The Constitutional Court in a majority judgment on Monday morning upheld the North Gauteng’s High Court order in February 2018 for Public Protector Busisiwe Mkhwebane to be personally liable for 15% of the legal fees in the Absa/Bankorp case.
The public protector, in a report published on June 19 2017, had tasked the Special Investigating Unit with recovering R1.2bn from Absa Bank, related to a bailout for subsidiary, Bankorp by the SA Reserve Bank in the mid-1990’s. She also ruled that Parliament should introduce a motion to amend the Constitution to change the SA Reserve Bank's mandate to focus on economic growth.
Following the publication of her report, the SARB, the minister of finance, Absa and National Treasury instituted review applications to set aside her directive that the SIU recover the funds from Absa.
These applications were later consolidated. The North Gauteng High Court in Pretoria set aside Mkhwebane's findings in February 2018, citing a "reasonable apprehension of bias" in her work.
Mkhwebane was also ordered to personally repay 15% of the SA Reserve Bank’s legal costs, while the office of the Public Protector was ordered to pay the remaining 85%.
Mkhwebane's applications for leave to appeal the judgment in the High Court and the Supreme Court of Appeal were refused. The public protector then, in November 2018, sought leave to appeal the section of the ruling relating to her personal liability for the legal costs in the Constitutional Court.
Here are 7 things you need to know about the latest ruling:
1. Mkhwebane to pay Reserve Bank’s legal fees
The ConCourt agreed with the high court that Mkhwebane is personally liable for 15% of the Reserve Bank’s legal fees on a punitive attorney and client scale, including the costs of three counsel. A punitive costs order refers to the courts allowing the other parties in the case to set their legal fees higher than the court tariffs allow. The court regulations are far below what normal attorney fees are.
2. Mkhwebane acted in bad faith
In a majority judgment read out by Justice Sisi Khampepe, the ConCourt upheld the North Gauteng High Court’s decision that Mkhwebane had acted in bad faith and “exceeded the bounds” of her potential indemnification under the Public Protector Act, in her sweeping remedial action in the Absa/Bankorp report.
3. Mkhwebane's personal costs order
In the majority judgment, the ConCourt also found that personal costs orders against public officials like the public protector “whose bad faith conduct falls short of what is required of them, constitute an essential, constitutionally-infused mechanism to ensure that they act in good faith and in accordance with the law and the constitution”.
4. Mkhwebane's model of investigation flawed
The ConCourt found that Mkhwebane’s “entire model of investigation was flawed” and that she was not honest about her engagements during the investigation. She failed to engage with the parties directly affected by her new remedial action before publishing the final report.
5. Mkhwebane and 'a number of falsehoods'
The ConCourt ruled that the Public Protector “had put forward a number of falsehoods” in the course of litigation, including misrepresenting under oath, the economic analysis underpinning her Absa report. She claimed this was expert opinion and the ConCourt found it was not. The Public Protector's various explanations were found to be “contradictory” according to the apex court.
6. Mkhwebane and whether she abused her office
The majority judgment dismissed the SA Reserve Bank’s application to cross-appeal for a declaratory order that Mkhwebane be found to have abused her office during the investigation. The ConCourt did not deal with the merits of the application as it did not have the benefit of other courts’ judgments on this matter. There could be a case to have the declaratory order granted but the Public Protector must first be given sufficient opportunity to respond to the appeal. The judgment also found that the Reserve Bank, the ConCourt and the public were "entitled to know why the Public Protector discussed the new remedial action to amend the Constitution and the 1998 SIU Proclamation with the Presidency when she discussed it with no other affected party".
"The Reserve Bank, at the very least, is entitled to know why amending the Constitution’s provisions around the powers of the Reserve Bank was only discussed with the Presidency and not with the Reserve Bank. The Reserve Bank is also entitled to an explanation why its vulnerability was discussed with the security arm of the State. In the absence of an explanation from the Public Protector, it is not for this Court to consider various reasons why these discussions may have been held with the Presidency and the State Security Agency. This would entail speculation,” the majority judgment read.
Meanwhile, the SARB tweeted on Monday that it welcomed the decision by the apex court and posted the full judgment and summary on its website and Twitter account. The Reserve Bank says it will not be commenting further.
7. Mogoeng Mogoeng's minority judgment
Chief Justice Mogoeng Mogoeng penned a minority judgment which held that the high court's order for Mkhwebane to personally fork out 15% of the legal costs should have been set aside. According to the minority judgment, the requirement of gross negligence and bad faith were not met in order to warrant a personal costs order. The minority judgment held that courts exist not to crush or destroy but to teach, caution and punish constructively. The order for costs against the public protector would, according to the minority judgment, predictably ruin her financially and possibly shipwreck her occupation. Mkhwebane commented to the media immediately after the judgment that she had noted it and would need to study it further. She said it would set a precedent where she and future public protectors would have the element of “fear” that they would also be held personally liable for legal fees. She added that she was encouraged by the minority judgment, which would have set aside the High Court’s decision and denied that she had lied under oath. Mkhwebane responded to a question that she was aware she cannot appeal the ruling and will comment further after studying the full judgment.