Johannesburg/Cape Town - South African President Jacob Zuma faced another attack on his leadership as members of the ruling African National Congress said the party should consider whether to oust him over his links to the millionaire Gupta family.
Deputy Finance Minister Mcebisi Jonas accused the Guptas of personally offering him the job of taking over the finance ministry.
Read: Zuma hammered amid warnings of 'mafia state'
“The political game has entered a deep and dangerous phase,” Ben Turok, a veteran ANC member and former lawmaker, said by phone. “ANC veterans, members of its integrity committee and MPs must stand up and say that Jacob Zuma must resign, because there is no way the Guptas could have done this without Zuma’s approval.”
Jonas’s statement on Wednesday was the latest in a series of embarrassing revelations linked to Zuma that have led opponents and allies alike to question his judgment. Jonas said he rejected the offer “out of hand” and that the proposal “makes a mockery of our hard-earned democracy”.
Zuma has insisted that his relationship with the Guptas, who are in business with his son, Duduzane, is above board. The Guptas, who have previously denied a meeting took place, described Jonas’s account as “totally false”. The ANC said it took the allegations very seriously and that the party’s leadership would discuss them at a meeting on the weekend. The rand rallied after Jonas’s statement was released.
Read: High-stakes drama as Zuma, reformers face off
“We confirmed the meeting and confirmed the offer,” party spokesman Zizi Kodwa told the South African Broadcasting Corporation. “The ANC can no longer sit back and do nothing in the face of these allegations. Whether you are an ANC member or not you have no right, outside the structures of the ANC leadership, to influence government in the manner that has been alleged about the Gupta family.”
Guptas deny offer
The Gupta family denied making the offer.
“Any suggestion that the Gupta family or any of our representatives or associates have offered anyone a job in government is totally false,” the family said in an emailed statement.
Zuma’s spokesman Bongani Majola didn’t answer calls to his mobile phone. Zuma’s lawyer, Michael Hulley, said Zuma hasn’t contacted him regarding Jonas’s statement.
Read: Jonas confirms Gupta job offer
The rand pared declines after Jonas’s statement, trading 0.4 percent weaker at 15.9837 per dollar by 7.18pm in Johannesburg on Wednesday after weakening as much as 2 percent. Yields on South Africa’s dollar-denominated bonds due September 2025 dropped 5 basis points to 5.23 percent. The rand later gained as much as 1.7 percent as the US Federal Reserve left its key interest rate unchanged.
“It is very difficult to ignore the degree to which the accusations of highly improper influence over the president from the Gupta family are being made,” Nic Borain, a Cape Town-based political analyst and adviser to BNP Paribas Securities South Africa, said by phone. “The glue, which was the power and discipline of Jacob Zuma and control over the ANC, is coming unstuck. His ability to control the narrative has been lost.”
‘Nenegate’
Zuma fired Nhlanhla Nene in December and replaced him with little-known lawmaker David van Rooyen, a move that sparked a selloff in the rand and the nation’s bonds. He changed course four days later and named Pravin Gordhan to the post, which he had held from 2009 to 2014, bowing to pressure from business leaders and senior ANC officials.
Zuma was forced last month to agree to demands from the corruption ombudsman to repay some of the R215 million ($13.5 million) in public funds used to renovate his private residence.
Gordhan’s own position isn’t secure. He has been involved in a public spat with the police since last month related to an investigation into the tax agency that he ran before 2009. Investor concern that his job is in jeopardy prompted the rand to drop 2.6 percent against the dollar on Tuesday.
“By making this statement, Jonas appears to be co-ordinating with Gordhan in defence of the Treasury’s independence,” said Mark Rosenberg, Africa analyst at Eurasia Group in New York. “It is part of the wider battle between pragmatic constitutionalists and more corrupt elements in the ruling ANC.”
Credit rating
The political turmoil comes at a time when the economy is threatened with recession and hovering close to a junk credit rating.
“Although the Treasury’s credibility and clout is in danger right now, longer term this may well be the beginning of the end of Zuma,” said Anne Fruhauf, vice-president at New York-based risk adviser Teneo Intelligence. “Jonas’s courageous statement confirms mounting suspicions about inappropriate interference in Zuma’s administration.”
Vytjie Mentor, the chairwoman of the parliament’s portfolio committee on public enterprises until 2010, said in a Facebook post earlier this week that members of the Gupta family offered her the job of public enterprises minister in the past, while Zuma was in the house. The Presidency said Zuma had “no recollection” of Mentor and can’t comment on her allegations.
It’s now up to the ANC’s National Executive Committee to decide Zuma’s fate, former party treasurer Mathews Phosa said.
Decision time
“It’s the NEC that needs to decide what will happen with the president now,” he said by phone. “It’s a big question. They have the power to decide on the head of state. I think the NEC must address this urgently. More people will speak out on the same issues. It’s difficult to extricate the president from this.”
Gwede Mantashe, the general secretary of the ANC, said if the situation wasn’t tackled the country could become a “mafia state where all what the state will be doing is to nurse interests of family businesses”, Johannesburg’s Business Day newspaper reported.
South Africa isn’t the only emerging market where currency and bond markets are being roiled by controversy related to the national president.
In Brazil, embattled President Dilma Rousseff installed her predecessor Luiz Inacio Lula da Silva at the heart of her government on Wednesday. His appointment as her chief of staff is designed to help shield Lula from a rolling corruption probe and harness his renowned negotiating skills to defend Rousseff from impeachment.
* With assistance from Rene Vollgraaff, Paul Burkhardt and Julia Leite
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