Gupta business sell-off: what it means for Zuma, SA – analysis

The Gupta family’s announcement that it is selling all of its businesses in South Africa has catapulted the country back into the headlines, with speculation that this move signals a weakening of President Jacob Zuma’s power. The Guptas, known for their close connections with President Zuma and his family, have “long been dogged by allegations that they bought influence with Mr. Zuma’s administration to further their business interests and score deals in strategic sectors”, the US-based Wall Street Journal reminded its readers. Hong Kong’s influential South China Morning Post underscored that the Gupta family represents the “extraordinarily brazen way in which Zuma has used the state to advance his own interests” and those of his associates at the expense of society. “Now as many South Africans ask whether they also have a Gupta-sponsored presidency, the controversy surrounding the family and its links to President Jacob Zuma appears to have contributed to the worst ever result for the African National Congress (ANC) in this month’s municipal elections,” said the news organisation. The UK’s Guardian noted that the Guptas were blamed for Nenegate, Zuma’s abrupt sacking of former finance minister Nhlanhla Nene in December, a move that rattled investor confidence and triggered calls for the president’s resignation. Deputy finance minister Mcebisi Jonas said the Gupta family had offered him his boss’s job. In a television interview, Oakbay Investments CEO Nazeem Howa has attributed the family’s withdrawal from South African business to constant media attacks. He says the Gupta family wants to protect its 7,500 employees and act in the best interests of the country. The Guptas indicated earlier this year that they had plans to sell their interests in South African businesses, with their announcement at the weekend indicating that they had firmed up their plans coming at a time in which a series of scandals – for example the sale of South Africa’s entire strategic oil reserve (see #Oilgate details here) – have bubbled to the surface. South Africa’s finance minister Pravin Gordhan, who is not in the Zuma camp, is under investigation by a controversial squad and concern is growing over Zuma’s role in the management of state-owned enterprises. – Jackie Cameron.

By Liezel Hill and Mike Cohen

The decision by a wealthy Indian family close to President Jacob Zuma to sell its businesses in South Africa is the latest indication that his grip on power may be slipping.

The Gupta family, which has holdings ranging from coal mining to media, made the surprise announcement on Saturday that it will exit all its interests in the country by the end of the year. Zuma, who has described the Guptas as friends while denying that the family wields political influence, is also facing a public backlash over a police investigation into Finance Minister Pravin Gordhan. Both developments come weeks after his ruling African National Congress suffered its worst-ever election performance.

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The Guptas’ move might be a signal that the family is positioning itself to take account of shifting power dynamics, according to Daniel Silke, director of the Political Futures Consultancy in Cape Town.

“They may feel that there is political change coming in South Africa,” Silke said by phone. “In the sense that they may not in future have the same access to benefits that they have had in the past.”

Zuma, 74, has been dogged by scandal since he took charge of Africa’s largest economy in May 2009, including allegations that he allowed the Guptas to use an air force base to transport friends to a wedding, and delegated the family the power to make cabinet appointments. The Guptas have been in business with the president’s son, Duduzane, and have employed one of his wives. Zuma and the Guptas say there is nothing untoward about their relationship and deny any wrongdoing.

With his second and final term ending in 2019, Zuma has faced calls to quit since the nation’s top court ruled in March that he violated the constitution when refusing to repay taxpayer funds spent on his private home.

Minister Probe

Criticism of the president has intensified since police revealed last week that they asked Gordhan, 67, to appear at their offices over allegations including setting up an illicit investigative unit while he headed the national tax agency. Opposition parties and analysts have speculated Zuma may use the case to install a more compliant head of the National Treasury. Zuma has said he doesn’t have the power to halt the probe. The spat caused the rand and government bonds to tumble.

The Guptas’ business dealings and links to senior politicians, including Zuma, are currently being investigated by the nation’s graft ombudsman. In April, some of the country’s largest banks said they would close accounts related to the Guptas’ Oakbay companies.

Oakbay Investments owns 80 percent of Oakbay Resources, a gold and coal mining company listed on the Johannesburg Stock Exchange, according to the resource company’s website. Other businesses include closely held Sahara Computers, a heavy-equipment supplier, a safari lodge, a television news channel and a national newspaper.

“The Guptas are acting in their own interests,” Abdul Waheed Patel, managing director of Ethicore Political Consulting, said by phone from Cape Town. “One must take a cautious view of what happens between now and the end of the year. We have no indication that Zuma is going anywhere any time soon.”

Poll Losses

File Photo. President Jacob Zuma , Atul Gupta and Eastern Cape Premier Noxolo Kieviet at a New Age Breakfast in Port Elizabeth. www.flickr.com.
File Photo. President Jacob Zuma , Atul Gupta and Eastern Cape Premier Noxolo Kieviet at a New Age Breakfast in Port Elizabeth. www.flickr.com.

In local elections this month, the ANC lost its absolute majority in four major cities including the economic hub of Johannesburg and the capital, Pretoria.

A spokesman for the president, Bongani Ngqulunga, said by phone he was in Nairobi and wasn’t immediately able to respond to questions on the implications of the Guptas’ sale plans. Gary Naidoo, a spokesman for the Guptas, requested e-mailed questions and didn’t immediately respond to them. The Guptas said in a statement on Saturday that the family has “no interest in politics, only business.”

