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Johannesburg - Public Protector Busisiwe Mkhwebane’s “clearly unlawful conduct exposes her own lack of competency”, said SA Reserve Bank governor Lesetja Kganyago on Friday.
“It is not good enough” that Mkhwebane has now admitted she could not change the Reserve Bank’s mandate, he said in a scathing new affidavit responding to the Public Protector announcing she will not oppose its review of her order to change the Constitution.
“Both the report and the Public Protector’s answering affidavit display a fundamental lack of understanding of the monetary system and the role of central banks in it. It is an abuse of power for the Public Protector to assume that she should act in an area and direct fundamental change to it, while displaying a lack of understanding of the basic underlying principles,” said Kganyago.
ABSA CEO Maria Ramos on Thursday made her own scathing attack on Mkhwebane’s report on the Bankorp bailout – essentially accusing her of intentionally misinterpreting facts and laws to drive an unknown agenda.
Ramos filed an affidavit to review and set aside Mkhwebane’s remedial action against ABSA, which said that it must be made to pay back R1.125 billion to the state.
However, she also wants Mkhwebane to produce all the information she relied on to form her conclusions, which have been widely lambasted as nonsensical or, at the very least, poorly supported.
“The Public Protector is called upon ... to produce all the documentation referred to in ... her report,” reads Ramos’ affidavit.
This introduces the prospect of making public Mkhwebane’s interviews with, for instance, Stephen Goodson – the controversial former Reserve Bank non-executive director speculated to have informed the Public Protector’s decision to try to interfere in the Reserve Bank’s constitutional mandate.
Goodson was the only relevant source of information Mkhwebane consulted between her interim and final reports on the matter – a period that saw the Reserve Bank mandate enter her sights.
The remedial actions Mkhwebane announced were “based on irrelevant considerations”, and are “arbitrary”, “irrational” and unreasonable, said Ramos.
An earlier affidavit by the Reserve Bank has accused Mkhwebane of overstepping the constitutional bounds of her powers by telling Parliament what to do.
Ramos says that Mkhwebane did the same thing to other branches of government.
“The Public Protector has exceeded her own powers, and usurped the powers of the Special Investigating Unit and the president,” she said.
Mkhwebane’s main order had been to make the president put the wheels in motion to get the money out of ABSA.
Ramos also accuses Mkhwebane of several “material errors of fact”, principally her unexplained rejection of a 2002 report by an expert panel led by Judge Dennis Davis that found that ABSA gained nothing from the bailout.
According to Ramos, Mkhwebane “picks and chooses aspects of various reports before her, deliberately ignoring facts and findings that do not suit her conclusion”.
BUSI BACKS DOWN – BUT DOESN’T REALLY
Kganyago’s fury stems from Mkhwebane standing by her reasoning for wanting to change the Reserve Bank’s mandate.
When she withdrew her opposition to the Reserve Bank’s application to review her report in an affidavit this week, she made it clear that this was “only” due to legal advice that she could not win.
This is in turn only because she phrased her remedial action – to amend the Constitution – as “mandatory”.
If it had been phrased as merely a recommendation, there would be no problem, said Mkhwebane.
“The remedial action for Parliament to consider review, as opposed to peremptory amendment of the Constitution, might have passed constitutional muster, which was intended to be the case,” she said.
The majority of Mkhwebane’s affidavit defends her conclusion.
Her order was that Parliament change the Constitution to remove “protect the value of the currency” as the chief mandate of the Reserve Bank. The strangeness of the order is that this apparent assault on inflation targeting follows a report that not once mentions inflation or inflation targeting.
Mkhwebane explains that the bailout of Bankorp three decades ago was done without regard to the socioeconomic wellbeing of South Africans.
This kind of failure “could continue to be enabled by the narrowly stated mandate of the Reserve Bank”, she said. Her apparent conclusion is that central banks must not be able to act as lenders of last resort, which is universally seen as one of their key roles.
Kganyago said she made a “grave and rudimentary error”.
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