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Internal warfare tears at South Africa’s ruling African National Congress

Party reeling from election downturns and graft allegations

27/09/2016 00:00:00
by Wall Street Journal
 
Under pressure ... President Jacob Zuma
 
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JOHANNESBURG: Beset by plunging poll numbers, factional infighting and a raft of corruption allegations, the party of Nelson Mandela is at war with itself.

In the weeks since the African National Congress recorded its worst election results since the collapse of apartheid, cabinet ministers, activists and party grandees have squared off, exposing deep rifts ahead of a leadership contest scheduled for December 2017.

Allies of President Jacob Zuma are openly fighting with Treasury Minister Pravin Gordhan over control of state finances, including the running of state-owned enterprises, anticorruption agencies and the central bank.

The drip of corruption allegations against Zuma and his wealthy business associates has swelled to a torrent. Ratings firms have warned that political infighting could see South Africa downgraded to junk status.

The nation’s graft ombudsman, Thuli Madonsela, who is investigating official corruption, has said she could unveil some more potentially explosive revelations—without elaborating—before she steps down at the end of her term in October.

The ANC’s Youth League president, Collen Maine, on Sunday repeated a prior allegation by an ANC minister accusing her of being an agent of the U.S. Central Intelligence Agency. She has repeatedly denied the allegation.

The outcome of the struggle inside the ANC is likely to dictate the path of Africa’s most advanced economy—still reeling from the collapse of commodity prices, weak growth and stubbornly high unemployment—for the next decade.

It also will shape the future of Africa’s most famed liberation movement as revolutionary leaders turned strongmen from Angola to Zimbabwe cling to power.

“This is a battle royal to determine the future of the ANC. The outcome will dictate the structure of governance here for years to come and will have an echo effect across the region,” said Manji Cheto, an analyst with Teneo Intelligence, a risk consultancy.



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The party’s war of words has spilled onto the streets, with hundreds of party activists clashing at the ANC’s Johannesburg headquarters on Sept. 4.

For much of the past week, students have marched near the University of the Witwatersrand in downtown Johannesburg to protest higher tuition fees. Police fired tear gas to disperse the demonstrators.


President Jacob with South Africa's finance minister

“The genius of the Jacob Zuma project was to take the levers of power and use them for his own personal gain,” Maimane said in an interview. “Public sentiment is with Pravin Gordhan, but Zuma needs to control these institutions, so the fight is intensifying.”

Zuma has said the Guptas are his friends, but denies doing anything improper. Gordhan has said whether he remains in office is up to the president.

The two men appeared together for the first time in weeks on Sept. 16 in a show of scripted solidarity, with Zuma calling for an end to factionalism “that promotes a negative narrative about the country.”

Two weeks after the election, South Africa’s highest crime-fighting body, a police unit widely seen as close to President Zuma, called Gordhan for questioning for allegedly establishing a rogue investigative unit when he headed the national tax agency.

Gordhan refused to present himself, saying the charges were trumped up, but rumors of his possible arrest have sent the currency tumbling by more than 5%.

The party battle has dragged up controversial business deals like the December sale by commodities giant Glencore PLC of an unprofitable coal mine to Tegeta Exploration and Resources—a little-known unit of a conglomerate controlled by the Gupta family.

Three weeks before the deal, an investment vehicle run by the president’s son, Duduzane, took a 28.5% stake in the company. Since the acquisition, the mine, known as Optimum Coal, has engineered a spectacular turnaround, thanks to a series of expanded contracts from Eskom, the state utility.

Days after being called in, Gordhan issued a highly unusual public rebuke to Eskom, accusing the utility of covering for the Guptas by refusing to provide information on payments made to Tegeta after it acquired Optimum. Eskom says its treatment of Tegeta was in line with its regular business practices and that it had to buy coal from the company to avoid winter power shortages.

The Gupta influence

Zuma’s cabinet allies took to the airwaves to petition Gordhan to comply with the investigation against him, stressing he wasn’t above the law.

Mining minister and Zuma ally Mosebenzi Zwane, who flew to Zurich in December to meet Glencore Chief Executive Ivan Glasenberg at the same time as the Optimum negotiations, called on Gordhan to stop grandstanding and comply with the police. He pledged to investigate banks that froze credit lines to the Gupta-controlled companies after the ombudsman’s probe.

The three Gupta brothers—Atol, Ajay and Rajesh—arrived in South Africa from the Indian state of Uttar Pradesh in the 1990s and opened a shoe store before establishing a successful information-technology business, meeting the Zuma family, and expanding into property, mining and media.

Duduzane Zuma, the president’s son, who began working with the Guptas as a trainee at the IT firm, has direct or indirect holdings in several Gupta-controlled entities, including Infinity Media, the holding company for their pro-government TV channel ANN7, as well as Tegeta. One of the president’s daughters and one of his four wives also worked at Gupta-controlled companies. Duduzane Zuma couldn’t be reached for comment.

Diplomats here say that despite the Gupta family’s insistence it is being unfairly scapegoated, its influence is felt at the heart of government.

Prominent ANC members have called on Zuma to step down and said the allegations of corruption are humiliating the party.

“We fail our own. We steal from the poor,” said Sipho Pityana, an ANC veteran and chairman of miner AngloGold Ashanti: “All these things we do with absolute impunity.”

But Zuma’s allies say the president is the victim of a conspiracy and that Gordhan has run to the media for sympathy.

“We are not comfortable with the linkage of the president to these investigations,” saidDes Van Royen, communities minister who served as finance minister for three days in December before a run on the currency forced Zuma to replace him with Gordhan. “Pravin Gordhan is not above the law.”

This article is taken from The Wall Street Journal.


 
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