Zuma drags his heels on vexing Gordhan affair
This past week, the rand plunged to its weakest level – R16 to the dollar – since President Jacob Zuma fired Nhlanhla Nene as finance minister in December. This time, the rout of the rand was because the spat between Finance Minister Pravin Gordhan and the Hawks was ratcheted up a notch, with Gordhan describing the crime-fighters’s bid to get him to answer questions about the so-called “rogue unit” in the South African Revenue Service (Sars) as “threatening”.
Ratings agencies and investors are keeping an eye on Gordhan and what happens to him because he is seen as the only person capable of imposing firm fiscal management on the government and fending off South Africa’s downgrade to junk status.
The root of this conflict is the appointment of Tom Moyane as Sars commissioner and Moyane’s decision to pursue the “rogue unit” matter and restructure Sars in a way that seems to sideline anyone appointed during Gordhan’s previous tenure as finance minister. The “rogue unit”, set up on Gordhan’s watch, is believed to have investigated several powerful figures.
The Hawks had sent Gordhan a list of 27 questions just before he delivered his budget speech last month, setting a deadline of March 1 for him to answer.
Gordhan questioned the legal status of the questions and said he was unable to answer by the deadline. The Hawks then allegedly sent him a reminder, with a new deadline, though Gordhan has denied seeing this letter. The Hawks later said they would exercise their constitutional powers to push him to answer.
Gordhan is seen, locally and internationally, as standing in the way of the further “state capture” of key institutions by cronies of President Jacob Zuma. This year’s budget declared an end to kleptocracy.
Moyane, on the other hand, is Zuma’s appointment to the vital tax-collecting institution and the Hawks’s attempt to smear Gordhan with some of the “rogue unit” dirt is viewed as a deliberate attempt to undermine him.
So what has the president done to resolve these tensions between two key people in essential institutions affecting South Africa’s future? Almost nothing. In a statement last month, Zuma said measures were being put in place to resolve the Gordhan-Moyane conflict. That statement came only after the Hawks’ conduct had been condemned by opposition parties and some senior ANC leaders, including secretary general Gwede Mantashe and the minister of higher education, Blade Nzimande.
Since then, Zuma has not said a word. If he really has the interests of the country at heart, he has a strange way of showing it. One would have expected that, by now, he would have found a working solution to the impasse, so that South Africa could start to pull itself out of its economic crisis. That was presumably the reason he reappointed Gordhan as finance minister. So why is he now letting this conflict further damage South Africa’s economic prospects?
Gordhan returned last weekend from a road show to the United Kingdom and the United States to address the concerns of bond investors and defend the country’s fiscal strength. For Gordhan to succeed in restoring investors’ confidence in South Africa, he needs political support – particularly from Zuma. So far, Zuma has demonstrated no sense of urgency in dealing with the Gordhan-Moyane dispute.
This reaffirms the perception that Zuma is only concerned with his own political survival and in protecting his cronies. Gordhan has apparently made it clear to Zuma that the only way things can return to normal, as far as the treasury and Sars are concerned, is to remove Moyane.
It has been reported that Gordhan has told Zuma it is either him or Moyane; that one of them has to go. It has also been reported that Zuma has indicated he will not fire Moyane, his longtime friend and ally.
The “rogue unit” was formed in 2007 when Gordhan was Sars commissioner. It is believed to have investigated Zuma for alleged tax evasion as well as two of the president’s associates, the super-wealthy KwaZulu-Natal businessmen Thoshan Panday and Jen-Chih “Robert” Huang, a Taiwanese citizen operating in South Africa who has links with Swaziland.
Veteran journalist Max du Preez recently wrote that Sars’s present hostility towards Gordhan relates to a dossier in a safe at Sars headquarters that contains damning allegations of corruption, fraud, front companies and foreign bank accounts to do with prominent benefactors of Zuma’s. Du Preez suggested that Zuma was keeping Moyane at Sars to stop any further investigation into these matters.
The dispute over the unit has also exposed cracks in the ANC’s top leadership. Gordhan enjoys Mantashe’s and Nzimande’s support, as well as that of other leaders of the South African Communist Party. Zuma is backed by, among others, the police minister, Nathi Nhleko, and the state security minister, David Mahlobo.
The Gordhan-Moyane issue is expected to be high on the agenda of the ANC national executive committee meeting this weekend, as is the perceived influence of the Gupta family on key government decisions.
Both issues are likely to become part of the factional battles for power in the party.
If Zuma cannot deal with the Gordhan-Moyane spat, this war will get nastier, with severe consequences for the country.
Matuma Letsoalo is the Mail & Guardian’s political editor