Upping the tempo in battle over the state

It would be surprising if, by now, most South Africans do not have whiplash after two weeks of tit-for-tat action in the battle for control of the levers of state.

Amid much uncertainty two things are increasingly clear:

• The ANC’s Gupta-aligned faction has it sights fixed firmly on the Reserve Bank and national treasury; and
• The fight-back campaign is gaining both traction and muscle.

Picking up on the non-stop sequence that has happened since last Monday, it was Treasury that was first out of the blocks, accusing Eskom of lying to the public and of refusing to cooperate in Treasury’s investigation into Eskom’s coal contracts with the Gupta-owned Tegeta Resources.

A slew of public pronouncements followed from Gupta-aligned cabinet ministers, David Des van Rooyen of co-operative governance and Mosebenzi Zwane of mineral resources, aided by ANC deputy secretary-general Jessie Duarte.

Included was a demand that finance minister Pravin Gordhan submit himself to the Hawks’ probe.

While Duarte and Zwane’s attempts to knock the Reserve Bank were amateurish, they nevertheless impinged on the Bank’s standing as one of the last independent pillars supporting SA’s investment case.

“The only reason SA hasn’t yet lost its investment grade credit rating is the relative strength of its institutions,” said Rand Merchant Bank chief economist Ettienne le Roux. “On this score, the independence of the central bank is as critically important as that of other autonomous institutions like the constitutional court, the public protector and treasury.”

An incensed former Reserve Bank governor Tito Mboweni hit back.

He let rip on Facebook, lecturing Duarte on the Bank’s history and functions and ended with this damning indictment: “In short, before you open your mouth and shout crazy, ignorant things about the SA Reserve Bank, please read this and visit the SARB website for more literature.

“The ANC has long ago resolved these issues ... No leadership must act and look so stupid! At that level, we expect better!”

Astonishingly this appeal fell on deaf ears.

The very next day, Zwane exposed even greater depths of ignorance when he called, in the name of the cabinet, for a judicial inquiry into the conduct towards the Gupta family of the banking sector, the Reserve Bank and Treasury.

The political world erupted. ANC secretary-general Gwede Mantashe lamented that cabinet had become dysfunctional. The DA labelled Zwane a “rogue minister”. The EFF was incredulous.

“If there is a family that should be investigated and subjected to a judicial commission of inquiry‚ it is the parasitic and corrupt Gupta family‚ which continues to callously loot SA government resources,” the EFF said.

Then events took a surprise turn as the week ended with the first major climb-down by President Jacob Zuma since the assault on the Treasury began.

Late last Friday the presidency publicly rubbished Zwane’s statement, saying it “deeply regretted” the “unfortunate contents”.

Zuma then flew out of the country to attend the G20 meeting in China.

One would have expected things to settle down a little but in his absence a seemingly unrepentant Zwane this Wednesday went on to heap more coals on the home fires.

Facing questions in parliament, Zwane repeated the need for a judicial commission of inquiry into the banks that had terminated their relationships with the Gupta family.

The very next day the ANC condemned Zwane’s comments. “They undermined the constitution as the independence of the Reserve Bank was guaranteed in it,” said party spokesman Zizi Kodwa.

“What we saw … was an arrogant cabinet minister, and that is the kind of arrogance, unfortunately, we are accused of in the ANC.

“It was his opportunity to explain, but he says, ‘No, it is a cabinet issue’, when he made a public statement about it .

“As a party, such reckless statements did not even emanate from discussions within the party … even if there was such a decision, he would not be the relevant person to make that announcement.”

Zwane’s behaviour would seem utterly bizarre, except for the slightly contrasting detail in a report in Business Day yesterday quoting ANC and alliance sources alleging that Zwane and a group of ministers had held a “factional caucus” before last week’s cabinet meeting and agreed to push his position in the executive meeting.

Zwane did not attend that meeting, but had “thought the resolution would have gone through”.

What exactly is going on inside the ANC over this issue remains as clear as mud. Zuma is, however, under pressure to rein in the minister and the ANC, SACP and Cosatu have all called for action against Zwane. But there is scepticism among party insiders over whether Zuma will act against him.

On to Thursday which did out not end without its share of drama.

In the National Assembly DA MP David Maynier put forward a motion for a parliamentary probe into allegations of state capture.

The Daily Maverick reports that Maynier described the Zwane fiasco as a reminder that state capture remained a clear and present danger to democratic South Africa.

“We all now know that the minister is a hired gun and he was contracted by the Guptas to carry out a political hit on the financial sector, national Treasury and the SA Reserve Bank,” said Maynier.

But it was DA leader Mmusi Maimane who went for the jugular, the DM says.

“I think it is important to acknowledge that President Zuma did not invent state capture. He just perfected it… We no longer have a president; we have a puppet.”

Listing ways the Guptas allegedly dictate to Zuma, Maimane reportedly said: “When the Guptas say ‘fire Nene’, number one says ‘He’ll be gone by the end of the week’. When the Guptas say ‘get Gordhan’, number one says ‘I’ll get the Hawks on it right away’. When the Guptas say ‘we want a coal mine’, number one says ‘I’ll go one better. I’ll give you your own minister of mineral resources’.

“Jacob Zuma is so deep in the Guptas’ pockets I’m surprised those pockets haven’t been declared a national key point,” Maimane said.

Concerned as some in the ANC may be about the issue of state capture, ANC MPs predictably closed ranks around their leadership and when put to the vote the motion was defeated by 169 to 103.

Elsewhere however, the fight- back campaign gained probably its most substantial muscle with the decision by SA’s largest local bond fund manager, Futuregrowth, to turn activist.

Andrew Canter, chief investment officer at Futuregrowth, announced the compnay was “suspending” all new loans and not extending debt to six state-owned enterprises – Eskom, Transnet, Sanral, the Land Bank, the Industrial Development Corp and the Development Bank of Southern Africa.

Concerns about transparency, political interference and the erosion of corporate governance in the state-owned enterprises prompted the bond manager to act, essentially throwing its R170-billion weight behind the Gordhan lobby.

The company is not alone in taking such steps. The Financial Mail this week revealed that it had found a number of smaller boutique investment houses that had cut exposure to state-owned firms.

“It’s a sensational twist, indicating that some investors are willing to use their financial muscle to stand up to President Zuma’s patronage network and efforts to sideline Gordhan. Given that state-owned companies borrow R1.3-trillion from the private sector, it should be a worrying development for Zuma,” says the FM.

Bill Clinton’s political adviser James Carville once said he’d like to be reincarnated as the bond market because it was the one thing more powerful than the president of the US. Whether a bond boycott will be enough to force back the Zuma cohort remains to be seen and depends on the extent of push-back from the market, civil society and the anti-corruption camp within government and the ANC.

Predicting the endgame is a bit like choosing between black and red on a roulette table.

The default option is a shaky compromise in which SA continues to stagger along as it has done for much of the past year, with Gordhan remaining in his post, fighting for reform, even as SAA chair Dudu Myeni and other Zuma mandarins cling to theirs, using every trick in the book to block reform and outflank Gordhan.

For the exhausted observers on the sidelines, the hope remains that sanity will prevail and that South Africans will be spared experiencing just how deep into junk territory a country can go.