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Treasury battles SOEs amid Gordhan probe

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Finance Minister Pravin Gordhan. (AP)
Finance Minister Pravin Gordhan. (AP)

Johannesburg – As Finance Minister Pravin Gordhan tries to fend off a police investigation, his department is engaged in open conflict with key state-owned companies over their management and spending plans.

Threatened court action by the National Treasury to stop a joint venture in Asia by Denel SOC is “political, sheer opportunism and grandstanding,’’ the state arms maker said in a statement Tuesday.

On Monday, utility Eskom Holdings SOC said it was “shocked and perplexed’’ after the department said the power producer was resisting a review of its contracts.

“There’s no question that the companies feel emboldened by the fact that Pravin Gordhan is apparently facing charges,” said Nic Borain, a Cape Town-based political analyst and adviser to BNP Paribas Securities South Africa.

“It feels like a showdown at high noon and it’s not a situation that the country can have continue.”

The escalating disputes cap almost two weeks of political and market turmoil after reports Gordhan could face arrest and amid speculation by analysts and opposition parties that President Jacob Zuma may use the police investigation to install a more compliant Treasury head.

The Eskom contract probe and Denel’s Asian joint venture involve companies with ties to the Gupta family, who are friends with Zuma.

The Treasury declined to comment publicly on Denel’s statement, it said by e-mail.

SAA stalemate

In another long-standing dispute, Gordhan is locked in a stalemate with national flag carrier South African Airways, chaired by Dudu Myeni, who is also the head of Zuma’s foundation. The unprofitable airline needs further loan guarantees from the government, which the finance minister has refused to sign.

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