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South African finance minister ordered to appear in court South African finance minister ordered to appear in court
(3 days later)
Prosecutors have ordered Pravin Gordhan, the South African finance minister, to appear in court over allegations he broke public finance rules by granting a colleague early retirement – news that sent the rand and share prices reeling.Prosecutors have ordered Pravin Gordhan, the South African finance minister, to appear in court over allegations he broke public finance rules by granting a colleague early retirement – news that sent the rand and share prices reeling.
The currency dropped as much as 3.4% against the dollar after the announcement of the latest legal problems for the finance minister, who says he has been the victim of a politically motivated campaign in the past few months.The currency dropped as much as 3.4% against the dollar after the announcement of the latest legal problems for the finance minister, who says he has been the victim of a politically motivated campaign in the past few months.
South Africa’s chief prosecutor, Shaun Abrahams, said Gordhan, in his previous role as head of the South African Revenue Service, had cost the tax agency around 1.1m rand (£62,000) by approving early retirement for the tax agency’s deputy commissioner, Ivan Pillay, and rehiring him as a consultant.South Africa’s chief prosecutor, Shaun Abrahams, said Gordhan, in his previous role as head of the South African Revenue Service, had cost the tax agency around 1.1m rand (£62,000) by approving early retirement for the tax agency’s deputy commissioner, Ivan Pillay, and rehiring him as a consultant.
Gordhan is still being investigated for his role a decade ago in setting up a surveillance unit at the tax department which is suspected of spying on politicians including the president, Jacob Zuma. Gordhan has since described the unit as “political mischief”. Gordhan is still being investigated for his role a decade ago in setting up a surveillance unit at the tax department which is suspected of spying on politicians including the president, Jacob Zuma. Gordhan has since described the investigation as “political mischief”.
An elite police unit known as the Hawks first questioned Gordhan about the allegation in February, in an investigation that some analysts have said was the result of political pressure from a faction allied to Zuma. The president has denied the claims.An elite police unit known as the Hawks first questioned Gordhan about the allegation in February, in an investigation that some analysts have said was the result of political pressure from a faction allied to Zuma. The president has denied the claims.
Abrahams said: “I can assure you there has been no political interference in this matter. There has been no political interference in the decision made.”Abrahams said: “I can assure you there has been no political interference in this matter. There has been no political interference in the decision made.”
Gordhan confirmed that prosecution officials had delivered the summons to appear in court to his house on Tuesday morning.Gordhan confirmed that prosecution officials had delivered the summons to appear in court to his house on Tuesday morning.
“It looks like we are in for a bit of excitement going forward,” he said at a business seminar in Johannesburg. “My lawyers will issue a proper statement in a short while.”“It looks like we are in for a bit of excitement going forward,” he said at a business seminar in Johannesburg. “My lawyers will issue a proper statement in a short while.”
David Maynier, the shadow minister of finance for the main opposition Democratic Alliance party, said prosecuting Gordhan would be “a disaster for the economy” and would make a credit ratings downgrade more likely.David Maynier, the shadow minister of finance for the main opposition Democratic Alliance party, said prosecuting Gordhan would be “a disaster for the economy” and would make a credit ratings downgrade more likely.
“We must now trust the courts to determine whether there is any merit to these charges,” he said.“We must now trust the courts to determine whether there is any merit to these charges,” he said.
In August, Gordhan declined to obey a police summons in connection with the inquiry into whether he had used the tax service unit to spy on politicians, saying he had done nothing wrong.In August, Gordhan declined to obey a police summons in connection with the inquiry into whether he had used the tax service unit to spy on politicians, saying he had done nothing wrong.
The governing ANC party urged Gordhan to cooperate with the latest summons and said the lingering investigation was having a detrimental effect on the economy.The governing ANC party urged Gordhan to cooperate with the latest summons and said the lingering investigation was having a detrimental effect on the economy.
The party said it hoped the latest legal step would move the country “a step closer to uncovering the truth from facts”.The party said it hoped the latest legal step would move the country “a step closer to uncovering the truth from facts”.
Analysts said the Gordhan summons increased the political risk of doing business in the country. “This will further erode confidence in the political and economic management of South Africa,” said Daniel Silke, director of the Political Futures consultancy. “It will potentially affect our chances of sustaining the current rating agency levels.”Analysts said the Gordhan summons increased the political risk of doing business in the country. “This will further erode confidence in the political and economic management of South Africa,” said Daniel Silke, director of the Political Futures consultancy. “It will potentially affect our chances of sustaining the current rating agency levels.”
In line with the weaker rand, South African bank stocks fell nearly 5% to a four-week low.In line with the weaker rand, South African bank stocks fell nearly 5% to a four-week low.
Government and dollar bonds also fell sharply, while the cost of insuring exposure to South African debt leapt to three-month highs.Government and dollar bonds also fell sharply, while the cost of insuring exposure to South African debt leapt to three-month highs.
Investors and rating agencies back Gordhan’s plans to rein in government spending in an economy that has been forecast by the central bank to grow at just above 0% this year.Investors and rating agencies back Gordhan’s plans to rein in government spending in an economy that has been forecast by the central bank to grow at just above 0% this year.
A cut to “junk” status in ratings reviews due later this year would push up Pretoria’s borrowing costs, making it harder to plug the budget deficit.A cut to “junk” status in ratings reviews due later this year would push up Pretoria’s borrowing costs, making it harder to plug the budget deficit.
• This article was amended on 14 October 2016. An earlier version said “described the unit” where “described the investigation” was meant.