Bruce’s List: A daily guide to informed reads.
Well, that was quite a weekend and it’ll be quite a week. deputy president Cyril Ramaphosa has finally emerged forcefully to take sides with finance minister Pravin Gordhan and to make clear that he expects him to deliver the medium-term budget policy statement on October 26. Gordhan himself lodged an affidavit in the Pretoria high court seeking a Declaratory Order that the finance minister cannot force the banks to do business with President Jacob Zuma’s friends, the Guptas — and in the process revealing a string of transactions the Guptas have made that have aroused the suspicions of the Financial Intelligence Centre, which reports to him.
So not only are the facts of the Guptas’ finances now out in the open (it is probably just a fraction of them), but the battle lines in the ANC are clear too. In the Top Six it is the president, chair Baleka Mbete and deputy secretary-general Jessie Duarte versus Ramaphosa, secretary-general Gwede Mantashe and treasurer-general Zweli Mkhize.
Zuma, as tradition seems to have it, was out of the country as all of this blew up but is back today and has some hard choices to make. If he fires Gordhan he is in trouble. If he doesn’t, he is in trouble.
Gordhan’s deposition has a lot of detail in it but it doesn’t yet make the Guptas guilty of anything. For instance, the fact that the Guptas used the Optimum mine’s R1.3bn rehabilitation cash fund to pay for the mine when they bought it from Glencore may well be perfectly legal. They could legally (and with mines minister Mosebenzi Zwane’s almost guaranteed permission) have replaced it with a bank guarantee or a trust fund. That is the law.
The question to ask is this: As cash, the rehabilitation fund would not be subject to tax. If the cash is no longer used for rehabilitation then it becomes subject to tax and must be treated differently on Oakbay’s balance sheet. To change the status of the cash Optimum had in its fund you’d need the permission of Sars and you would very likely have to pay some form of capital gains tax. Given that both Zwane and Sars boss Tom Moyane are in the Zuma/Gupta camp it is reasonable to ask what was done with the cash.
This is where Gordhan was clever. By laying down some facts, and by naming the four big SA banks as respondents, he opens the way for the banks to defend themselves from political attack in the courts. He lifts their obligation to client confidentiality. Let’s hope there’s a court case out of this. We need all the facts. And we need to hear the Guptas explain the facts. Here is Gordhan’s explosive deposition, including all his correspondence with the Guptas and the legal advice he worked off: Guptas’ shady billions revealed: read the full Gordhan Gupta Dossier.
And, typically, Ranjeni Munusamy in Daily Maverick provides the political background and implications, for us all, of what transpired over the weekend: As South Africa enters a Thuli-less era, Pravin steps into the breach. And from the Rand Daily Mail online I like this quick overview of how the Gordhan dossier will draw, willy-nilly, some serious institutions into the fray: Gupta cash flow raises serious questions for the JSE and SARS.
It is worth remembering too that while the state is being shaken, our great universities are on their knees, One of my fears is that Zuma, under pressure as he is, may try to use this crisis to divert attention from the spotlight he is now under. Under section 37 of the constitution he can, with the support of parliament, declare a state of emergency for 21 days if the life of the nation is threatened by, among other things, insurrection or disorder. This piece from Ivor Chipkin neatly draws the ideological lines around the #FeesMustFall rhetoric and illustrates how the Left is trying to turn protesting students towards treasury. The students may not know it but with Zuma cornered, their continued disruption of universities may be just the thing he needs to survive a little longer: #FeesMustFall: Separating Treasury’s truth from ‘ultra-left’ fiction.
Meanwhile Ramaphosa’s statement supporting Gordhan, who faces fraud charges on November 2, could not have been more timely. He absolutely had to stand up and while the language is temperate, the message is clear. Because he backs Gordhan and expects him to deliver his medium-term budget policy statement, if Zuma tries to fire Gordhan in the meantime, Ramaphosa will have to oppose it: Ramaphosa backs Gordhan: Read the full statement. And as Stephen Grootes explains in this really fine piece Ramaphosa’s stance is really big. “Surely,” he writes, “never before, have we had a sitting deputy president issuing a statement, in the full pomp of their office, in support of someone facing criminal charges”: Ramaphosa’s Gordhan surprise: A sign of the turbulent times to come.
And while the eternally foolish head of the ANC Youth League, Collen Maine, was calling at the weekend for MK veterans to arm themselves to defend Zuma, someone helpfully remembered this piece of reporting from City Press on Maine’s improbably large home mortgage. Maine, you see, is also a Gupta capture. Could not have been much of a chase though: Guptas ‘backed’ Oros’ R140k monthly bond.
Finally, off topic but amusing nonetheless, is this piece from Business Insider on the woes and regret in the UK over that country’s foolhardy Brexit vote in June. Apparently so many “leave” voters now regret it that if the referendum were held today the country would vote very differently: The number of people who regret voting for Brexit is now greater than the margin of victory for Leave.