BRILLIANT: John Battersby unpacks Nenegate, Jacob Zuma’s greatest blunder

John Battersby is without question one of the finest journalists South Africa has ever produced, having edited and reported for major publications in his homeland and internationally. He left journalism to wave the Brand South Africa flag in London for over a decade, further expanding an already wide contact base. Since leaving that post, Battersby has moved into consulting but returns occasionally to his first love, applying a cultured keyboard to sharing the inside track on matters of import. Our interview on EFF leader Julius Malema’s visit to the UK was among the best read of Biznews.com’s recent posts. This brilliant analysis of what has become known as Nenegate is also sure to resonate. Written for subscription-based Africa Confidential, which has been covering continental affairs for over half a century, Battersby analyses reasons behind President Jacob Zuma’s greatest blunder, exposing personalities who played the key roles in taking the country to the edge – and those who helped drag it back from the abyss. His assessment of the implications for South Africa, and the ANC, provide much food for thought. – Alec Hogg

By John Battersby for Africa Confidential*

The impromptu alliance of African National Congress leaders and business interests which forced President Jacob Zuma to rethink his unilateral decision to sack Finance Minister Nhlanhla Nene and replace him with a little-known back bencher has opened a new political chapter. The man-made crisis, which has proved hugely expensive for both working class and corporate South Africa, has greatly weakened Zuma and strengthened his growing band of critics within and outside the governing ANC. It was Zuma’s greatest blunder since he assumed the presidency in 2009.

Former South African Finance Minister Nhlanhla Nene
Former South African Finance Minister Nhlanhla Nene

After the ANC and business barons met on 13 December in a meeting coordinated by Deputy President Cyril Ramaphosa and ANC Secretary General Gwede Mantashe, it took their envoys, Zwele Mkhize and Presidency Minister Jeff Radebe, less than an hour to persuade Zuma to back off and again appoint Pravin Gordhan as Finance Minister.

The ANC stands up

Zuma has lost much of his power to determine the outcome of the presidential succession race between his ex-wife, Nkosazana Dlamini-Zuma, and Ramaphosa. In the short term, he has made himself much more politically vulnerable if ANC-loyalists want to try to recall him. For the first time, the ANC leadership, which he was accustomed to bypassing, took a stand and imposed itself.

It has since become clear that Zuma was aiming for direct control of the Treasury and state finances when he sacked the respected Nene. He was holding the line on reckless government spending on an unaffordable US$100 billion nuclear power station programme and a threatened re-arrangement of a $624 million leasing deal with Airbus Industries. We hear that a powerful business family, the Guptas, who are close to Zuma and have major interests in uranium mining, has been pushing hard for the nuclear deal and may have influenced Nene’s dismissal.

Nene was insisting on the full observance of lawful procurement procedures in the nuclear programme and on major if not indefinite delays. The proposed recasting of the Airbus deal to introduce a third party to it would have been at the insistence of Dudu Myeni, whom amid much criticism, Zuma appointed head of South African Airways.

Very pointedly Gordhan said, shortly after his re-appointment, ‘It’s time that individuals stop playing with SOE’s [state owned enterprises] as if it’s a personal toy when you want to extract money when you feel like it. These are public institutions.’

Nene’s sacking shocked the country to the core and seemed to be triggered by a combination of paranoia, pique and a belief that South Africa no longer needs to heed the warnings of Western investors as it has billions of dollars worth of cheap loans on tap from China and will benefit from the new development bank created for Brazil, Russia, India, China and South Africa – the BRICS countries. It also accords with Zuma’s personal pan-African vision of a united continent where political freedom is matched by economic freedom and all traces of colonial power have vanished.

A slide to disaster – and collapse of the currency – was averted by the appointment of the respected former Finance Minister Gordhan late on 13 December. Among other things, he has confirmed that the procurement procedures on which Nene was insisting will be followed in the nuclear programme and also that the Airbus leasing deal will go forward as originally designed. The Treasury issued a formal statement on 16 December seeking to reassure the country on public spending. ‘Any extra expenditure would only be accommodated if extra revenue is raised,’ it said.

The sacking galvanised the country. Protests poured in from civil society and church leaders, and Treasury civil servants threatened to resign if it were not reversed. Leading academics called on Zuma to stand down. Two respected ANC veterans and lifelong stalwarts, Ben Turok and Barbara Hogan, the partner of one of the late President Nelson Mandela’s closest associates on Robben Island, Ahmed Kathrada, called on Zuma to resign.

