Wednesday, October 12, 2016

Toilet Training for Law Makers

Business Day 12 October 2016 - 06:26 AM Natasha Marrian and Franny Rabkin

Zuma’s empire strikes back hard
Finance Minister Pravin Gordhan will not go down without a fight even as Jacob Zuma makes another charge to dislodge the defender of the public purse
President Jacob Zuma’s scorched earth policy is in effect. A Cabinet reshuffle is the next weapon he is likely to deploy as he moves to capture the Treasury, and Finance Minister Pravin Gordhan has been targeted as the next casualty.
In the 10 months since Gordhan’s reappointment was foisted on Zuma, it has been glaringly obvious that the president and those seeking control of the nation’s purse have not been defeated. Gordhan has been isolated from the president and the Cabinet.
Zuma professed after his removal of Nhlanhla Nene from the ministry last December that Des van Rooyen was the most qualified finance minister the country had been privileged to have — albeit for only four days.
Since then, Zuma has regrouped and has launched his next salvo, one he hopes will be a killer blow. It began with a dodgy intelligence dossier surfacing in August 2015 — accusing Treasury officials of being apartheid agents — which was the first indication that the Treasury was in the cross hairs. The strange document aimed at smearing senior Treasury officials was dismissed by Nene, but since then its contents have been used by senior ANC and government officials to justify "reining in the Treasury".
The charges announced on Tuesday by the National Prosecuting Authority (NPA) against Gordhan are questionable at best. What began as an investigation into an alleged rogue unit at the South African Revenue Service (SARS) has culminated in a criminal charge relating to an administrative act during Gordhan’s first term as finance minister in 2010.
The statement made by NPA head Shaun Abrahams on the criminal charges against Gordhan dealt with two "totally separate" issues. There was an investigation into the so-called rogue investigative unit and there were charges related to former acting SARS commissioner Ivan Pillay’s early retirement.
The rogue unit investigation was ongoing, said Abrahams. No charges were announced on this. Instead, the charges for which Gordhan, Pillay and former SARS commissioner Oupa Magashula must appear in court relate to Pillay’s early retirement and his subsequent re-employment.
Of the four counts — three of fraud and one breach of the Public Finance Management Act — Gordhan is an accused in two of them. The charge against the minister alleges that, when he authorised SARS to pay an early retirement penalty of R1.1m on behalf of Pillay, he had "pretended" that SARS was liable to pay this money while knowing it was not.
A possible defence to this charge could be that SARS was legally authorised to make the payment or that Gordhan did not know that SARS was not liable.
In answering the Hawks questions on the pension fund issue, Gordhan said in March that Magashula had inquired from the Department of Public Service about the terms of Pillay’s early retirement. He had established that these "were lawful and not unusual", he added.
"I approved Mr Magashula’s proposal because I believed it to be entirely above board," he said.
What evidence the NPA has in its arsenal to counter this statement was not disclosed at Abrahams’s press conference.
Magashula and Pillay face additional charges, one relating to the Public Finance Management Act. The charge sheet refers to sections 38, 39 and 45. It says Magashula, "acting in concurrence" with Pillay, did not prevent irregular, wasteful and fruitless and unauthorised expenditure. Sections 38 and 39 deal with the general and budgetary control duties of an accounting officer — which Magashula was as commissioner. They require the accounting officer to take steps to prevent irregular, wasteful and fruitless and unauthorised expenditure.
Section 45 does not appear to give rise to criminal liability under the act, so it is unclear why it is on the charge sheet.
The other two fraud counts relate to new employment contracts for Pillay, saying that fraud was committed because he and Magashula knew SARS was authorised to enter into only a three-year contract and not a five-year contract. Gordhan's authorisation of the four-year contract in 2014 was also allegedly fraudulent because they knew that SARS was under no obligation to extend Pillay's earlier contract. 
Rogue unit
While the charge sheet says that these acts were committed "with prejudice" to SARS — the suffering of prejudice being a requirement for a fraud charge — it does not specify what the prejudice is in these instances.
On the rogue unit, Abrahams said the investigation into alleged criminal conduct on the part of the unit was continuing. But this was preceded by a lengthy account of allegations about the unit’s unlawful establishment.
Debate has raged over whether the unit was indeed unlawfully established since this finding was made by a panel chaired by Muzi Sikhakhane SC.
