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CEOs weigh in on reason for Gordhan summons

Oct 12 2016 19:26
Carin Smith

Cape Town - Why summon Finance Minister Pravin Gordhan to court for what is essentially an administrative and human resource matter?

This question was raised in disbelief by Cas Coovadia, chair of the Banking Association of SA and part of the CEO Initiative, on Wednesday.

Coovadia told Fin24 the CEO Initiative is deeply concerned about the announcement by the National Prosecuting Authority (NPA) that Gordhan must appear in court.

"We are confident it would have been dealt with at the SA Revenue Service (Sars) at the time, according to normal processes," he explained.

"South African authorities cannot be putting national interest first by allowing the summons of Gordhan. South Africans should question the timing thereof. It is just prior to the mini budget. Ratings agencies are in town and now something as stupid as this is done."

As to what he thinks the hidden agenda against Gordhan could be, Coovadia said it is clear that Gordhan has been committed to curb corruption.

"That is what he has been doing, so we can just assume that this is latest action is to put obstacles in his way of curbing corruption," said Coovadia.

He said Gordhan has been doing a phenomenal job and he is a very committed and honest South African wanting to promote the national interest.

READ: Gordhangate: Almost R34bn wiped off SA banks

The CEO Initiative describes itself as a relatively informal body representing the largest companies in South Africa. It has been working closely with Gordhan and Treasury since the beginning of the year to avoid - or at least delay - a ratings downgrade. It believes this collaboration had begun to put the SA economy on a sustained inclusive growth path.

"This development will undoubtedly make all engagements with ratings agencies in the foreseeable future extremely difficult and erodes the positive progress we have made to date," the CEO Initiative said in a statement on Wednesday.

"Our joint work has also averted a ratings downgrade earlier this year. The announcement from the NPA – and its timing – has resulted in a significantly negative impact on the performance of the currency, the stock exchange and the positive sentiment built during the most recent international investor roadshow showcasing South Africa in New York.

READ: Rand tanks on Gordhan summons news

Although the CEO Initiative agrees with prior statements by Gordhan that the law must take its course, the body remains convinced that he has not acted incorrectly.

"We believe this announcement is part of a campaign against him and the National Treasury, in an effort to make it difficult for them to conduct their core responsibilities of maintaining fiscal discipline - which includes tightening up systems to deter fraudulent activities and creating a conducive environment for sustainably growing our economy for the benefit of all who live in it," the CEO Initiative said.

The CEO Initiative is a collective of leaders from various sectors chaired by Jabu Mabuza, chair of Telkom SA. The various work streams are led by Sim Tshabalala (joint CEO of Standard Bank); Ralph Mupita (CEO of Old Mutual Emerging Markets); Mike Brown (CEO of Nedbank); Adrian Gore (CEO of Discovery); Brian Joffe (founder of Bidvest); Dr Dan Matjila (CEO of the Public Investment Corporation); Colin Coleman (managing director for Goldman Sachs in SA) and Stephen Koseff (CEO of Investec Group).

The Consumer Goods Council of South Africa (CGCSA) also said on Wednesday that the timing of the summons of Gordhan and two former senior Sars executives is a matter of grave concern, not least because of the impact on the markets, but most importantly, on whether there will be stability at National Treasury.
 
"It is even more disconcerting that this is happening at a time when the minister has just returned from a successful trip in the UD to promote South Africa as a safe and credible investment destination. National Treasury is grasping with crucial economic issues that require focus and stability to ensure that South Africa avoids a potential investment credit rating downgrade," said the council.
 
"With projected economic growth in 2016 at a decade low, the CGCSA believes that government, the private sector and labour now more than ever before, need to work together to improve business confidence, attract investment and create jobs. In this respect, Minister Gordhan's efforts so far to rebuild confidence in South Africa following the removal of minister Nhlanhla Nene in December 2015 deserves the support of the business community and of the country as a whole."

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