Mkhwe­bane flip-flops

Pro­tec­tor backs down on SARB, with costs

The Star Early Edition - - FRONT PAGE - MAYIBONGWE MAQHINA

PUB­LIC Pro­tec­tor Bu­sisiwe Mkhwe­bane was yes­ter­day forced to back­track on her de­ci­sion to or­der Par­lia­ment to amend the con­sti­tu­tion to change the man­date of the SA Re­serve Bank (SARB).

Sources close to the em­bar­rass­ing sit­u­a­tion said her le­gal team had ad­vised her to back down and pay the le­gal costs of a se­ries of court ap­pli­ca­tions op­pos­ing her rec­om­men­da­tions.

Con­sti­tu­tional ex­pert Pro­fes­sor Shadrack Gutto said it was Mkhwe­bane’s first big rul­ing, and she had over­stepped her bound­aries and brought her of­fice into dis­re­pute.

In the same con­tro­ver­sial finding, she also ruled that a R1.125 bil­lion loan, which she termed a “lifeboat gift”, be re­cov­ered from Absa by the Spe­cial In­ves­ti­gat­ing Unit.

Gutto said: “What she has done is prob­a­bly the wise thing. She was in a hurry to pro­file her of­fice in her early days in of­fice, and she made an er­ror.

“Now that she is not pro­ceed­ing with the ap­pli­ca­tion, it will be dif­fi­cult for her of­fice to pur­sue Absa. She is stand­ing in muddy waters. She should rather fo­cus on her man­date. She has a lot to do,” he said.

Gutto added that the pub­lic pro­tec­tor would have to leave it to the court to de­cide on the costs in­so­far as Absa was concerned.

Yes­ter­day, Mkhwe­bane agreed to pay the le­gal costs of the SARB, but seemed de­ter­mined to put up a fight against the award­ing of le­gal costs to Absa, which had ap­plied to be a co-ap­pli­cant in the mat­ter.

Her re­me­dial ac­tion was harshly crit­i­cised across the board. But there

were oth­ers, no­tably the Black First Land First or­gan­i­sa­tion and the ANC Youth League, that backed her en­thu­si­as­ti­cally and started pres­sur­ing Absa to pay up.

But it was the big guns who ini­ti­ated the court ac­tion: SARB gov­er­nor Le­setja Kganyago lodged the ap­pli­ca­tion against the re­port and was sup­ported by Absa, Fi­nance Min­is­ter Malusi Gi­gaba and Par­lia­ment’s Speaker, Baleka Mbete.

While Mkhwe­bane, in her ap­pli­ca­tion, ac­cepted she over­stepped her mark, she went to great lengths to ex­plain why she had de­cided on this par­tic­u­lar re­me­dial ac­tion – and on her de­ci­sion to op­pose the ap­pli­ca­tion in the first place.

She said she had filed the no­tice to op­pose the SARB’s ap­pli­ca­tion on June 30 “with the in­ten­tion to take le­gal ad­vice on whether or not to op­pose the ap­pli­ca­tion or abide by the de­ci­sion of the court”.

She ar­gued that the (Absa) un­re­cov­ered funds be­longed to South Africans and could have been used to ben­e­fit the “broader South African so­ci­ety, as op­posed to a hand­ful of share­hold­ers of Ban­corp and/ or Absa”.

“Se­condly, it is to en­sure that prej­u­dice to or­di­nary South Africans of the kind es­tab­lished in this in­ves­ti­ga­tion does not hap­pen in the fu­ture.”

Mkhwe­bane, how­ever, ad­mit­ted that she could have only rec­om­mended to Par­lia­ment to con­sider a review of the con­sti­tu­tional man­date of the SARB.

“I sub­mit that such a rec­om­men­da­tion would have flowed from the is­sues in­ves­ti­gated and find­ings made, but am ad­vised that this no longer mat­ters…”

In an ap­par­ent de­fence of her re­me­dial ac­tion, Mkhwe­bane said the man­date of the SARB, to pro­tect the cur­rency, was nar­row. “There are other cen­tral banks in other coun­tries that have rel­a­tively mul­ti­ple or broader man­dates.”

She cited the US, China, In­dia and the UK as ex­am­ples.

Mkhwe­bane ar­gued that mo­ti­va­tion for the Absa “lifeboat” was the fear of a “run on the banks”, which could re­sult in ad­verse fi­nan­cial im­pacts and un­cer­tainty among lo­cal and in­ter­na­tional in­vestors.

Mkhwe­bane said her re­me­dial ac­tion on re­view­ing the man­date of the cen­tral bank was to “pro­vide a long-term ef­fec­tive rem­edy to a pos­si­ble prej­u­di­cial de­ci­sion by the SARB un­der­pinned by the nar­row­ness of its man­date”.

She, how­ever, said le­gal ad­vice she ob­tained on her re­me­dial ac­tion on the review of the man­date con­veyed a manda­tory re­me­dial ac­tion.

“I ac­cept that the pow­ers of the pub­lic pro­tec­tor are sub­ject to the con­sti­tu­tion and the law. It is not pos­si­ble that the con­sti­tu­tion would con­fer a power on the pub­lic pro­tec­tor to un­der­mine other pro­vi­sions of the con­sti­tu­tion” she said,

“The power to amend the con­sti­tu­tion is ex­er­cised at the dis­cre­tion of Par­lia­ment and isn’t un­der dic­ta­tion by any other body,” she said when with­draw­ing her court chal­lenge.

She agreed to pay the cost of the ap­pli­ca­tion. But she ar­gued that Absa’s ap­pli­ca­tion as co-ap­pli­cant was “still­born” as the re­lief SARB sought had been con­ceded.

Now that she is not pro­ceed­ing, it will be dif­fi­cult for her of­fice to pur­sue Absa

PIC­TURE: REUTERS

CON­CEDED ON MAN­DATE: Pub­lic Pro­tec­tor Bu­sisiwe Mkhwe­bane agreed on SA Re­serve Bank, but put up a fight in her Absa ap­pli­ca­tion.

PIC­TURE: PHILL MAGAKOE

The South African Re­serve Bank build­ing in Pre­to­ria.

PIC­TURE: TI­MOTHY BERNARD

Re­serve Bank Gov­er­nor Le­setja Kganyago

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