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Fraud charges fuel concern of plot to oust South Africa's Gordhan
October 12, 2016 / 11:26 AM / 10 months ago

Fraud charges fuel concern of plot to oust South Africa's Gordhan

* Finmin Gordhan to face fraud charges in court Nov. 2

* Gordhan says charges are political campaign

* Prosecutors will struggle to get conviction - lawyers

* Analysts say case is part of plan to oust Gordhan

By Joe Brock

JOHANNESBURG, Oct 12 (Reuters) - Fraud charges laid against South African Finance Minister Pravin Gordhan will be hard to prove and the case will fuel suspicion of a plot to oust a man who has defied allies close to President Jacob Zuma, legal experts, analysts and senior politicians say.

Prosecutor Shaun Abrahams, a Zuma ally, announced the charges on Tuesday and defended the independence of the National Prosecuting Authority (NPA) when asked about possible political interference. The rand and stocks tumbled.

Zuma later gave his backing to Gordhan saying he was "innocent until and unless proven otherwise".

Gordhan will appear in court on Nov. 2 to hear charges he cost the South African Revenue Service (SARS) 1.1 million rand ($79,000) by approving early retirement for a deputy commissioner in 2010 and re-hiring him as a consultant.

A charge sheet, seen by Reuters, says Gordhan "unlawfully, falsely and with intent to defraud" gave Pillay a retirement package and a new contract when SARS was under no obligation to do so.

But legal experts say it will be difficult to make the charges of fraud stick because the NPA will be required to prove Gordhan intentionally broke the law.

"I am relieved that I will not be the prosecutor tasked with securing a conviction," constitutional lawyer Pierre De Vos said, rating the NPA's chances as "highly unlikely".

"(It) raises questions about whether the NPA truly believes that it will be able to secure a conviction in the case."

Political analysts think it is more likely the case is meant to give Zuma an opportunity to reshuffle his cabinet, including appointing a new finance minister under the guise of giving Gordhan the space to clear his name.

If Zuma removed Gordhan in a reshuffle without a clear reason, it would give ammunition to opponents who say he wants to take control of Treasury and could spook financial markets.

Zuma denies any plot to remove Gordhan.

"The charges against him are so absurd and so trumped up that once he is likely forced out of the public office in the coming weeks, it will be a clear act of political vengeance," the Daily Maverick, an online political magazine, wrote.

Gordhan could also face charges about the legality of a surveillance unit he set up at the tax department a decade ago that is suspected of spying on politicians including Zuma. Abrahams said the NPA was still investigating this issue.

POWER STRUGGLE

"There is considerable legal opinion that these fraud charges and the 'rogue unit' charges that are still pending are so thin they could not hold up a tea-bag, let alone hold up in court," said Gary van Staden, analyst at NKC African Economics.

Gordhan and a political group close to Zuma have been at loggerheads over state spending and perceived corruption, sources in the ruling African National Congress (ANC) say.

Gordhan has urged fiscal prudence to appease ratings agencies which are on the verge of downgrading South Africa's sovereign rating to "junk" as economic growth hovers near zero.

Former ANC Treasurer General Mathews Phosa said Zuma's camp was keen to push through expensive state projects, including a nuclear power programme that could cost up to 1 trillion rand and a new fleet for the loss-making state airline.

"It all smacks of a political motive and desperate agenda to remove Pravin Gordhan in order to make way for a more pliable Minister of Finance who will dance to the tune of a corrupt clique who are chasing public contracts," he told Reuters.

Suspicions about a plot to gain control of the Treasury erupted in December when Zuma sacked respected finance minister Nhlanhla Nene and replaced him with an unknown lawmaker. Markets dropped so sharply Zuma recalled Gordhan days later to steady the ship.

Deputy President Cyril Ramaphosa has even said the government is at war with itself.

The cases against Gordhan have also distracted from several graft scandals swirling around Zuma.

Zuma was questioned last week by an anti-corruption watchdog over allegations his wealthy business friends influenced political appointments and were given sweetheart government tenders worth billions of rand.

The constitutional court then said last week the NPA could not appeal a ruling that could see the reinstatement of hundreds of corruption charges against Zuma set aside on a technicality before his presidential run in 2009. (Additional reporting by Ed Cropley; Editing by Angus MacSwan)

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