#HandsOffPravin: South African Business Leaders Defend Finance Minister
From The BRICS Post. Story by Helmo Preuss.
South African politics took a turn earlier this week when crime investigators (also known as “the Hawks”) summoned Finance Minister Pravin Gordhan to answer questions about an alleged surveillance unit established while he was head of the country’s tax authority.
The finance minister ignored the summons on advice of his attorneys but said he “remained committed to assist the Hawks in any bona fide investigation”.
“I have a job to do in a difficult economic environment and serve South Africa as best I can. Let me do my job,” Gordhan said in a statement.
The probe and the summons come at a sensitive time as South Africa tries to emerge from stalled GDP growth. Some pundits saying nothing could destabilize the economy and local currency more than this investigation.
Business leaders and former Finance Minister Trevor Manuel have jumped to defend Gordhan.
“Such action will destroy this economy,” Manuel told eNCA TV. “The next move is actually up to the head of state to call them (Hawks) in and say: if you have compelling evidence, let’s see what it is,” he added.
The president responded by saying he does not have the power to stop an investigation.
“Zuma wishes to express his full support and confidence in the Minister of Finance. The Minister has not been found guilty of any wrong doing. President Zuma does not have powers to stop any investigations into any individual. Our constitutional democracy, the strength of our state institutions and the effectiveness of our courts in upholding and protecting rights is our guarantee of justice and fairness,” a media statement said.
Foreign investors did not taken kindly to the latest Gordhan incident. The rand has regained ground against the dollar, but the latest political turmoil risks all that. The rand has weakened from R13.50 per US dollar on Aug. 22 to R14.28 per US dollar on Aug. 24 before closing at R14.37 on Friday.
In January 2016 the rand touched a record R17 per US dollar.
“This is going to be a relatively rapidly moving story in our view,” said Peter Attard Montalto, an economist with financial holding company Nomura. “There is political urgency now to the need for change at National Treasury, but Pravin Gordhan will not go without a fight. That means ultimately, it will be Zuma’s decision to push the reshuffle button or not. With market positioning the wrong way round the market reaction will be profound.”
The Centre for Development and Enterprise (CDE) said it was deeply concerned about the latest attack on the Minister of Finance.
“It is a politically motivated attempt to discredit the Minister of Finance and to create a seemingly rational basis for removing Mr Gordhan from office.”
The CDE warned that removing Gordhan from office would lead to the installation of what it believes is someone less likely to obstruct “the capturing of the state by a small coterie of dishonest businesspeople and compromised politicians”.
That would produce dire consequences for the South African economy, it warned.
The CDE urged an enquiry into the conduct and motivations of the senior officials involved in this “investigation”. They suggested that civil society use the hashtag #HandsOffPravin to show their support for Gordhan.
One of the civil society bodies that quickly came to the finance minister’s defense is The Helen Suzman Foundation, a non-governmental organization dedicated to the promotion of liberal constitutional democracy through broadening public debate and research.
“We believe we speak on behalf of all fair-minded South Africans, irrespective of political persuasion, in showing our support for the Minister of Finance and his former colleagues at SARS and our outrage at this attack on them. 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. Those behind this campaign of public vilification and persecution must have known this from the outset,” the foundation said.
Professor Raymond Parsons of the North-West University School of Business and Governance said the fallout on the economy could be worse than Nenegate in December 2015, when Zuma removed Finance Minister Nhlanhla Nene and replaced him with David van Rooyen, who himself lasted only four days.
“Unless the conflict between the Hawks and Finance Pravin Gordhan is resolved soon, the collateral damage to the economy will be considerable,” Parsons said. “The overall effects could well exceed the economic shock South Africa experienced when former Finance Minister Nene was replaced in December 2015.”
Read more at The BRICS Post.