TREASURY HIJACKED?

Named: Van Rooyen’s two Gupta “advisors” who almost hijacked SA Treasury

The day after the shock of respected Finance Minister Nhlanhla Nene being replaced by an unknown backbencher, David van Rooyen arrived at National Treasury with his two until now unnamed “advisors.” In this article republished with its permission, London-based Africa Confidential names the duo as “Gupta allies” Mohamed Bobat and Ian Whitley and explains the context in graphic detail. Their arrival so shook the Treasury that its Director General threatened to resign and his staff immediately dubbed the event “9/12” – a reference to the US’s disastrous “9/11” of 2001. Former Finance Minister Trevor Manuel was so incensed that he wrote an open letter that was highly critical of President Jacob Zuma, Van Rooyen and the dark forces manipulating them for publication in City Press. After Zuma’s December 9 shock (“9/12”) decision, the rand plummeted, financial shares crashed and bond yields surged. After wiping R500bn off the value of South African assets, Zuma was forced into reversing his appointment, replacing him with Pravin Gordhan, the man he had fired a year and a half earlier. Here’s the fascinating inside story from Africa Confidential, the subscription-only service which have been covering the continent for more than half a century. – Alec Hogg

From Africa Confidential*

Delivering the State of the Nation address at the opening of what promises to be the South African Parliament’s most turbulent year, President Jacob Zuma announced a series of measures to shore up the country’s ailing economy, including cutting government expenditure, revamping the management of state-owned enterprises and partnering with the private sector to promote domestic and foreign investment

File photo: David van Rooyen, South Africa’s then incoming finance minister, pauses during his swearing in ceremony at the Union Buildings in Pretoria, South Africa, on Thursday, Dec. 10, 2015. The rand fell for a sixth day in the longest streak of losses since November 2013, stocks slid and bond prices tumbled the most on record after South African President Jacob Zuma fired Finance Minister Nhlanhla Nene and replaced him with a little-known lawmaker. Van Rooyen was then replaced by Pravin Gordhan. Photographer: Waldo Swiegers/Bloomberg

The measures are high on the wish list of a formerly disengaged business community which was shocked into action by Zuma’s disastrous sacking of Finance Minister Nhlanhla Nene on 9 December and the crash in share prices and the value of the rand that followed. The dismissal of Nene turned out to be the latest in a series of cabinet appointments made to circumvent resistance to the deal Zuma struck with Russia’s President Vladimir Putin last yearto build nuclear power plants in South Africa. Successive Ministers of Finance and of Energy who voiced their opposition to the deal over its enormous cost were removed from office.

The main beneficiaries of the nuclear deal would have included the controversial Gupta family – three Indian brothers who have become massive beneficiaries of Zuma’s patronage. The Guptas influenced Zuma to appoint the previously unknown David ‘Des’ van Rooyen as Finance Minister, it is now generally accepted. Their intention was to secure uranium contracts for the nuclear plants in the same way they have for the coal and arms sector, according to the local press.

Another part of the strategy was to place two Gupta allies, whom Africa Confidential is able to name as Mohamed Bobat and Ian Whitley, as advisors to Van Rooyen at the Treasury. Whitley is a former head of small and medium enterprises at the defunct African Bank. When Van Rooyen was replaced at the Treasury, the two men went with him to his new portfolio of Local Government and Traditional Affairs, and appeared with him when he was sworn in on 10 December.

Bobat and Whitley, who have associations with the Guptas and their businesses, visited the Treasury before Van Rooyen’s appointment and told officials there that they would be able to sign expenditure and other authorisations on behalf of the new minister but otherwise there would be no changes. Senior Treasury officials led by Director General Lungisa Fuzile were so appalled that they threatened to resign unless Van Rooyen’s appointment was reversed.

Then there is the strange case of Van Rooyen’s childhood friend, Gaddafi Rabotapi, who, former Finance Minister Trevor Manuel pointed out in an angry open letter to Minister Lindiwe Zulu on 20 December, had known about Van Rooyen’s appointment a full month before it was announced by Zuma. Manuel also said that said the proper procedures had not been followed in the appointment Bobat and Whitley, whom he did not name in the letter, nor had it been established that they had the requisite skills for either portfolio.

Following the firing of Nene in December, it was the business leaders acting in concert with moderates in the African National Congress who forced Zuma at political gunpoint to reverse his appointment of a stooge as finance minister and re-instate the highly-respected Pravin Gordhan. Further details have now emerged about the meetings in which Zuma fought tooth and nail not to give in. At one of them Patrice Motsepe, the billionaire benefactor of the governing party, told Zuma to be quiet and listen to the business leaders.11 Zuma’s former wife, Nkosazana Dlamini-Zuma, the main rival of Deputy President Cyril Ramaphosa in the succession stakes, expressed shock that the President could be addressed in such a way.

