‘I’m not going anywhere’
EXCLUSIVE: Gordhan on that “arrest” and averting a downgrade
Finance minister Pravin Gordhan isn’t going anywhere — in spite of being spooked by talk of his arrest by the fatally compromised Hawks special investigations unit and being assailed by claims by some in the ANC that he thinks he’s “untouchable”. Gordhan (67), who spoke to the Financial Mail at national treasury’s head office in Pretoria this week, looks like he’s been on dragon-slaying duty in recent weeks. “I serve at the president’s pleasure. I’ve been asked to do a job, so let me do that job. I’m a committed public servant and I hope to remain so,” he says.
Of course, it’s the president’s pleasure which has been distinctly inscrutable ever since he axed Gordhan’s former deputy, Nhlanhla Nene, as finance minister in December.
With Zuma’s thinking now anyone’s guess, the rumour is that Eskom CEO Brian Molefe, a former treasury official, is being lined up to replace Gordhan.
To many, the reports of Gordhan’s imminent arrest have coalesced into a broad narrative of his treasury as the last vanguard of the “good guys” holding out against the “bad guys” intent on “state capture” — a group for which Zuma’s friends, the Gupta family, are the perfect symbol. Politically, it’s an unhelpful narrative for Gordhan, pitting him against his boss and causing ANC insiders to gravitate towards one of these two poles.
One ANC leader says Gordhan “has no friends” — meaning he brooks no favouritism and that by sticking to the book he was always going to make enemies. Of course, there are few as powerful as the one he is now up against.
Gordhan first became finance minister in 2009, replacing Trevor Manuel, after a decade at the helm of the SA Revenue Service (Sars), the state agency now at the centre of his battle with the Hawks.
It was the Hawks’ investigation into an alleged “rogue spy unit” at Sars which culminated in reports of his imminent arrest, on the eve of a visit to SA by ratings agency Standard & Poor’s (S&P). Just as he was about to fly to Rwanda for the World Economic Forum two weeks ago, Gordhan received “credible information” that he could be arrested. Then with that threat hanging over him, he was immediately pressed into meetings with S&P and Fitch to convince them not to downgrade SA’s credit rating to junk status.
Was he able to twist their arms to delay a potential downgrade?
“It’s hard to say. Look, we were able to explain everything they wanted explained. In fiscal terms, we have a credible story, and when it comes to building confidence, we have a credible story. With enough work, we can also turn the corner as far as growth is concerned,” he says.
Where he has been successful is getting the often painfully isolationist business community to unite with him against the downgrade threat. The rating agencies spoke to many of them last week. “We’re in a new space. Together, business and labour argued a case alongside us based on the national interest, and that’s entirely new and good for the country,” he adds.
Gordhan made a strong pitch to S&P and Fitch last week, demonstrating “our political willingness to put up tough fiscal targets as well as a credible plan to get there, including expenditure cuts where necessary”.
“What everyone wants to see is the evidence that we’re moving. They said to us, don’t tell us what you want to do, show us the evidence. And we’ve done that.”
If their concerns were largely around labour, growth, and state-owned enterprises, Gordhan laid out the plans on each score.
So, for example, a tender for the appointment of advisers has been released, paving the way for the next step in government’s plan to merge SA Airways and SA Express.
Of course, the agencies also wanted to talk about the political issues — such as Gordhan’s own position.
“Look, if you pull away from our immediate environment, you’ll realise that political noise is everywhere. We can still say treasury remains a stable institution. What was attractive for these agencies was our institutional resilience. Our courts are working, other processes are working, and this outweighs the immediate noise,” he says.
Gordhan’s herculean task in recent days has been mind-boggling. On the one hand, he had to “sell” SA’s economic story of stability to the rating agencies; on the other, his role was precarious since he was, bizarrely, facing possible arrest on what appears to be a wafer-thin case.
The rand was panicked by this, shedding 45c last week. Was Gordhan panicked too?
He’ll tell you he’s been through tougher moments. “When you’re picked up at 4 am, hands cuffed behind your back and told to pack some clothes, in a country where you have no rights, that’s difficult. I’ve had handcuffs on my wrists many times, so this isn’t a big thing,” says Gordhan. This refers to his arrest as an anti-apartheid activist twice in the 1980s and again in 1990 when he was held with 40 other members of the ANC underground network, Operation Vula, which ultimately fell under Zuma, the ANC’s then head of intelligence.
On the alleged Sars “rogue unit”, there’s no evidence that Gordhan broke the law or was aware anyone else did. The strongest evidence against him is a line in a KPMG report that, as Sars’ “accounting officer” he “ought to have known” if rules were broken. Which is pretty small beer.
Nonetheless, Hawks head Gen Berning Ntlemeza wrote to Gordhan last week, reassuring him that “no action” will be taken to “embarrass the minister or humiliate him”.
Says Gordhan: “We’ll take them at their word for now. That’s what they say, so we’d like to believe them.”
So if the “charges” are trumped-up, it’s no surprise the Sars controversy is seen as part of a bigger war: a proxy battle for control of the state purse.
But the Hawks’ tin ear for the economic consequences of their “investigation” is alarming. It was during Moody’s visit to SA in March that the Hawks first issued Gordhan with 27 questions about the rogue unit — days before he delivered SA’s 2016 budget.
Those questions were leaked to the media — the latest in a string of leaks around Sars which led some in the ANC to believe this to be an attempt to “manipulate the economy” and “influence ratings”.
These leaks are meant to sabotage Gordhan and pave the way for his removal. “It is being done for political reasons, so that in the end Pravin can be seen as a failure,” says ANC spokesman Zizi Kodwa. So who is doing this? It’s a plan being masterminded by “unscrupulous business people” using their connections with politicians to take control of key levers of the state, he says. And the ANC will fight this even if this means “fighting against our own comrades”.
Herein lies the essence of the issue. The suggestion that Zuma’s allies are trying to “capture” state institutions, particularly treasury, has cleaved the ANC in two.
The first brazen attempt to do so was in December when Zuma fired Nene and replaced him with backbencher David Des van Rooyen. On Van Rooyen’s first day in his new job, two advisers linked to the Guptas — Ian Whitley and Mohamed Bobat — tagged along with him to treasury.
Zuma had to backtrack and reappoint Gordhan, who he’d removed in 2014.
If the issue of “state capture” was simmering at that stage, it was blasted onto the front pages when Gordhan’s deputy, Mcebisi Jonas, revealed that the Gupta family had offered him his boss’s job just weeks before.
Zuma, characteristically unmoved, told a Gauteng ANC conference recently that it was not his choice to remove Van Rooyen, and he felt disempowered by being forced to reverse his decision, which showed, he added, where the “real power” resided.
Zuma also claimed concerns around state capture were exaggerated, adding that SA was the only country where the majority had political but not economic power.
It was a view which chimed with a somewhat unhinged presentation by the Guptas to certain ANC leaders, in which they urged the party to strong-arm the banks into re-opening their bank accounts.
The family’s influence clearly runs deep. Cabinet soon mandated mines minister Mosebenzi Zwane, labour minister Mildred
WE CAN STILL SAY TREASURY REMAINS STABLE. WHAT WAS ATTRACTIVE FOR THESE AGENCIES WAS OUR INSTITUTIONAL RESILIENCE. OUR COURTS ARE WORKING, OTHER PROCESSES ARE WORKING, AND THIS OUTWEIGHS THE IMMEDIATE NOISE PRAVIN GORDHAN