From catwalk to lion’s den
Establishment of Brics bank just one of their disagreements
MALUSI Gigaba was at a fashion show on Thursday evening when his phone rang. President Jacob Zuma was on the line with the news that he was making him finance minister. The call was a sharp break from the tradition in naming ministers
TENSIONS between President Jacob Zuma and former finance minister Pravin Gordhan got so bad they could not even agree on a Brics bank due to be built in South Africa.
Claims have emerged that the standoff has delayed the establishment of the bank, as the two were unable to agree on a location and staffing issues.
The bank is meant to fund big infrastructure projects worth billions of rands in Brazil, Russia, India, China and South Africa.
“The Brics colleagues follow our domestic politics. It’s an embarrassing yet serious issue,” a senior government official said.
“We are still struggling to set up the Africa regional centre of the bank, as announced a year ago. This is because PG and JZ differed on location and staffing issues.
“JZ wanted to nominate his people but PG insisted on professionals with proven banking expertise and experience.”
Zuma is said to have told the ANC’s top six leaders this week he had to fire Gordhan as the relationship between them had irrevocably broken down.
The National Treasury announced the establishment of the New Development Bank headquarters in Shanghai, China, in February last year, following a formal agreement between Brics leaders at the body’s fifth annual summit, in South Africa, in 2013.
Gordhan said in his budget speech last year that the bank was establishing its Africa regional centre in Johannesburg.
When Zuma fired Gordhan’s predecessor, Nhlanhla Nene, in December 2015, he said Nene was set to lead the bank, but that never materialised.
This week, South Africa also failed to attend the Brics bank’s annual board of governors meeting in Delhi, India. It was the first time South Africa had not attended the meeting, which is the highest decision-making meeting of the bank outside Brics and is attended by finance ministers of all Brics countries.
South Africa could not send any delegates to the meeting, which was held on Wednesday and Thursday this week, because of the cabinet reshuffle.
Asked what had caused the delay in establishing the bank, Department of International Relations and Co-operation spokesman Nelson Kgwete referred questions to the National Treasury and the Presidency.
Presidency spokesman Bongani Ngqulunga said the establishment of the bank was going ahead. “Work is proceeding well. President Jacob Zuma appointed an interministerial committee on Brics and among its priorities is to oversee the establishment of the bank. The [committee] looks at the Brics bank and other areas of co-operation within the Brics framework,” said Ngqulunga.
The bank issue is just one of many tensions that led to Gordhan being fired. He also had standoffs with various ministers, including Faith Muthambi, who has been moved from communications to the public service and administration portfolio, and Social Development Minister Bathabile Dlamini over their failure to follow proper procurement processes in their departments.
Gordhan also bumped heads with SAA chairwoman Dudu Myeni, a close associate of Zuma, and was engaged in a spat with Water and Sanitation Minister Nomvula Mokonyane over the multimillion-rand Mzimvubu water project in the Eastern Cape.
Muthambi and Gordhan clashed over the Treasury’s investigation into the SABC splashing out R40-million in 2015 on a “state-of-the-art studio”, which was little more than a hi-tech presenters’ table with multiple screens.
The office of the chief procurement officer requested tender documents from the SABC as it had not gone through normal procurement processes.
The SABC has to date not produced the documents. Instead, Muthambi wrote to Gordhan telling him she was unhappy she had not been informed about the investigation.
In a letter seen by the Sunday Times, she said: “The department finds it unfortunate that the National Treasury has decided to conduct an investigation into the SABC without the courtesy of informing me as the minister, who is the shareholder in the SABC on behalf of the South African government.”
Gordhan clashed with Dlamini over the payment of social grants, as the department’s contract with Cash Paymaster Services was coming to an end. In their correspondence, Dlamini rejected Gordhan’s proposals on how to pay beneficiaries and instead accused the Treasury of overstepping its duties.
At a press conference this week, Gordhan said: “There’s no such thing as the Treasury deciding to do X. The Treasury does not decide on its own. The Treasury could make recommendations, the budgeting process goes through a technical process which is chaired by our DG . . . Ultimately the decisions are made in cabinet and what I present are matters that have been agreed by cabinet.”
JZ wanted to nominate his people but PG insisted on professionals No such thing as the Treasury deciding to do X. Decisions are made in cabinet