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Guptas’ selloff may signal Zuma’s waning control

Aug 29 2016 06:48
Liezel Hill and Mike Cohen

Johannesburg - The decision by the Guptas to sell their businesses in South Africa is the latest indication that President Jacob Zuma's grip on power may be slipping.

The Gupta family, which has holdings ranging from coal mining to media, made the surprise announcement on Saturday that it will exit all its interests in the country by the end of the year.

Zuma, who has described the Guptas as friends while denying that the family wields political influence, is also facing a public backlash over a police investigation into Finance Minister Pravin Gordhan. Both developments come weeks after his ruling African National Congress suffered its worst-ever election performance.

The Guptas’ move might be a signal that the family is positioning itself to take account of shifting power dynamics, according to Daniel Silke, director of the Political Futures Consultancy in Cape Town.

“They may feel that there is political change coming in South Africa,” Silke said by phone. “In the sense that they may not in future have the same access to benefits that they have had in the past.”

Zuma, 74, has been dogged by scandal since he took charge of Africa’s largest economy in May 2009, including allegations that he allowed the Guptas to use an air force base to transport friends to a wedding, and delegated the family the power to make cabinet appointments. The Guptas have been in business with the president’s son, Duduzane, and have employed one of his wives. Zuma and the Guptas say there is nothing untoward about their relationship and deny any wrongdoing.

With his second and final term ending in 2019, Zuma has faced calls to quit since the nation’s top court ruled in March that he violated the constitution when refusing to repay taxpayer funds spent on his private home.

Minister probe

Criticism of the president has intensified since police revealed last week that they asked Gordhan, 67, to appear at their offices over allegations including setting up an illicit investigative unit while he headed the national tax agency. Opposition parties and analysts have speculated Zuma may use the case to install a more compliant head of the National Treasury. Zuma has said he doesn’t have power to halt the probe. The spat caused the rand and government bonds to tumble.

The Guptas’ business dealings and links to senior politicians, including Zuma, are currently being investigated by the Public Protector. In April, some of the country’s largest banks said they would close accounts related to the Guptas’ Oakbay companies.

Oakbay Investments owns 80% of Oakbay Resources, a gold and coal mining company listed on the Johannesburg Stock Exchange, according to the resource company’s website. Other businesses include closely held Sahara Computers, a heavy-equipment supplier, a safari lodge, television news channel ANN7 and national newspaper The New Age.

“The Guptas are acting in their own interests,” Abdul Waheed Patel, managing director of Ethicore Political Consulting, said by phone from Cape Town. “One must take a cautious view of what happens between now and the end of the year. We have no indication that Zuma is going anywhere any time soon.”

Poll losses

In local elections this month, the ANC lost its absolute majority in four major cities including the economic hub of Johannesburg and the capital, Pretoria.

A spokesperson for the president, Bongani Ngqulunga, said by phone he was in Nairobi and wasn’t immediately able to respond to questions on the implications of the Guptas’ sale plans. Gary Naidoo, a spokesperson for the Guptas, requested e-mailed questions and didn’t immediately respond to them. The Guptas said in a statement on Saturday that the family has “no interest in politics, only business.”

The investigations into the family’s business dealings have driven them to sell their South African assets, said David Maynier, the finance spokesperson for the main opposition Democratic Alliance.

“Things have evidently reached a ‘tipping point,’” he said in an e-mailed statement on Sunday. The Guptas are “abandoning a sinking ship.”

“Clearly the Guptas have been feeling very uncomfortable and very unwelcome in South Africa,” Azar Jammine, chief economist at Econometrix in Johannesburg, said by phone. “It’s an issue that undermines the president.”

Read Fin24's top stories trending on Twitter:

oakbay  |  pravin gordhan  |  jacob zuma  |  gupta family
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