Public protector said to be ‘overstepping the line’
ANALYSTS, the business community and ANC have expressed shock at the public protector’s recommendation the constitution be amended to change the mandate of the Reserve Bank, describing her conduct as overstepping the line.
On Monday, public protector Busisiwe Mkhwebane released a number of reports which included her findings on the controversial Ciex report.
Mkhwebane found the South African government breached its constitutional obligation to spend public money wisely when it made no effort to act on the findings of the 1997-1999 Ciex report in which it was alleged that the SA Reserve Bank irregularly gave money to Bankorp – a predecessor of Absa.
However, Mkhwebane included in her recommendations that the constitution be amended to stipulate the Reserve Bank’s primary objectives include protecting citizens’ socioeconomic conditions.
Chief economist at Econometrix Azar Jammine said this recommendation would lead to rampant inflation, then a downturn in poor people’s living standards and ultimately high food prices.
“That is the real danger of moving the way that [Mkhwebane] is recommending.
“What confuses me is why someone like the public protector should be interfering in economic matters . . . that shows there are forces that are trying to compromise the independence of the SA Reserve Bank and that will be a sad day, because it is one economic institution – now that people are questioning whether Treasury has been captured – that still has [institutional] stability, its credentials will be in jeopardy.”
Banking Association of South Africa managing director Cas Coovadia said government’s monetary policy, inflation targeting, was in line with other countries.
He said this was the policy the SA Reserve Bank is mandated to implement, which enables it to ensure that inflation remains within 3% and 6%.
The investigation conducted by the public protector emanates from a complaint by director and head of projects at NGO Accountability Now Paul Hoffman.
He questioned why the South African government had spent £600 000 (R9.9-million) on contracting a company to investigate the loan but then took no action.
The deal, in the last years of apartheid, was referred to as a “lifeboat” loan and was not repaid.
The report, by the UK recovery and investigations agency Ciex, alleged that R24-billion was unlawfully given to Bankorp by the South African government. Ciex told the Mandela administration that it could recover the funds.
In her findings, Mkhwebane said the correct amount of the illegal gift granted to Bankorp Ltd/Absa bank is in the amount of R1.125-billion.
She said the government’s spending on a report that was never used was contrary to the principles of Batho Pele (“People First”) in that there was no value for money.
Absa has said it might go to court to contest Mkhwebane’s findings.
CEO of the SA Chamber of Commerce Alan Mukoki said the report would not have any implications to the economy and Mkhwebane’s recommendation should not be taken by the general public as final.
“In other words, the public protector voice is not the last voice to speak on any matter.” — TMG