Public Enterprises minister Pravin Gordhan says that government pensioners alone lost R50-billion in two days following the axing of former Finance Minister Nhlanhla Nene by then President Jacob Zuma in December 2015.
Giving testimony before the Zondo Commission of Inquiry into State Capture in Johannesburg on Tuesday, Gordhan added to the R500-billion price-tag he had initially put on the cost of capture. In addition, new information provided to him by Bloomberg showed that the impact on the currency (in terms of the rand/dollar exchange) had been worse than initially predicted.
“This is just the impact the over two business days. The devastating impact is estimated to be R500-billion. The market value of the country’s biggest financial and property shares fell by R290-billion. The market value of pension funds would have dropped substantially and this figure excludes the remainder of the equities market.
“The rand depreciated sharply (from R14.59 to US dollar from the announcement made at 11pm on 9 December to R15.90/dollar two days later),” said Gordhan who said that it was clear that the numbers would be even worse by the Monday morning following Nene’s axing.
“What did that impact mean for the South African public?” asked Gordhan. As he spoke, the crescendo of singing and vuvuzelas blowing from an EFF mass meeting outside the commission’s venue in Hillbrow, Johannesburg got louder and louder. The EFF started protests on Monday and its members carried signs saying “Down with Pravin” while its leaders, including the party’s deputy president Floyd Shivambu and spokesperson Mbuyiseni Ndlozi, shouted “Phansi Pravin Gordhan, Phansi!”
The second day of disruption became so loud that the deputy chief justice Judge Raymond Zondo, who chairs the commission, said that it had been noted and that there were efforts to end the disruption. The EFF members gathered outside the commission’s venue during working hours all looked to be working age people. They were bused in by the party.
Inside the commission’s proceedings, Gordhan’s family sat listening, perhaps with one ear inside and one ear outside. His daughter has faced a consistent and three-year-long campaign on social media, alleging that she is benefiting from state contracts. In various parts of his testimony on Tuesday, Gordhan referred to the impact of the period of State Capture on his family and more generally, on ordinary South Africans.
“For working people who save their money in pension funds and other forms of investments, there would have been a substantial decline in the value of the shares and the value of the pensions,” said Gordhan as he set out the consequent risks from Nene’s axing. He said that transport and other price increases were likely as well as macro-economic risks including rising interest rates and inflation growth. He told the commission that of all other events which had impacted the maro-economy, the axing of Nene which started the attack on the Treasury was the worst since 1994.
Because Gordhan had been a finance minister, he realised the risks the country faced as he watched what was happening on the markets following Nene’s removal on the Friday afternoon, 11 December 2015. Gordhan called Lakela Kaunda who was then president Jacob Zuma’s chief-of-staff, to suggest that her principal set up a meeting to look at how the impact of the crisis could be mediated.
On Tuesday, nearly three years later, Gordhan gave the first ever intimate account of how he was rehired by Zuma after the markets went into turmoil and the country into political crisis after the shock firing of Nene in December 2015.
On Sunday afternoon 13 December 2015, Gordhan received two calls, one from then deputy president Cyril Ramaphosa and another from ANC deputy secretary-general Jessie Duarte. They explained that Gordhan was going to be asked to do something by Zuma and that he should not refuse the request. “I believe Ms Duarte and then deputy president Ramaphosa had met with former President Zuma over the weekend regarding his surprise removal of Mr Nene and the appointment of Mr (Des) van Rooyen.”
That evening, Gordhan travelled to the presidential guesthouse, Mahlamba Ndlopfu, at about 6.30pm and met with Zuma who told him that while he felt Van Rooyen had a fit-for-purpose CV for the job of finance minister, the turbulent markets meant that he wanted Gordhan back as finance minister.
“In fact what he said was that I am one that can calm the markets,” Gordhan told the commission on Tuesday. “My first response to the President was there are other people and I am enjoying my job (then as Minister of Co-operative and Local Government). He also asked Zuma why he wanted him back as he has just removed him as finance minister the previous year (2014, when Zuma appointed a new Cabinet following the election).
“’I want to consult my family’,” Gordhan told Zuma. He continued: “I did so and despite our (the family’s) reluctance, the country being where it is, let’s give the commitment to serve which we (the family) did.” After his return, Gordhan faced rumours that he had lobbied to get the finance minister’s position back.
“The first point I want to make is that I was surprised he (Zuma) was asking me to take this job again after being removed in 2014. I have never lobbied for any job including this one. For me, politics is not a career and tied to earning my income, it is a calling. One can walk out and look for a job. I did not actually want to change jobs. We were just beginning to understand the difficulties municipalities were facing. A fairly dysfunctional department was starting to come together,” said Gordhan, who concluded that “I am not a commodity for sale and the Guptas learnt that too”.
Two months after being asked by Zuma to return to his job, Gordhan was preparing the difficult Budget he would deliver to Parliament in February 2016. General Berning Ntlemeza, then head of the Hawks asked to see Gordhan and told him two investigations were ongoing in relation to SAA and Sars and a few days later, an envelope from the Hawks boss was delivered to the Treasury. The envelope contained 27 questions to Gordhan from the Hawks.”
Gordhan immediately went to see Zuma to discuss the questions which arrived at a time when South Africa’s economy was in perilous waters and when “maximum sanity” was required ahead of the Budget’s tabling, he said.
Zuma did nothing after the meeting although he said he would. The investigation by the Hawks into Gordhan and the defence thereof by State Security minister David Mahlobo and Police minister Nathi Nhleko further torpedoed the economy and the country continued toward greater instability. Gordhan said that in the following months, the attack on Treasury clarified and it became the focal point of the forces of State Capture.
Asked by Zondo whether the Hawks questions may have been justified and whether his response to them may have been exaggerated, Gordhan explained how tenuous the financial position of South Africa was. His response to Ntlemeza had been one of: “It’s the economy, stupid!” said Gordhan.
Testimony continues. DM
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