PRETORIA, The South African Reserve Bank (SARB) says it has been advised to bring urgent review proceedings to court to have the remedial action announced by Public Protector (Ombudsman) Busisiwe Mkhwebane for one of the country’s leading commercial banks, Absa Bank, set aside.
The Reserve Bank has consulted its legal team and has been advised that the remedial action prescribed by the Public Protector falls outside her powers and is unlawful. The Reserve Bank has been advised to bring urgent review proceedings to have the remedial action set aside. The Reserve Bank has resolved to do so, the central bank said Tuesday.
The Public Protector on Monday released a report into misappropriate use of public funds in pre-democracy era of apartheid rule and she said the government is allowed to recover 1.125 billion Rand (about 86 million US dollars at current exchange rates) in misappropriated public funds from Absa Bank and its predecessor, Bankorp.
The Public Protector had investigated the matter after a complainant, Pual Hoffmann, alleged that the government and the Reserve Bank failed to implement the recommendations by Britain-based asset recovery agency Ciex, and to recover the money from Bankorp Limited, which eventually became a part of Absa, without providing reasons to that effect.
The Ciex report alleged that 24 billion Rand were unlawfully given to Bankorp from 1985 to 1992 by the Reserve Bank (as a lifeboat/gift). It also provided Absa with a further 2.25 billion Rand in bailouts from 1992 to 1995.
At the media briefing, Mkhwebane ordered remedial action directing Parliament to effect a constitutional amendment to the Reserve Bank’s powers.
In its statement on Tuesday, the central bank said this order had had an immediate and negative impact on the financial markets and the exchange rate of the Rand.
The amendment would, if effected, strip the Reserve Bank of its key competency to protect the value of the currency and the well understood role that central banks play in securing price stability, it added.
Another recommendation of the report that the Parliamentary Committee on Justice must initiate a process that will result in the amendment of section 224 of the Constitution to emphasize that the Reserve Bank must promote a balanced and sustainable economic growth, while ensuring that the well-being of the citizens are protected.
The Reserve Bank further added that the remedial action proposed will have a negative impact on its independence. The Reserve Bank will address its other concerns with the report and evidential factual inaccuracies therein, at the appropriate time. The Reserve Bank acts in terms of its constitutional mandate in the interests of the welfare of all South Africans, said the central bank.
Source: NAN NEWS NETWORK