Reserve Bank governor Lesetja Kganyago. CREDIT: File photo

Cape Town -  - A report by Public Protector Busisiwe Mkhwebane into a government loan to Absa shows her lack of competency and understanding of both the Constitution and economy, Reserve Bank governor Lesetja Kganyago charges in an affidavit filed in the high court in Pretoria, made public on Friday.

In the strongly worded and scathing response to Mkhwebane's decision not to contest a review application by the South African Reserve Bank (Sarb), Kganyago said: "It is not good enough for the Public Protector to now concede the merits and say that she consents to her remedial action being set aside, when her explanation for her conduct, instead of offering a retraction or apology, perpetuates the damage."

Kganyago went further, accusing Mkhwebane of not understanding her role as Public Protector, and of being incompetent.

"The only explanation that the Public Protector has offered for her clearly unlawful conduct exposes her own lack of competency.

"It is not befitting of a Chapter Nine institution, tasked with upholding the Constitution, to investigate a matter, prepare a Report, direct remedial action to be taken, all without even having come to grips with what the Constitution provides," said Kganyago.

The consequences of Mkwebane's report and remedial action,  released in June, was "reckless" and had "damaging consequences for the country".

"The public protector’s explanation of it is based on a clear lack of understanding of the constitution. It perpetuates a fundamental misunderstanding of the bank’s powers and functions," said Kganyago.

"The markets responded with dismay to the Public Protector's Report. The Rand tumbled; R1.3 billion of South African government bonds were sold by non-resident investors; and ratings agencies threatened further downgrades."

In June, Mkhwebane released her final report regarding her investigation into the assistance provided by the Sarb to Bankorp between 1985 and 1995. Bankorp was acquired by Absa in 1992.

In her report titled Alleged Failure to Recover misappropriated Funds, Mkhwebane criticised government and Sarb for failing to recover an apartheid-era loan of R1.125 billion from Bankorp Limited/Absa Bank, advanced as an “illegal gift” to the Bankorp group.

Mkhwebane also directed Parliament to effect a constitutional amendment to Sarb’s powers.