The rand fell to its weakest level against the dollar in three weeks after finance minister Pravin Gordhan was asked by Hawks to report to its offices.
The minister alongside other SARS officials – former SARS deputy commissioner Ivan Pillay, former group executive Johann van Loggerenberg, and former spokesperson Adrian Lackay, and head of the investigative unit, Andries van Rensburg – were told to report to a police investigating team over allegations relating to a rogue tax unit, a case that has escalated the SARS wars.
The investigating unit issued the invitation in a letter, of charges they will be facing in relation to a so-called “rogue SARS unit” established under Gordhan’s watch, used to spy on citizens and government officials.
Following the minister’s arrest, the SA rand fell to as much as 2% to 13.9816 per dollar, the weakest level since it regained its stand in August 3, after trading as much as 1.1% stronger.
The currency was 1.4% weaker at 6.15pm on Tuesday, the worst performance out of 31 major and developing-nation currencies.
Treasury spokesman Phumza Macanda also confirmed that Gordhan had been in contact with the Hawks.
“[The] minister received correspondence from the Hawks yesterday. He’s currently taking legal advice and reserving comment at this stage.”
Reacting to this, pundits and players alike in the market, which sees the finance minister Gordhan as deciding factor that will determine the growth of the SA economy, say they fear his arrest will likely raise the possibility of a ratings downgrade to junk status.
Adams Phillips of Umkhulu Consulting agrees to this belief by saying that if Gordhan was to go, “I think there has to be a very real chance that we will be downgraded in December,” said ’s Adam Phillips. “Maybe they won’t wait to put us out of our misery.”
Wichard Cilliers, a trader at Treasuryone in Pretoria, said to Mail & Guardian news via phone call that this will be a disaster on the SA economy as investors will be threatened by it.
“It’s political turmoil and investors in the international market don’t like that there’s a possibility that Pravin Gordhan could go as finance minister,”
“They see him as a credible finance minister. That’s why there’s the initial selloff in the market and that’s why it’s very jittery.”
Speaking further on this is DA’s David Maynier who said Pravin Gordhan being “requested to appear before the Hawks suggests he may face arrest and could further escalate the SARS wars”.
Maynier however pointed out that the “only option to get to the bottom of the allegations relating to the SARS ‘rogue unit’ is the appointment of a judicial commission of inquiry”.
Phillips of Umkhulu Consulting went on to say that he believed the minister is innocent for the charges, if not, he (Gordhan) would have avoided political appointments.
“I think if Gordhan is guilty of doing anything wrong, I think he would have bailed out of politics long ago. It can only be the ongoing spate between the president and the Treasury. It is ironic that President Jacob Zuma has taken over certain SOEs to sort them out and this now comes out.
“I just cannot believe that Pravin Gordhan has done anything wrong and Zuma is playing a dangerous game because it is for such a reason that he and his party lost plenty of votes in the local elections…
“This news will mean we see nervousness for the rest of the week.”
Meanwhile, both the NPA and the Hawks said that there was no investigation into the ‘rogue unit,’ adding that there was no obligation to discuss the matter or comment on any evidence they may or may not have.