The reaction on Thursday, December 10, 2015 to Zuma’s removal of finance minister Nhlanhla Nene was immediate and scathing.
The DA said the decision was “reckless and dangerous”, while the EFF said it indicated that there was “a serious and pathological crisis in the country’s leadership”.
Analysts were left “speechless”, decrying the fact that the new Minister of Finance, Des van Rooyen, was a “complete outsider with no experience at Treasury”, while some were warning that the rand could slide as far as R20 to the dollar.
“This is a shock‚ coming so close to the recent downgrades of our debt. This will be interpreted in the worst possible light by markets,” said analyst Nic Borain. Academic Mzukisi Qobo said it was a “crony appointment”, and one that gave a clear indication of Zuma’s mindset as to how he runs the state – “a patronage system, essentially”, while the then-Business Day editor, Songezo Zibi, said the choice was based on whom to fire – Nene or Dudu Myeni: “There’d been a number of instances where Treasury had taken a line that was somewhat contrary to the president’s wishes … and this pattern had become more urgent recently, with the disagreement between the Treasury and the SAA board, led by Myeni.”
Bruce Whitfield, 702’s business presenter, tweeted that “Genghis Khan had wreaked less havoc on Mongolia” than Zuma had on the financial sector, and the South African Chamber of Commerce and Industry demanded answers, saying macroeconomic stability was crucial.
But not everyone was quite as distraught, though. Collen Maine, ANC Youth League president, said Nene’s firing couldn’t be considered the cause of the rand’s losses: “Nene is not so special that the rand can fall because of him, who is he? […] It’s not about Nhlanhla Nene, it’s because of the recession we are in that the economy is not growing … and there are problems with the rand. He might be beautiful to others, but he’s not so beautiful that he can make the rand fall.”
The extent of the carnage wrought on financial markets, however, was undeniably massive. Besides losing 80 cents against the dollar in the immediate aftermath, the currency lost 90 cents to the euro and 110 cents to the pound, while the country’s major banks lost between 3.8 percent and 7.7 percent in equity. South African bonds and equities lost more than half a trillion rand in value, and the Public Investment Corporation suffered losses of R106.2-billion.
“This guy, Mohamed Bobat, walks up to me and hands me a statement that is supposed to be issued on behalf of the minister. I ask him who he is, and he replies he is the minister’s advisor.”– Lungisa Fuzile, former Treasury director-general
Nene went to the Treasury on Thursday morning to clear out his office, say his farewells and wait for the new minister, so he could do a formal handover. Trevor Manuel had gone to great lengths to do the same for his successor, Pravin Gordhan, while Gordhan had extended the same courtesy to Nene.
Likewise, when the long-serving Lesetja Kganyago became governor of the SARB, he took time to onboard Lungisa Fuzile in the demanding role of Treasury director-general. Van Rooyen, however, wasn’t interested; he sent word that he would “come in his own time”.
Fuzile was instructed to attend the swearing-in ceremony of his new boss in the Union Buildings at 1pm – and that’s where the penny dropped, Fuzile explained. “This guy, Mohamed Bobat, walks up to me and hands me a statement that is supposed to be issued on behalf of the minister. I ask him who he is, and he replies he is the minister’s advisor.”
Fuzile suddenly understood what the ANC NEC member had meant when he got the mysterious phone call the previous evening on his way to Nene’s house. Van Rooyen introduced Fuzile to Bobat, and he could see they didn’t know each other. Van Rooyen proceeded to make a short acceptance speech, saying his task was to “demystify” Treasury and make it more “accessible”.
Back at Trillian, Eric Wood was seemingly triumphant, telling employees in the immediate aftermath of Van Rooyen’s appointment that a former colleague, Mohamed Bobat, would be appointed ministerial advisor. Bobat, he reportedly said, would appoint a “team of experts” with experience at Trillian. A colleague of Wood claimed that Bobat would “channel all tenders from Treasury and SOEs to this team”. In addition, the new minister would “approve requests from SOEs seeking approval for funding initiatives/transactions that Treasury historically did not approve”.
The Gupta takeover of the Treasury became apparent on Friday, December 11, when Van Rooyen rocked up with three hangers-on: Bobat, who was linked to the Guptas through Wood, Malcolm Mabaso, linked to the Guptas through his association with mineral resources minister Zwane, and Ian Whitley, son-in-law of ANC deputy secretary-general Jessie Duarte.
Van Rooyen told Fuzile: “Appoint Bobat as advisor and Whitley as chief of staff … do it as quick as possible. This guy [pointing at Mabaso], don’t worry about him, he’s going to be hanging around … just arrange an access card.”
Bobat and Whitley immediately got to work, and started asking around for information on the SAA/Airbus deal, saying they were authorised to act and approve spending on behalf of the minister.
Fuzile was flabbergasted. As the department’s accounting officer, he signed off on appointments, and he couldn’t just ignore protocol and procedure laid out by the ministerial handbook and the department of public service and administration.
He told Van Rooyen as much, after finding out that Mabaso was already on the payroll of the department of mineral resources, advising Zwane – a Gupta appointee. “I had to tell them a few times, ‘This is not how things work here. He [Mabaso] can’t just hang around!’ Bobat would not have lasted. I found his rudeness annoying. He started issuing instructions, including to me, this young boy pushing me around … a lightweight. He was making a terrible mistake with me,” said Fuzile.
But it got worse. Bobat and Whitley immediately got to work, and started asking around for information on the SAA/Airbus deal, saying they were authorised to act and approve spending on behalf of the minister. They wanted to see all Treasury’s files on the carrier. Bobat and Whitley needed a place to work, so they kicked Nene’s former chief of staff, Malcolm Geswint, out of his office. “The bullying was bad,” Fuzile recalled.
Fuzile was badgered with requests for documentation the whole day. Later that evening, he sent a confidential memorandum on the state of the economy – and Treasury’s plans to avert a further ratings downgrade – to Whitley. The document detailed the effect of the recent downgrades by rating agencies on the economy, a breakdown of government expenditure, issues around SOEs, corruption and perceptions thereof, mining and beneficiation, as well as input around the government’s nine-point plan to revitalise the economy and every department’s role in these efforts.
Whitley was overjoyed. Not only were they now running the show, they also had direct and unfettered access to Treasury’s workings and clear sight of its plans and machinations. After all the stalling and blockages preventing increased state expenditure, they had finally established a beachhead. Whitley sent it to Bobat and Mabaso – whom Fuzile in the end refused to take on – with the simple but sweet message: “Gents, finally …” Bobat sent it on to Wood.
The Treasury, the institution that blocked spending, canned tenders and almost religiously clung to the Public Finance Management Act, had at long last been captured.