South African assets sink after police summon finance minister

South African assets slumped on Wednesday a day after an elite police unit summoned Finance Minister Pravin Gordhan over an investigation into a suspected rogue unit of the tax service, fuelling speculation that there was a plot to oust him.

Reuters

South African Finance Minister Pravin Gordhan delivers his 2016 Budget speech to parliament in Cape Town, February 24, 2016. Pic by Mike Hutchings/Reuters
South African Finance Minister Pravin Gordhan delivers his 2016 Budget speech to parliament in Cape Town, February 24, 2016. Pic by Mike Hutchings/Reuters

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.

They will all receive a ‘warning statement’ given to someone before they are charged with an offence, the source and a summons sheet seen by Reuters showed.

Hawks spokesman Hangwani Mulaudzi said it did not comment on ongoing investigations. The Treasury confirmed the Hawks had contacted Gordhan and that he was seeking legal advice.

Uncertainty over leadership at the finance ministry is worrying investors 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.

The rand fell one percent early on Wednesday to its weakest in nearly a month, extending a drop of 3 percent 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 percent. South Africa’s stock market banking index opened almost four percent down.

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.

Zuma has rejected allegations by opposition parties that he has failed to publicly back Gordhan, saying that the law should take its course.

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

This month, the ruling African National Congress suffered its worst electoral performance since coming to power at the end of apartheid 22 years ago.

Zuma spooked investors in December by replacing then finance minister Nhlanhla Nene with relatively unknown lawmaker David van Rooyen. After markets tumbled, Zuma demoted van Rooyen and appointed Gordhan, in his second stint in the job.

Do you have a coronavirus story? You can email us on: news@alphamedia.co.zw