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Cape Town — The rand and financial markets should never become more important than the rule of law, according to political analyst Aubrey Matshiqi.

Speaking to Fin24 by phone yesterday about Finance Minister Pravin Gordhan’s fraud charges, Matshiqi said South Africans run the risk of believing that if someone has enough political support or the support of financial markets, such as Gordhan, that person is untouchable.

“I think we’re very close to falling into that trap, if not so already.”

South Africa’s National Prosecuting Authority (NPA) on Tuesday announced it would charge Gordhan with fraud. Gordhan has been summoned to appear in court on November 2, together with former commissioner of the South African Revenue Service (Sars) Oupa Magashula and former deputy commissioner Ivan Pillay.

The rand and bank stocks, among other financial instruments, fell sharply on the news, while analysts warned that the move could lead to an immediate credit rating downgrade to junk status.

Matshiqi, however, said it is a false conception that the financial markets “speak” or “act” in defence of Gordhan as finance minister. “Markets react in defence of their own interest.”

What markets want, continued Matshiqi, is policy certainty and stability in the economy. “And this can be delivered by Gordhan or any person other than him. I don’t believe the markets are married to Pravin Gordhan.”

Matshiqi is of the view that the ANC-led government faces a challenge: will it force Gordhan to step down in the light of the charges against him?

“Government could argue that the cloud over Pravin Gordhan and the imperative of economic stability necessitates that he step aside.”

Matshiqi says there is a possibility that Gordhan has a case to answer. “Even if it turns out that there is a political conspiracy against him, it doesn’t constitute evidence that he is innocent.”

But if the finance minister is removed and it turns out that he is indeed the victim of a conspiracy, those behind that conspiracy would be guilty of conduct tantamount to treason, Matshiqi concluded.

Claude Baissac, political risk analyst at investment advisory firm Eunomix, on the other hand said in a context where the NPA has systematically refused to pursue President Jacob Zuma – who faces 783 charges of fraud, racketeering and corruption – the zeal in pressing charges against Gordhan by comparison raises much suspicion.

“If propriety is the goal here, then how does the government account for the fact that there are no consequences for the misallocation of resources at government departments and state-owned entities?”

Baissac said it’s no secret that Gordhan has represented a “bulwark” against the abandonment of remaining sound fiscal and budgetary principles.

“The key question is: will the finance minister be relieved of his post, or will he be allowed to continue serving while standing trial?

“His removal is not an implausible outcome and one which would be disastrous.”

According to Baissac, the best outcome at this point would be for Gordhan to continue his tenure as finance minister while the courts exercise their jurisdiction. — Fin24