Re­serve Bank digs in its heels on pro­tec­tor’s re­port

Row over Pub­lic Pro­tec­tor’s comments rages on as Oatley re­pu­di­ates Mboweni state­ment

The Star Early Edition - - POLITICS - SIYABONGA MKHWANAZI See Busi­ness Re­port

Stands firm on pro­tect­ing rand, price sta­bil­ity

THE South African Re­serve Bank has stuck to its guns on its con­sti­tu­tional man­date de­spite calls by Pub­lic Pro­tec­tor Bu­sisiwe Mkhwe­bane to change it by hav­ing the con­sti­tu­tion amended.

In its an­nual re­port yes­ter­day, the SARB said its man­date to pro­tect the cur­rency and price sta­bil­ity re­mained.

In his state­ment in the re­port, Re­serve Bank Gover­nor Le­setja Kganyago em­pha­sised the key role and func­tions of the SARB.

“The SARB’s pri­mary man­date is to achieve and main­tain price sta­bil­ity. This man­date is de­rived from the con­sti­tu­tion. Dur­ing the past fi­nan­cial year, mone­tary pol­icy faced an in­creas­ingly dif­fi­cult sce­nario of deal­ing with ris­ing in­fla­tion in the con­text of slow­ing do­mes­tic eco­nomic growth,” Kganyago pointed out.

He also ex­pressed con­cern at the low growth prospects for this year.

This fol­lowed last year’s low growth rate from the tar­geted 1.5% slip­ping to 0.3%.

He said the econ­omy had not per­formed as well as it should have.

“At 0.3%, this was the low­est an­nual growth rate since the re­ces­sion af­ter the global fi­nan­cial cri­sis (of 2009),” he said.

The SARB had pro­jected growth of 1% this year.

The bank came un­der pressure last week af­ter Mkhwe­bane said its man­date must be changed.

But she has met ob­jec­tions from the SARB, Absa and Par­lia­ment, which have all in­di­cated they are tak­ing her re­port on ju­di­cial re­view.

Even the ANC has stepped in, say­ing Par­lia­ment is cor­rect to take Mkhwe­bane to court be­cause she had over­stepped her man­date.

The ANC de­scribed her de­ci­sion as con­sti­tu­tional over­reach.

Par­lia­ment said it can­not be di­rected by the pub­lic pro­tec­tor on how to con­duct its busi­ness.

It de­rives its man­date from the con­sti­tu­tion and only Par­lia­ment can de­cide to amend the con­sti­tu­tion, not the pub­lic pro­tec­tor.

But Mkhwe­bane has de­fended her de­ci­sion to call on MPs to amend the con­sti­tu­tion.

A con­sti­tu­tional amend­ment would re­quire a two-thirds ma­jor­ity in the House, while most of the par­ties in Par­lia­ment are op­posed to Mkhwe­bane’s rec­om­men­da­tion.

They have said they would not al­low Mkhwe­bane to in­trude on the con­sti­tu­tional func­tions of the na­tional leg­is­la­ture.

FORMER Ciex chair­per­son Michael Oatley yes­ter­day hit back at former South African Re­serve Bank gover­nor Tito Mboweni over his comments last week that a spe­cial team of ex­perts, which was pre­vi­ously hired to probe the Bankorp bailout, had not found it nec­es­sary to pur­sue the mat­ter fur­ther.

Oatley said the team ap­point­ment by Mboweni to in­ves­ti­gate the mat­ter had also ar­rived at the con­clu­sion that the trans­ac­tion be­tween Bankorp, Absa and the Re­serve Bank was il­le­gal.

Own panel

“Af­ter an in­ter­val fur­ther pub­lic con­cern prompted Mr Mboweni, by now gover­nor of the SARB, to ap­point his own panel of ex­perts un­der Mr Jus­tice Davis to re­view the mat­ter and, so he ev­i­dently hoped, to put it fi­nally to bed. They did their best to do so, but with ap­par­ent re­luc­tance joined by their pre­de­ces­sors in con­clud­ing that what had been done was im­proper and, in fact, il­le­gal,” Oatley said.

Pub­lic Pro­tec­tor Bu­sisiwe Mkhwe­bane last week faced crit­i­cism from a num­ber of quar­ters af­ter she stated that the gov­ern­ment and the SA Re­serve Bank had failed to pro­tect the pub­lic by bail­ing out Ban­corp be­tween 1985 and 1991.

Mkhwe­bane said the pri­mary man­date of the Re­serve Bank, there­fore, had to be amended. She fur­ther said that the Re­verse Bank had un­wisely failed to re­cover more than R1 billion from Bankorp/Absa Bank, which was part of bil­lions, ad­vanced as an “il­le­gal gift” to the Bankorp group and or­dered the Spe­cial In­ves­tiga­tive Unit to re­coup the money on be­half of the gov­ern­ment.

Mboweni quickly launched a spir­ited de­fence on the in­de­pen­dence of the Re­serve Bank on his face­book time­line last week, and ar­gued they had re­jected Oatley’s of­fer to re­coup the “bailout” money from Absa for a fee.

“Some­where in 1998, a Bri­tish bounty hunter came to us to say that there was a debt that the ‘boers’ had to re­pay the new South Africa. Hal­lelu­jah! He pro­duced to us doc­u­ments that showed that Absa was li­able to pay back about R1.5bn with in­ter­est over the years. He in re­turn would re­ceive 10 per­cent as a fee for help­ing us re­trieve these ‘stolen’ monies,” Mboweni said.

Upon as­sum­ing the of­fice of gover­nor of the Re­serve Bank, he had in­sti­tuted an in­de­pen­dent in­ves­ti­ga­tion headed by a judge, backed by a mul­ti­dis­ci­plinary team and the re­port they had fur­nished was sub­mit­ted to the Pub­lic Pro­tec­tor. “On the ba­sis of that re­port, and its rec­om­men­da­tions, the mat­ter was con­cluded. Yes, I must admit, that a dif­fer­ent panel might have come to a dif­fer­ent con­clu­sion as these mat­ters nor­mally are the case.


“But to cast neg­a­tive judg­ment on their gen­uine pro­fes­sional work is both in­ge­nious and un­fair. It might be im­pugn­ing on their pro­fes­sional stand­ing in their pro­fes­sions, so­ci­ety and ca­pa­bil­i­ties,” Mboweni said. Mboweni served as head of the cen­tral bank from 1999 to 2009.

Oatley said Mboweni’s ver­sion of events did not re­flect re­al­ity. He had writ­ten a let­ter to him on the find­ings of the in­ves­ti­ga­tions he had com­mis­sioned and alerted him that they also found the bailout to have been il­le­gal.

“In his reply to me dated April 15, 2002, Mboweni did not dis­pute that the op­por­tu­nity for re­cov­ery ex­isted, as in­deed it still does along with other op­por­tu­ni­ties for resti­tu­tion, but thanked me and said that “the process has moved on to such an ex­tent that we want to close this mat­ter.”


Former Re­serve Bank Governer Tito Mboweni al­legedly said to Michael Oatley that “the process has moved on to such an ex­tent that we want to close this mat­ter.”

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