The judicial order that Finance Minister Pravin Gordhan is seeking to force the Guptas to back off from the treasury will cement him in history as a visionary and the guardian of an independent banking system.
Even now, after getting axed, future finance ministers could be bound by an order not to bully the banks at the behest of their buddies. A full Bench of three judges in the high court in Pretoria is now considering his request after hearing arguments this week.
It was a tumultuous week during which President Jacob Zuma recalled Gordhan from his investment roadshow in the United Kingdom for an undisclosed reason. A badly written spy dossier claiming that Gordhan and his treasury colleagues were conspiring with foreign investors and “white monopoly capital” to oust Zuma’s government is said to have been a decisive factor in his decision.
The stakes of the court case are high and the impact far-reaching, compelling the Guptas to strengthen their armoury. Relatively late in the litigation process they appointed two senior advocates in addition to the advocate who already represents their holding company, Oakbay.
Judge President Dunstan Mlambo, Deputy Judge President Aubrey Ledwaba and Judge Lebogang Modiba were extremely critical in their probe of the case.
This week the court heard how the treasury, the Financial Intelligence Centre (FIC), the Reserve Bank, the presidency and the four biggest banks went to battle over the Guptas.
The legal team for Oakbay was fairly moderate in its arguments, but the teams for Gupta companies Sahara and VR Laser were vitriolic in their attack on Gordhan, accusing him of using his office to fight political battles against the family.
The three-pronged legal attack is seen as a strategy to afford the family another bite at the cherry and to increase pressure on Gordhan, said three lawyers at the proceedings.
Despite the strong political undercurrents, the legal question is simple: Gordhan wants a declaratory order saying he has no power to intervene in a bank-client relationship. This follows the banks’ closure of the Guptas’ and their companies’ bank accounts last year.
Standard Bank went further and asked that no Cabinet member, including the president, may intervene “in any manner whatsoever in any decision taken by [Standard Bank] to terminate its banking relationships with Oakbay”. Modiba took issue with its proposed relief, saying that such a broad order might unduly infringe on the powers of the executive.
In oral argument, Vincent Maleka SC, for Standard Bank, did not deal with the specifics of powers the executive derives from the Constitution and if, in some circumstances, they can become involved in a bank-client relationship. This goes to the heart of whether the president can appoint a judicial commission of inquiry into the banks. The banking sector and some political parties are vehemently opposed to it.
Maleka attempted to address Modiba’s concerns, saying the order “will not impede the powers of the executive; they will still be able to function and take decisions”.
Oakbay contended that there is no dispute between the parties, that they agree on Gordhan’s powers and that the application is a “waste of taxpayers’ money”. It did not want the court to pronounce on the matter and asked for the application to be rejected. “There is no reason to bother the court with an idle, abstract, moot point,” said Cedric Puckrin SC, for Oakbay.
Replying to this line of reasoning, Jeremy Gauntlett SC, for Gordhan, argued that the Guptas are “like Alice in Wonderland”. The family denied any dispute with Gordhan yet it did not want the court to make a pronouncement on the matter.
“All parties here agree on the minister of finance’s powers. They [Guptas] say what is before court is not a contested issue. They say we are right, that is the answer, but don’t do it [pass judgment on the matter].”
Rafik Bhana SC, for Sahara, said Gordhan “uses the application to make public the correspondence between him and Oakbay, which was private. Why is he inserting all this irrelevant information in the application? They used the application to put out in the public what they perceived is Oakbay’s dirty laundry.”
This was after Mlambo delivered a unanimous judgment on Tuesday morning that struck three submissions from the court record:
- Gordhan’s submission of the contentious certificate from the FIC. It shows 72 reports of dodgy transactions worth R6.8-billion by the Guptas and their businesses;
- The affidavit by Deputy Finance Minister Mcebisi Jonas, describing how Ajay Gupta allegedly tried to bribe him by offering him the job of former finance minister Nhlanhla Nene; and
- The Guptas’ accusation that Gordhan and the banks conspired and colluded against the family and their businesses.
Critics described this as a blow to the treasury’s case. But it can be reasoned that Gordhan lost nothing. The knowledge of the dubious transactions and Jonas’s description of how the Guptas allegedly tried to corrupt him will never be erased from the mind of the public.
Dealing with the merits of the case on Wednesday, David Unterhalter SC, for Absa, reminded the judges that the “court must decide how best the law can be observed”. He argued that the case not only addresses “particular problems raised in the Oakbay case but also looks to the future. Those who occupy power in future as well as the banks who must conduct business in a predictable manner … it will influence the integrity of the banking system.”
Unterhalter said it is “exactly the role of the courts to pronounce upon the question of law and boundaries, not only in public powers but also executive power and private competence. That is the fundamental function of courts to referee, but in no measure interfere, with the decision-making powers of the minister.”
Perhaps the most compelling oral argument Unterhalter made was to highlight a theme of lawlessness in the Gupta family’s conduct.
He said Oakbay accepted on paper that Gordhan may not intervene with the banks at their behest, but continues to say there is nothing wrong for Oakbay to prevail on the ministers and ask for assistance. “That theme seems to continue to feature in their understanding … They really are not observing the strictures of the law they claim to accept.”
Wim Trengove SC, for the registrar of the banks and the governor of the Reserve Bank, said they needed “clarity” on the “scope of political interference, not only by this minister [but] also by his successor”.
Standard Bank’s case looked grim. The judges seemed not to agree that it would be wise to grant “broad and far-reaching relief” that might impinge on the executives’ authority.
But Modiba quizzed Bhana on the proposition that there is a “need for certainty regarding whether, in law, officials of state may or may not intervene in these [banking client] relationships”.
Bhana answered: “That opens up a can of worms.”