South African prosecutors to file Zuma appeal

JOHANNESBURG (Reuters) - South African prosecutors pushed ahead with an appeal in the graft case of ANC leader Jacob Zuma on Friday, dashing ruling party hopes the prosecution would collapse with the ouster of President Thabo Mbeki.

Mbeki, whose resignation followed a judge's suggestion of political interference in the case, was replaced on Thursday by new President Kgalema Motlanthe, who faces pressure from ANC allies to tilt policy to the left.

The National Prosecuting Authority made clear in a statement it would not let the Zuma case drop and said it would file an appeal with the Supreme Court of Appeal next week.

A High Court judge had earlier this month dismissed bribery, fraud and other charges against the ANC leader.

The African National Congress, now dominated by Zuma supporters, says the judge's indication there was high-level political meddling in the case justifies ending the pursuit of Zuma, the frontrunner to win the next presidential election, expected around April, 2009.

The argument has failed to sway prosecutors, who have spent years investigating Zuma, first for his role in an arms scandal and later for his relationship with a financial adviser who was convicted of fraud and other wrongdoing.

"The NPA (National Prosecuting Authority) will file its application for leave to appeal to the SCA next week," the NPA said in a statement. It is also opposing Mbeki's appeal against the ruling in the Constitutional Court for procedural reasons.

Its decision to file the appeal, coming just a day after Motlanthe's government was sworn in, is certain to galvanize Zuma's supporters in the ANC, the powerful trade union movement and small but influential South African Communist Party.

The initial announcement to appeal the September 12 ruling by High Court Judge Chris Nicholson triggered the ANC's removal of Mbeki before his term ended next year. The crisis was the nation's worst since the end of apartheid in 1994.

Zuma defeated Mbeki for the ANC leadership in a bitter contest late last year that divided the ruling party into two warring factions and raised investor fears of a change in the country's pro-business policies.

The ANC's trade union and communist allies are putting pressure on Motlanthe to steer policy to the left.

Motlanthe, the ANC's deputy president and a Zuma ally, said on Thursday there would be no dramatic changes to policy while pledging to intensify the battle against poverty and high unemployment.

In a move to reassure investors, Motlanthe reappointed powerful Finance Minister Trevor Manuel.

But markets are watching to see if Zuma's left-leaning allies in the ANC, the Congress of South African Trade Unions (COSATU) and the SACP can get Motlanthe to take a different course. The three parties have an alliance.

LEFTIST PRESSURE

In a speech at a Communist Party conference in Johannesburg, COSATU President Sidumo Dlamini said the trade union federation looked forward to seeing the government tackle "the immense challenge to create jobs and eradicate poverty."

Motlanthe already faces huge challenges, including slowing economic growth and high inflation, which hit its highest level in August since before the end of apartheid, at 13.7 percent.

SACP General-Secretary Blade Nzimande, who backed Zuma's rise into the ANC leadership, told Reuters the party did not have huge expectations of Motlanthe and would not pressure him because of his short time in office.

"We agree with President Kgalema, but what is not working must be changed," he said without elaborating.

The SACP and COSATU want an end to inflation targeting which they blame for high interest rates -- the central bank's repo rate has risen 5 percentage points to 12 percent over the past two years.

"Let's debate it. We are saying the 3-6 percent (target) is killing us," said Nzimande, adding it was "a matter of urgency."

The Communists also renewed their demand that petrochemicals giant Sasol, the world's biggest maker of motor fuel from coal, be nationalized and that a windfall tax be imposed during the transition to nationalization.

COSATU and the SACP are pressing for more government spending to ease the poverty of millions of poor blacks, something Zuma has promised to do.

Mbeki's failure to bring the fruits of black majority rule to millions of poor South Africans was a leading cause of his unpopularity with the left and other supporters of Zuma, whom he fired as the country's deputy president in 2005.

(Additional reporting by Phakamisa Ndzamela and James Macharia; writing by Paul Simao and Michael Georgy; Editing by Charles Dick)