Why Zuma is so desperate to get rid of Gordhan

President Jacob Zuma needs to get rid of finance minister Pravin Gordhan as a matter of urgency, if the system of patronage and tenderpreneurship that has underpinned his presidency is to survive to 2019 and beyond.

This is the view of Nomura research analyst, Peter Attard Montalto, reflecting on the so-called “Sars Wars” which have sent South Africa’s markets on a downward path over the past few days.

On Tuesday, news broke that Gordhan had received a letter from the SAPS investigative unit, the Hawks, to appear at their offices on Thursday to receive a warning statement – a precursor to formal charges – relating to the “rogue Sars spy unit” established under his watch as commissioner.

Gordhan, after receiving legal council, decided that he would not comply with the request as there was no legal obligation for him to do so. The minister had been previously informed that there was no investigation or charges against him – and any ‘new’ legal claims are without basis.

According to Attard Montalto, the ongoing saga is the next phase of the ‘forgotten’ war between president Jacob Zuma and Gordhan that hit an uneasy stalemate ahead of the 2016 elections. This time, however, things will move rapidly towards the end-game, as there is a sense of urgency, with more at stake, the analyst said.

“The market does not understand the political dynamic within the ANC, and especially relating to Zuma’s position and his power,” Attard Montalto said.

“Zuma has not lost power – neither after Nene-gate nor after his constitutional court case on Nkandla nor after these local elections. Zuma is the master of playing the ANC, and especially the NEC at its own games, holding it in equilibrium exactly where he wants it.”

“We still believe he has the support of at least 60% of the NEC, which, in turn, backs him in what is going on now,” he said.

A desperate battle

Zooming out, the analyst said, this is all about winning the ANC elective conference – currently scheduled for December 2017, though possibly earlier, which now adds a sense of urgency.

“Winning the elective conference is about then charting a path under a new leader, but that represents the status quo for (Zuma’s) tenderpreneur faction, through to the ANC winning in 2019.”

“The route to that is a well-oiled patronage machine, which requires, ultimately, control
over National Treasury (NT),” Attard Montalto said.

Worryingly, the analyst pointed out that Pravin Gordhan doesn’t necessarily have to “be gone” to accomplish this, as there are other ways of “boxing-in” Treasury, such as a presidential oversight panel.

But such a route would be complex, and take time – which is something Zuma does not have in abundance. According to Attard Montalto, there are several ticking time-bombs around the presidency that are pushing this brash action:

  • SAA is an urgent issue where guarantees are needed. The deadlines are a little fuzzy, but accounts for last year are due in parliament by 15 September and require guarantees for that to happen. Hong Kong requires accounts (showing solvency) by 6 September or else would ground any plans there. The South African Air Services Licensing Council requires accounts and proof of solvency by early October or else would ground SAA planes. Leasing companies could also seize assets if this were to happen. This is the most pressing issue.
  • Zuma’s faction, Nomura says, wants an end to Treasury investigations of PRASA, Eskom contracts, and similar issues ongoing or about to start. They also want NT to stop blocking a lack number of tenders and contracts that are seen as politically necessary.
  • Nuclear is also seen as being stalled on by Treasury, and Zuma’s faction wants movement here to hard tendering by year-end, Nomura said.

“As such, we believe that a Pravin Gordhan exit is a ‘live’ issue – though putting a precise timeline on this or calling the end point is exceptionally difficult. We believe we are moving towards the endgame,” the analyst said.

“We believe that Pravin Gordhan will fight for as long as possible to remain in position
and to protect the law, NT, and its staff. This has been shown by his decision to
announce that he will not attend the meeting summons tomorrow with the Hawks.”

“He is protesting his innocence in the strongest possible terms but also putting the ball firmly in Zuma’s court to fire him,” Attard Montalto said.

More on the Hawks vs Gordhan

Gordhan responds to arrest claims: ‘I can’t believe this is happening’

A new twist in the Hawks vs Gordhan saga

Let’s be clear – there are no charges against Pravin Gordhan: NPA

Zuma takes charge of state owned companies

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Why Zuma is so desperate to get rid of Gordhan