The legitimacy of the Public Protector’s office and her reputation may be damaged if she takes a dismissive or procedurally unfair approach as she has done in the matter regarding the South African Reserve Bank (SARB), Judge John Murphy said.
The judgment, delivered on Tuesday by Justice Cynthia Pretorius on behalf of Murphy, sets aside Public Protector Busisiwe Mkhwebane’s remedial action.
According to a report issued by the Public Protector’s office in June, which was based on an investigation into the apartheid-era Bankorp bailout, Mkhwebane ordered that the Reserve Bank’s constitutional mandate to protect the currency be changed instead to ensure the socio-economic well-being of citizens and the achievement of socio-economic transformation.
Mkhwebane also ordered the Reserve Bank and the chairperson of the portfolio committee on justice and correctional services to submit an action plan before August 18. This has also been set aside.
In his judgment, Murphy said that it is “disconcerting” that Mkhwebane seems “impervious” or “disinclined” to address criticism of her conduct during the investigation.
Murphy acknowledged that the Public Protector has a difficult task and is expected to deal with complex and challenging maters with limited resources and without the “benefit of rigorous forensic techniques”. This would make it easy to make errors in informal alternative dispute resolution processes.
But Murphy added that the Public Protector is the “constitutionally appointed custodian” of legality and due process in the public administration. “She risks the charge of hypocrisy and incompetence if she does not hold herself to an equal or higher standard than that to which she holds those subject to her writ,” he said.
“A dismissive and procedurally unfair approach by the Public Protector to important matters placed before her by prominent role players in the affairs of state will tarnish her reputation and damage the legitimacy of the office.”
Murphy said the Public Protector should reflect “more deeply” on her conduct during this particular investigation, and she should consider the criticism made by the SARB and Parliament.
Professor Jannie Rossouw, head of the Wits School of Economic and Business Science, said that if the matter had gone any other way, it would have been a “constitutional crisis”. “From that perspective it is a very positive judgment,” he said.
‘Maybe she should just resign’
The judgment also raises questions on whether Mkhwebane is fit to hold office, he said. “Maybe she should do the honourable thing and just resign.”
Econometrix chief economist Dr Azar Jammine said the ruling may have damaged the image of the Public Protector, and that some may argue that her days are numbered. He said the ruling showed the strength of South Africa’s institutions and the judiciary.
A different judgment would not have been viewed favourably by ratings agencies, he said.
By Lameez Omarjee for News24
The rand tanked on Monday after the Public Protector recommended changes to the Constitution that would see the removal of a clause to protect the currency.
Public Protector Busisiwe Mkhwebane announced her findings after her investigation into the South African Reserve Bank’s assistance to Bankorp between 1985 and 1995, which Absa bought in 1992. She wants Absa to repay R1.125bn, a move the bank refutes as it believes it has paid all money owed.
However, her big remedial action was a recommendation that the Portfolio Committee on Justice and Correctional Services change the Constitution.
It “must initiate a process that will result in the amendment of section 224 of the Constitution, in pursuit of improving socio-economic conditions of the citizens of the republic, by introducing a motion in terms of section 73(2) of the Constitution in the National Assembly and thereafter deal with matter in terms of section 74(5) and (6) of the Constitution”.
She wants section 224 of the Constitution to read:
“The primary object of the South African Reserve Bank is to promote balanced and sustainable economic growth in the Republic, while ensuring that the socio-economic well-being of the citizens are protected.
“The South African Reserve Bank, in pursuit of its primary object, must perform its functions independently and without fear, favour or prejudice, while ensuring that there must be regular consultation between the Bank and Parliament to achieve meaningful socio-economic transformation.”
Mkhwebane’s suggestion removes reference to “protect the value of the currency”, Bloomberg told traders on Monday.
The Constitution currently states: “The primary object of the South African Reserve Bank is to protect the value of the currency in the interest of balanced and sustainable economic growth in the Republic.”
Opening Pandora’s box
Nomura economist Peter Montalto said the rand is taking a knock because it’s “not a good headline … it’s a live wire issue”.
“Even if a change here is not likely to actually occur, the risk of it is important to markets and ratings agencies,” he said in an emailed comment to investors.
“This is quite unusual that a Public Protector has been so specific on changing the Constitution or indeed be so radical on transformation.”
“This is touching the real last Pandora’s box,” he said. “Note, whilst the PP is meant to be independent she is widely viewed as a Zuma loyalist.
“I don’t think this is going to happen in the short to medium run. The ANC cannot really muster the support to change the Constitution in Parliament and would require a two-thirds majority.
“What the worry is here is that actually it’s much, much easier than that. You just need a new MPC (monetary policy committee) mandate, which is done by a letter from the FinMin to MPC and can be done technically at any time.
“I do not think (Finance Minister Malusi) Gigaba is going to do that, but this raises the risk and promotes the idea in public debate about how secure this last bastion of an institution is.
“The SARB is also one of few ratings positives for the ratings agencies,” he said. “The very fact this issue is being raised and the SARB dragged into the debate is negative.
“However, I see the SARB leadership strongly and resolutely defending their independence and existing mandate including via court action if necessary.”
By Matthew le Cordeur for News24