The Minister of Finance, Malusi Gigaba, must now act decisively and fire his economic advisor, Professor Chris Malikane, for suggesting that people “take up arms” to achieve “radical economic transformation” in South Africa.
The minister says that Professor Chris Malikane has been “reined in” and told to “keep quiet”. But Professor Chris Malikane says the minister cannot tell him to “keep his mouth shut”. Up until now, Professor Chris Malikane has made a fool of the minister by ignoring his instruction to “keep quiet”.
However, things have now come to a head: Professor Chris Malikane crossed a “red line” in our constitutional democracy when he pivoted from warning about “civil war” to calling for “civil war” in South Africa. Speaking at an event last night, Professor Chris Malikane reportedly suggested that people may have to “take up arms” to achieve “radical economic transformation” in South Africa.
The fact is that it is complete madness for the minister’s economic advisor to be allowed to suggest that people “take up arms” to achieve “radical economic transformation” in South Africa.
These are exactly the kind of reckless statements that undermine investor confidence and discourage private sector investment, which are desperately needed to boost economic growth and create jobs in South Africa.
The minister must now try to save himself by acting decisively to stop the bleeding by immediately: making a public statement distancing himself from his economic advisor’s mad ideas; and firing Professor Chris Malikane as his economic advisor at National Treasury.
In the end, the minister can run but he cannot hide from “Malikanegate” because I will be holding the minister’s feet to the fire for his reckless decision to appoint Professor Chris Malikane during “Question Time” on Wednesday 10 May 2017 in Parliament.
The Minister of Finance, Malusi Gigaba, needs to act decisively to stop the bleeding following his appointment of Professor Chris Malikane as his economic advisor.
Last week the minister claimed his economic advisor had been “reined in” and told to “keep quiet”.
But since being “reined in”, the minister’s economic advisor has done anything but “keep quiet”.
He was interviewed by:
- SAFM (bashing ratings agencies);
- Cape Talk (bashing the private sector);
- Sowetan (bashing the National Development Plan); and
- Rapport (warning of coming civil war).
And he appeared at the minister’s side during his international investor roadshow in the United States.
In fact, the minister’s economic advisor now denies being told to “keep quiet”, defiantly claiming there is no way the minister could tell him to “keep his mouth shut”.
This is what the minister’s economic advisor said in response to a question about the ministerial gagging order:
“No, no, no, no. People’s inference of what the minister said is wrong. There is no way the minister can tell a fellow South African to keep his mouth shut. I am an academic, I work with ideas. I have to challenge public opinions that mislead the nation. When the minister said he reined me in, he meant we should no longer focus on talking, but on doing – action that will transform the economy.”
We can only conclude that either the minister was lying when he claimed his economic advisor had been told to “keep quiet”, or he is too weak to ensure that his economic advisor does in fact “keep quiet”, and his economic advisor has gone rogue.
Whatever the case, the minister must now face up to the fact that his first few weeks on the job have been a disaster which has undermined investor confidence and fueled policy uncertainty.
The minister has tied himself into knots by:
- somersaulting from “radical economic transformation” to “inclusive economic growth”;
- attacking “orthodox” and “right wing” economists at National Treasury; and
- appointing an economic advisor who wants to turn South Africa into Venezuela.
The fact is that the minister’s economic advisor has become a political liability and it is now time for him to act decisively and stop the bleeding by cutting him loose and sending him back to the seminar room where his mad ideas about the economy will do no harm to South Africa.
Note to Editors: Please find correspondence between National Treasury and Tegeta Exploration & Resources (Pty) Ltd relevant to the report discovered as a result of a request for access to information, in terms of the Promotion of Access to Information Act (No. 2 of 2000), submitted by DA Shadow Minister of Finance David Maynier MP here.
The Minister of Finance, Malusi Gigaba’s, first big test is going to be his handling of National Treasury’s final report on the review of coal contracts entered into by Tegeta Exploration & Resources (Pty) Ltd and Eskom.
The draft report reportedly finds inter alia that there was no evidence that the advance payment was used for its mining operations and recommends that the R659 million be converted to a loan with interest payable by Tegeta Exploration and Resources (Pty) Ltd.
The controversy surrounding the report is not new and exploded last year when Tegeta Exploration & Resources (Pty) Ltd threatened to apply for an urgent interdict to prevent National Treasury handing me a copy of the report, which I had requested in terms of the Promotion of Access to Information Act (No. 2 of 2000).
In a letter, dated 23 June 2016, Tegeta Exploration & Resources accused National Treasury of trying to defame their business as follows: “…your efforts to obtain our feedback on the request of Mr Maynier must be seen as an unwarranted attempt to obtain approval to publish your report to a political party with the motive of defaming our business with facts not tested or commented on.”
And Tegeta Exploration & Resources went on to threaten National Treasury as follows: “We will consider obtaining further legal advice in launching an urgent application to interdict you from releasing the report until it has been subjected to scrutiny of all parties concerned.”
