South African Finance Chief Met Guptas, Refused Nuclear Deal
(Bloomberg) -- South African Finance Minister Nhlanhla Nene said he met repeatedly with Gupta family members, who are accused of being in a corrupt relationship with Jacob Zuma, and that the ex-president was the force behind pressure on him twice to sign a multi-billion Russian nuclear-power deal.
Nene made his comments in a statement accompanying his testimony at a judicial inquiry in Johannesburg into allegations of corruption and so-called state capture that relates to the Guptas and Zuma. Nene denied wrongdoing in his meetings with the family and said he refused to sign the deal for Russia to provide nuclear energy, a plan that Zuma publicly backed.
Nene first served as finance minister until December 2015, when Zuma fired him, causing a plunge in the rand and bonds. Mcebisi Jonas, who was Nene’s deputy, told the commission the Guptas offered him a bribe to take over the finance minister post, which he declined.
“I believe that I was removed from office because of my refusal to toe the line in relation to certain projects,” Nene said. “In hindsight, it seems that those projects may have benefited the Gupta family and other close associates of the president.”
Nene has come under pressure to resign from the Economic Freedom Fighters opposition party because he refused to answer its questions in May about his relationship with the Guptas. President Cyril Ramaphosa, who since coming to power in February has changed the top management at state-owned companies as part of his pledge to fight corruption, reappointed Nene as finance minister. That has helped bolster investor confidence after years of economic mismanagement and regular cabinet changes under Zuma.
Nene rejected pressure to approve the construction of as many as eight nuclear reactors, which would have the capacity to generate 9,600 megawatts of energy. The costs of the project, championed by Zuma, would have been “astronomical,” he said in his statement.
In July 2015, Nene twice declined to sign a letter from former Energy Minister Tina Joemat-Pettersson providing a guarantee to the Russian government on the nuclear program.
“As a result of my refusal to sign the letter, I was seen as the person standing in the way of the nuclear deal,” he said. “I was accused of insubordination, not only by the president but by some of my colleagues.”
A day before Nene was fired in his first stint as finance minister on Dec. 9, 2015, Zuma held meeting with cabinet ministers involved in the nuclear program but excluded Nene. A presentation at a later meeting that day -- where Nene was present -- didn’t include input from the Treasury regarding concerns about the feasibility of the plan, he said.
The presentation assumed an exchange rate of 10 rand per dollar, more than 40 percent stronger than the prevailing rate of 14.57 rand, he said.
“If the price of 9.6 gigawatts was $100 billion, the understatement was $40 billion, or some 560 billion rand,” he said. “This was a truly gross, material understatement of the project.”
Nene visited the Gupta’s home in the Johannesburg suburb of Saxonwold four times as deputy minister, saying he regarded the visits as one of his tasks to “engage with different stakeholders in the economy,” he said in the statement.
The visits were short, initially to discuss the economy and then to talk about a contribution to a Gupta-owned magazine.
He also visited the family in 2013, before the start of the family’s ANN7 television channel. Zuma’s son, Duduzane, was at the home “most times” but they didn’t speak, Nene said.
The statements contradict what he told Johannesburg-based broadcaster eNCA in an interview broadcast in April 2016.
“I bumped into them at public gatherings once or twice, but I’ve never had any engagement and I’ve never been asked by them to do anything for them,” he said.
In mid-2015, Zuma summoned Nene to a meeting where an official from Petroliam Nasional Bhd., Malaysia’s state oil company known as Petronas, was present and asked the minister to provide a guarantee to enable state-owned PetroSA to buy the Asian company’s Engen refinery in the country.
Nene said he would consider the guarantee but only subject to the normal evaluation process, according to the statement.
(A previous version of this story was corrected to fix the relative value of the rand.)
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