Pub­lic Pro­tec­tor spooks the rand

Cur­rency falls to R13/dol­lar

The Star Early Edition - - BUSINESS REPORT - Siseko Njobeni

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.

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