SUNDAY TIMES - It's war: Gordhan-Zuma rift brings junk status nearer
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Sunday Times News By QAANITAH HUNTER, SABELO SKITI, MZILIKAZI wa AFRIKA and PIET RAMPEDI, 2016-02-28

It's war: Gordhan-Zuma rift brings junk status nearer

South Africa's Finance Minister Pravin Gordhan speaks. File photo
Image: MIKE HUTCHINGS REUTERS

Simmering tensions between President Jacob Zuma and Finance Minister Pravin Gordhan burst into the open this week, risking the careful consensus crafted by the government and business to save South Africa from junk status.

Gordhan has until Wednesday to answer 27 questions from Hawks boss Lieutenant General Berning Ntlemeza in the latest round of an extraordinary battle that has seen the minister go toe-to-toe with some of Zuma's closest lieutenants.

But Gordhan is unlikely to heed the ultimatum, because he considers the letter - sent to him six days before he tabled the 2016 budget in parliament this week - an attempt to discredit him.

Economists are now warning that the high-profile battle could inflict long-term damage on the economy, with dire consequences for the livelihoods of South Africans.

New battle lines have been drawn between Luthuli House and the Union Buildings, with ANC secretary-general Gwede Mantashe saying "the timing" of the Hawks' questions was "an effort to destabilise the economy".

Zuma's office indirectly hit back at Mantashe, saying it "noted rumours and gossip which insinuate some conspiracy" against the finance minister.

Another cause of tension between Gordhan and Zuma is the minister's apparent determination to remove SAA chairwoman Dudu Myeni from the state-owned airline's board.

Two sources, one at SAA and another at National Treasury, told the Sunday Times that the minister on Tuesday informed Zuma of his intention to remove Myeni, a close friend of the president.

"The first time the president ignored him and after some time he said it again. This time the president simply responded that he had heard him. He never said yes or no, or asked why," said a source close to the situation.

Relations between Gordhan and Myeni are said to be so bad that the two have not had a formal meeting this year, and the SAA board had no idea of Gordhan's announcement that SAA would merge with SA Express.

SAA spokesman Tlali Tlali refuted claims that the two have not met, saying they have had three meetings since Gordhan became finance minister.

Finance Minister Pravin Gordhan and President Jacob Zuma ahead of the 2016 budget speech in parliament. Image: ESA ALEXANDER

Gordhan's likely refusal to respond to Ntlemeza's questions would paint Zuma into a corner, and he would soon have to choose between his newly appointed finance minister and South African Revenue Service chief Tom Moyane, who initially laid the complaint with the Hawks.

In a week in which Gordhan presented a budget that even critics said would help appease international rating agencies, South Africa witnessed an unprecedented proxy war between the president and his finance minister, with Gordhan demanding that the Hawks probe be stopped and Moyane be removed as SARS commissioner.

At the heart of the unprecedented conflict is a SARS investigation into the National Research Group and the High Risk Investigation Unit, which were set up during Gordhan's tenure as commissioner at SARS.

Gordhan's critics alleged that the unit was illegally set up and went "rogue", conducting illegal intelligence-gathering and surveillance.

But the minister on Friday denied this, saying it was "legally constituted and approved" and that it had done "commendable work in disrupting activities in the illicit economy".

"I can categorically state that the Hawks have no reason to investigate me," said Gordhan on Friday.

Among the questions posed by Ntlemeza in his four-page letter to the minister is whether Gordhan knew about an operation code-named "Sunday Evenings", which involved "the bugging or installation of sophisticated surveillance equipment" at the offices of the National Prosecuting Authority.

"If this unit was operating legitimately, why were they operating from guesthouses, hotels, restaurants and their private dwellings? Further, why were they not provided with SARS laptops to store confidential information?"

After receiving the letter from Ntlemeza last Thursday, Gordhan is said to have complained to Zuma about the Hawks investigation.

He thinks he is above the law just because . . . he is now the most powerful minister in the cabinet

On Monday, he met Zuma and the rest of the ANC's "top six " leaders and further expressed his frustrations with Moyane and the Hawks.

One version of the events at the meeting, given mostly by sources sympathetic to Zuma and Moyane, is that Gordhan threatened to resign from the ministry if the president did not fire Moyane and did not order the Hawks to stop harassing him.

But those close to Gordhan deny that the minister put a gun to Zuma's head, saying all he pointed out at the meeting was that he had told party leaders when he was appointed to the post in December that he did not want to work with Moyane.

Mantashe confirmed that the "top six" meeting dealt with tensions between Gordhan and Moyane but declined to comment on the alleged threat to resign.