Reversal

The eventual reversal of the dismissal and the appointment of Gordhan followed a statement by Presidency Minister Radebe. ‘The ANC have heard the people of South Africa,’ he said. Zuma’s de facto admission of defeat read, ‘we emphasise the importance of listening to the people and to respond to their views… I have received many representations to reconsider my decision.’

These concessions followed a meeting on 13 December of Radebe and Mkhize with an extremely high-powered business delegation that included the Barclays Africa Group Chief Executive Officer, Maria Ramos; Goldman Sachs’ South Africa head Colin Coleman; Investec Bank’s global Chief Executive Officer, Stephen Koseff; Imperial Holdings’ CEO, Mark Lamberti; Sanlam CEO Ian Kirk; Business Leadership South Africa Chairman Bobby Godsell; Toyota Europe CEO Johan van Zyl and FirstRand CEO Johan Burger.

They presented a four-page document itemising how, if Nene’s sacking stood, the rand would continue its plunge, foreign investors would flee, the cost of borrowing by the state and state corporations such as Eskom and Transnet would become exorbitant and inflation would soon hit the poorest people hard. This was the decisive meeting, insiders say, and Gordhan’s appointment was announced about two-and-a-half hours after it ended.

The business community had also been pressuring the ANC leaders who came to Zuma. Before the business people made their démarche on the Sunday, ANC leaders had met at the home of former President Kgalema Motlanthe, who lost to Zuma in the 2012 ANC presidential election.

Motlanthe is one of three former leaders of the National Union of Mineworkers who now play a key role in the succession to Zuma by a new ANC leader who must be elected at the party’s five-yearly conference in 2017, before general elections in 2019. Another key figure is Deputy President Ramaphosa, also a former NUM leader. He is married to Tshepo Motsepe, a former Deloitte risk analyst and sister of the billionaire Patrice Motsepe, who is one of the ANC’s main financial backers and sponsored the last conference of the Congress of South African Trade Unions. Ramaphosa was on the brink of resigning after Nene was sacked, Africa Confidential understands.

The Motsepes’ other sister, Bridgette Radebe, is married to Jeff Radebe, whose job at the presidency was earlier believed to be under threat. Zuma had become suspicious of Bridgette because she had been flirting politically with the opposition Economic Freedom Fighters’ campaign to stop foreign companies from engaging in transfer pricing, a form of tax evasion. The Mmakau Mining Company which she chairs is estimated to be worth around $100m.

New dynasties

The Motsepes, along with the Ramaphosas and the Radebes, via marriage, are the closest equivalents to the diamonds-and-gold Oppenheimer dynasty (the late Harry and Nicky Oppenheimer and son Jonathan Oppenheimer) which opposed apartheid while having to cooperate with the National Party government on business compliance.

The Motsepe dynasty, while instrumental in supporting the ANC and at the centre of power, is quite apart from the coterie of rich business associates who keep Zuma afloat financially and enjoy his patronage in return. This group includes Robert Gumede, Vivian Reddy, Sandile ‘Gwabs’ Zungu, the Independent News and Media baron Iqbal Survé, and the Gupta brothers (Ajay, Atul and Rajesh) who have massive influence with Zuma and benefit from extensive patronage in return.

Other key figures whose influence would have been felt in the lobbying prior to the reversal were former SA Reserve Bank Governor Tito Mboweni, Godsell, former Eskom boss Reuel Khoza, Eskom Chairman Brian Molefe, and banker Martin Kingston, CEO of Rothschild in South Africa.

Rambling

To many, the most worrying aspect of the whole affair was the rambling speech that Zuma delivered at a gala evening of the African Business Leadership Programme on the night that he fired Nene and which, astonishingly, was carried live on national television. Zuma abandoned his prepared speech after formally addressing the host, Patrice Motsepe, and assembled guests, who included business leaders from at least ten African countries, and he extemporised vaguely for nearly an hour.

Zuma spoke about the suffering of Africans, first under slavery and then under colonialism and apartheid, and repeatedly returned to the theme of the impotence of political power if it were not accompanied by economic power. He kept coming back to how the British and French colonialists in particular had developed ways of creating Africans in their own image. These Africans, who have not found their true identity as Africans, are unconsciously manipulated to serve the interests of the colonialists rather than the interests of Africa, he explained. What became apparent was a distinction in his mind between true Africans who identified with the continent and those who were obstructing the realisation of the economic kingdom. It was clear to many that he saw Nene as one of those in the latter group. Such Africans had gone astray and were preventing the access to state funds that was needed to create a new class of African industrialists. He seemed almost to be asserting his entitlement to personal control of state funds.

