By Alan Hirsch*
The relatively trivial nature of the charges against South Africa’s Finance Minister Pravin Gordhan, and the way in which the prosecution has been pursued, leads to the conclusion that this is a trumped-up charge. It also suggests that Gordhan is being prosecuted for reasons unrelated to the law and order mandate of the body that has laid the charge, the National Prosecution Authority.
It is shockingly obvious that the only way to explain the charge against Gordhan and his two co-accused and the manner of its serving is malicious intent. The charges are widely viewed as an attempt to remove Gordhan from office without formally firing him, or to justify doing so soon.
These developments bode ill for South Africa. Because of the nature of events, including the circumstances of the firing of Minister Nhlanhla Nene in December 2015, all reasonable observers will expect the quality of financial management to deteriorate in a post-Gordhan scenario. They will expect that the reason for Gordhan’s removal is to loosen controls over the country’s National Treasury.
The expectation of most will be that the budget deficit will rise, unaffordable projects will be supported for bad reasons, state-owned enterprises that are under incompetent management will get more bailouts, guarantees, or capital injections, and government finances will quickly deteriorate.
Ratings will fall, funds will leave South Africa and the rand will grow even weaker. South Africans with assets will seek to move them abroad, and younger South Africans with marketable skills will look for jobs in countries with better prospects, including many in Africa.
Simply put: it will be a train smash.
But how did it get to this? What lies behind this latest attack on the finance minister?
Gorhan has served two stints as finance minister – from 2009 to 2014, and then again when he was asked by President Jacob Zuma to return to the job in December last year after abandoning the disastrous appointment of Des van Rooyen.
When he first assumed office in May 2009 he faced the very difficult task of helping to lead South Africa out of a recession brought on, in part, by the global financial crisis. However, the constraints on him were not excessively severe at the time.
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The financial circumstances were strong. South Africa had run a budget surplus for two years in the financial years ending 2007 and 2008.
There were several reasons for the surpluses. One was that far better tax collection and management systems were developed by Gordhan and his team from the time of his appointment as deputy commissioner of the South African Revenue Services in 1998. Not only were the systems better, but the budgeting and spending policies and practices of then Minister of Finance, Trevor Manuel, gave South African taxpayers the confidence that their payments would be reasonably well used.