South Africa's finance minister quits over scandal

South Africa's finance minister Nhlanhla Nene has quit after admitting to meeting members of the Gupta family, who have been accused of corruption.

Background

On August 2017, Jacob Zuma, the South African President, survived a vote of no confidence in the Parliament through a relatively narrow margin. It was the sixth no-confidence vote during his Presidency. His government was accused of improper dealings with the South African based Gupta family. Brothers Ajay, Atul and Rajesh (also known as Tony) Gupta, all in their 40s, relocated to South Africa from India's northern state of Uttar Pradesh in Saharanpur in 1993.

They run a company called the Sahara Group (no relation to the Indian company of the same name). As of December 2016, their company has an annual turnover of about 200m rand ($22m; £14.3m) and employs close 10,000 people. They have interests in computers, mining, air travel, energy, technology and media.

In 2016, leaked emails and documents (over 100,000) appeared to highlight improper dealings between the Gupta family and the government. The family has been able to land a number of lucrative government deals for decades. Additionally, Zuma and his family have strong ties to the Guptas. Zuma’s daughter Duduzile was a Director at Sahara Computers. His son, who was also a Director of one of the Gupta-owned companies, stepped down due to public pressure.

There has been a significant backlash against both Zuma and the Gupta family. Some have even called them – Zupta. Thousands have taken to the streets to protest the alleged influence wielded by the Guptas. Zuma and the Gupta family have denied any wrongdoing.

Analysis

South Africa's finance minister Nhlanhla Nene has quit after admitting meeting members of the Gupta family, who have been accused of corruption. President Cyril Ramaphosa said he accepted the resignation "in the interests of good governance".

The Guptas have been accused of working with former President Jacob Zuma to secure government contracts and determine cabinet appointments.

Both the Guptas and Mr Zuma deny the allegations. Mr Nene has been replaced by former central bank chief Tito Mboweni. This is the fifth change of finance minister since 2014.

Last week, Mr Nene told a judge-led inquiry into the alleged influence of the Guptas, known as the Zondo commission, about meetings that he had previously denied.

There is no suggestion that he had done anything illegal in meeting the businessmen during his stint as deputy finance minister and finance minister in Mr Zuma's government, but he has been under intense political pressure to step down since making the admission.

Mr Zuma sacked him as finance minister in 2015, but he was reappointed by the current president in February. Rumours of his intended resignation on Monday led to a fall in the value of South Africa's currency, the rand, but it has since recovered its value. Mr Nene met the Guptas at their businesses and home at least six times between 2009 and 2014.

On the face of it, a finance minister talking to top business people may seem normal, but the Guptas have been accused of using meetings, in their residence in a posh suburb of Johannesburg, to influence political decisions.

Mr Ramaphosa, who became president in February, brought Mr Nene back into the cabinet in order to restore confidence in the reputation of the country's economic management. It had received a battering under Mr Zuma's presidency.

In his speech accepting the resignation, Mr Ramaphosa said that Mr Nene had "defended the cause of proper financial management and clean governance".

However, he had accepted the resignation because Mr Nene feared his testimony "detracted from the important task of serving the people of South Africa as we work to re-establish public trust in government", Mr Ramaphosa said.

Assessment

Our assessment is that the resignation of the finance minister is a big blow to President Ramaphosa’s efforts to revitalise public trust in the government. The Zuma-Gupta scandal had eroded the public confidence in the South African government and Mr. Nene’s resignation is the collateral damage of the scandal. We believe that President Ramaphosa may look to weed out any members of his cabinet who may have had dealings with the Gupta family in order to keep his government away from scandals. We also feel that Mr. Nene’s resignation is the first of many political causalities from the fallout of the Zuma-Gupta scandal.

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