NewsSouthern AfricaGordhan court summons panics rand

Tue,21Nov2017

Posted on Tuesday, 11 October 2016 14:43

Gordhan court summons panics rand

By Crystal Orderson in Cape Town

South Africa's finance minister Pravin Gordhan/AP

 

South Africa's finance minister Pravin Gordhan has been summoned to court by the National Prosecuting Authority (NPA) on fraud charges, roiling markets and pushing the rand into free fall.

 

The rand dropped to R14.3, and the stocks of some of the country's largest banks fell by about 4% on the day of the announcement, 11 October.  

Gordhan – who was summoned to a police station in August – and two others have been asked to appear at the Pretoria regional court on 2 November. Gordhan is accused of approving an illegal early retirement package for former South African Revenue Services (SARS) boss Ivan Pillay.

The NPA’s prosectutor Shaun Abrahams said this was a violation of the Public Management Finance Act. “[Gordhan] has not received any money, but the evidence will come out in court,” Abrahams argued. The NPA has been investigating Gordhan's activities at SARS, and other charges are possible.

The NPA's October move – part of a cat-and-mouse game played by President Jacob Zuma's administration over the past six months – raises serious questions about the hijacking of political institutions in the country, according to legal experts. Constitutional law professor Pierre de Vos branded the charges “bizarre”.

The timing of the charges certainly raised eyebrows. On 9 October, Zuma failed to persuade the Constitutional Court that his nearly 800 thrown-out corruption charges should not be revisited. The following day, public protector Thuli Madonsela said President Zuma refused to answer questions regarding her probe into state capture by the private economic interests.

Abrahams insisted there is no “political interference in the decision-making process”.

Meanwhile, Gordhan, addressing an event in Johannesburg, confirmed the summons and said he would be in court on 2 November.

This will be a week after he delivers a crucial mid-term budget scheduled for 26 October.

“No one is above the law,” South Africa's vice-president Cyril Ramaphosa told reporters on 7 October on a visit to Singapore, “but clearly the way it’s been done so far has caused some concern in a number of quarters.”

Gordhan has other backers, including Gauteng premier David Makhura, who said “the Gauteng government knows he’s an ethical leader”.

Abrahams is unrepentant, however, highlighting the schisms within the governing African National Congress: “If Pravin is unhappy with the decision and the NPA is incorrect, he and the others must ask me to review it.”

The markets were taken by surprise by the NPA's announcement, with economist Francois Stofberg saying “if Gordhan is forced to retire [the currency] might reach levels of R17-18 to the dollar and [would make] a ratings downgrade likely.”

South Africa is in the midst of other crises, with student protests across the country. President Jacob Zuma has largely been silent on the issue and is currently in Kenya on a state visit.



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