/ 26 February 2016

Recap: Pravin Gordhan’s battle with Zuma

Battle lines: Pravin Gordhan and President Jacob Zuma are said to be at odds over the finance minister’s former colleagues at Sars.
Battle lines: Pravin Gordhan and President Jacob Zuma are said to be at odds over the finance minister’s former colleagues at Sars.

This article was originally published on February 26.

Days before democratic South Africa’s most anticipated budget speech, Gordhan received a letter from the Hawks, posing questions to the former South African Revenue Service (Sars) head in connection with a criminal investigation into the activities of the so-called Sars “rogue unit”.

Various sources confirmed this as a salvo in the “proxy war” between President Jacob Zuma and Gordhan, with the battle over state resources at stake.

At the heart of the battle is the recapturing of Sars from perceived Zuma allies.

A source with close access to Gordhan said the letter from the Hawks arrived late last week. He said it contained “nonsense questions” and seemed calculated to destabilise the finance minister as he prepared his budget speech. He also claimed that the Hawks were being abused to fight the proxy war with Gordhan.

Gordhan delivered his budget speech this week with an ongoing Hawks investigation hanging over his head. He was called back as finance minister in the wake of the reversal of Zuma’s disastrous appointment of Des van Rooyen.

However, Zuma made it clear this week that he was forced to back-track by stating publicly that Van Rooyen was “the most qualified” person for the finance minister job.

“Rogue unit”

The Hawks investigation is eerily reminiscent of previous fight-back efforts against perceived Zuma enemies.

Treasury spokesperson Phumza Macanda said Gordhan could not comment, and other attempts to reach Gordhan were unsuccessful at the time of going to press.

The Hawks case is understood to relate to the alleged “rogue unit” saga that has dogged Sars, prompted by claims that the revenue service had conducted illegal intelligence gathering under Gordhan’s watch.

The same allegations were used by Sars commissioner Tom Moyane to move against top revenue officials perceived to be loyal to Gordhan, notably deputy commissioner Ivan Pillay, who was charged internally but resigned after reaching an out-of-court settlement with Sars.

Moyane, who grew close to the Zuma family during exile in Mozambique, has been criticised for his restructuring of Sars, which critics allege has alienated those with skills and concentrated power in the hands of a trusted inner circle.

The same independent sources, who come from different sides of the Zuma-Gordhan divide, also stated that prior to his budget speech Gordhan asked Zuma to remove Moyane from office.

The president is said to have refused.

He made it clear to Pravin that it would be wrong for him to be seen interfering with the investigation”

Ex-Sars deputy commissioner Ivan Pillay was said to have instituted a probe into Zuma and his alleged benefactors. (David Harrison, M&G)

According to one account from an alliance leader who is close to the president, Zuma instructed Hawks boss Berning Ntlemeza to inform Gordhan that he was being investigated the day after his appointment.

Two different sources confirmed that Gordhan had been sent a letter by the Hawks.

Ntlemeza could not immediately be reached for comment.

The alliance leader said that Gordhan threatened to resign if Zuma did not act against Moyane, but Zuma said he could not take sides, seeing as there was an ongoing criminal investigation: “He [Zuma] told him [Gordhan] if there are issues that need to be answered, he must go answer. He made it clear to Pravin that it would be wrong for him to be seen interfering with the investigation.”

The alliance leader said one reason why Zuma supported the investigation was that he, too, had been investigated by the “rogue unit”: “I don’t see the old man [Zuma] backing off on this one. He has an interest. He wants to know why he was targeted and why certain people were investigated [by Sars].”

This account could not be independently verified, but amaBhungane has previously reported that Sars, under Pillay’s leadership, had begun serious probes into Zuma and his alleged benefactors, including raising issues around Nkandla and the president’s personal tax liability.

Asked for comment relating to Gordhan’s investigation, Hawks spokesperson Hangwani Mulaudzi said: “What investigation? Even if we were, we don’t conduct our investigations through the media.”

“… the presidency does not respond to gossip and rumours at all… “

Presidency spokesperson Bongani Majola, who is currently in Burundi with Zuma, said that “the presidency does not respond to gossip and rumours at all and is unable to assist you on those aspects of your inquiry”.

Majola said Zuma was pleased with the budget process and its outcome, and that Gordhan had worked closely with Zuma and the rest of the Cabinet in preparing it.

