Public Protector Busisiwe Mkhwebane’s recommendation to amend the Reserve Bank’s constitutional mandate had nothing to do with her investigation into the apartheid-era Bankorp ‘lifeboat’, and was only aimed at stripping the Bank of its powers to maintain price stability, the bank said yesterday, according to a Business Day report. Bank Governor Lesetja Kganyago, applied to the Gauteng High Court (Pretoria) to review and set aside sections of Mkhwebane’s report on the lifeline granted to Bankorp, which Absa subsequently acquired.

Kganyago argued she had no power to amend the Constitution; had gone beyond the ambit of her investigation; was encroaching on the legislative functions of Parliament; and irrationally expected the Bank to take on the responsibility for socio-economic development.

The process she followed was also procedurally unfair, Kganyago said. ‘The Public Protector’s remedial action is constrained by the conduct she investigates. She has no power to take remedial action on matters she has not investigated,’ he said. In what the report describes as a strongly worded affidavit, Kganyago said Mkhwebane’s investigation ‘had nothing to do with the Reserve Bank’s powers under section 224 of the Constitution’.

Mkhwebane – in addition to recommending that Absa pay back more than R1bn Bankorp received in assistance during apartheid – has said the bank’s constitutional mandate to protect the value of the currency should be amended to one that focuses on the socio-economic wellbeing of citizens. She directed Parliament to initiate processes to amend the Constitution accordingly.

Full Business Day report

Kganyago also labelled Mkhwebane’s instruction to rewrite the Constitution ‘ill-informed and reckless’, and a threat to the poor. Mkhwebane ‘threatens to undermine the critical contribution that the Reserve Bank makes to the stability of our financial system, which is central to sustainable growth and development, job creation, the reduction of inequality and poverty alleviation,’ he is quoted as saying in a Mail & Guardian report.

However, Mkhwebane has since claimed she was merely making a suggestion that Parliament start a process that could, theoretically, amend the Constitution – but, notes the M&G, this is not how the bank sees it. Mkhwebane, says Kganyago, plainly ‘instructs Parliament to pass a Constitutional amendment that has been selected by an unelected functionary’. That instruction simply cannot be allowed to stand, Kganyago says. ‘From the moment it was announced, it has had a serious and detrimental effect on the economy and for as long as it remains in place, it holds the risk of causing further rand deprecation, further ratings downgrades and significant capital outflows. ‘This gross overreach by a Chapter Nine institution must be stopped in its tracks so that certainty and predictability about the Reserve Bank’s role in our constitutional democracy is affirmed.’

Full Mail & Guardian report