The case against Mkhwebane

Johannesburg - The South African Reserve Bank’s application to urgently review Public Protector Busisiwe Mkhwebane’s report was filed on Tuesday and presents three different arguments.

First, argues the Reserve Bank, Mkhwebane doesn’t have the power to order changes to the Constitution. Second, even if she did, the change she ordered makes no sense and is irrational because it bears no relationship to her actual investigation. Lastly, the report is procedurally unfair because the interim version the bank had a chance to comment on didn’t mention anything about monetary policy – denying it the chance to meaningfully comment.

The interim version was sent to interested parties late last year and only ordered that the president should consider a new commission of inquiry into the 1985 Bankorp bailout.

An affidavit by Reserve Bank governor Lesetja Kganyago this week detailed the panic that ensued after Mkhwebane released her vastly different final report.

Mkhwebane’s office allegedly dragged its feet in giving the bank a copy of the report on the day of the release as financial analysts almost immediately started calling for clarification.

Lawyers were called the same evening to prepare the bank’s review application. Two days after the report’s release, credit ratings agency S&P Global asked for a meeting.

The mystery around Mkhwebane’s decision to tack a short critique of central banking on the back of her report remains.

“The report makes no reference to a complaint about, or an investigation into, the Reserve Bank’s conduct in pursuing its primary objective,” said Kganyago.

Even the order itself, which is evidently meant to attack inflation targeting, bears no relationship whatsoever to the small amount of monetary policy criticism Mkhwebane did write, he said.

“Not one of the findings relates to the Reserve Bank’s function in protecting the value of the currency.

“The gross overreach by a chapter 9 institution must be stopped in its tracks so that certainty and predictability about the Reserve Bank’s role in our constitutional democracy is affirmed.”

In passing, Kganyago called Mkhwebane’s primary order that Absa should be pursued for R1.15 billion “inexplicable”.

“This is a glaring error, but it is not the focus of this application,” he said.

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