South African Reserve Bank to Challenge Public Protector’s Remedial Action

The Reserve Bank in South Africa says it has been advised to bring urgent review proceedings to court to have the remedial action announced by Public Protector Busisiwe Mkhwebane set aside.

“The Reserve Bank has consulted its legal team and has been advised that the remedial action prescribed by the Public Protector falls outside her powers and is unlawful.

“The Reserve Bank has been advised to bring urgent review proceedings to have the remedial action set aside. The Reserve Bank has resolved to do so,” said the central bank in a statement on Tuesday.

On Monday, Mkhwebane released a report into misappropriate use of public funds pre democracy. At a media briefing in Pretoria, the Public Protector said government is allowed to recover R1.125 billion in misappropriated public funds from Absa Bank and its predecessor Bankorp.

The Public Protector investigated the matter after the complainant, Advocate Pual Hoffmann, alleged that government and the Reserve Bank failed to implement the recommendations by UK-based asset recovery agency, Ciex, and to recover the money from Bankrop Limited, which eventually became a part of Absa, without providing reasons to that effect.

The Ciex report alleged that R24 billion was unlawfully given out to Bankorp from 1985 to 1992 by the Reserve Bank (as a “lifeboat”/gift). It then provided Absa with a further R2.25 billion in bailouts from 1992 to 1995.

At the briefing, Public Protector Mkhwebane ordered remedial action directing Parliament to effect a constitutional amendment to the Reserve Bank’s powers.

In its statement on Tuesday the central bank said this order has had an immediate and negative impact on the markets and the exchange rate of the Rand.

“The amendment would, if effected, strip the Reserve Bank of its key competency to protect the value of the currency and the well understood role that central banks play in securing price stability.”

Another recommendation of the report  is that the Portfolio Committee on Justice must initiate a process that will result in the amendment of section 224 of the Constitution to emphasize that the Reserve bank must promote a balanced and sustainable economic growth, while ensuring that the wellbeing of the citizens are protected.

The Reserve Bank further added that the remedial action proposed will have a negative impact on its independence.

“The Reserve Bank will address its other concerns with the report and evidential factual inaccuracies therein, at the appropriate time. The Reserve Bank acts in terms of its constitutional mandate in the interests of the welfare of all South Africans,” said the bank.

Source: SAnews.gov.za