SA society must stand firmly behind Gordhan

AT A casual glance there would seem little wrong with a cabinet decision that President Jacob Zuma chair a new co-ordinating committee to oversee South Africa’s state-owned companies (SOCs).

One may ask what could possibly be wrong if there is more rather than less oversight of public business? The answer, unfortunately, is not so straightforward.

To start with, the language of the decision is alarming in terms of both scope and intent.

The official announcement says the Presidential SOC Coordinating Council will provide Zuma “line of sight on strategic decisions and interventions to create SOCs that play a transformative role in a capable developmental state. The decisions and plans from the cabinet lekgotla will bolster implementation of government’s programme of action and gives confidence that South Africa is on a sustainable social development and economic growth trajectory”.

Clearly the intent goes further than simple oversight and covers strategic intervention in SOCs for political reasons, which is a concern – and here’s why.

To start with the reason for a SOC is not for any political “programme of action” as part of a vague “transformative role”, or to give confidence for a “sustainable social development and economic growth trajectory”.

The reason is to run a public business (like SAA, Eskom or SABC) in the same way as a private business with a sharp focus on making sure it performs properly.

A SOC is a trading entity registered as a company in terms of the Companies Act that derives most, if not all, its income from commercial trading. It is not a public service entity (like the Electoral Commission) that performs a public service and relies fully on the state for its finance.

Secondly, there is already substantial oversight of every aspect of SOCs, with final oversight, in terms of the constitution, vested in parliament, who act as shareholders.

There is an auditor-general who oversees a SOC’s accounts to make sure its books are accurate and in line with accepted accounting practice.

There is the National Treasury which oversees governance to make sure a SOC doesn’t trade recklessly or sign contracts that harm the national fiscus.

There is a cabinet minister, answerable to cabinet, who oversees a SOC’s board to make sure its strategic direction is correct.

All are accountable to parliament through various committees to make sure all oversight is open and transparent.

Adding another layer of oversight behind closed cabinet doors may result in executive “intervention” in SOCs that is opaque and accountable only to the president.

We don’t need that. LET me do my job,” said Finance Minister Pravin Gordhan as yet another day of sound and fury, and smoke and mirrors came to an end.

Gordhan, who was ordered to “present himself” to the Hawks yesterdsy in relation to the SARS investigative unit set up in 2007, has thrown down the gauntlet. In a dramatic twist, Gordhan, following legal advice, declined to appear before the Hawks.

It feels a little like December as the rand immediately nose-dived on the back of the news of Gordhan’s possible arrest.

Much ink has been spilt on the matter and on what exactly is going on, yet there is a perfectly simple answer to all this. It goes like this: Gordhan and Team Treasury have been doing a sterling job in overseeing South Africa’s macro-economic stability and ensuring that the ratings agency downgrades are kept at bay.

He has steadfastly refused to grant SAA a R5-billion bailout and has said we cannot afford the nuclear deal or a 0% fee hike for universities. His predecessor, Nhlanhla Nene, now in the political wilderness (not the BRICS Bank), was fired for saying precisely that too.

Gordhan, his deputy Mcebisi Jonas and National Treasury stand as a bulwark between South Africa and complete state capture. They have held the line against a maverick and dangerous populism and nepotism within the ANC and from President Jacob Zuma himself.

Gordhan’s stance represents an inconvenience for Zuma and his cronies. He therefore must be replaced. Removing Gordhan or pressuring him to resign would ensure that someone more pliable might be appointed, thus allowing Zuma and his merry band free rein over SOEs and related contracts worth billions.

Post elections, Zuma has made an angry speech in KwaZulu-Natal where he denied he was a liability to the ANC.

It was Gwede Mantashe who had to front up during a post-NEC press conference, muddling his way through “collective responsibility”.

But he knows, and we all know, that the ANC’s poor electoral showing is in large part due to Zuma and the impunity with which he governs.

What does Zuma, the wounded animal, do? He unleashes the Hawks on Gordhan and attempts to shore up his and his cronies’ wealth ahead of an ANC leadership contest next year.

Former finance minister Trevor Manuel has called on the president to exercise his “constitutional responsibility” and protect Gordhan.

Manuel’s call is laudable but this is a president who has scant regard for the constitution, as has been seen repeatedly. He governs only in his own narrow interests and the interests of those within his patronage network.

It’s that simple really and to suggest otherwise would be naive. We are dealing with a president who is a threat to the very fabric of our constitutional democracy. Gordhan knows that and Mantashe does too. But given the balance of power within the ANC, he just seems powerless to stop the wreck. Yesterday Zuma said he supported Gordhan but wouldn’t intervene in an investigation.

Needless to say, this would not be South Africa if there weren’t some bitter irony.

It is worth repeating that Hawks head Mthandazo Ntlemeza is the same person the North Gauteng High Court found to be unfit to hold his position.

The latest news that Gordhan might face charges of corruption for granting former SARS deputy head Ivan Pillay early retirement is thus laughable.

Quite how this all plays out is anyone’s guess. Gordhan, buoyed by support from within and also from powerful business and civil society lobbies and with the law on his side (all signs are that the Hawks have no case against him), clearly feels emboldened not to “present himself” before the ham-handed Hawks.

In this scenario Gordhan stymies Zuma and his cronies while Zuma lends Gordhan no support. It’s stalemate, not checkmate, and the paralysis of now pretty much plays itself out.

Alternatively, Zuma lashes out and dares to fire Gordhan, this time replacing him with someone pliable but more acceptable to the markets.

In that scenario we witness looting of the state with a less brazen veneer. But it’s looting all the same with disastrous effects for the economy.

Because what possible reason would Zuma have to remove the very capable and trusted Gordhan except to get his hands deeper into the SOE cookie jar?

Zuma may well over-extend himself, precipitate a crisis and lose the war. The nearer the ANC gets to its elective conference next year, the more Zuma will have to lose as patronage seeps away from him and possible new players enter the stage.

The ANC NEC is dominated by Zumarites who for now hold the balance of power, yet power is a fickle thing. There are decent men and women in the ANC, they are simply outnumbered right now.

In this fast-moving, unpredictable environment, anything is possible. Therefore, business and civil society cannot afford to be bystanders and wait for the ANC to sort itself out. Already Business Leadership SA and a group of economists have warned in open letters of the dire consequences of removing Gordhan from his position. This pressure needs to be stepped up – more so now than before.

Gordhan too will need to play his cards carefully. He needs to win the war and not be distracted by the battles. State capture is difficult in places where transparency is a key governance principle.

Shining light on the dark places is therefore critical in the next months and the media will have a crucial role to play.

When Zuma met the CEOs of the Top 100 companies, he assured them that government would act to deliver the necessary economic reforms and that Gordhan had his backing to bring about the economic stability necessary. CEOs were sceptical because they have heard the words before.

Last year veteran Financial Times journalist Martin Wolf visited South Africa for the first time in 15 years. Wolf’s concern is for a slide to populism of the wrong kind when he says:

“The fundamental point is that if the country does not shift to a path of faster, employment-generating growth, the populist disaster seems increasingly inevitable... the stagnation and high unemployment of today are a politically unsustainable combination. Change will come. Let it be in the right direction.”

And, one might add, let Pravin Gordhan do his job.

Judith February is a senior research associate at the Institute for Security Studies (ISS).

● This article first appeared in the Daily Maverick