Reserve Bank asks high court to rule against protector on Absa report
The South African Reserve Bank (SARB) has asked a full bench of the Pretoria High Court to declare that public protector Busisiwe Mkhwebane breached the constitution‚ because she failed to act impartially and independently in her investigation into the Absa/Bankorp “lifeboat” saga.
Of concern to the country’s central bank are several undisclosed and scantily recorded meetings that Mkhwebane held with the Presidency and State Security Agency (SSA) spies during the course of her investigation.
Advocate Kate Hofmeyr‚ for the SARB‚ told the court yesterday that Mkhwebane had at least two meetings with the Presidency and the SSA in the period between her provisional and final reports.
She noted that no other party was afforded the same treatment‚ and that there was no proper recording of these seemingly clandestine meetings.
Hofmeyr said that also of concern was the meeting which Mkhwebane had with the SSA, during which the vulnerability of the central bank was discussed.
She reiterated that there was no recording of the meetings‚ but rather‚ in the case of the meeting in June with the Presidency‚ a handwritten note that appeared to have been scribbled by Mkhwebane herself.
“This investigation was handled in a manner that abuses her office – her independence was further breached by her meeting with the SSA,” Hofmeyr said.
“There was a handwritten note of the meeting – the subject was how vulnerable the South African Reserve Bank was.”
She said that in the meeting with the Presidency‚ Mkhwebane’s widely criticised remedial action – that the constitution be amended to take away the core functions of the SARB – was discussed.
Hofmeyr said Mkhwebane had not denied these facts in her answering affidavit – saying she did not even deal with the June meeting with the Presidency‚ but revealing another meeting with the Presidency in April.
“These facts require a declaratory order from this court. There has been a breach of the constitution by the public protector,” Hofmeyr said.
“The public protector is required to act impartially and independently. She has failed to do that in this instance.”
Absa and the SARB approached the court to set aside a report Mkhwebane released in June‚ in which she ordered Absa to repay R1.125-billion in loans provided to Bankorp by the SARB during the apartheid era‚ in what became known as the “lifeboat scandal”.
Absa has raised serious concerns of lack of jurisdiction‚ independence‚ impartiality and procedural fairness – and a report riddled with plagiarised work – in Mkhwebane’s handling of the investigation.
The court heard from Absa’s legal team yesterday how Mkhwebane had refused to hear Absa out after the release of her provisional report‚ but had no problem meeting with the Presidency‚ the SSA and Absa’s “adversaries”‚ the Black First Land First (BLF) movement.
Advocate Gilbert Marcus SC‚ for Absa‚ said it was common cause that BLF had protested against Absa after the leaking of the provisional report‚ and that the same organisation and the ANC Youth League marched to Absa after the release of Mkhwebane’s final report.
He said Mkhwebane had also refused his clients access to the original complaint.
Marcus said that this‚ as well as Mkhwebane’s refusal to hear Absa out‚ exposed her lack of appreciation of the principle of procedural fairness‚ and that her failure to hear Absa out while she did take submissions from other parties amounted to bias.
“These [meetings] took place during the course of finalising the report – this was post-provisional report,” he said.
“She justifies these meetings on the basis that these parties were implicated‚ but did not afford Absa the same.”
Marcus said Mkhwebane had stated in her final report that Absa had improperly benefited from the bailout between 1985 and 1995 and that these funds should be recovered‚ but that she was now‚ in her replying affidavit‚ telling the court that this was just a recommendation.
He said this was not the first time Mkhwebane had made an about-turn – she did the same when her remedial action to amend the constitution to change the SARB mandate was challenged.
Marcus said Mkhwebane’s interpretation of her remedial action did not do her office any credit.
“Five years after investigating‚ she recommends another investigation?”
He also pointed to sections in Mkhwebane’s report that he said were lifted verbatim from economist Dr Tshepo Mokoka’s report on the legality of the Bankorp loan.
He said Mkhwebane lifted Mokoka’s conclusion that the transaction was illegal and used it in her report as if it were her own finding.
Absa also questioned Mkhwebane’s jurisdiction‚ whether she had a mandate to investigate matters that happened before the Public Protector Act came into effect.