Tegeta Exploration & Resources (Pty) Ltd and Eskom clearly have something to hide and have worked hard to frustrate and delay the review conducted by National Treasury.
This matter has gone on for too long and it is now imperative that the report be completed, made public and that action be taken against Tegeta Exploration & Resources (Pty) Ltd and Eskom.
I have, despite numerous requests for access to the report, in terms of the Promotion of Access to Information Act, (No. 2 of 2000), been unable to obtain a copy of the report from National Treasury.
The reply is always the same: “Your request has been assessed and it has been established that the report is not yet finalised. Some technical information was received from Eskom and this necessitated the appointment of experts to assist in reviewing it. The report will be released once the experts have completed the review process.”
However, I have not given up and on 05 April 2017 I submitted a further request for access to the report, in terms of the Promotion of Access to Information Act (No. 2 of 2000), to National Treasury.
The handling of the final report will be the first test of the minister’s willingness to stand up to his political master, Jacob Zuma, and his most important clients, the Guptas, who control Tegeta Exploration & Resources (Pty) Ltd.
The Minister of Finance, Malusi Gigaba, is in full damage control mode following the appointment of Professor Chris Malikane as his economic advisor ahead of an important international investor roadshow in the United States.
The fallout from the appointment has forced the minister to issue a media statement distancing himself from his own economic advisor’s mad ideas and reassuring investors that it is not government policy to nationalise the banks.
The fact that the minister is in damage control mode is proof enough that Professor Chris Malikane should never have been plucked out of the seminar room, where his mad ideas could do no damage to the economy, and appointed as an economic advisor, where his mad ideas can do damage to the economy.
The minister seems to think that it is possible to “firewall” himself from his own economic advisor’s mad ideas and that it is possible for his economic advisor to be left to “think aloud” as he takes on what he calls “right wing economists” at National Treasury.
This is simply impossible and will no doubt send a chill up most international investors’ spines and will ensure a hostile reception during the international investor roadshow in the United States.
The Minister of Finance, Malusi Gigaba’s, reported controversial appointment of Professor Chris Malikane as his economic advisor should come as no surprise in South Africa.
The minister set out his political agenda in his maiden press conference on 01 April 2017, which includes: transforming the economy by implementing “radical economic transformation”; and transforming National Treasury because it is dominated by “orthodox economists, big business, powerful interests and international investors”.
The appointment of Professor Chris Malikane, who appears to have been trained at the “Hugo Chavez School of Economics”, is entirely understandable and a logical consequence of the minister’s political agenda, to implement “radical economic transformation” and to take on orthodox economists at National Treasury.
The fact is that Professor Chris Malikane has been appointed precisely because he is an unorthodox economist and he will be used as a ministerial battering ram in coming battles with orthodox economists at National Treasury.
In the end, Professor Chris Malikane’s appointment will reinforce the perception held by the ratings agencies that there will be major shifts in economic policy, which will shake investor confidence and contribute to a ratings downgrade of South Africa.
The Minister of Finance, Malusi Gigaba, has committed to holding the fiscal line in South Africa.
However, a series of parliamentary questions submitted to all national departments reveals that a staggering R 13 864 380 has been spent on “sponsorships” of various institutions between 2014 and 2017.
The latest reply to parliamentary questions reveals, for example, that various state-owned companies transferred R 74 563 to the Afrikaanse Handelsinstituut, R3 725 624 to the South African Chamber of Commerce and R 1 151 393 to the Black Management Forum.
The total “sponsorship” so far is as follows: Afrikaanse Handelsinstituut (R 74 563); South African Chamber of Commerce and Industry (R 3 725 624), Black Management Forum (R1 151 393), Black Business Council (R 8 050 000), Business Unity South Africa (R 22 800) and the Progressive Business Forum (R 840 000).
And the biggest “sponsors” so far are as follows: Department of Trade and Industry (R 7 000 000), Transnet (R 5 059 002), Eskom (R 1 501 763), and Denel (R 303 615).
It boggles the mind that cash strapped state-owned enterprises would be allowed to use public funds to sponsor private institutions, especially when some of these institutions blatantly pursue a political agenda and bite the hand that feeds them.
I will therefore be requesting the Auditor-General, Kimi Makwetu, to investigate this matter when we have all the facts, based on all the replies to my parliamentary questions on this subject in Parliament.
The Minister of Finance, Malusi Gigaba, will reportedly take office this morning at National Treasury.
The minister tried to restore confidence and calm following his shock midnight appointment.
However, there is a strong impression that President Jacob Zuma appointed the minister with the Guptas’ “stamp of approval” and that the minister is close to the Guptas.
The impression was re-enforced when the minister reportedly zig-zagged his way around hard questions about his relationship with the Guptas at his maiden press conference on the weekend.
The minister can run but he cannot hide from hard questions about his relationship with the Guptas.
