Reserve Bank digs in its heels on protector’s report
Row over Public Protector’s comments rages on as Oatley repudiates Mboweni statement
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.
Unfair
“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.”