The South African Reserve Bank’s (Sarb) personal attack on Public Protector Busisiwe Mkhwebane’s integrity could cost Mkhwebane her job, a court has heard.
During the Bankorp-CIEX hearing which continued on Wednesday at the North Gauteng High Court, Mkhwebane’s legal counsel Paul Kennedy SC defended her conduct in the investigation as being out of “good faith” and not malicious as painted by the Sarb.
In June Mkhwebane released a report where her findings called for ABSA to repay R1.125-billion for a lifeboat provided to Bankorp by the Reserve Bank during the apartheid era. Both the Sarb and ABSA filed court applications to have the court review the report and set it aside. The Sarb wants the court to declare that she abused her powers.
But Kennedy argued that even if the Public Protector was wrong, she did not abuse her powers.
The consequence that would flow from the declaratory order would be serious. “The court is being used to prepare the ground for the removal of the person who occupies the office of the Public Protector,” Kennedy said. He appealed to the court not to be part of the strategy or approach of the Sarb.
“When the institution is undermined, this is what the strategy in fact amounts to; the consequences will be serious.
“What is particularly serious and concerning - it is an institute of state (Sarb) itself which is required to be impartial - is reacting in a partisan, unjustified manner by attacking another important institute of state (Public Protector).”
Kennedy suggested that the Sarb still had a bitter taste in its mouth following the Public Protector’s challenge to its constitutional mandate. The court had set aside the remedial action. “That is water under the bridge. The earlier application was dealt with and disposed of. The Public Protector conceded she went too far.”
He also pointed out that the other applicants, ABSA and the minister of finance, were not seeking a declaratory order. He added that the declaratory order that she abused her powers would have serious consequences for public confidence in her office.
If the Public Protector was found to be wrong, then she was just wrong, it does not prove an abuse of power, he explained.
During the first day of the hearings, both ABSA and the Sarb argued that the Public Protector acted impartially in the investigation, having met with other parties, the Presidency, State Security Agency and Black First Land First (BLF) to finalise the report.
They each separately argued that they were not afforded the opportunity to defend themselves, in the case of ABSA, or consult on the remedial action, in the case of the Sarb, before the report was finalised and published.
Referring to the meeting with the Presidency, Kennedy said that it was put forward as something “sinister” or a deliberate deception of the court. “There is nothing to show the meeting with the Presidency and BLF influenced or was meant to influence the Public Protector.”
He also said that an explanation for the meeting had been provided. “Even if not adequately explained, it does not come in the ambit of abuse of office.”
He said that Mkhwebane’s omission of the meetings in her submissions was a matter of human oversight. “In the real world, mistakes happen.” Just because someone fails to meet high standard does not logically mean there is an abuse of powers.
But the Sarb’s counsel David Unterhalter took aim at Mkhwebane for the omission. “The Public Protector herself is a lawyer, highly trained, and cannot blame her legal team for omissions.”
He argued that Mkhwebane had failed to be frank and candid with the court in her explanations, which is below the standard of what is required by her office. He lambasted her conduct as being “disgraceful”.
The Sarb is seeking a punitive cost order for Mkhwebane’s “disrespect” of the court's processes, and referred to her application for a postponement of the hearing.
“If she acted wrongly in seeking a postponement, then she acted wrongly and not maliciously or out of disrespect to the court or abused her office,” Kennedy said in his response. This matter had also been dealt with and the Public Protector had agreed to cover the costs.
For this reason, Kennedy argued that further punitive costs could not be sought.
No bad faith
Earlier Unterhalter criticised Mkhwebane for misunderstanding the Sarb’s role as a lender of last resort when it provided a lifeboat to Bankorp during the apartheid era.
“It is fundamental to the bank’s role that it ensures financial stability of the financial system. One of the risks to financial stability is sometimes if a bank or many banks run a risk of insolvency. The role of the bank is to intervene to prevent systemic risk to the financial system. That was done in respect to Bankorp,” he explained.
Mkhwebane incorrectly interpreted this as an effort to protect the financial system only and not the socio-economic well-being of the public, he said. Due to the misunderstanding, she imposed the unlawful remedy to have the constitutional mandate of the Reserve Bank changed.
“By calling into question the fundamental role of the Reserve Bank as a lender of last resort, the remedial action has been a source of instability within the financial system.”
Kennedy defended this by saying that even if Mkhwebane was wrong, and had disregard for the impact of her findings on the market, her motive was based on her findings that there was illegality. If there is unlawfulness by the Sarb, then she has the independence to declare that without fear or favour.
“Without fear of the Reserve Bank, without favour to the Reserve Bank and without fear of the consequences to the market,” he said.
It would be a disturbing state of affairs if the Public Protector is inhibited from providing remedial action for what she finds to be illegal, he added.
“In particular we submit a declarator such that the Public Protector is guilty of an abuse of power should entail a finding that she acted in bad faith. That is not established in the papers,” he said.
“Even if she acted inappropriately by meeting the Presidency or the SSA, it does not justify the finding that she acted out of bad faith.”
Kennedy said that Mkhwebane acted in “good faith”. She found that large amounts were unlawfully paid (to Bankorp), the government failed to recover the amounts and she believes these funds could have gone to alleviate the suffering of those in the public.
She may have been over-enthusiastic, but did not act with the intention of abusing power, he argued.
The hearing continues.