That is why the minister should act in the best interests of National Treasury and issue a public statement:
- setting out all the facts including the details of every meeting, every decision, and every gift ever received from or relating to the Guptas; and
- reassuring the public that he is committed to serving the public interest rather than the private interests of the Guptas.
If the minister continues to zig-zag his way around the hard questions, he will be responsible for compromising the institutional integrity of National Treasury.
And the one thing that we simply cannot afford is for the whiff of corruption and maladministration to waft around National Treasury.
Newly appointed Minister of Finance Malusi Gigaba’s maiden press conference to “restore confidence and restore calm” is likely to have exactly the opposite effect and create even more policy uncertainty when it comes to the economy in South Africa.
The minister expressed his commitment to “radical economic transformation” with almost religious zeal, but then did not seem to be able to explain exactly what it means and conceded that there was still “a whole lot of clarification that we have to do”.
This is unlikely to go down well with what the minister called the “credible ratings agencies”, with one ratings agency already warning that a change in policy may signal a ratings review of South Africa.
The real concern is that the minister was appointed with the Guptas’ stamp of approval and the real test of the new minister will not be his words, but his deeds when it comes to decisions that may have an effect on the Gupta empire’s interests in South Africa.
These include, but are not limited to, the following: the appointment of the Chief Procurement Officer at National Treasury; the approval of the joint venture or partnership with VR Laser Asia; the review of coal contracts entered into between Eskom and Tegeta Exploration and Resources; and any action in respect of the control over the Habib Overseas Bank.
Three days ago President Jacob Zuma announced he had instructed the Minister of Finance, Pravin Gordhan, to cancel his international investor roadshow and immediately return to South Africa.
There has been no reasonable explanation for the bizarre instruction, beyond the speculation that the minister is about to be fired in a cabinet reshuffle.
However, bizarre explanations for the bizarre instruction are now beginning to surface.
The most bizarre explanation by far is that President Jacob Zuma issued the instruction on the basis of an “intelligence report” claiming that the finance minister would be holding secret meetings with people in the United Kingdom and the United States to discuss “overthrowing the state”, as part of “Operation Check Mate”.
This is by far the most bizarre explanation for the bizarre instruction and is exactly the kind of rubbish that one would expect President Vladimir Putin to dream up and have published in “Pravda”.
The fact is that nobody in their right mind would believe the finance minister would participate in secret meetings with the intention of overthrowing the state.
However, President Jacob Zuma and his inner circle of securocrats are so prone to conspiracy and so clueless about international finance that we cannot be sure, mad as it may seem, that the bizarre instruction was not based on a fake intelligence report about a fake intelligence operation, comically called “Operation Check Mate”.
I will request the Inspector-General for Intelligence, Isaac Dintwe, to probe these allegations because we need to know whether a fake intelligence report about a fake intelligence operation played any role in the bizarre instruction for the finance minister to cancel his international investor roadshow and return to South Africa
The DA is pleased that the Tax Ombud, Judge Bernard Ngoepe, has asked for permission from Finance Minister Gordhan to investigate possible systemic problems with the payment of refunds by the South African revenue Service (SARS).
All efforts by SARS must be to ensure the efficiency and credibility of the VAT system, which includes the payment of refunds of diesel and Employment Tax Incentive (ETI) claims. The DA has been reliably informed of serious backlogs across the board which is a clear indication of the weak administration and technology at SARS.
On the 3rd of February 2017, I wrote to Minister Gordhan and requested that he use his authority as contained in section 16(1)(b) of the Tax Administration Act to request the Tax Ombud to conduct an investigation into:
- Whether or not;
- There are systemic failures with regard to SARS refunds of tax/VAT?
- There are grounds to conclude that SARS are deliberately delaying the payment of tax/VAT refunds?
- Identifying the sections of legislation that SARS may be using in order to “legally” delay the payment of refunds.
- Identifying any other methods that SARS may be using in order to delay the payment of tax/VAT refunds.
- Recommend solutions that will ensure that tax/VAT refunds are paid out promptly by SARS and within 30 days of the submission of returns.
At the same time, I suggested to Minister Gordhan that:
“As an alternative approach, and as the Davis Tax Commission is currently reviewing the SARS operating model, we request that the Minister consider referring this vital issue to the Davis Tax Commission to review as part of the operational model review.”
After I had not received a response from Minister Gordhan by the 8th of March 2017, I sent a follow-up reminder and received the following response:
“Dear Mr Lees. My sincere apologies for not sending an acknowledgement. Your matter has been escalated to the Tax Ombud for review and is receiving the necessary attention.”
I have no doubt that Judge Ngoepe initiated his request to investigate to Minister Gordhan on the basis of my letter to Minister Gordhan.
The delays with VAT, diesel and ETI refunds directly impacts on the creation of new jobs and negatively impacts small businesses which often rely on timeous refunds to keep their cash flow positive. However, it does artificially inflate the tax revenue collected.
The need for a far-reaching investigation is clear and the DA welcomes the fact that the Tax Ombud has taken up our call.