* Gordhan to appear on court on Nov. 2 to face charges
* Finance minister faces prosecution over severance packages
* Gordhan says bracing for "exciting times" ahead
* Rumbling saga has rattled South African markets
(Adds ANC, Democratic Alliance, analysts quotes)
By Joe Brock
PRETORIA, Oct 11 South African prosecutors on
Tuesday ordered Finance Minister Pravin Gordhan to appear in
court on Nov. 2 over allegations he broke public finance rules
by granting a colleague early retirement, news that sent the
rand and share prices reeling.
The currency dropped as much as 3.4 percent against
the dollar on the latest legal problems for the finance minister
who says he has been the victim of a politically motivated
campaign over the last few months.
Prosecutor Shaun Abrahams said Gordhan, in his previous role
as head of the South African Revenue Service (SARS), had cost
the tax agency around 1.1 million rand ($79,000) by approving
early-retirement for tax agency deputy commissioner Ivan Pillay
and re-hiring him as a consultant.
Gordhan is still being investigated for his role in setting
up a surveillance unit at the tax department a decade ago which
is suspected of spying on politicians including President Jacob
Zuma, Abrahams confirmed.
An elite police unit known as the Hawks first questioned
Gordhan about that in February in an investigation that some
analysts said was the result of political pressure from a
faction allied to Zuma.
The president has denied the claims, and said he was not at
war with the finance minister.
Abrahams said: "I can assure you there has been no political
interference in this matter. There has been no political
interference in the decision made."
Gordhan, who is respected by financial markets, has called
the allegations about the tax unit "political mischief". He
confirmed that prosecution officials had delivered the summons
to appear in court to his house on Tuesday morning.
"It looks like we are in for a bit of excitement going
forward," he said at a business seminar in Johannesburg. "My
lawyers will issue a proper statement in a short while."
David Maynier, the shadow minister of finance for the main
opposition Democratic Alliance party, said prosecuting Gordhan
would be "a disaster for the economy" and would make a credit
ratings downgrade more likely.
"We must now trust the courts to determine whether there is
any merit to these charges," he said in a statement.
"A STEP CLOSER"
In August Gordhan declined to obey a police summons on the
inquiry into whether he had used the tax service unit to spy on
politicians, saying he had done nothing wrong.
The ruling African National Congress (ANC) urged Gordhan to
cooperate with the latest summons and said the lingering
investigation was having a detrimental effect on the economy.
The party said it hoped the latest legal step would move the
country "a step closer to uncovering the truth from facts" and
resolve the saga.
South Africa's Communist Party, a member of a ruling
alliance with the ANC, said it was opposed to "political
persecutions in any manifestation."
Analysts said the Gordhan summons increased the political
risk of doing business in the country.
"This will further erode confidence in the political and
economic management of South Africa." Daniel Silke, director of
Political Futures Consultancy said. "It will potentially affect
our chances of sustaining the current rating agency levels."
In line with the weaker rand, South African bank stocks fell
nearly 5 percent to a four-week low.
Government and dollar bonds also fell sharply, while the
cost of insuring exposure to South African debt leapt to
Investors and rating agencies back Gordhan's plans to rein
in government spending in an economy that has been forecast by
the central bank to grow at just above zero percent this year.
A cut to "junk" status in ratings reviews due later this
year would have pushed up Pretoria's borrowing costs, making it
harder to plug the budget deficit.
($1 = 13.8542 rand)
(Additional reporting by Olivia Kumwenda-Mtambo, Ed Stoddard
and Tanisha Heiberg in Johannesburg; Writing by James Macharia;
Editing by Ed Cropley and Robin Pomeroy)