26 February 2016

South Africa: Gordhan Threatened to Quit As SARS Wars Escalates

Photo: South African Govt
Finance Minister Pravin Gordhan presents the 2016 Budget.

Finance Minister Pravin Gordhan threatened to resign ahead of his crucial budget address over an alleged clash with Sars commissioner Tom Moyane and ultimately a "proxy war" with President Jacob Zuma, reports said on Friday.

His threat reportedly emerged after the Hawks sent Gordhan a letter, questioning him over his role in the alleged rogue unit at Sars during his tenure as commissioner from 1999 to 2009, according to reports in Business Day and the Mail & Guardian (M&G) on Friday.

"At the heart of the battle is the recapturing of Sars from perceived Zuma allies," the M&G said.

"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," it said. "He also claimed that the Hawks were being abused to fight the proxy war with Gordhan."

The battle started well before Gordhan was reappointed as Finance minister, with Moyane using the contentious rogue report to oust senior Sars officials who were close to Gordhan. A new inner circle close to Moyane has now been formed in an alleged bid to protect Zuma and his allies.

"Gordhan ... was (first) targeted after a leaked copy of a KPMG document reportedly recommended that he be questioned about the unit," Business Day said.

"It's allegations that have no foundation," Gordhan told press after he was reappointed in December. "They are based on a leaked document that even I haven't seen."

"Where is this mysterious report? KPMG has a cheek to say he [Gordhan] doesn't know anything but he should know. I thought forensic people are supposed to come up with facts. What does that say about the reputation of KPMG?" Gordhan asked at the time.

"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 (as Finance minister in December)," the M&G reported.

Soon afterwards, Gordhan instructed Moyane to halt his extensive restructuring plans, so he could assess the situation before allowing the process to continue. Moyane directly ignored the directive from Gordhan, who he officially reports to.

The Hawks letter was seen as the final straw and Gordhan allegedly told Zuma last week: "Moyane must go or I must go".

Shortly after this meeting, Zuma told press in Pretoria that he thought Des van Rooyen was the most experienced Finance minister he had ever appointed, which has been seen as a swipe at Gordhan.

It became evident at the budget on Wednesday that tensions were rising, with Moyane absent from the pre-budget press conference.

When asked why Moyane was absent, Gordhan said: "It's no secret that there are issues to resolve at Sars. We will resolve them in a couple of weeks and then we will communicate to the public."

Gordhan was frank about his political future. "If you see me sitting here in October, then I have political support and if not, then I don't have political support - that's how life works," he said.

The following day, Leanne Manas, SABC Morning Live presenter, asked Gordhan to respond to some viewers' questions about the size of President Jacob Zuma's cabinet and the burden it puts on the economy.

"The finance minister will be fired if he says anything about the size of the cabinet," Gordhan quipped. "I can't comment on that. Constitutionally that is the president's prerogative."

Ahead of local government elections, tensions seem to be running high within the ANC with people either in support or in opposition to Zuma.

During the post-budget briefing to the ANC's parliamentary caucus on Thursday, Gordhan was allegedly outspoken about Moyane.

AN ANC MP told M&G that 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".

The clash does not bode well for South Africa's credit rating, which is on the verge of being downgraded to junk status.

The markets' opinion of the budget may worsen if any disconnect between the political system and the Treasury emerges, NKC Research analysts Gary van Staden and Bart Stemmet said on Thursday.

"If there is the slightest indication that Mr Gordhan does not have the full support and backing of his government colleagues and key elements of the party and the alliance, then all bets (with the rating agencies) are off," they said.

"Some things only make sense with hindsight," said BizNews publisher Alec Hogg. "On Monday, most South Africans were amazed at President Jacob Zuma's claim his 'Weekend Special' Finance Minister Des van Rooyen was the best he'd ever appointed.

"No longer. It is now clear this was Zuma's ham-handed attempt to prepare the nation for another financial shock. Unless the President backs down on another of his strange deployments, the country's reappointed Finance Minister Pravin Gordhan will quit.

"Moyane was appointed soon after Zuma fired Gordhan in 2014, and spent the next year systematically dispatching the respected Sars executive team Pravin had built," he said.

"We will soon know whether the new Finance Minister is indeed 'unfireable' as those in global markets currently assume."

Sars and Treasury declined to give comment to both reports, while the Presidency told M&G it does not respond to gossip and rumours.

Source: Fin24

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