Impact

Although national elections are due only in May 2019, the ANC is expected to suffer greatly in next year’s municipal polls, at least if the opposition parties can capitalise on its woes. That much is a given in political debate in South Africa but Zuma has set up obstacles to through his extensive re-engineering of the ANC and of key institutions, particularly in intelligence and the police. He has also introduced a raft of legislation designed to empower tribal chiefs and – through a combination of legislative coercion and patronage – to keep them and some 18 million people beholden to their power.

While the 2014 general elections showed that the ANC was losing support in key cities such as Johannesburg, Pretoria and Nelson Mandela Bay in the Eastern Cape, the party’s support in the rural areas is still solid and Zuma and his allies have been working hard to make sure that remains so. Within government and the governing party, however, the centre of gravity has shifted away from the President. There are strong rumours that a cabinet reshuffle is likely after the ANC birthday celebrations in Rustenburg on 8 January. Ministers most associated with the Communist Party and whom Zuma no longer trusts may be on the chopping block: Rob Davies (Trade and Industry), Tina Joemat Patterson (Energy) and Blade Nzimande ( Higher Education).

Chronology of a crisis

25 May 2014: President Jacob Zuma makes shock transfer of respected Minister of Finance Pravin Gordhan to a lesser portfolio, Cooperative Governance and Traditional Affairs. He appoints his deputy Nhlanhla Nene as the first black Finance Minister.

27 August 2015: Nene says he will not sign on off on a controversial US$100 billion deal to build nuclear power stations, struck between Zuma and Russian President Vladimir Putin, if it is unaffordable.

23 October 2015: Zuma surprises by capitulating to a student demand to scrap a 6% increase in tuition fees after protests around the country culminating in a march in Pretoria.

2 November: Former Acting President Kgalema Motlanthe says the Tripartite Alliance of the governing African National Congress (ANC), Congress of South African Trade Unions (Cosatu) and the SA Communist Party is dead and criticises the Zuma leadership for not sticking to the constitution.

5 November: Zuma launches attack on Motlanthe for his ‘cowardly’ criticism.

8 November: In a boost to the Zuma succession plan, pro-Zuma candidate for the ANC provincial chair of KwaZulu-Natal, Sihle Zikalala, narrowly beats the incumbent Edward Senzo Mchunu. Zuma says that he (Zuma) puts the ANC’s interests before those of South Africa.

24 November: Cosatu gives tacit backing to Deputy President Cyril Ramaphosa as presidential candidate. Zuma’s backers have made it clear they want his ex-wife, Nkosazana Dlamini-Zuma, the African Union Commission Chairperson, to succeed him.

27 November: Standard & Poor’s and Fitch downgrade South Africa’s investment status respectively from BBB to BBB- and from BBB stable to negative, taking the country to the brink of ‘junk status’.

7 December: It is revealed that Finance Minister Nene has written to the South African Airways Chairperson, Dudu Myeni, instructing her not to interfere with a deal with European manufacturer Airbus Industrie over the lease of new aircraft to save the national carrier from financial ruin. Zuma is reported to have had a love child with Dudu Myeni, which he later denies.

9 December: Zuma sacks Nene, replacing him with a little-known member of the parliamentary Finance Committee, David van Rooyen. The move is met with shock and disbelief in all sectors at home and abroad. Zuma cancels an appearance at the African Business Leadership Forum in Johannesburg to attend a crucial cabinet meeting where he reportedly pushes through an agreement to support the Russian nuclear deal. He appears late at the ABLF black-tie gala and makes a rambling 55-minute speech on Pan-Africanism which SA television broadcasts live.

10 December: Hundreds of billions of rand are wiped off the value of banking and financial shares and the battered currency, the rand, goes into freefall losing around 5% of its value. In one year, it has lost a third of its value against the dollar and sterling.

11 December: The currency rout continues with the rand touching R16 to the US$ and R24 to the British pound. There is a massive backlash in all sectors and widespread calls for Zuma to go.

12 December: Civil society and church leaders write open letters appealing for urgent meetings with the President. Academic leaders call for him to go. Social media is abuzz with #Zumamustfall.

13 December: Captains of industry hold urgent meetings with ANC leaders who later meet with Zuma and urge him to reverse the Finance Minister’s appointment to save the country from economic meltdown. Zuma reconsiders and announces the reappointment of Gordhan.

14 December: The ANC’s National Working Committee meets and endorses Gordhan’s appointment and commends Zuma for his act of leadership.

Copyright © Africa Confidential 2015

  • Nofearorfavor

    However, he managed placing it on the back burner — until its deemed to be affordable — so not cast in stone as yet.