In this debate a crucial distinction seems to have been lost. Whether the unit was unlawfully established is a different inquiry from whether its activities were criminal. Even if the unit was unlawfully established, the NPA’s mandate is restricted to acts that can give rise to criminal charges. In the scandal there have been such allegations — most significantly that the unit criminally bugged the offices of the NPA in an operation known as Project Sunday Evenings.
While these would fall within the NPA’s mandate, it is unclear why Abrahams spent such a significant portion of his press conference talking about whether the unit was unlawfully established — only to end with a statement that the criminal investigation was continuing.
The first indication that there would be no smooth sailing for Gordhan after his reappointment was the defiance displayed by Zuma’s pointman at SARS, commissioner Tom Moyane, when Gordhan asked that he halt a far-reaching restructuring. Then, on the eve of the February budget, the Hawks delivered 27 questions to Gordhan relating to the unit established during his tenure as SARS commissioner.
Eskom and Denel’s leadership have launched unrestrained attacks on the Treasury — Eskom over scrutiny of dodgy coal contracts with the Gupta family, and Denel while defending a joint venture with VR Laser Asia, a company partly owned by a Gupta associate, Salim Essa.
Gordhan has pushed back against every attempt to capture state-owned enterprises.
While sentiment in the ANC is slowly shifting, it is nowhere near enough to halt the Zuma assault on the public purse, which has long been in play.
ANC secretary-general Gwede Mantashe boarded a plane to China ahead of the news breaking on Tuesday about Gordhan’s fraud charge, but other senior ANC leaders expressed shock and disbelief.
One of them expressed hope that this was the final nail in the Zuma administration’s coffin and that the party would rally around Gordhan to rid the ANC of its most destructive force in the postdemocratic era.
But this is wildly optimistic – the ANC’s national executive committee remains a deer in the headlights, unable to move against the unassailable wall Zuma has built around himself.
When Public Protector Thuli Madonsela releases a preliminary report into state capture in the next few days — which Zuma has tried to stall and defer to her successor — the party’s inability to act against its president will again be on display. Madonsela has made it clear Zuma has to answer to allegations "implicating him" in violating the Executive Ethics Code.
ANC provincial leaders say signs are that history is repeating itself and that Gordhan would become a figure to rally around in the ANC’s 2017 succession battle, just as Zuma had before the Polokwane conference.
The South African Communist Party (SACP) — which is already on record as an anti-Zuma and anti-Premier League bloc in the alliance backing Deputy President Cyril Ramaphosa to succeed Zuma — echoes this belief.
The SACP labels the charges against Gordhan as "putative" and says it believes that the Hawks’ pursuit of him is politically motivated. The probe into the rogue unit, it says, is intended to ensure Gordhan’s removal from office to weaken the Treasury in its fight against state capture and corruption.
Further evidence, say ANC insiders, is Zuma’s reluctance to sign the amendments to the Financial Intelligence Act into law at the behest of a single organisation after they had been passed by the Cabinet and approved by a Parliament in which the ANC holds the overwhelming majority of seats.
The SACP says the timing of the summons served on Gordhan bears an "eerie similarity" to the events that led to charges being brought against Zuma between 2003 and 2007.
The ramifications will be felt by all the factions positioning themselves for the ANC’s succession race. The argument for leadership by "consensus", pushed by a group of Zuma allies, may collapse if their political principal does not tread carefully — particularly as the ANC heads woundedly towards a crucial national election in 2019.
The AU Commission’s chairwoman, Nkosazana Dlamini-Zuma, was billed as this group’s preferred candidate, but increasingly there is talk that some are mobilising support for ANC chairwoman Baleka Mbete. The selection of this group’s leader is key — as a trade unionist put it, Zuma may push it to a point where "even the scent of him" in 2019 may damage the ANC’s campaign.
But Gordhan will not go down without a fight, as demonstrated by his statement on Tuesday — which was made in the face of the ANC’s invocation of a Mangaung conference resolution that recommended that senior officials step aside of their own volition should they face damaging charges.
Zuma should tread carefully if he plans to use the resolution to extract Gordhan from the Treasury – he is facing 783 criminal counts himself and his legal escape routes are dwindling.
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