How now for Busi? | Fin24
 
  • Cutting Back

    BP's CEO says he plans to sell some oil projects to meet climate targets in Paris agreement.

  • No-Deal Brexit

    The UK's worst-case scenario warns of food shortages and public disorder.

  • Fin24’s newsletter

    Sign up to receive Fin24's top news in your inbox every morning.

Loading...

How now for Busi?

Aug 20 2017 06:00
Dewald Van Rensburg

This week’s Pretoria High Court judgment against Public Protector Busisiwe Mkhwebane goes beyond the unconstitutionality of her recommendation about the SA Reserve Bank’s mandate to fundamentally question her competence.

Judgment was handed down on the first of two review applications brought by the Reserve Bank against Mkhwebane on Tuesday.

This one only concerned her order that the constitutional mandate of the central bank be changed to remove any reference to “protecting the value of the currency”.

The second case concerns the rest of her report about the Absa/Bankorp bailout, but is yet to be heard.

A ruling against Mkhwebane was inevitable. She had already conceded, in court papers, that her order to Parliament to change the Constitution was unconstitutional.

Her concession was, however, barbed.

If she had couched the order as a “recommendation” instead of presuming to tell Parliament exactly how to change the Constitution, it would have passed constitutional muster, she argued.

Most of her affidavit focused on defending the reasoning that led her to submit the strange order – and her right to have considered the Reserve Bank’s mandate to begin with.

The finding that the central bank’s mandate should change was, in essence, correct, Mkhwebane maintained.

But Judge John Murphy’s ruling viciously attacked Mkhwebane’s defensive position.

“The Public Protector’s explanation and begrudging concession of unconstitutionality offer no defence against the charges of illegality, irrationality and procedural unfairness,” he wrote.

“It is disconcerting that she seems impervious to the criticism, or otherwise disinclined to address it.”

Mkhwebane ordered that the Constitution be amended to remove the words ‘protect the value of the currency’ from the Reserve Bank’s mandate.

While this appears to be an attack on inflation targeting, the policy of inflation targeting is never once mentioned in her report.

Instead, Mkhwebane said her intention was to prevent bailouts like that of the former Bankorp in the 1980s.

Judge Murphy slammed her “unrepentant alignment with one side of the public debate” around what central banks should do – specifically, the longstanding economic debate on whether inflation targeting is wise.

“It is difficult to discern precisely the rationale for the remedial action. This brings into question the appropriateness and legality of the remedial action,” he wrote in the judgment.

The judge also frowned on the way in which the Ciex investigation – into misappropriated funds during the apartheid era – was broadened to include the central bank mandate in the first place, without any stakeholders being told about it.

The Ciex investigation has a long history. The original complaint was laid in 2010 and former public protector Thuli Madonsela belatedly worked on it before her departure late last year.

A draft report, largely prepared by Madonsela, had been shared with interested parties – and was pilloried for misunderstanding the issue.

When Mkhwebane took over, she met only two new sources of information before adding the Reserve Bank mandate to the scope of the report.

The one was the department of state security and the other was Stephen Goodson, a shareholder in the Reserve Bank who advocates nationalising it and has written books on the evils of central banking.

He is better known for being a Holocaust denier.

Afterwards, Mkhwebane released a radically different final report.

“The Public Protector, without any explanation, jettisoned most of the remedial action proposed in the preliminary report,” noted the judge.

Judge Murphy spent much of his judgment repeating the economic criticisms made by the Reserve Bank and expert witness Iraj Abedian.

Making the central bank’s primary aim the vague aspiration to ensure the economic wellbeing of everyone would turn it into a overly independent entity, encroaching on the executive branch of government’s functions, argued the judge.

In a parting shot, the judgment concludes by saying Mkhwebane “would do well to reflect more deeply on her conduct of this investigation and the criticisms of her...”.

Cleopatra Mosana, spokesperson for the Public Protector, said this week that she was unable to comment on the criticisms levelled at Mkhwebane by the judge.

NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

What's your view on deep sea mining?

Previous results · Suggest a vote

Loading...