Prosecutors yesterday issued a formal summons to South African Minister of Finance Pravin Gordhan to appear in court on Nov. 2 in relation to the granting of early retirement to a colleague, sending the rand reeling.
The currency fell as much as 3.4 percent when National Prosecuting Authority (NPA) head Shaun Abrahams also told a news conference that Gordhan was being investigated for his role in setting up a surveillance unit at the tax department a decade ago.
Abrahams said Gordhan, in his previous role as head of the South African Revenue Service (SARS), would be charged with approving early retirement for former tax agency deputy commissioner Ivan Pillay and then reappointing him as a consultant.
This cost the tax agency about 1.1 million rand (US$79,000), in violation of public finance laws, Abrahams said.
An elite police unit known as the Hawks also has also been investigating Gordhan over the so-called “rogue spy unit” at the tax agency, set up when he was at its helm. Abrahams said the probe of the unit was continuing.
Gordhan was first asked questions by the Hawks about the SARS unit in February, an investigation analysts say was the result of political pressure from a faction allied to South African President Jacob Zuma. The president has denied the claims.
The affair, which has rumbled on for months, has rattled markets in Africa’s most industrialized country, which faces the risk of ratings downgrades later this year.
Gordhan, who is highly respected by financial markets, has painted the allegations about his role in establishing the special tax unit as “political mischief,” but said prosecution officials delivered a summons to his house yesterday morning.
“It looks like we are in for a bit of excitement going forward,” he said at a business seminar in Johannesburg. “My lawyers will issue a proper statement in a short while.”
Abrahams denied any mischief in the handling of the case, and said the surveillance unit acted in a “very strange manner” and without clearance from the national intelligence services.
“I can assure you there has been no political interference in this matter. There has been no political interference in the decision made,” Abrahams said.
Abrahams also said that he was still studying a Constitutional Court order last week that said his office could not appeal a ruling that may see corruption charges reinstated against Zuma.
The High Court in April ordered a review of an NPA decision to set aside hundreds of corruption charges against Zuma, calling it “irrational.”
That decision allowed Zuma to run for president in 2009.
The scandals swirling around Zuma contributed to the worst election showing by the ruling African National Congress in local elections in August, intensifying calls for his resignation.
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