Zuma Watch

End game for Zuma is on – SA on the edge

Who – me?

The end game for President Jacob Zuma and his circle of patronage, trying to retain their stranglehold on the South African state and its resources, is on. It could leave the country in ruins. (Read more)

The high drama exploded on the South African public scene early last week when the police elite unit, the Directorate for Priority Crime Investigation or Hawks, summoned Finance Minister Pravin Gordhan to appear at its offices to receive a warning statement. It has become an extremely confusing picture – a dream world for conspiracy theorists.

On careful analysis, however, it is clear that Mr Zuma and his allies have, with the local government elections behind him and the ANC embarked on a final showdown with their detractors. Some of his allies – notably the Gupta family – are running for cover, something for which they have been preparing for some time.  

Battlegrounds developing

A number of battlegrounds on various fronts have quickly developed between what can broadly be described as the Zuma and Gordhan camps. They transcend lines between various government institutions, between government and civil society organisations and are especially fierce between groups within the increasingly fracturing ANC.

The latter became especially clear at the funeral service for the late premier of the Eastern Cape and former Minister of Sport, Makhenkhesi Stofile, where both Deputy President Cyril Ramaphosa and SA Human Rights Commission head Sipho Pityana seemed not only to be defending Mr Gordhan, but also to be aiming swipes at the Zuma network of patronage and state capture.

Almost coinciding with the news of the Hawks’ renewed attack on Minister Gordhan, which seemed to have gone on hold during the local election campaign period, was the move by President Zuma to take control of state owned enterprises (SOEs) via a newly created Presidential Coordinating Commission (PCC)

This might have been a move against Mr Ramaphosa, who played a key role in Minister Gordhan’s reappointment as finance minister in December and who now came out strongly out in his corner. Ramaphosa was also until last week the member of the executive responsible for the SOEs as chairman of the Presidential Infrastructure Coordinating Commission (PICC).

Interestingly enough, the PICC was introduced in 2014 after cabinet, the previous year, announced the intention to establish a PPC, which never happened as Mr Zuma was putting distance between himself and the SOEs, increasingly embroiled in controversial contracts with Gupta-controlled companies.

Also read: South Africa in deep trouble as existing order comes apart

Fact is, however, that the particular SOEs have a joint annual revenue of just under R290 billion and are almost without exception involved in controversial deals with known friends and/or family of Mr Zuma.

On Friday last week Dr Popo Molefe, chairman of the Passenger Rail Agency (Prasa) claimed the ANC illegally bagged R80 million from the Prasa locomotive contract via a close friend of Mr Zuma (Angolan businesswoman Maria da Cruz Gomes.

This came only 48 hours after transport minister Dipuo Peters was criticised for trying to put an end to a forensic investigation into a string of deals, by Werksmans Attorneys commissioned by Prasa’s board.

Also last week, reports surfaced that people and companies involved in the controversial sale of South Africa’s strategic oil reserves below market value in December last year pocketed at least R1.5 billion.

Typical Zuma manoeuvre

In a typical Zuma manoeuvre to try and put distance between him and the Hawks’ onslaught on Minister Gordhan, and to try and turn the tables, he claimed he has no power to intervene in the investigation, has to uphold the constitution and not to shield individuals from the law.

At the same time President Zuma’s son Edward slammed Gordhan’s backers and insisted he must be probed. “Let’s not be fooled by the so-called ‘rating agencies’ in that the rand will crumble because of the super minister, Gordhan. If he’s clean, then [he must] stop panicking as if he’s hiding something,” he reportedly said.

Mr Zuma also, probably on the advice of his close allies and employees in the state security establishment, avoided public appearances where he could become the target of jeering, as happened at the funeral of the late President Nelson Mandela. He was at a conference in Kenya during the Stofile funeral service.

However, there is no hiding the fact that the position of Mr Zuma, with its litany of controversy upon controversy and the network of friends and family benefiting from patronage, has become a serious source of conflict inside the ANC and its alliance partners.

Not only have increasing numbers of party veterans come out against Mr Zuma and defended the position of Minister Gordhan, but the party’s South African Communist Party alliance partner this past weekend called for President Zuma’s power to hire and fire cabinet ministers to be reviewed if he continues to use it for “factional reasons”.

In KwaZulu-Natal, Mr Zuma’s home province, conflict between ANC and SACP supporters have already seen politically inspired murders and tensions led to a planned joint memorial service being called off due to fear of “all hell breaking loose”.

And as calls within the party are growing for an early elective conference, there are also increasing rumours of a Zuma cabinet reshuffle, which would lead to members of the SACP and Mr Gordhan being replaced. It will probably be a manoeuvre by Mr Zuma to strengthen his own position in the party and maybe the reason why ANC secretary-general Gwede Mantashe has indicated that an early conference might “not be a bad idea”.

There is, however, no doubt that such an early elective conference will heighten the factional battle within the ANC and its alliance.

Running for cover or distraction

The announcement, also over the weekend, that the Gupta family is selling all of its shares in its South African businesses “for the good of the country” could be signalling one of two things or both:

  • They are running for cover, fearing the end of the Zuma era and wanting to dodge criminal charges, which might be instituted against them; or
  • Having already moved most of their [money] out of the country and largely relocated to Dubai, they will be transferring their South African interests for next to nothing to Zuma family members and friends.

The end of the Zuma era seems to be nigh.

A Samson move?

Judged by the extent to which Mr Zuma just shrugged his shoulders at the possible economic implications of especially the attack on and likely removal of Minister Gordhan, he seems to be willing to pull down the walls around him if he goes down.

Among others, former Minister of Finance Trevor Manuel has warned that firing Mr Gordhan would destroy the economy. All the signs are there it will lead to the rand tumbling. A credit rating downgrade to junk status by the end of the year also seems a certainty.

It could trigger a downward spiral for the country into failed status.

Judge Bernard Ngoepe, South Africa’s tax ombudsman, has already warned of a tax revolt, with taxpayers saying that if state institutions or those charged with the administration of their money conduct themselves unethically, the country will have problems.

Addressing the annual conference of the Fiduciary Institute of Southern Africa, he said: “One of the problems we will have, will be that taxpayers will say ‘I will not pay if my money is not going to be used properly. I will not pay if my money is going to be corrupted. I will not pay if my money is going to be used to finance institutions, which are going to abuse their power for political gains.”

The country has already experienced some element of this in the way people have refused to pay road tolls.

Consumers under pressure

A bigger and more immediate danger, however, might be lurking in the increasing pressures on ordinary South Africans’ living costs and quality of living.

South Africa’s Banking Association (BASA) recently said it was extremely concerned about the events regarding the Minister of Finance, Mr Pravin Gordhan.

The latest Consumer Credit Index from TransUnion shows that consumers are feeling the pressure and turning urgently to credit sources to keep afloat.

The cost of a basic food basket in South Africa is up R100 in six months.

The price of a basic basket of 23 grocery items has risen by 13% since February this year, Massmart Holdings said last Wednesday at the announcement of its first-half-year results to 26 June 2016.

This situation can worsen dramatically if things go wrong in the Gordhan affair, with ordinary people ultimately taking their frustrations to the streets, triggering a seriously destabilising public revolt.

Add to this the fact that civil society organisations and high profile civic leaders like retired Constitutional Court judge Johan Kriegler, with the support of advocate George Bizos and organisations like the Helen Suzman Foundation, might challenge the Hawks in court, and it becomes clear that the country is heading for turbulent times.

by Piet Coetzer

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