Pretoria - The findings in the Public Protector’s report, in which Absa was ordered to pay back its so-called R1.25-billion apartheid-era bailout, has been set aside by the Gauteng High Court, Pretoria.
The court has found the remedial action to be unlawful and that there is a reasonable apprehension of bias on the side of the Public Protector.
A full bench (three judges) said on Friday it was not necessary to set aside Public Protector Busisiwe Mkhwebane’s entire report, but only the parts which referred to the remedial action to be taken against Absa.
This include the findings that the matter of the so-called bailout had to be referred to the Special Investigating Unit (SIU) to “recover the misappropriated public funds unlawfully given to Absa”.
Judge Cynthia Pretorius, who wrote the judgment, found that the Public Protector had jumped the gun and simply made her own findings.
Read more: Public Protector's #CIEXReport set aside
“The outcome of the investigation is premeditated as the Public Protector informed the SIU that Absa is guilty. She does not leave the investigation to the SIU to determine whether Absa is guilty and has to pay back R1.25-billion. She has already found Absa to be liable and decided that the money must be paid back,” the judge said.
The matter followed the final report issued by Mkhwebane into the “alleged failure to recover misappropriated funds”. She made certain factual findings and came to certain conclusions in the report, which includes that the South African Government had failed to implement the CIEX report which dealt with alleged stolen state funds, after commissioning the report from CIEX.
The Public Protector also found that the Government and the Reserve Bank had failed to recover R3.2 billion from Bankorp Ltd/Absa and that the South African public was prejudiced by this conduct.
This led to her prescribing the offending remedial actions in her report.
Absa and the Reserve Bank turned to court to have the report set aside. They cited various grounds, including that Mkhwebane lacked the jurisdiction to re-open the investigation into the transfer of funds by the Reserve Bank during the period 1986 to 1995. It was argued that the Public Protector’s office was only established in October 1994 and that the transfer thus took place long before this office came into existence.
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It was also argued that she failed to consider the effect of the reopening of the investigation into Absa on the financial stability of the banking system.
Judge Pretorius said the proposed investigation by the SIU concerns transactions which occurred decades ago. It was pointed out by counsel for Absa that it is difficult to obtain documentary evidence after all this time to defend itself. She said there has in any event already been investigations into this matter in the past and this would be the second investigation into the same facts by the SIU.
The judge said Mkhwebane clearly made findings and conclusions in her report and subsequent remedial action, which by no means could be regarded as mere recommendations. Mkhwebane, for instance, said the “illegal gift” of R1.25-billion had to be recovered from Absa.
The judge also criticised Mkhwebane for not alerting the Reserve Bank and Absa that she met with the Presidency and the State Security Agency (SSA) prior to issuing her final report, nor did she inform the banks about the outcome of this meeting.
Judge Pretorius said an office such as the Public Protector should always be independent and it was thus reasonable for the banks to have a reasonable suspicion of bias on her part.
“It transpired that the Public Protector does not fully understand her constitutional duty to be impartial and to perform her functions without fear, favour or prejudice. She failed to disclose in the report that she had a meeting with the Presidency.”
The court, in “showing its displeasure with the unacceptable way in which she conducted her investigation” and because she persisted in opposing this application, awarded a punitive costs order against her."
The final nail in the coffin was when she was ordered to pay 15% of these costs in her personal capacity.