“Clearly the Guptas have been feeling very uncomfortable and very unwelcome in South Africa,” Azar Jammine, chief economist at Econometrix in Johannesburg, said by phone. “It’s an issue that undermines the president.”

Gupta family plans to sell all South African interests: statement

By Ed Stoddard

South Africa’s wealthy Gupta family, which has been accused of holding undue political sway over President Jacob Zuma, said on Saturday it planned to dispose of all stakes it holds in South African businesses before the end of the year.

The Guptas have denied accusations that they have used their friendship with Zuma to influence his decisions or advance their business interests. But South Africa’s anti-corruption watchdog said in July it would get more funds to investigate whether Zuma allowed the family to make government appointments.

In a statement, the Gupta family said “we now believe the time is right for us to exit our shareholding of the South African businesses” and it believed the move would benefit current employees.

“As such, we announce today our intention to sell all of our shareholding in South Africa by the end of the year. We are already in discussions with several international prospective buyers,” the statement said.

The prominent business family is accused of being behind Zuma’s abrupt sacking of former finance minister Nhlanhla Nene in December, a move that rattled investor confidence and triggered calls for the president’s resignation.

The scandal surrounding the Guptas took a dramatic turn earlier this year after deputy finance minister Mcebisi Jonas said the family had offered him his boss’s job.

Zuma has said that the Guptas are his friends but denied doing anything improper. The Guptas have also denied making job offers to anyone in government.

The three Gupta brothers moved to South Africa from India at the end of apartheid rule in the mid-1990s and went on to build a business empire that stretches from technology to the media to mining.

A family spokesman told the Gupta-owned ANN7 news channel that the decision to divest from South Africa had “been on the cards” since April, when the brothers had resigned from the directorships of their companies.

He also said the family planned to stay in South Africa.

In a statement, the family said it “had been a victim of a political campaign … A narrative has been constructed against us, which has been perpetuated by many media titles, and that flawed perception has become the truth in the eyes of some.”

“We have no interest in politics, only business.”

Assets

The Gupta family’s assets in South Africa would include its holding company Oakbay Investments, which controls Johannesburg-listed Oakbay Resources. They also own the New Age newspaper and the ANN7 news network.

Oakbay Investments chief executive Nazeem Howa said the company would remain rooted in South Africa. “Oakbay Investments will continue in South Africa, they (the Guptas) are just selling their shareholding,” he told the eNCA news channel.

Nazeem Howa, CEO of Oakbay Investments, a Gupta-family owned company, during an interview with Bloomberg at their Johannesburg offices in South Africa on Monday, April 11, 2016. Pic: Waldo Swiegers / Bloomberg
Nazeem Howa, CEO of Oakbay Investments, a Gupta-family owned company.

The company does not have an easy operating environment in South Africa. All four of the country’s major banks have severed links with it. Analysts have said the banks were likely prompted by concerns about reputational risk and if the Guptas are no longer part of Oakbay, that risk may diminish.

South African markets were rattled again this week by news that current Finance Minister Pravin Gordhan, had been summoned by an elite police unit known as “the Hawks” over an investigation into a suspected rogue spy unit in the tax service.

Political pundits have said Gordhan is being undermined by a faction allied to Zuma. On Friday, South African police denied being part of a conspiracy targeting Gordhan, City Press newspaper reported, after the opposition described the investigation into him as a “witch-hunt”.

Gupta family asks political party to stop using name as “political football”

By Amanda Khoza

Durban – The Gupta family has on Sunday pleaded with the Democratic Alliance’s David Maynier to stop using the family name “as a football in his party-politicking battles”.

David Maynier. Picture courtesy of Twitter @SABreakingNews
David Maynier. Picture courtesy of Twitter @SABreakingNews

The family, in a statement, was responding to utterances made by Maynier following the controversial family’s announcement that it had decided to sell all their shares in South Africa.

News24 reported earlier that family said exiting their shareholdings in their South African businesses would benefit existing employees and lead to further growth.

Maynier reportedly responded to the announcement likening the family to “rats abandoning a sinking ship in South Africa”.

“Things have evidently reached a ‘tipping point’ and the Gupta family have decided that it’s in their best interests to abandon ship in South Africa,” he reportedly said on Sunday.

The family responded to Maynier’s utterances saying his comments could not go unanswered.

The family said it had become accustomed to Maynier and his colleagues’ “shoot from the hip” approach.

The family said despite making it clear that they remained South African citizens and planned to continue living in this country, Maynier, attempted to grab media headlines by adopting emotive and dramatic language around the family leaving the country.

“We would have expected Maynier to at least be honest enough to acknowledge that our businesses have always committed to co-operate with any statutory investigation announced, so it is disingenuous for Maynier to suggest that our companies will not participate as required in any investigation.

“I am sure Mayner also understands that the directors and management teams are responsible, in line with the Companies Act, for all decision-making.”

The family said it was surprised that Maynier had not acknowledged the impact of the decision had on direct and foreign investment.

“As we believe many potential investors will be concerned about the treatment meted out to the family through a media narrative without any basis of wrong-doing.

“We appeal to Maynier to not use us as a football in his party-political battles,” the family said. – News24

Source: http://www.news24.com/SouthAfrica/News/gupta-family-hits-back-at-das-maynier-20160828

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