JOHANNESBURG – This has also tumbled the rand to its weakest in a month and yields on bonds spiked on Wednesday after a special investigations unit ordered Finance Minister Pravin Gordhan to report to police in relation to a surveillance unit in the state tax service.
South African Finance Minister Pravin Gordhan has been summoned by an elite police division and may face charges in relation to an investigation into a suspected rogue unit of the state tax service, a source close to the matter said on Tuesday.
Treasury spokeswoman Phumza Macanda confirmed to Reuters that the Hawks police division had contacted Gordhan on Monday and that the finance minister was taking legal advice.
Gordhan and former officials at the South African Revenue Service (SARS) must report to the Hawks on Thursday morning where they will receive a ‘warning statement’ given to someone before they are charged with an offence, the source said.
A letter to one of the SARS officials, seen by Reuters, says the summons relates to contravening surveillance regulations.
Uncertainty over leadership at the finance ministry will worry investors as Africa’s most developed economy teeters on the edge of recession and credit rating agencies consider downgrading it to “junk” status by year-end.
The rand tumbled three percent after the news first emerged and was 2.3 percent weaker at 13.89 against the dollar by 1746 GMT, its weakest in nearly three weeks.
“The currency is taking a serious view on this,” political analyst Gary van Staden said. “The mere suggestion, true or false, that there is a campaign against Gordhan will bring dire financial and economic consequences.”
Local media reports in May said Gordhan may face arrest on espionage charges for setting up the unit to spy on politicians including President Jacob Zuma.
Gordhan, who headed SARS from 1999 to 2009, has said the unit set up at the tax agency was lawful.
Zuma spooked investors in December by replacing then finance minister Nhlanhla Nene with relatively unknown lawmaker David van Rooyen. After markets tumbled, Zuma demoted van Rooyen and appointed Gordhan, in his second stint in the job.
Zuma has rejected allegations by opposition parties that he has failed to publicly back Gordhan, saying that the law should take its course.
This month, the ruling African National Congress suffered its worst ever electoral performance since coming to power at the end of apartheid 22 years ago.
The ANC’s reputation was bruised by Zuma’s flip-flopping over the finance ministry and by a constitutional court ruling that said he flouted the law over an order to repay inappropriate spending of state funds on his private home.
A presidency spokesman did not respond to request for comment.
Hawks spokesman Hangwani Mulaudzi said he knew nothing about the report. In May, Mulaudzi said Gordhan was not a suspect and that police were not singling out the finance minister in their investigation of the surveillance unit.
Gordhan, who headed SARS from 1999 to 2009, has said the unit set up at the tax agency was lawful.
Gordhan said last week that a previous newspaper report of his imminent arrest was an attack on the Treasury.
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