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Reprieve for Gordhan, SA as NPA backtracks on fraud charges

Oct 31 2016 12:38
Sam Mkokeli and Mike Cohen

Johannesburg - National Prosecuting Authority (NPA) head Shaun Abrahams on Monday withdrew fraud charges against Finance Minister Pravin Gordhan and two former SA Revenue Service commissioners, saying he didn’t intend to act unlawfully.

The announcement marked a dramatic turnaround in the legal pursuit against Gordhan, who was under investigation over the early retirement of a former colleague at the national tax agency that resulted in R1.1m of allegedly wasteful expenditure. Gordhan was scheduled to appear in court on Wednesday.

Gordhan and former colleagues Oupa Magashula and Ivan Pillay “did not have the requisite intention to act unlawfully”, Abrahams told reporters at a media briefing in Silverton. “I have decided to overrule the intention to prosecute. I have directed the summonses to be withdrawn with immediate effect.”

READ: Rand rallies as NPA drops Gordhan charges

Gordhan has been a key driver of a campaign to maintain South Africa’s investment-grade credit rating, which is up for review over the next two months. He called the allegations a political stitch-up, and he’s clashed with President Jacob Zuma over the affordability of nuclear power plants the president wants to build, and the management of state companies and the national tax agency.

The rand advanced as much as 1.8% against the dollar, to the strongest since October 4, leading gains among 31 major and emerging-market currencies tracked by Bloomberg. Against the euro, South Africa’s currency rallied as much as 2.1% to the highest since August 16.

“This is new chapter in the war between Zuma and Gordhan,” said Theo Venter, a political analyst at North West University in Potchefstroom, west of Johannesburg. “The obvious strategy to get Gordhan out of the cabinet failed. It is going to be very, very hard to remove Gordhan now.”

While Monday’s decision appeared to strengthen Gordhan’s position, prosecutors are still considering whether to charge him in connection with allegations that he oversaw the establishment of an illicit investigative unit during his tenure as head of the national tax agency.

READ: NPA can’t win fraud, theft case against Pravin Gordhan: Expert legal analysis

Zuma appointed Gordhan as finance minister in December under pressure from ruling party and business leaders, after his decision to give the post to little-known lawmaker David van Rooyen sparked a sell-off in the rand and the nation’s bonds.

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