Intense and high-level meetings between government and business followed in rapid succession at the World Economic Forum in Davos, Switzerland, in January. There was a follow-up meeting between Gordhan and Zuma and 60 captains of industry and finance on 29 January. Zuma met over 100 top business chief executive officers on 10 February in Cape Town on the eve of the State of The Nation speech.

At the 29 January meeting, hosted by Old Mutual/Nedbank and chaired by Gordhan, emergency working groups were set up to report within four days to: promote economic growth, take steps to stimulate foreign and local investment, revamp the management of state-owned enterprises, and take urgent steps to avoid junk status for investment. Gordhan and his officials then processed the recommendations in record time and they were fed in as the core content of Zuma’s State of The Nation speech. It was the best coordinated collaboration between government and business in 22 years of democracy, insiders said. The dramatic sequence of events has put Gordhan in the driving seat of government and all but indemnified him against dismissal.

At the Mining Indaba in Cape Town in the days before the State of the Nation speech, Zuma would have felt additional pressure from mining luminaries who shared the views of the CEOs who were directly in touch with the President, such as Simanye’s Neal Froneman, Pallinghurst’s Brian Gilbertson, Adam Fleming, Clifford Elphick of Gem Diamonds, Africa Invest’s Rob Hersov, hedge fund manager Julian Schrager, Lord Robin Renwick of Hannam and Partners and Ivanhoe’s Robert Friedland. Global players who also added to the pressure on Zuma included the Indian steel tycoon Lakshmi Mittal, who was contemplating a major investment when news of Nene’s dismissal broke.

President Xi Jinping of China is also understood to have delivered a message via diplomatic backchannels to protect China’s 20% state in Standard Bank.3 The country’s two richest families – the Oppenheimers (Nicky and his son Jonathan) who recently sold the diamond giant De Beers to the ailing Anglo American, and the Ruperts (Johan) who command a huge international empire – kept a low profile through the affair. The events also revealed that the two more recent plutocratic dynasties – the Motsepes and the Guptas – are increasingly at daggers drawn as they vie for influence over the ANC.

Deputy President Ramaphosa is backed for the succession by the Motsepes. He is married to aders by the Anglican Archbishop of Cape Town, the Right Reverend Thabo Makgoba and will include business leaders, academics, professional and community organisations and non-governmental organisations.

Trevor Manuel blasts Zuma’s finmin blunder, asks tough questions

In January, Trevor Manuel turns 60. That puts him at an age where he is thinking about the country his grandchildren will inherit. A stage of life where many dispense with niceties of political correctness to speak out on things that are wrong. And right now, to Manuel’s mind, there is a lot that is going very wrong in his beloved country. For one thing, only lip service is paid to the National Development Plan, SA’s economic blueprint he spent five years guiding to conception. For another, Manuel is furious at what happened earlier this month in the Finance Ministry, a portfolio he spent more than a decade nurturing into a global position of esteem. Manuel penned this open letter for City Press – republished here with the newspaper’s permission – in reaction to “reckless statements” from President Jacob Zuma’s acolyte, small business minister Lindiwe Zulu. In reality, he is blowing the whistle on Zuma’s puppeteers, perhaps unwittingly supporting similar concerns expressed last week by EFF’s deputy president Floyd Shivambu. Given Manuel’s lifelong service to the ANC, his approach may prove even more pivotal than Shivambu’s disclosures in derailing Zuma’s “network of patronage”. He asks the key questions about why Zuma fired Finance Minister Nhlanhla Nene and sweeps away Zuma’s belated justification that Nene was proposed for a position which, Manuel says, is “15%” of the responsibility of the one he held. Equally pointed is his anger atpreviously invisible backbencher David van Rooyen‘s appointment, and how the shock new incumbent was able to show up at National Treasury barely a day after his appointment with two hand-picked “advisors”. It will be interesting to discover exactly who those “advisors” are; who championed their appointment; and, as Manuel asks, who approved putting them on the payroll. A must read. – Alec Hogg

By Trevor Manuel*

Dear Minister Lindiwe Zulu,
You may have observed that I refrained from commenting on the events of the past week. I have been contacted by at least 15 journalists since last Thursday, but opted to remain above the fray.
It is not that I’ve not had opinions, but I chose to remain silent. However, your comments, as quoted in the Mail & Guardian and confirmed on Radio 702 on Friday, with the customary “I was quoted out of context”, compel me to break my silence.

MINISTER TREVOR MANUEL

I choose to address through this medium a response to what I consider to be reckless statements.