“There has not been a single aspect of the budget or the speech that the president and minister Gordhan have not agreed upon,” Majola said. “Anyone who says anything to the contrary is misleading the public.”

But various people are saying just that. A variety of government and other sources cited as evidence of what they perceive to be a growing spat between Zuma and Gordhan:

  • Zuma’s announcement of a plan to increase the salaries of public office bearers, albeit only slightly, shortly before Gordhan presented a belt-tightening budget;
  • The announcement by the treasury that it would review some of the big contracts awarded by Eskom, including those involving the Zuma-linked Gupta family; and
  •  Gordhan thanking former finance minister Nhlanhla Nene in his speech, to much applause from MPs, which was interpreted as a signal that they had not agreed with Nene’s firing.

“The sense is that JZ has dropped all pretences… “

Tense times: Sars commissioner Tom Moyane, seen here with former finance minister Nhlanhla Nene. (David Harrison, M&G)

Many are interpreting the renewed push to prosecute high-ranking Sars officials as another example of the Zuma/Gordhan split, characterising it as a proxy battle.

Said one source sympathetic to Gordhan: “The sense is that JZ has dropped all pretences … He is going to back Moyane at Sars, and Moyane is not budging from where he is and what he’s doing.”

Said another: “Already they have unleashed the Hawks – and the Hawks are pushing on that case, though what the charges might be is anybody’s guess. But they don’t care about that: the attack on Ivan and Pravin is coming.”

It appears that Gordhan is aware that he is walking a tightrope.

His budget pulled back from several initiatives that treasury sources had indicated would be appearing in this week’s budget. Those included more robust steps to rein in the board of SAA, and particularly chairperson Dudu Myeni, who is a personal friend of Zuma’s.

A source who works for the ANC said that Gordhan had threatened to pull back on social grants but was persuaded not to do so in an election year. He did, however, slash the social relief of distress grant from an adjusted R501.8?million to R249.2?million. This grant enables the department of social development to give out food parcels to those in need, for example after fires or floods. There were allegations in the past that this grant was used to distribute food parcels as a way of winning votes.

Gordhan also made a point of taking public credit for building Sars into one of the best revenue authorities in the developing world.

He did it to make a point that he felt ‘exiled'”

Although evidence of Gordhan’s attempts to have Moyane removed is hard to come by, allegations of such efforts are spreading fast and conflicting versions are emerging.

Two sources sympathetic to Gordhan claimed that in his post-budget briefing to the ANC’s parliamentary caucus on Thursday, Gordhan was outspoken about Moyane and suggested that one of them will have to go: if not Moyane, then Gordhan himself.

However, an ANC MP who was in that caucus meeting said Gordhan gave a straightforward presentation where he unpacked the budget and did not refer to Sars or the problems there in any way.

The ANC MP said the caucus was tired of the embarrassment Zuma was causing them, and that Deputy President Cyril Ramaphosa was given a standing ovation at the last caucus meeting.

Moyane was pointedly excluded from the minister’s briefings. Before the budget speech, Moyane went to sit down in the public gallery, from where an official had to direct him to sit in the director general’s gallery with other treasury managers.

“He did it to make a point that he felt ‘exiled’,” said an official who knows Moyane well.

Gordhan also shunned the by now customary post-budget breakfast briefings, hosted by the New Age newspaper, which is owned by the Zuma-aligned Gupta family.

Attempts to obtain comment from Moyane via his spokesperson, Sandile Memela, were unsuccessful at the time of going to press.

The P-word is still to come

Finance Minister Pravin Gordhan might not have mentioned the P-word in relation to SAA in his budget speech this week, but insiders said things were still likely to head that way.

A government source closely involved in the issue told the Mail & Guardian that privatisation discussions around SAA are “in the early stages”.

In his speech, Gordhan said he and Public Enterprises Minister Lynne Brown had agreed to “explore the possible merger of SAA and SA Express, under a strengthened board, with a view to engaging with a potential minority equity partner, and to create a bigger and more operationally efficient airline”.

Gordhan told journalists in Parliament on Wednesday that full privatisation for state-owned entities (SOEs) was not on the cards. According to the report “effective co-funding arrangements between SOEs and other investors” was required, Gordhan said.

