In respect to a “Report No:8 of 2017/18 on allegations of maladministration
In her Report, the Public Protector found that an amount on R1.125 billion was an illegal gift to Bancorp/ABSA Bank and the matter was referred to the Special Investigation Unit (SIU) to approach the President to re-open and amend proclamation of May 1998, in order to recover misappropriated public funds unlawfully given to Bankorp/ABSA Bank.
Subsequent to the issue of the aforesaid report, the South African Reserve Bank (“SARB”) instituted an urgent High Court application to review and set aside of paragraph 7.2 of the Report essentially dealing with the proposed amendment of the constitutional mandate of the SARB.
Today, the Public Protector filed her Answering Affidavit in respect of SARB’s Judicial Review Application issued on 27 June 2017.
In her Answering Affidavit, the Public Protector explained the reasons for arriving at the remedial action recommending the amendment of the Constitution. In this affidavit, the Public Protector submitted that the mandate of SARB is narrowly stated in section 224(1) of the Constitution, as there are central banks in other countries that have relatively multiple or broader mandates, such as to include, as primary objects and not as consequential or secondary objects, the promotion of full employment (job creation) and balanced economic growth, or other socio-economic objectives. She further explain that the US central bank is one such example, including central banks of China, India and the United Kingdom which has additional mandates other than just price or currency stability.
From the investigation conducted, it appeared to the Public Protector that the major motivation for the “lifeboat” was the fear of a “run on the banks”, which could result in adverse financial impacts and uncertainty amongst local and international investors and depositors. It is not evident that the socio-economic well-being of South Africans, including as regards the diversion of money that could have been used for job creation and other socio-economic objectives featured in the assessment of whether or not the “lifeboat” ought to have been extended.
In her view, such a failure to assess the other socio-economic objectives were probably enabled, and could continue to be enabled, by the narrowly stated mandate of the SARB. If left unchanged or reviewed, this narrowly stated mandate could continue to enable decisions to be taken that prejudice the socio-economic interests of ordinary South Africans, including as to the realisation of full employment or job creation. It was for this reason that the Public Protector considered that a possible review and broadening of the SARB mandate would provide a long-term effective remedy to possible prejudicial decisions by the SARB underpinned by the narrowness of its mandate.
Having considered the legal advice from the Senior Counsel, which advice she accepted, the Public Protector, Advocate Busisiwe Mkhwebane has decided not to oppose SARB’s review application.
Ms Cleopatra Mosana
Public Protector South Africa
Cell: 072 321 7585
Tel: 012 366 7006