I want to put it to you that you are plainly wrong in your assumptions about the roles, responsibilities and attitudes of business. I do not wish to pretend that I am competent, or sufficiently knowledgeable, to speak for business. Nor do I believe that there is a monolithic view that can be ascribed to an entity called “business”.

In a curious manner, even attempting to secure a single ANC view on the events since the dismissal of Mr Nhlanhla Nene as minister of finance is exceedingly difficult, as was self-evident at the press conference of Tuesday, December 15.

Let me argue one small, but significant, point of disagreement. There was no rallying against the appointment of Mr Des van Rooyen as minister of finance. In fact, the largest cross-section of commentators withheld judgement because he is so completely unknown.

The few exceptions were people who knew him from Merafong. Even I, as an MP for the period he served in Parliament from 2009 to 2014, when he was my fellow ANC member, battled to recall who he was.3

Subsequent attempts by various people in the ANC to justify his appointment as that of a rising star (I even heard Comrade Jessie Duarte describe him as the chief whip of the finance portfolio committee), fell flat.

Actually, the ANC has only one chief whip in the National Assembly, Stone Sizani, and his role is recognised by the rules of Parliament; portfolio committee whips are an internal party matter.

The issue of contention and disbelief was never about Mr Van Rooyen, it was about the summary dismissal of Mr Nene.

Having worked closely with Comrade Nene over a long period, I can confirm he is thoroughly decent, smart, diligent and more than capable. I have not heard any commentator interested in the economic management of South Africa raise any doubts about his leadership.

A few weeks before his removal, he demonstrated his mettle when he was prepared to disagree with SAA chairperson Dudu Myeni.

At that stage, some analysts raised the fact that he may have been demonstrating too much independence for President Jacob Zuma to tolerate. But he was merely insisting that SAA, as a state-owned company under his purview, be properly managed.

What is also clear from comments by Cabinet colleagues in the wake of Mr Nene’s dismissal was that when Cabinet adjourned at about 6pm on Wednesday, December 9, neither he nor Cabinet had any inkling of what was to follow that evening.

The suggestion by the president that Mr Nene was destined for some undefined post in the New Development Bank just does not wash. In fact, that assignment is unlikely to be even 15% of the size of that which he so ably performed as minister of finance.

I was in Cabinet when Mr Tito Mboweni was moved across from the department of labour to the SA Reserve Bank and when Dr Nkosazana Dlamini-Zuma left Cabinet to take up a position as chairperson of the African Union Commission.

In both those instances, the ground was properly prepared and Cabinet was apprised of developments.

This announcement for the New Development Bank was not time bound either, so why the haste? No attempt has been made to explain any of this.

We live in a world where there is so much information available. You may be surprised to learn how much is publicly available about Cabinet and government departments. I can therefore say that, from what I have heard, the removal of Mr Nene from his position both as minister of finance and as a Cabinet minister came as a complete shock to too many.

Yet it was not a shock to Des van Rooyen, whose soul mate, Gaddafi Rabotapi knew about this for more than a month (according to Mr Rabotapi himself, as quoted in the Saturday Star of December 12. By the way, what entitled Mr Rabotapi, as a nonmember of Cabinet, to know this?).

Similarly, Des’ brother was interviewed by the Mail & Guardian and he said he had been informed that “big things” would happen in the week.

Moreover, and if the press and the vast rumour mill are to be believed, for me the ultimate shocker was when Mr Van Rooyen arrived at National Treasury that Thursday morning with two advisers.

How did he appoint these advisers?

Since these advisers would have had to be placed on the payroll of Treasury, why did he not consult with the accounting officer and, importantly, how did he acquire their services even before he had been sworn in as a minister?

As a Cabinet minister, you would know that the position of ministerial advisers is used to help bridge the divide in skills between a minister and his or her department. How did Des van Rooyen know what skills were deficient in the Treasury?

Also, following his redeployment to the department of cooperative governance and traditional affairs, these highly specialised advisers accompanied him to this department. So, who determined that their skills were appropriate for either assignment? Or is that not a factor to consider, particularly with a portfolio as important as finance?

The picture I am sketching for you is that the saga of dismissing a competent minister and replacing him without warning or explanation led to a complete breakdown in trust.

It cannot be correct that there is an outside hand (and not the ruling party) that knows more than Cabinet does about unfolding events.2

If the views expressed by ministers in the post-Cabinet briefing are correct – and I have no reason to doubt this – the events of the previous day shook the trust of the Cabinet collective at its roots.

If this view holds, the trust is not broken only with Cabinet, of course. It is also broken with the ANC, with the broader South African electorate, with the markets and with that entity you call “business”.

The breach of trust was not the first, but perhaps the last, straw that broke the camel’s back in the careless handling of a pivotal portfolio.

