The South African Reserve Bank (SARB) has won its application to have the Public Protector’s remedial action to change its constitutional mandate set aside.
The judgment on Tuesday was delivered in the North Gauteng High Court by Justice Cynthia Pretorius following the SARB’s application on August 1.
The judgment, read on behalf of Judge John Murphy, comes a few days before August 18, the deadline that the SARB and Parliament were given to respond to Public Protector Busisiwe Mkhwebane with an action plan on her remedial action.
The judge said the obligation placed on the chairperson of the portfolio committee on justice and correctional services and the SARB to submit an action plan is also set aside.
Mkhwebane must pay costs for the application, up to and including the filing of her answering affidavit, the judge said.
During the hearing on August 1, the SARB opposed Mkhwebane’s order, which was part of a report released in June based on an investigation into the Bankorp bailout during the apartheid era.
Mkhwebane ordered the bank’s mandate to be changed to ensure the socio-economic well-being of citizens and to achieve socio-economic transformation.
However, the bank contested this on several grounds, among these that it falls outside the Public Protector’s powers and that the remedial action breached the separation of powers because it encroached on Parliament’s exclusive domain. It was also not related to the subject of the Public Protector’s investigation.
The SARB pointed out that the remedial action was irrational and the process was unfair, as it was not given an opportunity to comment on the constitutional amendment.
Reserve Bank governor Lesetja Kganyago previously said that the bank’s primary objective is to protect the value of the currency, in the interest of balanced and sustainable growth.
“I know of no central bank that does not have this mandate. These institutions are best equipped to carry out this function, and stripping them of this mandate would raise the question as to where the responsibility for price stability should lie,” he said at the bank’s annual general meeting on July 28.
During the hearing, David Unterhalter SC, who represented the SARB, explained that relief was being sought from the courts as the Constitutional Court has previously ruled that the remedial powers of the Public Protector are binding. The Reserve Bank will have to obey the remedial action unless the court rules that it is unlawful.
Unterhalter further argued that the Public Protector misunderstood the role of the Reserve Bank. “The Public Protector has simply failed to appreciate the true role of the Reserve Bank and why it plays a critical role in maintaining financial stability and why it is critical to the economic welfare of South Africans,” he said.
Arguments were also presented by Absa’s counsel Gilbert Marcus SC, who emphasised the economic consequences of the remedial action and its threat of a credit downgrade which would impact poor South Africans most. – Fin24