic and social welfare of millions.”
Investor confidence in South Africa has been reeling since Zuma fired then-Finance Minister Nhlanhla Nene in December and replaced him with a little-known lawmaker, causing the rand and bonds to plunge. The market backlash and lobbying by business leaders and politicians prompted Zuma four days later to reappoint Gordhan to a position he had held from 2009 to 2014. Since then, the president has refused to bow to Gordhan’s demand to fire tax chief Tom Moyane and backed the Hawks investigation.
“There are two factions that are fighting for control of the ministry,” said Pierre De Vos, a law professor at the University of Cape Town. “It’s very difficult not to see these developments as part of that fight.”
The worsening dispute comes after Gordhan (66) met with investors in the UK and the US last week as South Africa risks losing its investment-grade status. Growth in Africa’s most-industrialised economy is forecast to slow to less than 1 percent this year, knocked by the worst drought in more than a century, falling commodity prices and weak demand from its biggest export market, China.
The investigative unit in the tax agency was set up when Gordhan led the revenue service before 2009. He didn’t provide answers to the Hawks before an initial deadline on March 2 and said he’d respond after properly examining what information the police were seeking.
Gordhan is also facing demands by the opposition Democratic Alliance party to respond to reports that Zuma’s friends, the Gupta family, met Deputy Finance Minister Mcebisi Jonason November 27 to offer him the ministerial post. The appointment would have been conditional on his support for plans to build nuclear plants and fire key National Treasury officials, the Sunday Times reported, citing unidentified officials at the Treasury and the ruling African National Congress.
After refusing the offer, Jonas was again asked if he wanted the post a week later in a phone call from the ANC’s deputy secretary-general, Jessie Duarte, the Johannesburg-based newspaper said. The Financial Times first reported about the approach to Jonas on March 8.
“I have no personal knowledge of this,” Gordhan told reporters Monday in response to a question if knew whether Jonas had been offered the job. “There’s nothing I can tell you.”
At least one of the three Gupta brothers is a joint director or shareholder in about a dozen companies with the president’s son, Duduzane Zuma, and in December a venture between him and the family bought a coal mine from Glencore Plc.
Phumza Macanda, a spokesperson for the Treasury, and Bongani Majola, a spokesperson for Zuma, declined to comment when contacted by Bloomberg News. The Gupta family, whose businesses include media, engineering and uranium and coal mining, said there was no meeting with Jonas.
“There have been an extraordinary number of allegations around the Gupta family in recent weeks, several of which have involved the finance ministry,” the family said on Sunday in a statement on the website of Oakbay Investments (Pty) Ltd., a company it controls. “To be clear: there was no meeting at all. Atul Gupta was not even in South Africa on the date of the alleged meeting,” they said, referring to one of the brothers.
The reports on the approach to Jonas were “nothing but gossip masquerading as news,” the ANC said on its Twitter feed.
The Hawks’s Mulaudzi said if Gordhan doesn’t respond to their questions by the end of Monday, he has to inform the police unit why and it will decide on the way forward.
“It’s unnecessary to suggest that we’re harassing him,” he said.
The rand weakened 1.4 percent to 15.4417 per dollar as of 3:47 p.m. on Monday in Johannesburg.
“This thing is being run like a public trial,” ANC spokesperson Zizi Kodwa told reporters on Monday in Johannesburg. “Without saying the Hawks must not do their work, we are worried that there seems to be an undermining of the two entities, the office of the minister of finance and the office of the Hawks.” - Bloomberg