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Cape Town - President Jacob Zuma is hunting for any route to remove Finance Minister Pravin Gordhan, which should be hard but not impossible, said Nomura emerging markets economist Peter Attard Montalto.
He said the ongoing battle between the tenderpreneur and anti-tenderpreneur camps stepped up significantly over the weekend with the news of Gordhan's "imminent arrest" over his apparent involvement in the SA Revenue Service's (Sars's) "rogue unit".0
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"We think the market is still grossly underestimating political risk premia and President Zuma’s present position and power – he is not a lame duck and may discount market turbulence," said Montalto.
The Sunday Times reported that Gordhan faces "imminent arrest" after the Hawks allegedly handed a docket over to the National Prosecuting Authority (NPA). Former finance minister Trevor Manuel and former Sars commissioner Ivan Pillay were also implicated.
Montalto said charges would likely claim that there were covert operations at Sars for political purposes to aid former president Thabo Mbeki.
The presidency dismissed the report, saying it was clearly the "work of dangerous information peddlers who wish to cause confusion and mayhem in the country", while the NPA denied receipt of the docket.
"As far as the so-called rogue unit matter is concerned, which is [being] investigated by the Hawks, our prosecutors are actually guiding that investigation," NPA spokesperson Luvuyo Mfaku told News24 on Sunday.
The Presidency also denied any imminent Cabinet reshuffle.
"However, it is assumed that any arrests should take place after the 3 August local elections so as not to disrupt ANC chances then," said Montalto.
He said the news is not a total surprise. "The ongoing conflict between the tenderpreneur camp (with Zuma as its head) and the anti-tenderpreneur camp (with Pravin Gordhan as its notional head) has reached something of a stalemate on a number of issues.
"On SAA, Pravin Gordhan will not extend new guarantees until the board is reshuffled and chairwoman Dudu Myeni is removed, but President Zuma will not permit her removal.
"On Sars, Pravin Gordhan’s attempts to take greater control and restrict commissioner Tom Moyane’s restructuring of the entity have apparently been blocked by President Zuma.
"On the nuclear issue, the whole procurement process is still being blocked by the lack of sign-off from Pravin Gordhan and yet government rhetoric maintains that it will proceed."
Montalto pointed out that Zuma had to reluctantly reappoint Gordhan in December last year after former finance minister Nhlanhla Nene refused to take the job back and given the lack of other obvious candidates.
Zuma unceremoniously removed Nene of his post and replaced him with unknown ANC MP Des van Rooyen, only to replace the latter four days later amid a financial market rout.
"Given this stalemate, President Zuma is going to have to take a major step forwards to achieve his goals. Pravin Gordhan’s strategy so far has been defensive and will have to remain so. For both sides the conflict is existential to different visions of South Africa. Pravin Gordhan has to successfully defend against every attack; President Zuma ultimately has to win only once."
Montalto said a trial of Gordhan would never be successful and probably could never be attempted. He cited four reasons for this.
- Proving that the so called rogue spy unit was undertaking political activities would be nearly impossible.
- Trying to prove that the unit was undertaking illegal covert activity seems to be a challenge given it appears to have been acting within relevant laws.
- The existence of dossiers at Sars, originating from this unit, on Zuma, his family and associates would come up in any trial and be problematic for him and those around him.
- If Zuma were indeed involved in the setting up of the unit and was a witness for the defence in any trial, it would further make such a trial untenable.
However, he added that it may be that a trial never has to happen.
"We believe there is a scenario that Pravin Gordhan and others merely have to be charged (after the local elections) in order for President Zuma to reshuffle the Cabinet and install a new finance minister (and deputy as well most likely).
"The charges could then hang in place for some time before being dropped and no trial would ever have to occur. In the interim, whoever takes on the finance minister role would have had time to provide whatever sign-offs and project approvals President Zuma may require," Montalto said.
