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South Africa's Gordhan says anti-graft efforts face 'dangerous fightback'

JOHANNESBURG (Reuters) - South African Public Enterprises Minister Pravin Gordhan said on Sunday that efforts to clean up corruption in state-owned companies (SOCs) faced “dangerous” resistance which threatened the country’s sovereignty.

Gordhan, a former finance minister, has been tasked by President Cyril Ramaphosa with cleaning up SOCs such as power utility Eskom, which suffered misgovernance under former president Jacob Zuma.

In an opinion piece in the Sunday Times newspaper, Gordhan said that new boards had started to address “the depth of corruption and criminal behaviour that seems to have become endemic in these institutions.”

“But the dangerous and unscrupulous fightback against our reform efforts continues. If we allow this fightback to prevail, we risk losing our sovereignty,” he said, without naming who was behind the backlash.

But in another context Gordhan did specify the Gupta family, a trio of wealthy Indian brothers widely accused of using their friendship with Zuma to siphon state proceeds or win contracts for their companies - allegations they and Zuma have consistently denied.

Referring to state-run logistics and railway group Transnet, Gordhan said academics, which it did not identify, had found that at least 37 billion rand ($2.5 billion) was allocated by the company “towards tainted deals for the period 2012 to 2017.”

“Of this, about 7.7 billion rand appears to have been paid illicitly in various forms to a number of firms linked to the Gupta network,” he wrote.

No-one at Transnet was immediately available to comment.

Officials representing the Guptas were also not immediately available for comment.

“Over the past seven months, we have been piecing together the story of how are SOCs were repurposed to benefit a few, with repercussions for the rest of the country which has suffered financially,” Gordhan wrote.

“The challenges facing SOCs are also structural, and cannot simply be solved with a cash injection. Dismantling the destructive business-state patronage networks that have embedded themselves across public enterprises ... will require time, difficult choices and bold action by leaders,” he said.

Companies that have been caught up in the unfolding scandals have included accountancy KPMG, which has cut jobs in South Africa and lost business over work done for a company owned by the Guptas.

Ramaphosa took over in February from the scandal-tainted Zuma after the ruling African National Congress party forced him from office and he has made the restoration of good governance and kick-starting a moribund economy his top priorities.

($1 = 14.5871 rand)

Editing by Elaine Hardcastle