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Mkhwebane colluded with Zuma advisers on SARB report

Publish date: 13 September 2017
Issue Number: 4305
Diary: Legalbrief Today
Category: Litigation

An explosive affidavit filed by the SA Reserve Bank (SARB) in the Gauteng High Court (Pretoria) has confirmed suspicions that Public Protector, Busisiwe Mkhwebane, colluded with President Jacob Zuma's legal advisers and the State Security Agency to use an investigation by her office into a 1985 SARB bailout of Bankorp (now Absa) to launch an attack on the independence of the Reserve Bank. The affidavit also suggests Mkhwebane lied about meeting ‘the Presidency’. The revelations most certainly offer grounds for reviewing Mkhwebane's appointment to the vital position and implicate the President in her unlawful behaviour, suggests Marianne Thamm in a Daily Maverick report. And Constitutional law expert, Pierre De Vos agrees, arguing there may now be enough evidence to launch an application for Mkhwebane's removal as Public Protector (See: The smoking gun to oust the Public Proctor in TODAY's ANALYSES section, below).

 

The Reserve Bank alleges Mkhwebane colluded with the Presidency to attack the central bank two weeks before she released her controversial report calling for the amendment of the bank’s constitutional mandate and the recovery of an apartheid-era bail-out to Bankorp. The bank’s general counsel, Johannes de Jager, filed a supplementary affidavit this week with new grounds for reviewing certain aspects of the report, arising from previously confidential notes of the Public Protector’s meeting with the Presidency’s legal advisers, says BusinessLIVE. Dated 7 June and attached to De Jager’s affidavit, the notes show Mkhwebane discussed reopening the Special Investigating Unit’s (SIU’s) prior probe into the Bankorp issue – which found that the funds could not be recovered without risks to the financial system. ‘The Public Protector was not frank about disclosing the fact of this meeting in the report,’ said De Jager. ‘This is a glaring omission.’ According to the notes of the meeting with the Presidency, Mkhwebane wanted the SIU to amend its proclamation to include the Ciex report drafted by former British spy and bounty hunter Michael Oatley. The notes also show that Mkhwebane discussed potential remedial actions for what she said was the bank’s failure to recover R1.25bn in misappropriated funds from Bankorp – including changing the Constitution and the formation of a state bank – with former Reserve Bank director Stephen Mitford Goodson. De Jager said in his affidavit it was unclear whether these were separate meetings, and that if it was one meeting, it was highly irregular.

Full BusinessLIVE report

Supplementary affidavit

Full Daily Maverick report

The meeting compromised the independency of the Public Protector’s Office, the affidavit claims. ‘By 7 June 2017, the Public Protector was clearly considering remedial action aimed at expanding the reach of an SIU investigation into the Ciex report. It was also clear that by this stage, she was considering remedial action aimed at amending the Constitution to deprive the Reserve Bank of its constitutionally entrenched power to protect the value of the currency,’ the report read. This meeting took place after the SARB responded to the preliminary report. The Public Protector had not informed the bank that the focus of the investigation and the remedial action had changed. Meetings were not held with parties who would be affected by the remedial action. The Public Protector submitted eight pages of notes. It is not clear if all matters were discussed in the meeting with the Presidency as Mkhwebane did not provide a proper index for the record, De Jager said, according to a Fin24 report. Assuming that the meeting with the Presidency covered all matters in the eight pages, this is ‘highly irregular’, he said. ‘The meeting traversed the Public Protector's proposed remedial action to amend the Constitution to deprive the Reserve Bank of its role in protecting the value of the currency. This is an aspect of the remedial action that had nothing to do with the Presidency,’ the affidavit read. ‘There is no legitimate basis on which this ought to have been discussed with the Presidency.’ The Public Protector is required to conduct investigations independently and impartially. ‘Discussing these aspects of the report with the Presidency destroys that independence.’ If however the meeting dealt with the Ciex report, it was ‘procedurally unfair’ and there is evidence of bias by the Public Protector, De Jager explained.

Full Fin24 report

Mkhwebane’s office battled to explain itself yesterday, says a Business Day report. Asked to explain the contents of the notes, Mkhwebane’s spokesperson Cleopatra Mosana said, 'that suggestion is incorrect and not factual, but just an exaggeration'. Pushed to clarify, Mosana reportedly said Business Day’s questions were irrelevant and misguided. SSA spokesperson Brian Dube referred questions back to the Public Protector. But the notes, attached to the affidavit show that in a 3 May meeting, the Public Protector and the SSA apparently discussed why the agency had not pursued the Ciex recommendations. The SSA explained it was 'early in democracy' at the time and the department was weak in terms of operations. Mkhwebane noted three points regarding the bank, including 'how are they vulnerable'. Mosana declined to explain what the Public Protector meant by this and reportedly refused to answer further questions.

Full Business Day report

The revelations cast serious doubt as to her independence, says the DA’s justice spokesperson, Glynnis Breytenbach, in a statement on the Politicsweb site. ‘The DA will, therefore, write to the Speaker of the National Assembly, Baleka Mbete, to request that this matter is dealt with by the relevant portfolio committee, in terms of Rule 337 and 338 of the National Assembly Rules,’ says Breytenbach. She adds: ‘Specifically, the DA in the committee will call for removal proceedings to be initiated urgently. In terms of Section 194 of the Constitution, the portfolio committee has the power to make a finding of ‘misconduct, incapacity, or incompetence’ against the Public Protector. Thereafter, the National Assembly must adopt a resolution calling for removal, which requires a two-thirds majority.’

Statement on the Politicsweb site