Public Protector spooks the rand
Currency falls to R13/dollar
THE RAND yesterday fell to R13 to the US dollar after Public Protector Busisiwe Mkhwebane earlier in the day called for the Constitution to be amended so that the mandate of the South African Reserve Bank could be changed.
Mkhwebane yesterday released a number of reports, including one on her office’s investigation into the Reserve Bank’s bail-out, to the tune of R1.125 billion, of Bankorp, which Absa took over 25 years ago.
Mkhwebane has ordered the Special Investigating Unit to recover the funds.
At a press conference on the reports, Mkhwebane took aim at the Reserve Bank. She said the Reserve Bank and the government had failed in their constitutional duty by not acting on the matter. She proposed amending the Constitution, to remove a clause designed to protect the currency.
On proposed remedial action on the matter, Mkhwebane said Parliament’s portfolio committee on justice and correctional services should take steps to change section 224 of the Constitution. She said the Constitution should require the Reserve Bank to promote balanced and sustainable economic growth in South Africa, “while ensuring that the socio-economic well-being of the citizens is protected”.
Mkhwebane’s comments rattled the local currency. It sank to R13 to the dollar at 2.25pm and was trading at R12.94 to the dollar at 5.27pm.
In a statement yesterday, the Reserve Bank said it was studying the Public Protector’s report on the loan granted to Bankorp “and will thereafter announce its response to the findings and remedial actions”.
The Public Protector’s office has been investigating allegations that the Reserve Bank and the government failed to recover public funds and assets that were allegedly misappropriated during the apartheid era. This included what she said was an illegal gift from the Reserve Bank to Bankorp.
Absa took over Bankorp in 1992, seven years after it started receiving financial assistance from the central bank.
She said the Reserve Bank and the government had contravened various sections of the Constitution.
In its defence, Absa said it paid R1.23bn to Bankorp shareholders to write off the bad debts of Bankorp customers.
“Judge (Dennis) Davis and a panel of experts he chaired conducted a thorough investigation between 2000 and 2002 and produced what is now known as the Davis Report. Davis said Absa paid fair value for Bankorp and is not liable to pay anything further,” Absa said.
“Davis delivered a comprehensive report. In it he determined that the beneficiaries of the (South African Reserve Bank) assistance were the shareholders of Bankorp.
“The report stated that Sanlam policyholders owned 88 percent of the bank, while the remaining 12 percent was owned by minority shareholders. The R1.23bn Absa paid was split between these parties,” Absa said.
Absa is bracing for a legal showdown over the matter. The bank said yesterday it had received the Public Protector’s report on her investigation.
“We are currently studying the report and will consider our legal options, including seeking a High Court review.
“Absa met all its obligations in respect of the loan provided by the Reserve Bank by October 1995.
“It is our firm position that there is no obligation to pay anything to the government.”
Barclays Africa shares yesterday closed 1.12 percent down at R144.86 a share.