Banking group warns of corruption threats

IOL image Cas Coovadia INDEPENDENT MEDIA Cas Coovadia, managing director and member of The Banking Association.

Johannesburg - South Africa’s main banking group said interference in the government by private groups is threatening the nation’s constitutional democracy, adding to a chorus of criticism over allegations that businessmen linked to President Jacob Zuma influenced cabinet appointments.

The Banking Association of South Africa, which includes all major banks in the country, was commenting on an uproar over Deputy Finance Minister Mcebisi Jonas’s claim last week that he was offered a promotion to the Treasury’s top spot by members of the Gupta family, who are friends of Zuma’s and in business with his son. South Africans have described this sort of influence as “state capture.”

“We must be clear that ‘state and corporate capture’ is a euphemism for blatant corruption,” banking association Managing Director Cas Coovadia said Wednesday in an e-mailed statement. “We remain deeply concerned and disturbed that the worrisome trend of undue and illegitimate influence and interference in the state continues to represent a clear and present danger and threat to the stability of our constitutional democracy.”

The controversy has weakened Gordhan’s bid to turnaround a weakening economy that’s set to grow less than 1 percent this year and is threatened by a credit-rating downgrade. Standard & Poor’s has a negative outlook on its BBB- rating, one level above junk. Moody’s Investors Service rates South Africa’s debt one level higher.

‘Mafia state’

Jonas’s claims triggered several senior members of the ruling African National Congress to make similar allegations about the Gupta family’s attempts to unduly influence the state. They prompted ANC Secretary-General Gwede Mantashe to warn that South Africa is slipping into a “mafia state.” The Gupta family has denied the accusations.

Read also: ANC ‘embracing business’

The allegations over the Guptas have fuelled disgruntlement with Zuma that peaked in December when he replaced his respected finance minister, Nhlanhla Nene, with a little-known lawmaker, sparking a selloff of the rand and the nation’s bonds. Four days later, Zuma reappointed Pravin Gordhan to the post which he had held from 2009 to 2014, after coming under pressure from ANC and business leaders.

Special unit

The rand declined as much as 16 percent against the dollar in the weeks after Zuma fired Nene on December 9. As of 1 p.m. in Johannesburg on Wednesday, it was 4.6 percent weaker than the day before the finance minister was replaced.

Since then, Gordhan has been involved in a dispute with the head of the national revenue service, Tom Moyane, who he said defied an order to halt a management overhaul. A special police unit known as the Hawks has asked Gordhan to respond to questions about a unit in the tax agency set up to investigate high-profile tax dodgers during his time at its helm.

While he was able to block an attempt by the loss-making state airline, South African Airways, to introduce an intermediary into a plane leasing agreement with Airbus Group, the chairwoman who was promoting the deal has remained in her post. She is also the head of Zuma’s personal foundation.

A weekend meeting of the ANC’s leadership endorsed Gordhan, a decision the banking association said “provides a timely degree of political certainty.” It didn’t comment on the ANC’s backing of Zuma’s leadership.

The nation’s graft ombudsman said on Tuesday that it would investigate Zuma’s relationship with the Gupta family. The ANC also supported Jonas following his revelations and said it would investigate claims of undue influence by the Gupta family.

The banking association said the ANC’s probe “cannot be a proxy for being answerable to accountability and investigating authorities.”

BLOOMBERG

Follow us on Twitter

Connect with us on LinkedIn

Hungry for more business news? Sign up for our daily newsletter!

Like us on Facebook


sign up