Public Protector Busisiwe Mkhwebane. File photo: Phando Jikelo/African News Agency(ANA).

Johannesburg - The Constitutional Court on Monday upheld a Gauteng North High Court order that Public Protector Advocate Busisiwe Mkhwebane should be held personally liable for the costs of the South African Reserve Bank (Sarb) on a punitive scale.

The court also agreed with the high court ruling that her entire investigation into the Sarb/Absa matter was flawed and that she was not honest during her investigation. 

The ConCourt, however, dismissed the Reserve Bank's application for a declaratory order to find that Mkhwebane abused her office during the investigation.

The apex court ruled on the matter after earlier appeals by Mkhwebane in lower courts failed.

In February 2018, the high court ordered Mkhwebane, to pay 85 % in her official capacity, and 15% in her personal capacity, of the costs of the Sarb on an attorney and client scale, including the cost of three counsel.

The court also set aside and reviewed the remedial action put forward in Mkhwebane's report, "Alleged Failure to Recover Misappropriated Funds".

This is after the Sarb, finance minister, National Treasury, and Absa, respectively, instituted review proceedings, challenging Mkhwebane's report and requesting the court to review and set aside certain paragraphs of the report dealing with remedial action.

In June 2017, Mkhwebane had ruled that the South African government had improperly failed to implement the CIEX report which dealt with alleged stolen state funds and recover R3.2 billion from Bankorp Limited/Absa.

She also said the South African public was prejudiced by the conduct of the South African government and the Sarb.

CIEX is a UK based assets recovery agency which, in 1997, approached the government with a proposal to assist it in investigating and recovering misappropriated public funds and assets, that had, allegedly, disappeared prior to the coming into being of the democratic government in 1994. 

The alleged debt arises from what has become known as the "lifeboat transactions" entered into during the mid-1980s between the SA Reserve Bank and several small banking institutions, including Bankorp, which was in financial distress at the time. 

Between 1985 and 1991, the Reserve Bank had provided financial assistance to Bankorp in the amount of R1,25 billion, of which R300 million was at an interest rate of three percent per annum and the balance at 16 percent interest per annum. 

Part of the agreement was that Bankorp would invest R400 million in the Reserve Bank. R600 million would be invested at 15% interest per annum, which would be used to buy government bonds to serve as security for the loans.

In April 1992, Absa Bank acquired Bankorp for an amount of R1.230 million. The acquisition of Bankorp by Absa Bank was conditional upon the existing financial assistance arrangements between the Reserve Bank and Bankorp being extended to Absa bank.

IOL and ANA