Protector, Bank battle heats up
• Papers in Absa-Bankorp case suggest Mkhwebane conspired with Presidency on her directive to change Reserve Bank mandate
The gloves are off in the battle between Public Protector Busisiwe Mkhwebane and the Reserve Bank regarding the Absa-Bankorp matter, with the Bank now seeking a costs order against Mkhwebane in her personal capacity and a declaratory order that she abused her office.
The gloves are off in the battle between Public Protector Busisiwe Mkhwebane and the Reserve Bank regarding the Absa and Bankorp matter, with the Bank seeking a costs order against her in her personal capacity and a declaratory order that she has abused her office.
There is also a suggestion in court papers filed by the Bank this week that Mkhwebane conspired with the Presidency.
Mkhwebane’s answering affidavit — filed in response to review applications by the Bank, Absa and the Treasury regarding her report — sought to justify the report on reasons not given in the report, the Bank’s general counsel, Johannes de Jager, said in papers. The retrospective justification relied on the analysis of economist Tshepo Mokoka that was “based on a number of fundamental misunderstandings of the nature of the financial assistance given to Bankorp”, De Jager said.
Mkhwebane’s now notorious Absa and Bankorp report, released in June, found that the government and Reserve Bank neglected their constitutional duties in failing to implement the findings of the dubious Ciex report, relating to an apartheidera bail-out extended to Bankorp, which Absa later bought.
In the report, Mkhwebane directed that the Special Investigating Unit (SIU) recover R1.125bn in “misappropriated public funds unlawfully given to Absa”. She also directed Parliament to initiate a process to change the constitutional mandate of the Reserve Bank from one that focused on protecting the value of the rand in the interest of economic growth, to one that focused on the socioeconomic wellbeing of citizens. The high court declared this aspect of the report, on which Mkhwebane retreated, unconstitutional.
Mkhwebane had failed to be impartial and independent, De Jager said. “She is required to be a check on the misuse of state power; not a vehicle for it. This court, ought, accordingly, to declare that she has abused her office during this investigation.”
Mkhwebane had not disclosed in her report that she had held two meetings with the Presidency to discuss her remedial action before issuing her findings. “The public protector failed to keep a transcript of these meetings when it is routine practice within her office to record her interviews. [Mkhwebane] evidently discussed amending the Constitution with the Presidency to take away the Reserve Bank’s primary function — a topic that bore no relation to her investigation.”
Mkhwebane’s contention in her answering affidavit that her report merely requested the president to consider asking the SIU to reopen an investigation into the lifeboat was a “retreat from her report’s unambiguous requirement” that R1.125bn be recovered from Absa, CEO Maria Ramos said in papers.
Mkhwebane’s admission in the same affidavit that she had not “interrogated how the proceeds of the [Bankorp] lifeboat were utilised”, rendered irrational her remedial action to recover the lifeboat from Absa, Ramos said. The assistance had been provided to set off the bad debts of Bankorp. Absa had paid fair value for Bankorp and received no benefit from the assistance, Ramos said.
An independent investigation headed by Judge Dennis Davis in 2000 reached the same conclusion, despite finding that the assistance was unlawful.