CharacterControllers and Transform.Rotate

I have a very simple question. I have a simple script. It uses the A and D keys to rotate the player and the W and S keys to move forward and back. When I press A or D to rotate the CharacterController ignores the movement as if it's movement on a global axis? How can I fix this?

Here is the code if it will help:

 using UnityEngine;
 using System.Collections;
 
 public enum MovementState
 {
     standing = 0,
     walking = 1,
     running = 2,
     sprinting = 3,
     jumping = 4
 }
 
 [RequireComponent (typeof(CharacterController))]
 public class MovementController : MonoBehaviour
 {
     [System.Serializable]
     public class WalkSpeedProps
     {
         public float forwardSpeed = 3.0f;
         public float backwardSpeed = 2.5f;
         public float strafeSpeed = 2.75f;
     }
 
     [System.Serializable]
     public class RunSpeedProps
     {
         public float forwardSpeed = 4.0f;
         public float backwardSpeed = 3.0f;
         public float strafeSpeed = 3.75f;
     }
 
     [System.Serializable]
     public class SprintSpeedProps
     {
         public float forwardSpeed = 6.0f;
         public float backwardSpeed = 4.5f;
         public float strafeSpeed = 5.0f;
     }
 
     public MovementState mvState = MovementState.standing;
     public WalkSpeedProps WalkSpeed;
     public RunSpeedProps RunSpeed;
     public SprintSpeedProps SprintSpeed;
     public float rotationSpeed = 3.0f;
     public float airControl = 4.0f;
     public float runThreshold = 0.5f;
     public float jumpForce = 8.0f;
     public float gravity = 20.0f;
 
     private CharacterController player;
     private float horizontal, vertical, speed, strafeSpeed;
     private Vector3 moveDirection = Vector3.zero;
     private bool movingForward = true;
 
     public void Start ()
     {
         player = GetComponent<CharacterController> ();
 
         speed = SprintSpeed.forwardSpeed;
         strafeSpeed = SprintSpeed.strafeSpeed;
 
         if (!player)
             Debug.Log ("Please attach a CharacterController to the " + gameObject.name + " gameobject.");
     }
 
     public void Update ()
     {
         if (!player)
             return;
 
         horizontal = Input.GetAxis ("Horizontal");
         vertical = Input.GetAxis ("Vertical");
 
         // Figure out the players movement state
         if (!player.isGrounded)
             mvState = MovementState.jumping;
         else {
             if (vertical == 0 && horizontal == 0)
                 mvState = MovementState.standing;
             else if (Input.GetButton ("Sprint"))
                 mvState = MovementState.sprinting;
             else if (Mathf.Abs (vertical) < runThreshold && Mathf.Abs (horizontal) < runThreshold)
                 mvState = MovementState.walking;
             else if (Mathf.Abs (vertical) > runThreshold || Mathf.Abs (horizontal) > runThreshold)
                 mvState = MovementState.running;
         }
 
         if (vertical < 0)
             movingForward = false;
         else
             movingForward = true;
 
         if (mvState == MovementState.walking) {
             speed = movingForward ? WalkSpeed.forwardSpeed : WalkSpeed.forwardSpeed;
             strafeSpeed = WalkSpeed.strafeSpeed;
         } else if (mvState == MovementState.running) {
             speed = movingForward ? RunSpeed.forwardSpeed : RunSpeed.forwardSpeed;
             strafeSpeed = RunSpeed.strafeSpeed;
         } else if (mvState == MovementState.sprinting) {
             speed = movingForward ? SprintSpeed.forwardSpeed : SprintSpeed.forwardSpeed;
             strafeSpeed = SprintSpeed.strafeSpeed;
         } else if (mvState == MovementState.jumping) {
             speed = airControl;
             strafeSpeed = airControl;
         }
 
         if (Input.GetButton ("Jump") && player.isGrounded)
             moveDirection.y = jumpForce;
 
         if (Input.GetMouseButton (1))
             moveDirection.x = horizontal * strafeSpeed;
         else
             transform.Rotate (0, horizontal * rotationSpeed, 0);
 
         moveDirection.z = vertical * speed;
 
         moveDirection = transform.TransformDirection (moveDirection);
 
         moveDirection.y -= gravity * Time.deltaTime;
         player.Move (moveDirection * Time.deltaTime);
 
         Debug.Log (mvState);
     }
 }

Thanks, in advanced! :)