  • Nofearorfavor

    I read somewhere that the criminal music he would still have to face, is very much a reality and the reason why he’s so desperate to hang on as long as he can, while feeding very well at the trough…

  • Nofearorfavor

    Well you saw that Zapiro’s laconic satire of the one Gupta brother — Zuma already in the cart — shopping for a new finance minister he was… Gupta’s it seem are the unofficial gov of SA..

  • Nofearorfavor

    Hope you’re right! What is of concern though, are the dirty fingers they have in so many state and corporate pies and the power wield these provide — ?

  • Nofearorfavor

    All done to guarantee re-election — keep the masses dumbed down unable to think for themselves, never mind become politically or economically aware and educated. Tragic for South Africa.

  • Nofearorfavor

    Amen!

  • Nofearorfavor

    Hear! Hear!

  • Tata ma chance

    The youth are being given anc style Bantu-education, so we are rightly in a pickle. The birth rate in my opinion, is out of control, and it is tragic that the anc has monetized childbirth through the grant system. And Zuma will moan about slavery, but have millions of people become economic slaves means zip to Zuma and his crew of Pirates.

  • Arthur Richard Francis

    You share my secret sentiments exactly – Zuma is the surest way the make the ANC fall. Unfortunately, so will the country go down into an abyss – so “timing” is critical when he should get the “chop” and be recalled. (I was actually “happy” he was re-elected in May 2014 because I felt he would make more gaffes to harm the ANC and galvanize the youth into ACTION).

  • Arthur Richard Francis

    I agree – Let’s ask the Public Protector.

  • Arthur Richard Francis

    Strings attached to the puppet Zuma (dyslexic uneducated No.1 Buffoon) are being pulled under control of the manipulative Gupta’s, including the nuclear energy deal with Russia, which will surely kill South Africa ‘stone dead’, already up to its ears in foreign debt and getting close to the fiscal cliff. Get rid of the scandalous Zuma and suspected ‘Guptagate’ affiliation. Frankly, the Public Protector should investigate further! Voters should also NOT wait until 2019 – it will be too late then. ACT NOW! #ZumaMustFall Bring the guillotine! Heads must roll! The whole ZANC corrupt regime which usurped Nelson Mandela’s government by stealth under Zuma (erstwhile ‘Butcher of Camp Quatro’). Bring the guillotine before the SA economy is completely butchered and lies in tatters covered in blood at the South Pole.

  • The problem is, if his power isn’t checked sooner, there might not be much left for any future opposition to take over.

  • Amen.

    Next time the ANC pulls the colonialist / imperialist argument on one of their opponents, be sure to point out that every single one of those opponents has been in the country longer than the Guptas.

  • Bertie vd Merwe

    Gupta/Zuma still laughs last as Pravin Gordan only stopped the smaller of the two, the Airbus deal, but not the gigantic nuclear procurement deal . . .

  • Frank Payne

    You are joking right?? Lol

  • New SA is dysfunctional !

    I agree wholeheartedly with you !

  • Paul Chinchen

    Please, anc, do not get rid of Jacob Zuma, please…

  • Dave Harvey

    Notwithstanding the list as described above of Presidential failures and just plain lack of any form of understanding the consequences of his actions, what is equally devastating for the future of South Africa id that there is a coterie of people who surround him and applaud his actions. This group of individuals and their boss are collectively pushing South Africa to the brink of disaster. While in many ways the ANC has done the country proud, the state of the current leadership is just appalling.

  • peterq

    We can only hope, and then take all those leeching off the state with him. He has given control of the ANC and government to people who are not elected. The ANC do not rule, other people do.

  • peterq

    In his speech van Rooyen also alluded to getting their hands on the purse strings, when he said National Treasury must be close to the masses.
    What you got wrong is that it would be the Gupta’s controlling state spending and not Zuma or the ANC.
    If they got this right National Treasury would of paid for the airplanes that they would of leased back to us. They already control the mining minister and use taxmoney to buy these mines for them, through the IDC and others.

  • New SA is dysfunctional !

    Unless democracy with all its principles is respected by the ANC, this country will become just another failed African country post colonialism. So let’s wait and see if the ANC is really what it professes to stand by ! As for zuma I say it again, he should be given a boot to his backside right out of the back door and forced to face the 783 fraud, money laundering, bribery and corruption charges he has tried so valiantly to side step! Let South Africa and the ANC start stand up for once as shining light in Africa and show the rest of the world that black Africa can be held up as an example of what democracy and freedom is about on this continent of darkness and poverty !