Please help us by explaining how we might repair the trust, the legitimacy and, if you must, the obedience of the governed. In my limited view, it is possible for autocrats to rule, but not for democrats to govern without the vital ingredient of trust.

Comradely greetings,

Trevor Manuel

• Trevor Manuel was South Africa’s Finance Minister from 1996 to 2009 before taking over as the Minister in charge of the National Planning Commission which produced the National Development Plan, SA’s economic blueprint. He left the public service in 2014.                ALEC HOGGDECEMBER 21, 2015 

NATIONAL TREASURY: YES, MINISTER

BY FIONA FORDE AND ROB ROSE, FEBRUARY 18 2016, 07:26

MAHOMMED Bobat, one of the two men hired as a mysterious “adviser” to blink-and-you-miss-it finance minister David van Rooyen, resigned from his position at an investment company weeks before Van Rooyen’s four-day tenure at national treasury began.
The 46-year-old Bobat had worked at the politically connected black economic empowerment firm Regiments Capital for three years. But insiders say he told his bosses last October that he was leaving to work as a special adviser to Van Rooyen, when he was to become finance minister.

It was only weeks later, on December 9, that President Jacob Zuma shocked the country by firing Nhlanhla Nene and installing Van Rooyen, sparking a R169bn plunge on the JSE.
This is likely to fuel speculation over why Zuma’s plan to axe Nene was well known among Van Rooyen’s cohorts weeks before it was announced.
Van Rooyen’s tenure was cut short when Zuma was strong-armed into reversing the controversial move, reappointing Pravin Gordhan and sending Van Rooyen to the co-operative governance & traditional affairs department (Cogta).

Deepening the mystery, it has now emerged the other “adviser” who arrived at treasury with Van Rooyen was Ian Whitley, who is married to the daughter of Jessie Duarte, the ANC deputy secretary-general and a Zuma confidante.
This week, Duarte told the Financial Mail that Whitley called her soon after Van Rooyen’s appointment and told her he had been asked to work in his private office.

“I advised him not to take the job, because my understanding was that national treasury has been reserved for the elite few, and you have to be known to have come through the ranks. I said ‘don’t do this, it’ll bring discomfort to you’,” she said.
Nonetheless, the 44-year-old Whitley took the job as Van Rooyen’s chief of staff. Even though Van Rooyen has since shifted departments, Whitley and Bobat still work for him.
Duarte adds: “I did not introduce them because, quite frankly, I didn’t know who Van Rooyen was. But my understanding is that they’ve known each other for a long time.”

This week, Bobat told the Financial Mail that he still works for Van Rooyen, describing his role as to “advise the minister on any other work” within the department.
“I have known [Van Rooyen] for some time, and have a good relationship with him.”
However, treasury insiders say that even within their few short days at the ministry, Whitley and Bobat raised the hackles of a number of senior ministry officials, who referred to the two as “thugs”.

During one meeting with senior officials, insiders say, Bobat told them they would be reporting to him directly — and not to the minister as was the norm.
News reports this week claim Whitley and Bobat insisted they would sign off all expenditure.
However, Bobat says he “never insisted” anyone report to him. “I work with the minister and any senior official reports to the minister,” he said.

Nonetheless, the sudden emergence of the “advisers” has fuelled speculation that Van Rooyen’s appointment was a bid by vested interests, such as the Gupta family, to “capture” the country’s purse strings.
Treasury staff who spoke to the Financial Mail say both Bobat and Whitley are known as “Gupta boys”.
Though there is no evidence of formal business relationships with the family, “we knew who they were,” says one. “They are Gupta insiders. They are right in there.”
While Whitley did not answer calls, Bobat vehemently denied having anything to do with the Guptas.
“It does not mean that any Indian person in SA is related to the Gupta family. If I was, I wouldn’t have come to Cogta,” he said.
But treasury officials say that if Bobat had stayed, a string of senior officials would have resigned.
Both Bobat and Whitley, whom Duarte describes as an “honest person with an incredible CV”, have experience in the banking sector.
For Bobat, his new venture into the murky world of politics and public service is a first. His first job was at Deloitte, soon after graduating with a BCom. He then moved to Standard Bank in the late 1990s, before joining Investec.
In 2012, Bobat was headhunted by Regiments Capital, where he forged ties with a number of influential individuals and companies.
He was at Regiments when the firm advised Transnet on the awarding of the controversial R50bn tender to purchase locomotives and when it put together financing plans for state-owned enterprises.
Regiments is a controversial firm. It was embroiled in a scandal over a R1m kickback to an ANC Gauteng official and implicated in the wrongful management of a City of Johannesburg fund before Bobat joined.

Whitley also worked at Standard Bank in the late 1990s. In 2006 he joined Absa, before moving to the troubled African Bank in 2012.