Don't mess with SARB's independence - Duarte

Jessie Duarte.
Jessie Duarte.

Johannesburg - ANC deputy secretary general Jessie Duarte has warned against meddling with the independence of the South African Reserve Bank (SARB).

“It is very important that a Reserve Bank is left to run independently so that there is no management of it. Once it is managed, incorrectly so, and not through specific fiscal disciplinary mechanism and legislation, it can be a tool of destruction,” Duarte told News 24. 

Duarte would not comment directly on Public Protector Busisiwe Mkhwebane’s remedial action directing Parliament to evoke a constitutional amendment to the Reserve Bank's mandate. 

READ: SARB seeks urgent court review to set aside Public Protector’s ‘unlawful’ action

Mkhwebane released a report on Monday on the alleged failure by government to recover R1.125bn in “misappropriated funds” in the Bankorp lifeboat investigation. She also wants Absa - which bought the bank in the 1990s - to pay back the R1.125bn.

Absa has disagreed with the finding, while the Reserve Bank is taking her report on review to set aside her recommendations.

READ: Absa: No obligation to pay R1.125bn bailout

Duarte warned that while Mkhwebane’s sentiment is correct, people should be cautious about tinkering with the independence of the bank. 

She said she expects SARB's role to come under discussion at the ANC’s policy conference which gets under way next weekend. The party is split on how far to push in radically transforming the economy.

Mkhwebane’s findings have divided the ANC, with some supporting the criticism that she went beyond her mandate by recommending constitutional changes.

WATCH: Interview with Jessie Duarte

In early June, the Public Protector received a complaint from an ANC MP, asking her to investigate collusion and corruption at Treasury and other financial institutions, including the Reserve Bank. 

Some ANC insiders have questioned why the bank’s shareholding remains in private hands when it dictates monetary policy. 

But Duarte said the bank is currently one of the "better managed [central banks]" and praised legislation managing it.  

“The criticism we have is that private individuals own shares in the Reserve Bank, but that criticism in itself does not mean the Reserve Bank is managed non-independently. 

READ: S&P warns of more downgrades over proposed changes to SARB mandate

“I think legislation we have is very good to assist the bank is one of better managed in the world and on the continent and people praise it,” Duarte said. 

Former SARB governor Tito Mboweni wrote on his Facebook page that he had instituted the first investigation into CIEX, a London-based organisation which produced a report that Absa is liable to pay back R1.5bn, including interest. 

He said the investigation was headed by a judge and carried out by people highly qualified in economics, finance, accounting and political complexities, both black and white and with international expertise. He said following their report the matter was concluded, and that the report was submitted to the Public Protector during her current investigation.

“This report, it would seem, at reading the media reports, was ignored or might have been complex. I do not want to be judgemental,” Mboweni wrote.

He however admitted that a different panel might have come to a different conclusion. He also warned that central banks are important and sensitive institutions that have to balance both political considerations and the stability of banking and financial institutions.

“One of their central tasks as central bank is to protect the stability of the banking and financial system of the economies in which they operate. To fulfil this mandate, central banks have to assess the negative impact of bank failures."

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