Public Protector in 'serious error' about SARB's role - counsel | Fin24
 
In partnership with
  • Another VAT hike?

    Absa warns that govt may again announce an increase in value added tax in next month's Budget.

  • SA Revenue Service

    The tax agency says a unit that tackles illicit financial flows has recovered R2.6bn since April 2019.

  • State Capture Inquiry

    Former Eskom chairperson Zola Tsotsi says Tony Gupta threatened to have him removed.

Loading...

Public Protector in 'serious error' about SARB's role - counsel

Aug 01 2017 13:09
Lameez Omarjee

Pretoria – Public Protector Busiswe Mkhwebane was in serious error when she ordered the Reserve Bank’s Constitutional mandate to be changed, the North Gauteng High Court heard on Tuesday.

The South African Reserve Bank’s (SARB's) counsel formally presented its matter to have the Public Protector’s remedial action set aside. David Unterhalter SC, who represented the SARB, said that although the Public Protector is not opposing the matter she has failed to apologise or recognise that she took a “reckless” decision in issuing the remedial action.

She had not consulted with the SARB beforehand to understand the consequences that would develop from the “radical” and “destabilising” finding, he said. “It would be sensible to at least tell the Reserve Bank this is what you have in mind and ask them what are the consequences.”

The remedial action could lead to a further credit downgrade, and poor South Africans would suffer the most, he highlighted in his argument.

During his delivery, Unterhalter explained that relief was being sought from the courts as the Constitutional Court has previously ruled that the remedial powers of the Public Protector are binding. The Reserve Bank will have to obey the remedial action unless the court rules that it is unlawful.

He added that the matter is urgent as the Public Protector required the SARB to respond to the remedial action within 60 days of the release of her report, which will be August 18.

Unterhalter said the matter is also urgent because of its consequences to the economy. Following the release of the report, the rand depreciated which poses a risk to the sovereign credit rating, he explained.  

Unterhalter argued that the Public Protector’s remedial action should flow from the findings of the investigation. Given the findings and the remedial action, there are no “interlinkages” between the findings of the duty of the SARB to secure the repayment and the alteration of the mandate, he said.

“The Public Protector has fallen into serious error … the remedial action does not flow from the investigation undertaken,” he said.

Unterhalter further unpacked that Mkhwebane encroached on Parliament’s powers to amend the Constitution. “Only Parliament has legislative authority to determine what is placed before Parliament by way of legislation.”

Unterhalter explained that an amendment to the Constitution can only be given effect by a majority vote by the National Assembly. “Only Parliament is sovereign in these issues... the allocation of power to amend the Constitution is given to Parliament.”

He added that Mkhwebane persisted in justifying the remedial action in her affidavit. Among others, Mkhwebane said in her affidavit that the review of the bank’s constitutional mandate was merely a recommendation. But Unterhalter said regardless of the language chosen, Mkhwebane still acted beyond the scope of her powers.

Misunderstood mandate

Unterhalter further explained that the Public Protector misunderstood the role of the Reserve Bank. “The Public Protector has simply failed to appreciate the true role of the Reserve Bank and why it plays a critical role in maintaining financial stability, and why it is critical to the economic welfare of South Africans,” he said.

Mkhwebane wants the mandate to be altered to secure the socio-economic wellbeing of citizens, but this is the responsibility of the executive, said Unterhalter.

The SARB’s role in ensuring financial stability by preserving the currency to secure debt funding is critical for the well-being of all South Africans, he said.

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Read Fin24's top stories trending on Twitter:


sarb  |  public protector  |  monetary policy
NEXT ON FIN24X

 
 
 
 

Company Snapshot

Voting Booth

How concerned are you about ransomware attacks?

Previous results · Suggest a vote

Loading...