March 13, 2016 / 12:43 PM / in 2 years

South African finance minister cannot meet new deadline in spy unit case: lawyers

JOHANNESBURG (Reuters) - South African Finance Minister Pravin Gordhan cannot meet a Monday deadline to respond to police questions on his role in setting up a spy unit at the revenue service, his lawyers said in a letter sent to media on Sunday.

South African Finance Minister Pravin Gordhan delivers his 2016 Budget speech to parliament in Cape Town, February 24, 2016. REUTERS/Mike Hutchings

The Sunday Independent newspaper had reported that Gordhan had been given until Monday to respond to questions about the unit, which was set up while Gordhan headed the South African Revenue Service (SARS).

The Directorate For Priority Crime Investigation, also known as the Hawks, is investigating the unit on suspicion of conducting illegal surveillance on taxpayers. Gordhan has said he has no case to answer.

The letter, dated March 7 and distributed by the Treasury, said Gordhan could not meet the deadline because he was attending an investor roadshow in London and the United States.

The public spat has undermined investor confidence in Africa’s most advanced economy, which could lose its investment-grade rating by mid-year, potentially raising borrowing costs for government and firms alike.

“Once again the Hawks, and those who instruct them, have no regard for the economic and social welfare of millions,” Gordhan said in a statement on Sunday.

The top of the statement bluntly said: “Hawks harassment must stop in the interests of justice.”

In late February, South Africa’s rand currency shed nearly 4 percent in one day after Gordhan said there were attempts to discredit him and the integrity of the Treasury through the probe.

Gordhan’s lawyers said in early March that he had missed a previous deadline to respond to the questions because he was busy preparing the national budget, and would respond at a later date.

Gordhan on Sunday suggested that probe was a distraction from his attempts to mend South Africa’s battered image with investors.

“Over the past week, a Team SA delegation consisting of government, business and three Labour federations have been on an intense investor roadshow to address concerns of our bond investors and defend our fiscal strength,” the statement said.

“This is so that we can continue to borrow money we don’t have to spend on infrastructure and other projects. These investors and the ratings agencies are observing every development in South Africa with a keen eye.”

Gordhan also said he would respond to the 27 questions posed by the Hawks, in accordance with advice from his lawyers, “once the legal matters have been clarified.”

Gordhan is scheduled to hold a press conference on Monday where he will be accompanied by the business and labor leaders who were with him on the roadshow.

Appointed after a predecessor’s sudden sacking, Gordhan has been trying to win back British- and U.S.-based investors and repair the damage from “9-12”, the day in December when President Jacob Zuma suddenly changed his finance minister.

It took the subsequent appointment of Gordhan, respected for a previous stint at the ministry, to calm markets, and analysts have expressed concern that fallout from the Hawks’ probe could potentially lead to his departure.

Editing by Kevin Liffey and Andrew Bolton

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