Gordhan Dispute With South African Police Worsens Over Probe

  • Hawks unit indicates it may force Gordhan to answer questions
  • Rand slumps as standoff between Hawks, Gordhan intensifies

A standoff between South Africa’s police and Finance Minister Pravin Gordhan intensified on Tuesday, as investigators indicated they will force him to cooperate with their probe into the national tax agency. The rand slumped by the most since Feb. 26.

The Directorate for Priority Crime Investigation, known as the Hawks, said Gordhan missed two deadlines to respond to questions about an investigative unit within the South African Revenue Service, which Gordhan led before 2009 and local newspapers said investigated politicians, including President Jacob Zuma. On Monday, Gordhan said he hadn’t been notified of the second deadline and accused the Hawks of harassing him.

“This is neither a talk-show nor a soapie,” the Hawks said in an e-mailed statement on Tuesday. “We are mandated to investigate without fear, favor or prejudice. Our legal team are forging a way forward, which will see the Hawks exercising our constitutional powers.”

The rand slumped as much as 2.6 percent to 15.9276 per dollar and was trading at 15.9035 as of 3:30 p.m. in Johannesburg.

Damaging Country

“Levels of policy uncertainty rise because investors start wondering how long the shelf-life of Pravin Gordhan as finance minister is going to be,” Aubrey Matshiqi, an analyst at the Johannesburg-based research group, the Helen Suzman Foundation, said by phone on Tuesday. “The Hawks and the minister are doing some damage to the image of the country.”

Treasury spokeswoman Phumza Macanda said she hadn’t seen the Hawks statement and couldn’t immediately comment when contacted by Bloomberg News. Bongani Majola, Zuma’s spokesman, didn’t answer calls to his mobile phone.

“The Hawks can ask all the questions they want,” said Pierre De Vos, a law professor at the University of Cape Town. “There is no legal obligation to answer any of the questions. I’m not sure on what basis they will be able to force him to answer.”

Zuma reappointed Gordhan as finance minister, a post he had held from 2009 to 2014, in December after the president’s decision to replace Nhlanhla Nene with little-known lawmaker David van Rooyen sparked a selloff in the rand and the nation’s bonds. While Zuma says Gordhan has his backing, he’s refused to intervene in the Hawks probe or bow to the minister’s demands to fire tax chief Tom Moyane for defying an order to halt a management overhaul.

“Investors and the ratings agencies are observing every development in South Africa with a keen eye,” Gordhan said in a statement Sunday. “Once again the Hawks, and those who instruct them, have no regard for the economic and social welfare of millions.”

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