ANC must recall Zuma – anything else is “mockery of hard fought democracy”

Biznews.com’s  purpose is to promote South Africa’s democracy through supporting free enterprise and attacking corruption. With that as our compass, it is not surprising that we have a consistent position on the Guptas, their attempts at State Capture and the unsuitability of President Jacob Zuma to lead this modern democracy. The elected members of the ANC, and specifically its Top Six, now need to show whether they agree, and share a position most South Africans support. Or whether the party of Luthuli and Mandela, the party that brought the end to Apartheid, has, like its current leader, fallen into the gutter. The evidence against Zuma is now so overwhelming that in any rational environment he would not only be fired, but the subject of a judicial commission that will likely lead to a lengthy jail term – much like what is happening to his pals in Brazil. The extent of his ruinous rule is reflected in South Africa’s GDP per capita which in US Dollar terms has fallen for five successive years. Rampant cronyism and a network of patronage tends to do that. Overriding all of this logic, however, is the fact that this is a developing country, the definition of which is where politics trumps economics. So the power and responsibility to reverse the drift lies not with the rational but the emotional membership of the ruling political party. On this score, there is reason to be confident the ANC will do the right thing and recall the President. The extreme effort taken by both Pravin Gordhan and Mcebisi Jonas to protect Deputy Secretary General Jessie Duarte over the Gupta job offer disclosures gives a good idea of the back story. With Duarte on side, four of the ANC’s Top Six will be aligned, isolating Zuma and his close ally Baleka Mbete. Their recent actions suggest Mkhize, Mantashe, Ramaphosa and Duarte are set to extract the nation from its Zuma-inflicted misery. By providing the excuse, the rapacious Guptas have done at least one useful thing for South Africa. Hope Springs. – Alec Hogg

By Mike Cohen, Franz Wild and Amogelang Mbatha

(Bloomberg) — President Jacob Zuma of South Africa faced another attack on his leadership as members of the ruling African National Congress said the party should consider whether to oust him over his links to the millionaire Gupta family.

South African President Jacob Zuma. Photographer: Waldo Swiegers/Bloomberg
South African President Jacob Zuma. Photographer: Waldo Swiegers/Bloomberg

Deputy Finance Minister Mcebisi Jonas accused the Guptas of personally offering him the job of taking over the finance ministry.

“The political game has entered a deep and dangerous phase,” Ben Turok, a veteran ANC member and former lawmaker, said by phone. “ANC veterans, members of its integrity committee and MPs must stand up and say that Jacob Zuma must resign, because there is no way the Guptas could have done this without Zuma’s approval.”

Jonas’s statement Wednesday was the latest in a series of embarrassing revelations linked to Zuma that have led opponents and allies alike to question his judgment. Jonas said he rejected the offer “out of hand” and that the proposal “makes a mockery of our hard-earned democracy.”

Zuma has insisted that his relationship with the Guptas, who are in business with his son, Duduzane, is above board. The Guptas, who have previously denied a meeting took place, described Jonas’s account as “totally false.” The ANC said it took the allegations very seriously and that the party’s leadership would discuss them at a meeting on the weekend. The rand rallied after Jonas’s statement was released.

“We confirmed the meeting and confirmed the offer,” party spokesman Zizi Kodwa told the South African Broadcasting Corp. “The ANC can no longer sit back and do nothing in the face of these allegations. Whether you are an ANC member or not you have no right, outside the structures of the ANC leadership, to influence government in the manner that has been alleged about the Gupta family.”

The Gupta family denied making the offer.

“Any suggestion that the Gupta family or any of our representatives or associates have offered anyone a job in government is totally false,” the family said in an e-mailed statement.

Zuma’s spokesman Bongani Majola didn’t answer calls to his mobile phone. Zuma’s lawyer, Michael Hulley, said Zuma hasn’t contacted him regarding Jonas’s statement.

The rand pared declines after Jonas’s statement, trading 0.4 percent weaker at 15.9837 per dollar by 7:18 p.m. in Johannesburg on Wednesday after weakening as much as 2 percent. Yields on South Africa’s dollar-denominated bonds due Sept. 2025 dropped 5 basis points to 5.23 percent. The rand later gained as much as 1.7 percent as the U.S. Federal Reserve left its key interest rate unchanged.

“It is very difficult to ignore the degree to which the accusations of highly improper influence over the president from the Gupta family are being made,” Nic Borain, a Cape Town-based political analyst and adviser to BNP Paribas Securities South Africa, said by phone. “The glue, which was the power and discipline of Jacob Zuma and control over the ANC, is coming unstuck. His ability to control the narrative has been lost.”

Zuma fired Nhlanhla Nene in December and replaced him with little-known lawmaker David van Rooyen, a move that sparked a selloff in the rand and the nation’s bonds. He changed course four days later and named Pravin Gordhan to the post, which he had held from 2009 to 2014, bowing to pressure from business leaders and senior ANC officials.

Zuma was forced last month to agree to demands from the corruption ombudsman to repay some of the 216 million rand ($13.5 million) in public funds used to renovate his private residence.

Gordhan’s own position isn’t secure. He has been involved in a public spat with the police since last month related to an investigation into the tax agency that he ran before 2009. Investor concern that his job is in jeopardy prompted the rand to drop 2.6 percent against the dollar on Tuesday.

“By making this statement, Jonas appears to be coordinating with Gordhan in defense of the Treasury’s independence,” said Mark Rosenberg, Africa analyst at Eurasia Group in New York. “It is part of the wider battle between pragmatic constitutionalists and more corrupt elements in the ruling ANC.”

Credit Rating

The political turmoil comes at a time when the economy is threatened with recession and hovering close to a junk credit rating.

“Although the Treasury’s credibility and clout is in danger right now, longer term this may well be the beginning of the end of Zuma,” said Anne Fruhauf, vice president at New York-based risk adviser Teneo Intelligence. “Jonas’s courageous statement confirms mounting suspicions about inappropriate interference in Zuma’s administration.”

Vytjie Mentor, the chairwoman of the parliament’s portfolio committee on public enterprises until 2010, said in a Facebook post earlier this week that members of the Gupta family offered her the job of public enterprises minister in the past, while Zuma was in the house. The Presidency said Zuma had “no recollection” of Mentor and can’t comment on her allegations.

It’s now up to the ANC’s National Executive Committee to decide Zuma’s fate, former party treasurer Mathews Phosa said.

Decision Time

“It’s the NEC that needs to decide what will happen with the president now,” he said by phone. “It’s a big question. They have the power to decide on the head of state. I think the NEC must address this urgently. More people will speak out on the same issues. It’s difficult to extricate the president from this.”

Gwede Mantashe, the general secretary of the ANC, said if the situation wasn’t tackled the country could become a “mafia state where all what the state will be doing is to nurse interests of family businesses, Johannesburg’s Business Day newspaper reported.

South Africa isn’t the only emerging market where currency and bond markets are being roiled by controversy related to the national president.

In Brazil, embattled President Dilma Rousseff installed her predecessor Luiz Inacio Lula da Silva at the heart of her government on Wednesday. His appointment as her chief of staff is designed to help shield Lula from a rolling corruption probe and harness his renowned negotiating skills to defend Rousseff from impeachment.