May 17, 2016 / 4:16 PM / 2 years ago

South African finmin says report of imminent arrest 'extremely distressing'

JOHANNESBURG (Reuters) - South Africa’s finance minister said on Tuesday that reports of his imminent arrest were “extremely distressing”, calling them an attack on the Treasury and asking for its protection to help deliver economic growth.

South African Finance Minister Pravin Gordhan gestures during a media briefing in Sandton near Johannesburg, March 14, 2016. REUTERS/Siphiwe Sibeko/File photo

In his first public comments on a report published in a Sunday newspaper that said he faced arrest, Finance Minister Pravin Gordhan said he had met with his lawyers and they would in turn meet with the elite police unit Hawks and the National Prosecuting Authority for further information and clarity.

The report by South Africa’s Sunday Times quoted unidentified sources as saying Gordhan faced arrest.

The report was denied by the presidency, police and prosecutors, but the rand tumbled to a two-month low and bonds weakened.

On Tuesday the currency of Africa’s most industrialized country firmed nearly one percent to 15.4905 against the dollar - its highest intraday level - after Gordhan’s statement. The Hawks have been investigating Gordhan’s role in the establishment of a spy unit within the South African Revenue Service (SARS) at a time when Gordhan was head of the agency.

Gordhan has denied any wrongdoing and has called the investigation a smear campaign aimed at tarnishing his and the Treasury’s credibility.

The minister urged protection from “all South Africans” for Treasury staff.

“The recent media reports about my arrest - imminent or not - have been extremely distressing for my family and me,” Gordhan said in a statement released after the markets had closed.

“I cannot believe that I am being investigated and could possibly be charged for something I am completely innocent of. I have answered the questions submitted by the Hawks and have not heard from them. I was not aware of any impending charges or further investigations until the reports in the past weekend.”

Gordhan said the SARS surveillance unit was above board.

“SARS and the specialist investigative units therein operated within the law during my time as the Commissioner,” he said. “The malicious rumors and accusations about ‘espionage’ activities are false and manufactured for other motives.”

The newspaper report came just as South Africa is trying to fend off a credit ratings downgrade.

Gordhan said last week he was scheduled to hold meetings with rating agencies Fitch and Standard & Poor’s in the next few weeks after Moody’s on May 6 kept its rating of South Africa’s debt at Baa2, two levels above sub-investment grade.

Fitch and S&P rate the country at one notch above subinvestment grade and plan to release their reviews in June.

Analysts said Gordhan was facing intense pressure.

“Gordhan is expressing a real concern that the National Treasury is under attack and that he might not be able to defend it on his own from whatever forces that are trying to get control of it,” said Gary van Staden, political analyst with NKC African Economics.

Writing by James Macharia; Editing by Gareth Jones

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