Pravin has Cyril’s backing
Groundswell of support for minister against Zuma
THE UPROAR around the impending arrest of Finance Minister Pravin Gordhan has escalated into verbal sparring, with President Jacob Zuma and his deputy Cyril Ramaphosa sending conflicting messages.
This was as the ramifications of the political saga continued to rattle the government, the ANC and its partners in the tripartite alliance, as well as business.
As the Hawks’ pursuit of Gordhan and other former Sars officials for their role in the “rogue unit” threatened to blow up in his face, Zuma went on the defensive yesterday.
In a flurry of media statements from the Presidency echoing those in the days after the firing of Nhlanhla Nene as finance minister last year, Zuma said he had no power to halt investigations.
He said the presidential com- mittee on state-owned enterprises announced on Monday was the product of recommendations from a review of parastatals adopted by the cabinet.
Gordhan had significantly raised the stakes in the stand-off by effectively challenging the Hawks to come and get him if they dared, for their use of a purported investigation into Sars to instruct him to report to their offices.
While Zuma yesterday said he had “full support and confidence” in Gordhan, he insisted he did not have the powers to stop any investigation against him.
However, Zuma’s denial, while strictly correct in law, was received with scepticism and criticism. This was as evidence mounted that the Sars saga was turning into a public relations disaster for him.
A few hours later, however, Ramaphosa, in an apparent proxy war with Zuma, contradicted him when he publicly backed Gordhan.
Ramaphosa, who was speaking at the funeral of former minister and diplomat Makhenkesi Stofile in the Eastern Cape, said Gordhan’s integrity was unquestionable.
“The minister of finance is today facing what could be an arrest. It should concern us. When the government works well, it should not be a government that wages a war against itself,” warned Ramaphosa.
Gordhan and his deputy Mcebisi Jonas were part of a team of ministers attending Stofile’s funeral in the Eastern Cape.
“I am here to pledge my total support to the minister of finance,” said Ramaphosa, who has been working closely with the finance minister in unlocking growth in the economy.
Former foreign affairs director-general Sipho Pityana was particularly scathing of Zuma, saying if the president had been in the Eastern Cape for Stofile’s funeral, he would have pleaded with him to resign. He then asked the mourners to use Stofile’s funeral to rid the ANC of the ills of corruption and nepotism.
“May his (Stofile’s) wish for the movement to go back to its former glory during his last few days, not be in vain,” said Pityana, who pointed out that he was disappointed that Zuma was not at the funeral to listen to him make all these pleas.
This came as public sentiment overwhelmingly swung in behind Gordhan and the other Sars officials with jurists, lawyers, opposition parties and academics adding their voices to the call for Zuma to block the Hawks from locking up Gordhan.
Following an open letter to Zuma from Business Leadership SA on Wednesday begging him to call off the Hawks for the sake of the economy, advocate George Bizos, retired judge Johann Kriegler and the Helen Suzman Foundation came out in support of former Sars deputy commissioner, Ivan Pillay, and former group executive: strategy and risk Pete Richer, agreeing with Gordhan that the charges were baseless.
“Not only are the charges baseless, but the manner in which they have been pursued is clearly calculated to besmirch the names of the individuals, and has predictably already seriously impaired our national economy,” said the Helen Suzman Foundation and Freedom Under Law, in a joint statement.
Former finance minister Trevor Manuel has been backing Gordhan. Opposition parties in Parliament have also backed Gordhan, saying he was standing up to Zuma for trying to capture the National Treasury.
PRESIDENT Jacob Zuma and his deputy Cyril Ramaphosa’s public support for embattled Finance Minister Pravin Gordhan yesterday failed to lift the rand after the currency rebounded in early trade but fell again as their pledges failed to inspire the markets.
The rand opened at R14.1486 to the dollar but fell to R14.32 around 4pm only to recover to R14.2777 by 5pm.
Earlier, the currency and stocks rallied after Zuma pledged his full confidence in Gordhan but said he could not stop the Hawks from investigating any individual.
The rand has weakened 5 percent against the greenback this week.
Ramaphosa’s support for Gordhan was more emphatic.
Speaking at the funeral of late former sports minister Makhenkesi Stofile in Alice in the Eastern Cape, Ramaphosa said he had confidence in the finance minister and the way he was doing his job.
War against itself
“When a government works well, it should not wage a war against itself,” he said. Ramaphosa said the fact that Gordhan could be facing arrest “should concern us”.
He also had a word for state institutions: “Whatever various agencies of government have to do, we should do it in a way that does not destabilise government, that does not destabilise our economy and does not demonstrate to our people that we are a government that is at war with itself.”
The rand strengthened 1.2 percent to 13.95 per dollar at 11.24 am while the yield on rand-denominated bonds due in December 2026 dropped 9 basis points to 8.96 percent.
“At least he’s coming out to support the finance minister, that’s helping,” said Ion de Vleeschauwer, the chief dealer at Bidvest Bank in Johannesburg. “That’s calming the market fears a little bit. Every little comment that comes out that’s telling people it’s fine and we’re good, that will help.”
Per Hammarlund, the chief emerging markets strategist at Swedish bank SEB Group said the rand strengthened along with other emerging markets’ currencies on the back of profit-taking following the dollar rally over the last few days and favourable global risk appetite.
Hammarlund said at one point, the rand strengthened more than the others when Zuma expressed his “full confidence” in Gordhan.
He said Zuma’s announcement was an attempt at damage control and was meant to limit the impact on markets and appease the rating agencies.
“However, he also said that he cannot intervene to stop the investigation, so the issue is not over. Zuma’s faction… will likely see strengthening or even stability of the rand as an invitation to increase the pressure on Gordhan. In addition, the rand is no longer particularly undervalued, which increases the downside risk potential,” he said.
He said the rand would be particularly volatile with a weakening bias in the coming days and weeks, adding that he expected the currency to head to R14.36 a dollar “and potentially break through resistance with the next level to break being R14.57 to the dollar”.
Hammarlund said the big- gest risk to that view was a dovish speech by Federal Reserve chairwoman Janet Yellen today, “which would send risky assets like the rand higher again, steamrolling any domestic political risks coming from the Zuma-Gordhan struggle.”
The rand’s one-month implied volatility against the dollar remained above 20 percent yesterday, the highest among emerging-market currencies, indicating that traders still saw risks ahead. – Additional reporting by Bloomberg.