Among the startling revelations made by former finance minister Pravin Gordhan in his submission to the Zondo Commission is how some of his Cabinet colleagues resisted and applied pressure on him to dump proposed crucial legislation to help fight the illicit flow of money.
The amendments to the Financial Intelligence Centre Act would give government more power to scrutinise the banking affairs of individuals considered to be politically exposed persons, including politicians and connected business people.
Gordhan counts this as part of the reasons that he, during his second stint as finance minister between 2015 and 2017, and national treasury were under constant attack.
Others minister sought to wrestle the Finance Intelligence Centre (FIC) from treasury.
“This amendment process saw a concerted effort by other members of the executive in the security cluster to undermine National Treasury’s oversight of the FIC. There appeared to be an effort to move FIC, and presumably access to its highly sensitive personal information, to the security cluster. This was concerning since the FIC plays such an important role in in the fiscal and banking regulatory environment overseen by national treasury,” said Gordhan.
“Former president (Jacob) Zuma also delayed signing the amendments into law until litigation was commenced to force him to do so. No meaningful engagement occurred between the Presidency and National Treasury regarding any reservations that the former president may have had regarding the bill.”
“Media reports noted he was lobbied not to sign it into law by critics and those that seemed opposed to national treasury at the time. Eventually it was referred back to parliament by the President in November 2016.”
At the time the Gupta family, close friends of Zuma and business partners to his sons, were extremely critical of the amendments and even lobbied Zuma to refuse to sign it into law.
In his affidavit Gordhan further notes the family attacked national treasury through analysts Mzwanele Manyi, Tshepo Kgadima, and Danisa Baloyi on their news channel ANN7.
“At the parliamentary hearing held in January 2017, these same critics objected to the Bill. My Cabinet colleagues in the security cluster also met with officials from national treasury to raise their objections to the amendments as well,” he said.
The amendments to the Financial Intelligence Centre Act were to combat illicit financial flows through empowering and requiring financial institutions such as banks to better know and do proper due diligence on their customers and consider beneficial ownership of companies and trusts.
The Guptas concern was specifically regarding enhanced scrutiny of politically exposed persons and prominent or influential persons, groups which include foreign politicians and public officials, as well as domestic politicians, senior government officials, and persons in companies doing business with government.
The enhancement requires risky customers to provide information about the sources of their wealth. After much resistance from Zuma, which resulted in the litigation, the amendment bill was passed into law last May, by then finance minister Malusi Gigaba.
Gordhan is set to appear before the commission into allegations of state capture chaired by judge Raymond Zondo next week.
In his affidavit, which appears to have been widely distributed, he also details numerous interactions with Zuma in which the former president seemed to ignore or disregard due process in efforts to push specific deals that would have benefited him and his cronies.
These included the procurement of nuclear power stations from Russia for over R1-trillion, the proposed purchase, for billions, of a stake in Engen by PetroSA that was riddled with irregularity, as well as a South African Airways (SAA) and Airbus aircraft swap deal — pushed for by former chair Dudu Myeni — that could have sunk the airline.
Gordhan’s resistance to these pressures, as well as treasury’s investigations of corruption at state-owned companies, led to the isolation of treasury by other departments as well as unprecedented attacks on it both from outside and within government, he said.
This included an attack on him by Denel board chair Daniel Mantsha that went unchecked by Public Enterprises Minister Lynne Brown and an attack from fellow Cabinet Minister Bathabile Dlamini.
“… I believe that the capture of national treasury was an essential objective of state capture, along with the weakening of law enforcement and the capture of state owned enterprises.”
Gordhan also notes that his attempts to turn Sars around — one of three urgent actions he noted to Zuma when he was appointed as finance minister in December 2015 — was met with blatant insubordination and disrespect from Sars commissioner Tom Moyane. Instead of intervening, Zuma seems to provide cover for Moyane, who had taken to even submitting leave requests directly to the Presidency.
The police’s elite crime fighting unit, the Hawks and the National Prosecuting Authority, were used to target and intimidate him, said Gordhan. This included former Hawks General Berning Ntlemeza asking him to answer 21 questions related to a criminal investigation just before he was to deliver his budget speech in 2016.
Later that year, just before the budget adjustment statement, National Director of Public Prosecutions boss Shaun Abrahams announced criminal charges would be brought against Gordhan and former Sars commission Ivan Pillay related to the latter’s early retirement.
“Subsequent media reports revealed that Adv Abrahams had met with President Jacob Zuma, Mr Mahlobo, Justice Minister Michael Masutha, and Social Development Minister Bathabile Dlamini at Luthuli House the day before his announcement, 10 October 2016. Adv Abrahams explained the meeting as being held to discuss student protests with ANC leaders, but it is unusual that the ministers of higher education, finance, and police were not present if that was the subject of the discussion,” Gordhan added.
At the end of October Abrahams announced the withdrawal of the charges, but it was after R34-billion was wiped off the Johannesburg Stock Exchange Africa Banks Index and the rand had weakened 3.9 percent against the dollar.