South Africa: Pravin Gordhan charges dropped

Fraud charges against Pravin Gordhan, South Africa’s embattled finance minister, have been dropped in a dramatic development to a long-running case that has threatened the country’s economic stability. 

The suspension of the charges against Gordhan and former South African Revenue Service colleagues Oupa Magashula and Ivan Pillay was announced this morning by Shaun Abrahams, national director of public prosecutions. 

“They did not have the requisite intention to act unlawfully. I have decided to overrule the decision to prosecute Mr Magashule, Mr Pillay and Mr Gordhan. I direct the summonses to be withdrawn with immediate effect,” Abrahams said.  The reversal comes less than a month after Gordhan was summoned to appear in court over allegations that he approved an early payout for a senior colleague at the organisation, which he led until 2009. Gordhan has repeatedly denied any wrongdoing.

The highly politicised case, which Gordhan’s supporters believe was orchestrated by factions close to President Jacob Zuma, had damaged investor confidence in South Africa and sent the rand plummeting. This morning’s news sent the rand to its highest level in a month against the dollar.

Markets reacting to the withdrawal of #PravinGordhan charges. Rand 1.5% stronger, bonds up and the banks have rallied by 4.5% #sabcnews

— Francis Herd (@FrancisHerd) October 31, 2016

The dropping of fraud charges against #PravinGordhan brings a sigh of relieve!

— Glisson N (@glissonniekerk) October 31, 2016

 Gordhan – credited by investors for attempting to bring stability to the country’s finances and speaking out against corruption in state-owned enterprises – has appeared under threat since returning as finance minister last December in the wake of the double sacking of his predecessors, the respected Nhlanle Nene and the unknown David Van Rooyen. Gordhan’s return to a position he first held from 2009 to 2014 initially cheered markets hoping for a reprieve from the repeated political and personal scandals of Zuma’s second term. 

Yet the internationally respected finance minister’s attempts to stave off the threat of a credit ratings downgrade have been continuously undermined by his legal troubles, which some see as an attempt by Zuma to replace him with a more flexible colleague. In September, ratings agency Moody’s released a quarterly credit report warning that political infighting at the Treasury would lead to a downgrade, which has yet to materialise.

The suspension of the charges against Gordhan could see that decision further deferred. Moody’s – in common with major ratings agencies Standard & Poor’s and Fitch – rates South Africa marginally above junk status. Last week, Gordhan used his budget statement to slash the country’s growth forecast to just 0.5% from around 1%, arguing that the country was at “at a crossroads, politically and economically.” In comments perceived as a sideswipe at the President, Gordhan noted that the government had placed “unnecessary hurdles” in the way of the country’s development. 

Responding to the development on Monday, the ANC affirmed its support for Gordhan and called on the NPA to avoid a repetition of the decisions that led to the finance minister being charged. 

“Actions of the NPA to charge Comrade Pravin Gordhan and others, have had a negative impact on the economy and created unnecessary speculations about the real motive’” the ANC said in a statement. “The ANC calls on the appointing authority to engage the NPA leadership to avoid a repeat of this and to protect the independence and integrity of the NPA.”

David Thomas