The merger of SAA and SA Express could mean SAA board chairperson Dudu Myeni, who is close to President Jacob Zuma and who has been accused of running SAA into the ground, could lose her position. A merger would mean both boards would be disbanded and appointed from scratch.

This could, however, set Gordhan up for a clash with the unions. The M&G understands that the South African Transport and Allied Workers’ Union wrote to the SAA board opposing treasury’s intentions to privatise SAA. The union said it was prepared to raise the money itself to keep SAA afloat. Zuma is also understood to be against the wholesale privatisation of SAA. – Carien du Plessis & Matuma Letsoalo

A whiff of politically motivated prosecutions

Although the Hawks are certain to deny there is any political motivation involved in any investigation of Pravin Gordhan and Ivan Pillay, the investigations appear to follow a pattern of what may be targeted probes emanating from perceived proxies of President Jacob Zuma in the police and the National Prosecuting Authority (NPA).  

The moves add to those against former Hawks boss Anwa Dramat, KwaZulu-Natal Hawks commander Johan Booysen, former prosecutor Glynnis Breytenbach and Robert McBride, the suspended head of the Independent Police Investigative Directorate (IPID).

The NPA announced last week that Dramat was to be charged with kidnapping in connection with the alleged illegal rendition of several Zimbabwean fugitives in 2010.  

McBride is also about to be charged criminally in relation to the rendition matter. His investigation emanates from two conflicting reports made by the IPID in the rendition case, which accused McBride of attempting to cover up for Dramat, a charge McBride denies.

A case of defeating the ends of justice and fraud was opened against McBride and two others in May 2015, with the complainant apparently being a Colonel Khaya Gwayi, who is said to be close to Hawks commander Berning Ntlemeza. They are both from the Eastern Cape. Gwayi is also part of the team probing Breytenbach.

“It’s a hare-brained scheme by someone with a track record of being a constitutional Neanderthal”

In May 2015, the Sunday Independent reported: “Hawks spokesman Hangwani Mulaudzi said the unit had appointed a task team led by two high-ranking colonels, Mmeli Makinana and Khaya Gwayi, to probe the allegations that Breytenbach, now a Democratic Alliance MP, abused her position and powers in cases where close associates, one allegedly her lover, were involved.”

McBride is expected to make a statement in his matter on Monday. He told amaBhungane: “It’s a foolish, yet dangerous, hare-brained scheme by someone who has a very active and creative imagination, but who has a track record of being a constitutional Neanderthal.”

Dramat is due to appear in the Pretoria magistrate’s court on Friday.

A written statement issued on behalf of Pillay noted: “Mr Pillay cannot comment on your query for the following reasons: he’s not been notified of any criminal investigation into him for his work at Sars [the South African Revenue Service]; he’s not received any query from the police or any other body regarding any investigation into him; in May last year, Sars issued a statement saying that there’ll be no new investigations instituted against him; and, in September last year, [prosecutions boss] Shaun Abrahams announced that he had not, nor had any NPA official, received a docket on which to charge him following similar rumours in the media.” AmaBhungane reporters

Sars threatens M&G over story

The South African Revenue Service (Sars) has threatened to criminally pursue the Mail & Guardian for last week’s article: “Sars wars: Moyane’s empire strikes back”.

The M&G quoted key insiders accusing tax commissioner Tom Moyane and others of grabbing control of a key division dealing with large corporations and wealthy individuals.

It described claims that Moyane’s second-in-command, Jonas Makwakwa, had previously clashed with executives over his engagements with taxpayers.

Sars’s lawyer, David Maphakela, demanded a retraction and an apology. He said the M&G contravened the Tax Administration Act by “unlawfully disclosing taxpayer information” and that the article was “littered with falsity, inaccuracy, unfairness, distortion and misrepresentation of facts”.

M&G lawyer Dario Milo responded that the article was “clearly in the public interest and its publication was lawful”.

He invited Sars to answer the M&G’s questions, which have been ignored for two weeks, and said “in the circumstances” the paper declined to apologise and retract.

Maphakela responded: “[The M&G’s] … defence of public interest as a panacea to justify the publication, illustrates … [an]unfathomable misdirection of the law.”

He said: “Our client will proceed to exercise its rights in law, including civil and criminal proceedings.” – Craig McKune

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The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.