The best public protector Busisiwe Mkhwebane can hope for next week is to be portrayed as a bumbling incompetent, making things up as she goes along in ever more bizarre efforts to hide her inadequacies. That, though not flattering, would be better for her than the worst-case scenario — being described as a conspirator gone mad with power, lying and cheating as she plots with parts of the government she is tasked with keeping in check.
It all depends on the extent to which the Reserve Bank and Absa manage to recover the icy professionalism on which bankers pride themselves — and which both institutions lost this week.
Without last-minute changes, Mkhwebane is next week due to defend her first major report as public protector against Absa and the Reserve Bank in the high court in Pretoria. She has abandoned the most eye-popping part of that report, an imperious directive to Parliament to change the Constitution and so the mandate of the Reserve Bank.
But she is staunchly defending her other major finding, that the state must seek to claw back R1.125-billion she says remains due after an apartheid-era bailout of the Bankorp group, later bought by Absa.
Until last Friday, it seemed clear that Mkhwebane intended that money to be claimed back from Absa. But then she filed an affidavit, in preparation of next week’s court hearing, and that seemingly determined intention went out the window.
In her papers, Mkhwebane said, although she had said money that had been given to Absa must be recovered, she did not say it should necessarily be recovered from Absa.
Although the remedial action in her report did not state “from Absa”, the rest of her report did.
“The allegation [that] the South African government and the South African Reserve Bank improperly failed to recover from Bankorp Limited/Absa bank an amount of R3.2 billion … is substantiated,” Mkhwebane found, before revising that amount downwards.
Elsewhere she said “the amount given to Bankorp Limited/Absa bank belonged to the people of South Africa. Failure to recover the illegal gift from Bankorp Limited/Absa bank resulted in prejudice to the people of South Africa.”
Yet, in her recent affidavit, she said the money could be recovered from “third parties” — seemingly a reference to Sanlam, whose policyholders owned shares in Bankorp and then Absa. Absa was not yet affected, she added, and so should not be rushing to court.
Her submission contained other unusual arguments: that the word “may” means “must”, that her Bankorp report was basically the work of her predecessor Thuli Madonsela, that Bankorp (which disappeared in the 1990s) did a deal with the Reserve Bank in 2015.
But those paled in comparison to the assertions of her new economics expert, Tshepo Mokoka.
As far as Absa and the Reserve Bank can tell, Mkhwebane never took economic advice before adjudicating on the highly complex Bankorp bailout, or deciding how central banks should deal with failing banks. But, after the two banks filed their challenge, she turned to Mokoka, an academic and colleague of the occasionally controversial government economic adviser Chris Malikane.
In the evaluation Mokoka provided, and which Mkhwebane attached to her papers, he went a little beyond just an economic analysis.
Two previous investigations, by the Special Investigating Unit under Judge Willem Heath and an international panel for the Reserve Bank led by Judge Dennis Davis, had got Bankorp badly wrong, Mokoka said. Both had misunderstood the principles behind central banks acting as a lender of last resort and had ignored crucial evidence.
And everyone else had been bought off, he said. After Trevor Manuel left as finance minister, he was rewarded for not seeking repayment of the Bankorp money by being made chairperson of Old Mutual, Mokoka told the court. Reserve Bank deputy governor Gill Marcus was similarly bribed by being made chairperson of Absa, and Maria Ramos, now Absa’s chief executive, was made a board member of Sanlam “after she had not acted against Absa” while she directed the treasury.
“Given the series of conflicts of interest that characterised the key players involved in decision-making on the matter, it is clear why the debt owed to the SARB [South African Reserve Bank] remains outstanding,” said Mokoka.
This, perhaps, is what pushed Absa and the Reserve Bank over the edge. In affidavits hastily drafted over the weekend, the two banks could not contain their fury with Mkhwebane.
The allegations of conflicts of interest amount to “a series of unsupported defamatory and clearly actionable accusations and conspiracy theories” against former high-ranking government officials, Ramos said in her replying affidavit.
“I am advised that Dr Mokoka has overstepped the bounds of propriety and has abandoned any pretence of independence in these paragraphs in his attempts to support the public protector’s case.”
The Reserve Bank did not limit similar criticism to the Mokoka submission. Mkhwebane, it said, “deserves serious censure” from the court for her conduct in the litigation, such as making at least two false claims under oath.
One falsehood was that she said she had obtained expert economic evidence while investigating the matter, but she clearly only got such advice after publishing her report, the Reserve Bank claimed.
The other was her claim that, “during a meeting with the president in April 2017, she became concerned about remedial action that would direct him to establish a commission of inquiry”, an approach President Jacob Zuma was already challenging in court after her predecessor made such an order on state capture.
But by that stage, the Reserve Bank said, Mkhwebane had already moved to alleviate such a concern, so the issue could not have arisen in that meeting, as she now claims.
The meeting itself — with the presidency as she was finalising her Bankorp report — was a new revelation, made only on Friday, said the Reserve Bank. She had previously only disclosed a meeting with the presidency in June.
“Section 181 of the Constitution requires the public protector to conduct her investigations independently and impartially,” said the central bank’s general counsel Johann de Jager.
“These are the foundation stones of her office. She is required to be a check on the misuse of state power, not a vehicle for it.”
In her affidavit, Ramos said, in meeting the presidency, Mkhwebane clearly discussed her planned remedial action with that office — “or was provided with” it.
Neither the Reserve Bank nor Absa said outright why Mkhwebane would be conspiring with the office of the president to wring money out of Absa or undermine central banking, but both have promised explanations of their positions in argument in open court.
The two banks also have other, lesser gripes with Mkhwebane and her conduct. Both said her turning to Mokoka proved she did not do her homework to begin with, and was now trying to justify decisions she took without doing the necessary background work.
Both said she contradicted herself, continued to ignore laws that do not serve her purpose and, at best, has a strained relationship with the truth.
The public protector had “neither engaged candidly nor unambiguously with the evidence”, Ramos said.
The Reserve Bank simply contended that she abused her office.
Absa said it would seek a punitive cost order against the cash-strapped office of the public protector. The Reserve Bank said it would seek costs instead from Mkhwebane personally.