Tuesday’s judgment in the matter of Public Protector Busisiwe Mkhwebane and the Reserve Bank does not bode well for her chances of withstanding a court challenge by Absa regarding findings made by her in the same report.
Mkhwebane risked the charge of "hypocrisy and incompetence" if she did not hold herself to an equal or higher standard of legality than those subject to her writ, Judge John Murphy said when handing down judgment in the High Court in Pretoria.
He set aside Mkhwebane’s remedial action directing a change in the Bank’s constitutional mandate.
The protector’s "superficial reasoning and erroneous findings on the issue [of the Bank’s mandate], as appear in the final report and answering affidavit" did not provide a rational basis for the remedial action, he said.
Remedial action directing changes to the Bank’s constitutional mandate and instructions to recover money from Absa for an apartheid-era bail-out of Bankorp, which Absa had bought afterwards, were contained in a report issued by the public protector in June.
In the report, Mkhwebane instructed Parliament to institute a process that would result in a change in the Bank’s mandate from one that focused on protecting the value of the currency to one that focused on socioeconomic wellbeing.
She later accepted this was an overreach of her powers, but sought to defend the recommendation by saying the Bank’s mandate was narrow and did not protect the socioeconomic wellbeing of citizens.
Bank governor Lesetja Kganyago and economist Iraj Abedian challenged this argument on a number of grounds, including a misunderstanding of the role of central banks.
The public protector’s "begrudging concession of unconstitutionality offers no defence to the charges of illegality, irrationality and procedural unfairness", said Murphy.
The remedial action was procedurally unfair, as the Bank was given no prior notice of it, with consequences that were damaging to the economy.
"A dismissive and procedurally unfair approach by the public protector to important matters placed before her by prominent role players in the affairs of the state will tarnish her reputation and damage the legitimacy of her office," he said.
Murphy’s criticisms echo those made in court papers by Maria Ramos, CEO of Absa parent Barclays Africa.
Mkhwebane had ignored submissions made to her by Absa so that her findings regarding the Bankorp bail-out rested on "material errors of fact". The public protector "picks and chooses aspects of various reports before her, deliberately ignoring facts and findings that do not suit her conclusion", Ramos said.
In her report, Mkhwebane instructed the Special Investigating Unit to recover R1.125bn from Absa for the Bankorp bail-out. Absa is challenging this finding. The unit confirmed it would submit an action plan for implementation of her recommendations by Wednesday.
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