January 18, 2018 / 7:44 AM / 9 months ago

South Africa's Ramaphosa piles pressure on Zuma with anti-graft call

JOHANNESBURG (Reuters) - South African Deputy President Cyril Ramaphosa on Thursday called on prosecutors to act urgently in pursuit of a firm owned by friends of scandal-plagued President Jacob Zuma, as pressure mounted on him to step down.

FILE PHOTO: African National Congress (ANC) President Cyril Ramaphosa addresses supporters during the Congress' 106th anniversary celebrations, in East London, South Africa, January 13, 2018. REUTERS/Siphiwe Sibeko

Ramaphosa succeeded Zuma as head of the ruling African National Congress (ANC) last month, making him likely to replace Zuma as the country’s next president in 2019 - or even earlier, if Zuma resigns.

In recent days he has gone on the offensive against companies controlled by the Gupta family, businessmen friends of Zuma accused of unduly using political connections to win work with the state.

“We want to deal with the rot. It is unacceptable, totally unacceptable, that companies owned by the nation and set up to benefit the people have been hijacked,” Ramaphosa said at a meeting of business leaders and cabinet ministers.

The rand currency has rallied around 16 percent since Ramaphosa’s ANC leadership victory as investors bet he will crack down on corruption and implement policy reforms.

The Gupta family and Zuma have denied wrongdoing and say they are victims of a politically-motivated witchhunt. A spokesman for Zuma and a lawyer for the Gupta family did not respond to requests for comment on Thursday.

Zuma’s removal as head of state is not on the agenda of a four-day meeting of the ANC’s newly-elected national executive committee that began on Thursday, the party’s Secretary-General Ace Magashule said later.

South Africa’s state prosecutor said on Wednesday it would serve a court order on McKinsey relating to a 1.6 billion-rand ($130 million) contract with state utility Eskom that the global consultancy worked on with Trillian, a local firm that was then controlled by Gupta family associates.

“We welcome the actions they are beginning to take and we encourage them to act with urgency,” Ramaphosa said.

International firms being probed by South African authorities over work done with the Guptas include German software maker SAP, auditor KPMG and consultancy McKinsey.

ESKOM IN TURMOIL

McKinsey has apologized for working with Trillian at Eskom in 2016 without a contract and is offering to pay back its fee, but denies doing anything illegal.

Parliament is carrying out a wide-ranging investigation into Eskom, Africa’s biggest power utility.

The firm’s financial turmoil and allegations of mismanagement and corruption are a major concern for investors and ratings agencies. Finance Minister Malusi Gigaba said on Thursday the Treasury could not afford to bail out Eskom.

Separately, South Africa’s companies registry office is pursuing criminal complaints against SAP, KPMG and McKinsey in relation to Gupta-controlled companies.

SAP, KPMG and McKinsey all said on Wednesday they were happy to cooperate with any police enquiries.

KPMG cleared out its South African leadership in September last year after an internal investigation found work done for Gupta family firms “fell considerably short of KPMG’s standards”. KPMG denied it had done anything illegal.

SAP, Europe’s biggest technology company, said last year it had “let down South Africa” by paying $7.7 million in commissions to Gupta-related companies between December 2014 and November 2016.

Zuma, who has denied numerous corruption allegations since taking office in 2009, said last week he would set up a commission of inquiry into allegations of influence-peddling in the government.

In last month’s ANC vote, Ramaphosa edged out Zuma’s ex-wife, and his preferred successor, Nkosazana Dlamini-Zuma.

Additional reporting by Ed Stoddard; Writing by Joe Brock; Editing by Andrew Roche

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