"I always refuse to talk about rumours because if I start talking about rumours I am going to be deep in trouble because some of the rumours are driven deliberately," he said.

However, a number of ANC insiders with intimate knowledge of the talks insisted that the minister threatened to leave.

"He did threaten to leave if Tom is not removed and Ntlemeza and others are not told to stop the investigation. But how does Baba instruct a law-enforcement agency to stop investigating anyone? It would be unfair and dangerous," said one official.

Another source accused Gordhan of "thinking that he was above the law just because everybody tells him that he is now the most powerful minister in the cabinet".

Zuma sympathisers, including three from the criminal justice cluster and two from SARS, rubbished claims that Gordhan was the subject of a smear campaign aimed at distracting him from doing his work.

They pointed out that Moyane opened the case in May last year, long before Gordhan returned to the finance portfolio.

"When SARS established the rogue unit in 2009, Pravin was the commissioner and it is only logical that he can be asked to clarify certain things and answer certain questions.

"If Pravin's hands are clean and if he is innocent, as he claims, then why is he scared of this Hawks investigation? He is now busy lobbying the public to rally for him instead of letting the law do its course and exonerate him," a SARS source said.

Zuma has told those close to him that he would "not interfere" with the Hawks investigation and that he will not sack Moyane as he believes he is doing a great job.

Tensions between Moyane and Gordhan were evident at the presentation of the budget.

SARS staff who were on standby to fly to Cape Town and help the Treasury prepare the speech were told at the last minute that they were not required, SARS sources said.

"We learnt on Friday last week that all the bookings should be cancelled ... it's a case of don't call us, we will call you. But eventually a few others including Tom went," one said.

Two criminal justice cluster sources said Moyane requested a meeting with Zuma in December, to which Ntlemeza was invited, to discuss the implications of Gordhan's re-appointment.

At a meeting between Zuma, Gordhan and organised business earlier this month, Old Mutual's Ralph Mupita presented a nine-point plan to help avoid a rating downgrade, which included a need for the tensions between SARS and National Treasury to be resolved amicably.

Zuma is said to have agreed to this plan.

People need to understand that this is our future. Food prices are already skyrocketing

On Friday Cas Coovadia, chief executive of the Banking Association, who had also attended the meeting with Zuma, said:

"We have made the point with the president and the minister that we need to do what needs to be done.

"A critical balance is that we collect taxes properly, and an efficient revenue service is critical to that.

"The revenue service has done very well in collecting taxes. We as a business, we are extremely concerned: now we have reached a total breakdown between the revenue service and the minister of finance.

"We urge that this matter gets sorted out urgently, that the minister plays the role he should be playing, and the commissioner to play a role that he should."

Economic analyst Mike Schussler of economists.co.za warned that the Treasury battle was causing uncertainty that the beleaguered South African economy could ill-afford.

"One thing is certain: if the one faction wins, all of these plans will come to naught and the decline of state-owned entities under unsuitable leadership will continue.

"People need to understand that this is our future. Food prices are already skyrocketing.

"Hunger will be the plight of the workers and the poor if we do not act with restraint.

"If this unnecessary fight is not nipped in the bud, it will not end well."

Sunday Times saw the questions the Hawks sent to Gordhan and they include:

• Who was heading the unit and to whom was it responsible and accountable?;

• Was there any input you gave for establishing the unit?;

• As the commissioner of SARS at the time, were you briefed about all key strategic operations?;

• Were there things at SARS (when you were the commissioner) that would have happened without your knowledge?;

• If this unit was operating legitimately, why were they [its members] operating from guesthouses, hotels, restaurants and their private dwellings?;

• Who authorised the procurement of the surveillance equipment to be utilised during the unit's operations?;

• We believe you are aware of the KPMG forensic investigations into the existence of a rogue unit at SARS. Do you perhaps have a clue as to why such investigations were conducted?; and

• Did the minister of finance receive the KPMG report? If yes, have you read it since you took office or requested to be briefed about its content by the deputy minister or the commissioner? Have you made any contact with Judge Frank Kroon?

Read the Hawk's Questions to the Finance Minister here.

hunterq@sundaytimes.co.za, skitis@sundaytimes.co.za, rampedip@sundaytimes.co.za, investigations@sundaytimes.co.za

 

CORRECTION: In a previous version of this article, we quoted Finance Minister Pravin’s Gordhan’s wife, Vanitha, but incorrectly named her as Patsy. Mrs Gordhan has also brought it to our attention that she was not aware we intended to publish her comments when she answered her husband’s phone. We regret the errors.