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SA assets sink after Hawks summon Gordhan

Aug 24 2016 12:13
Joe Brock and Mfuneko Toyana
Johannesburg - South African assets slumped on Wednesday after the Hawks summoned Finance Minister Pravin Gordhan over an investigation into a suspected rogue spy unit in the tax service, fuelling speculation that there was a plot to oust him.


Gordhan and other former officials at the South African Revenue Service (Sars) must report to the Hawks on Thursday morning in relation to contravention of surveillance regulations, a source close to the matter told Reuters.

The announcement added to investors' worries about leadership at the finance ministry as Africa's most developed economy teeters on the edge of recession and credit rating agencies consider downgrading it to "junk" status by year-end.

Shadow finance minister David Maynier urged authorities not to take any more formal steps against Gordhan.

"The arrest of the finance minister would shatter investor confidence, risk a sovereign ratings downgrade and be a disaster for the already fragile zero growth, zero jobs economy in South Africa," the member of the opposition Democratic Alliance said in a statement.

The Treasury confirmed the Hawks had contacted Gordhan and that he was seeking legal advice, but declined to go into further details.

Gordhan is due to speak at a debate in Cape Town at 19:00. Hawks spokesperson Hangwani Mulaudzi said it did not comment on ongoing investigations.

The rand extended losses after dropping 3% the previous session when the news about Gordhan emerged.

Bonds also slumped with the yield on benchmark 2026 issue rising 46 basis points to 8.935%. South Africa's stock market banking index opened almost four percent down.

 "Plot to oust Gordhan"

A Zuma-backed plan to build a fleet of nuclear power plants, at a cost of as much as $60bn, has been a cause of tension with the Treasury for months and is likely adding to pressure on Gordhan's position, analysts say.

Russian state-backed companies are the favourites to win the nuclear bid, industry sources say. "This is all part of a plot to oust Gordhan," political analyst Prince Mashele said. "Gordhan refuses to sign-off on the Russian nuclear deal."

Gordhan has refused to be drawn publicly on whether he supports the nuclear project but has said South Africa will only enter agreements it can afford.

Presidency spokesperson Bongani Majola did not respond to requests for comment.

Local media reports in May said Gordhan may face arrest on espionage charges for setting up the unit to spy on politicians including President Jacob Zuma.

Read Fin24's top stories trending on Twitter:

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