The Public Protector was forced to backtrack on her decision to order Parliament to amend the constitution to change the mandate of the Reserve Bank. Picture: Reuters
Johannesburg - Public Protector Busisiwe Mkhwebane was on Monday forced to backtrack on her decision to order Parliament to amend the constitution to change the mandate of the SA Reserve Bank (SARB).

Sources close to the embarrassing situation said her legal team had advised her to back down and pay the legal costs of a series of court applications opposing her recommendations.

Constitutional expert Professor Shadrack Gutto said it was Mkhwebane’s first big ruling, and she had overstepped her boundaries and brought her office into disrepute.

In the same controversial finding, she also ruled that a R1.125 billion loan, which she termed a “lifeboat gift”, be recovered from Absa by the Special Investigating Unit.

Gutto said: “What she has done is probably the wise thing. She was in a hurry to profile her office in her early days in office, and she made an error."

“Now that she is not proceeding with the application, it will be difficult for her office to pursue Absa. She is standing in muddy waters. She should rather focus on her mandate. She has a lot to do,” he said.

Gutto added that the public protector would have to leave it to the court to decide on the costs insofar as Absa was concerned.

On Monday, Mkhwebane agreed to pay the legal costs of the SARB, but seemed determined to put up a fight against the awarding of legal costs to Absa, which had applied to be a co-applicant in the matter.

Her remedial action was harshly criticised across the board. But there were others, notably the Black First Land First organisation and the ANC Youth League, that backed her enthusiastically and started pressuring Absa to pay up.

But it was the big guns who initiated the court action: SARB governor Lesetja Kganyago lodged the application against the report and was supported by Absa, Finance Minister Malusi Gigaba and Parliament’s Speaker Baleka Mbete.

While Mkhwebane, in her application, accepted she overstepped her mark, she went to great lengths to explain why she had decided on this particular remedial action - and on her decision to oppose the application in the first place.

She said she had filed the notice to oppose the SARB’s application on June 30 “with the intention to take legal advice on whether or not to oppose the application or abide by the decision of the court”.

She argued that Absa unrecovered funds belonged to South Africans and could have been used to benefit the “broader South African society, as opposed to a handful of shareholders of Bancorp and/or Absa”.

“Secondly, it is to ensure that prejudice to ordinary South Africans of the kind established in this investigation does not happen in the future.”

Mkhwebane, however, admitted that she could have only recommended to Parliament to consider a review of the constitutional mandate of the SARB.

“I submit that such a recommendation would have flowed from the issues investigated and findings made, but am advised that this no longer matters”

In an apparent defence of her remedial action, Mkhwebane said the mandate of the SARB, to protect the currency, was narrow. “There are other central banks in other countries that have relatively multiple or broader mandates.”

She cited the US, China, India and the UK as examples.

Mkhwebane argued that motivation for the Absa “lifeboat” was the fear of a “run on the banks”, which could result in adverse financial impacts and uncertainty among local and international investors.

Mkhwebane said her remedial action on reviewing the mandate of the central bank was to “provide a long-term effective remedy to a possible prejudicial decision by the SARB underpinned by the narrowness of its mandate”.

She, however, said legal advice she obtained on her remedial action on the review of the mandate conveyed a mandatory remedial action.

“I accept that the powers of the public protector are subject to the constitution and the law. It is not possible that the constitution would confer a power on the public protector to undermine other provisions of the constitution” she said,

“The power to amend the constitution is exercised at the discretion of Parliament and isn’t under dictation by any other body,” she said when withdrawing her court challenge.

She agreed to pay the cost of the application. But she argued that Absa’s application as co-applicant was “stillborn” as the relief SARB sought had been conceded.

The Star