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Public Protector's impartiality tainted - SARB

Sep 12 2017 16:41
Lameez Omarjee

Johannesburg – The Public Protector’s meeting with advisers of the Presidency 12 days before the release of a report ordering the constitutional mandate of the Reserve Bank to be changed is “highly irregular” and compromised the independency of the office, a supplementary affidavit filed by the bank revealed.

According to the supplementary affidavit, filed to support the South African Reserve Bank's (SARB's) founding affidavit challenging Public Protector Busisiwe Mkhwebane’s remedial action, Mkhwebane met with the Presidency and the State Security Agency.

A record of proceedings submitted by the Public Protector, which is still incomplete, reveals that Mkhwebane met with the Presidency’s legal advisers on June 7 - 12 days before the release of a report on the investigation of the Bankorp bailout during the apartheid era. By this date, Mkhwebane had expanded the reach of her investigation.

“By June 7 2017, the Public Protector was clearly considering remedial action aimed at expanding the reach of an SIU [Special Investigation Unit] investigation into the CIEX report. It was also clear that by this stage, she was considering remedial action aimed at amending the Constitution to deprive the Reserve Bank of its constitutionally entrenched power to protect the value of the currency,” the report read.

This meeting took place after the SARB responded to the preliminary report. The Public Protector had not informed the bank that the focus of the investigation and the remedial action had changed. Meetings were not held with parties who would be affected by the remedial action.

The Public Protector submitted eight pages of notes. It is not clear if all matters were discussed in the meeting with the Presidency as Mkhwebane did not provide a proper index for the record, the Reserve Bank’s legal counsel Johannes de Jager said.

The notes deal with the CIEX report and the remedial action to direct an SIU investigation into various institutions mentioned in the CIEX report, as well as the recovery of R1.125bn from ABSA.

Three pages deal with evidence from former Reserve Bank governor Chris Stals; the remaining pages include notes from an interview with Stephen Goodson, who lodged the original complaint. The notes also refer to the remedial action to change the SARB’s constitutional mandate to protect the value of the currency.

Assuming that the meeting with the Presidency covered all matters in the eight pages, this is “highly irregular”, De Jager said.

“The meeting traversed the Public Protector's proposed remedial action to amend the Constitution to deprive the Reserve Bank of its role in protecting the value of the currency. This is an aspect of the remedial action that had nothing to do with the Presidency,” the affidavit read.

“There is no legitimate basis on which this ought to have been discussed with the Presidency.” The Public Protector is required to conduct investigations independently and impartially. “Discussing these aspects of the report with the Presidency destroys that independence.”

If however the meeting dealt with the CIEX report, it was “procedurally unfair” and there is evidence of bias by the Public Protector, De Jager explained.

“After the Public Protector had decided substantially to change the remedial action of her preliminary report, she was required to give affected parties an opportunity to comment on the new remedial action.

“The Public Protector did not provide this opportunity to anyone other than the Presidency. To give an opportunity for comment to one party but not to others is inconsistent with the Public Protector's obligation to conduct her investigations impartially.”

The Public Protector’s independence is also compromised by the fact that she consulted the Presidency.

Failure of the Public Protector to disclose to SARB the meeting with Presidency to discuss the remedial action is a “glaring omission” of a material event in the investigation.

Meeting with Presidency an 'attack' on SARB

The SARB also took aim at the fact that meetings held with Goodson and the Department of State Security happened after the bank submitted comments on the preliminary report.

The meeting with State Security took place on May 3, and notes revealed that the vulnerability of the Reserve Bank was discussed. “It is unclear on what possible basis the vulnerability (and vulnerability to whom) of the Reserve Bank was relevant to the Public Protector's investigation into the CIEX report.

“The fact that this topic was even discussed with the State Security Agency indicates that the Public Protector's investigation was aimed at undermining the Reserve Bank.

“It also indicates that by May 2017, the investigation had turned from the question whether the government had implemented the CIEX report to an attack on the Reserve Bank.”

De Jager explained that this points to the Public Protector’s impartiality in the investigation.

“This attack is evidence of bias or at least a reasonable apprehension of bias on the part of the Public Protector. It also shows that her remedial action had an ulterior purpose.”

De Jager acknowledged that these are serious accusations made against the Public Protector, and urged her to provide the full transcript of the meetings.

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sarb  |  absa  |  busisiwe mkhwebane  |  public protector

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