Economists: Contradictions from govt over Gupta family may frustrate markets

Economist Dawie Roodt says rating agencies are watching and taking note and this could affect the economy.

Mosebenzi Zwane, South African Minister of Mineral Resources, addresses the first day of the Mining Indaba 2016 Conference on 8 February 2016, at the Cape Town International Convention Centre in Cape Town. Picture:  AFP/RODGER BOSCH

JOHANNESBURG - Economists say the contradicting messages from government over the Gupta family and an Inter-Ministerial Commission's recommendations regarding their bank accounts may further frustrate the markets.

Mineral Resources Minister Mosebenzi Zwane released a statement this week, saying cabinet discussed the independent monitoring commissions report and recommended that a judicial inquiry be established.

However, speaking on 702 yesterday the ministers spokesperson admitted cabinet had not approved the inquiry, as initially stated.

The presidency then distanced itself from Zwane's statement, saying he was speaking in his personal capacity.

Group chief economist at Standard Bank Goolam Ballim says, "South Africa has witnessed, over the last couple of weeks, conflicting voices emerging, not just from government but also from the party, clearly tensions, divisions and fights within the party is beginning to spill into government."

Economist Dawie Roodt says rating agencies are watching and taking note.

"The confusion that is going in government. The contradictions that we're getting from government, the total lack of leadership that we get from government is really something that we all need to be extremely concerned about."


The Economic Freedom Fighters (EFF) said it will now write to the banks to encourage them to take action against the Gupta family and disclose reasons behind the family's accounts being closed.

Zwane said the banks failed to protect the rights of the Gupta family when their accounts were closed earlier this year.

At the time, the Banking Association of South Africa defended the banks decision, saying the four big banks did so within regulatory requirements.

Zwane said the Inter-Ministerial Committee resolved this week that there should be legal action taken against the treasury and the reserve bank.

However, the EFF's Fana Mokoena said Zwane is speaking on behalf of the Gupta family as he has proven to have a relationship with them.

Mokoena said there is no need for an investigation into the banks but rather the Gupta family needs to be investigated.

He said the banks and auditing firms should disclose the real reasons for disassociating themselves with the family.


On Thursday, Zwane had said the inter-ministerial team, set up by the cabinet in April and led by him, had cabinet backing for its proposal to set up such an inquiry to consider legal action against the banks.

That could trigger further turmoil after markets were rocked by a police investigation of Finance Minister Pravin Gordhan.

South Africa's Treasury is also in public rows with state-owned companies over their dealings with firms linked to the Guptas, who have been accused of holding undue sway over the President Jacob Zuma.

The statement from Zwane's team said the banks that had closed Gupta-owned Oakbay Investments' accounts were influenced by "innuendo and potentially reckless media statements".

The prominent business family is accused by the opposition of being behind Zuma's abrupt sacking of former finance minister Nhlanhla Nene in December, a move that rattled investor confidence and triggered calls for Zuma's resignation.

The Guptas have denied using their friendship with Zuma to influence his decisions, including on cabinet appointments, or to advance their business interests.

The president has acknowledged the Guptas are his friends but denies any improper behaviour based on that.


On Friday evening, presidency spokesman Bongani Ngqulunga said in a statement that the proposals by Zwane, which had drawn criticism from political commentators, were not the views of the inter-ministerial team, nor the cabinet.

Ngqulunga said the presidency regretted the confusion caused by Zwane's statement, which "was issued in his personal capacity and not on behalf of the task team or Cabinet".

As part of its recommendations, Zwane said his team also urged Zuma to set up a state bank and called for new banking licences to be issued to end the "oligopoly" in the industry.

He also said that although Gordhan was one of the cabinet team's members, he did not take part in its meetings.

Asset manager Futuregrowth said earlier this week it had decided to stop lending money to six state-owned companies because of the swirling political uncertainty.

Gordhan said on Friday that Futuregrowth's decision was a "very concerning development".

Speaking to the SABC news broadcaster in China, where he has accompanied Zuma for a G20 meeting, Gordhan said "we in the Treasury have been warning both political figures and people who run some of our institutions to be careful ... and make sure your governance is right".

"Don't think that the world is not watching us in some of the things that are happening in some of these SOEs (state-run enterprises). Those people are not obliged to lend us money."

Gordhan is embroiled in a separate investigation into whether he used a tax service unit to spy on other politicians, something he denies, and that has also put markets on edge about the fate of Africa's most industrialised economy.

Several banks and companies had cut ties with Oakbay, including South Africa's top four: Standard Bank, Nedbank, Barclays Africa's Absa and First National Bank (FNB), part of FirstRand.

In April, Oakbay approached government departments including the presidency to express "deep disappointment" over the account closures, saying this made it "virtually impossible" to do business in South Africa.

A family spokesman for the Indian-born businessmen, who moved to South Africa in the early 1990s, said any inquiry would not change plans announced on Saturday for the Guptas to exit their South African businesses this year.

Although the Guptas' relationship with Zuma has been a source of controversy for years, it burst into the open in March when senior political figures went public to say the family had exerted undue sway, including offering cabinet positions.