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UPDATED: ANC plans vote of no-confidence in Zuma. Several arrests in Gupta raid.

JOHANNESBURG — Gradually then suddenly. It’s a refrain from Ernest Hemingway that we at BizNews have been repeating for several months now. As evidence of the Guptas’ wide-scale corruption, looting and state capture exploded onto the scene last year, it looked inevitable that some kind of criminal charges would be heading their way. Today, the Hawks swooped in on No. 1 Saxonwold Drive. The Guptas’ security goons left powerless as the raid commenced. There are now reports that a Gupta or two has been arrested as well. Welcome to South Africa’s very own Operation Car Wash. In Brazil, Operation Car Wash led to 160 arrests and 232 people being investigated over a massive money laundering and corruption scandal involving government officials. Could we see the same here? – Gareth van Zyl

Read more: More Gupta-Related Arrests Expected in South Africa, Judicial Source Says

Press statement from the Hawks:

Hawks operation on Vrede Farm investigations

PRETORIA – The Hawks’ Serious Corruption Crime Unit is currently conducting on-going operations at various addresses in Gauteng, including a residential premises in Saxonwold near Johannesburg.

The operation is in respect of the Vrede Farm investigations. So far three people have been arrested and two other suspects are expected to hand themselves over to the Hawks. Operations are still ongoing and further details will be made available at a later stage.


Zuma Faces No-Confidence Motion as Ruling ANC Seeks to Oust Him

By Mike Cohen and Paul Vecchiatto

(Bloomberg) — The noose tightened on South African President Jacob Zuma as the ruling African National Congress said it’s preparing to hold a vote of no confidence in him on Thursday, after the police raided the home of key allies.

The ANC said it will vote Zuma out of office and hopes to elect a new president on Thursday, the latest signs that he’s lost his struggle for power with the new party leader, Cyril Ramaphosa. The ANC had expected Zuma to respond on Wednesday to its National Executive Committee’s decision to replace him but has not received one.

“It’s clear for us as the ANC we can no longer wait beyond today,” ANC Treasurer-General Paul Mashatile told reporters in Cape Town. “My message to the caucus is they must proceed with the parliamentary process. A decision has been taken, it must be implemented.”

The party desperately needs a quick transition, so Ramaphosa, a 65-year-old lawyer and one of the richest black South Africans, can move to fulfill pledges to revive the struggling economy, clamp down on corruption and rebuild its image ahead of elections scheduled for mid-2019. Any delays in parliament and establishing a new government will harm the party’s chances.

The rand jumped 1.3 percent to 11.8159 per dollar by 1 p.m. in Johannesburg, set for its strongest level in almost three years. Yields on benchmark government bonds due 2026 fell eight basis points to 8.37 percent.

The announcement Wednesday came after police raided the Johannesburg home of the Gupta family, who are in business with Zuma’s son, Duduzane.

 

Zuma state capture commission
President Jacob Zuma

From an earlier Bloomberg article: Gupta Raid

A investigative police unit known as the Hawks raided the Gupta family’s Johannesburg residence Wednesday morning. Spokesman Hangwani Mulaudzi couldn’t confirm a report by broadcaster eNCA that one of the Gupta brothers and a business associate were arrested. The rand strengthened after the report.

In his battle with the ABC, the principal card Zuma has left to play is the threat of disruption. Should he resist the order to resign, the party’s next option is a no-confidence motion in parliament. The problem is the third-biggest opposition party, former ANC youth leader Julius Malema’s Economic Freedom Fighters, already has one on the table, set for Feb. 22.

File Photo: Gupta residence in Saxonwold, Johannesburg.

Voting for an opposition motion would put the ANC in an uncomfortable position, yet opposing it would keep Zuma in power.

Even if the ANC is able to schedule its own motion before that of the opposition — which legally will be complicated — approval of the proposal will mean Zuma’s entire cabinet must also resign. While that will present Ramaphosa with a clean slate, it would complicate the Feb. 21 annual presentation of the budget, which investors are anticipating will show the nation’s new leaders are committed to fiscal consolidation.

Already the political impasse gripping South Africa has forced the unprecedented decision to postpone the annual state-of-the-nation speech. Another delay of a major event such as the budget would smell of a serious political vacuum in Africa’s most-industrialized economy.

The drop in the party’s public support during Zuma’s rule — the ANC lost control of Johannesburg, the economic hub, and Pretoria in municipal elections in 2016 — ironically gives him leverage.

Struggling Economy

The party desperately needs a smooth transition, so Ramaphosa, a 65-year-old lawyer and one of the richest black South Africans, can move quickly to fulfill pledges to revive the struggling economy, clamp down on corruption and rebuild its image ahead of elections scheduled for mid-2019. Any delays in parliament and establishing a new government will harm the party’s chances.

“The National Executive Committee firmly believes that this situation requires us to act with urgency in order to steer our country towards greater levels of unity, renewal and hope,” Magashule said. “We are determined to restore the integrity of the public institutions, create political stability and urgent economic recovery.”

The prospect of a Ramaphosa presidency has cheered investors, with the rand gaining the most against the dollar of all currencies tracked by Bloomberg since his Dec. 18 election as ANC leader. It was 0.6 percent stronger at 11.9002 at 9:31 a.m. in Johannesburg.

“He is finished,” said Mkhabela. “The only thing he needs to do is step down, which is really a procedural matter. He does always like to drag things out and there is a little room for him to refuse to resign, but the end result will be the same.”

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