Last year, South Africa had its feet at the edge of an abyss. President Jacob Zuma dismissed Finance Minister Nhlanhla Nene and replaced him with Desmond van Rooyen. Under huge pressure, four days later Zuma relented and replaced van Rooyen with former Finance Minister Pravin Gordhan, taking us a few steps back from the edge. Now South Africa has been marched back to the edge of the abyss. Gordhan is being investigated and potentially faces criminal charges.
The investigation by the Directorate of Priority Crime Investigation (aka the Hawks) stems back to when Gordhan was Commissioner of the South African Revenue Service (SARS). He set up a covert unit to investigate tax evasion. The claim is that Gordhan acted illegally in doing so. Gordhan’s response is that the Hawks have misinterpreted the law in question. One legal expert has described the case as “legal nonsense”. So…
What the heck is going on?
A grab for control of South Africa’s finances.
Over the last month, several highly irregular things have happened in rapid succession. Firstly, shortly after the Local Government Elections, ESKOM asked for comment on a nuclear build programme that it intends to undertake. It did this in a very low key way, as if it was hoping it wouldn’t be noticed and would pass without public comment. Secondly, it was announced that all major government procurements will be handled by an office under the control of President Jacob Zuma. Zuma had millions of taxpayers’ money spent on his private residence at Nkandla, and had 783 charges of fraud and corruption against him that were controversially dropped shortly before he became President. Thirdly, South African Airways (SAA), under the mismanagement of Chairwoman Dudu Miyeni, is in financial meltdown, and needs guarantees from the Treasury otherwise it may be declared insolvent and forced to stop flying. Finally, Minister of Transport Dipuo Peters instructed that a forensic investigation into the Passenger Rail Administration of South Africa (PRASA) be halted. Said investigation has already uncovered a fortune in dodgy spending.
Where does Gordhan fit into all this?
He’s trying to stop money being squandered.
Gordhan has refused to support the nuclear build until he gets solid proof that it is affordable and feasible. Given that the build would take decades to come online and cost tens of billions of Rand, this seems unlikely. In addition, over the last year, ESKOM started a programme for Independent Electricity Producers to get paid for generating electricity for the Grid. These producers have been able to provide electricity at affordable prices and still turn a profit. This programme was recently and abruptly cut back, under very suspicious circumstances.
Gordhan refuses to provide any guarantees to SAA until Miyeni and the Board are replaced. This is reasonable as the Board is largely responsible for the mess SAA is currently in. Miyeni is politically connected, however, and refuses to go. If Treasury refuses to provide guarantees, SAA could be placed in liquidation by its creditors and Miyeni would be removed anyway.
Gordhan has also insisted on belt tightening and a halt to wasteful expenditure across all government departments. The aforementioned PRASA investigation appears to have uncovered proof of illegal activity. This could be politically quite damaging.
Why is Zuma attempting this grab for control?
Since December last year his position has become precarious. He has suffered considerable damage to his standing.
After the news about Nkandla broke, Public Protector Thuli Madonsela was asked to investigate. Her report, entitled “Secure in Comfort” detailed a fortune in improper expenditure and recommended that President Zuma pay back a portion of the more than R240 million spent. Zuma ignored Madonsela’s recommendations and the opposition Democratic Alliance took him to Court. After a long process where Zuma lost and then appealed several times, he capitulated and agreed to reimburse the State.
The DA has also taken the Directorate of Public Prosecutions to Court to get the dropping of charges against Zuma reviewed. They have had considerable success, even in the face of relentless delaying tactics.
The biggest thing that has weakened Zuma’s position is the Local Government Elections. In their campaigning, opposition parties turned the Election into a referendum on Zuma’s presidency. It worked. The ANC’s share of the vote fell to below 55%, the worst it has done in any general election it has contested. It also lost control of several major municipalities, including Johannesburg, Tshwane and Nelson Mandela Bay.
Sections of the ANC have begun to realise just how damaging Zuma is to them. There has been talk of an early Elective Conference. Zuma has surrounded himself with cronies. If he is forced out (which is looking increasingly likely) then he won’t be able to rely on them to shield him from having the charges against him reinstated and facing criminal prosecution.
How will it go down?
It’s very unlikely that Gordhan will be arrested. What’s most likely is that the investigation will drag on for a few months, and then Zuma will make an announcement along the lines of “I have lost trust in Gordhan, and with great sadness have decided to replace him”.
If Zuma succeeds, all will be lost. If Gordhan prevails, victory.