Reserve Bank governor again slams Public Protector in speech on central bank independence

SA Reserve Bank governor Lesetja Kganyago has again hit out at Public Protector Busisiwe Mkhwebane for displaying a "flagrant disregard of the law" when she ordered the Constitution be changed in 2017 to alter the mandate of the SA Reserve Bank.

Kganyago was in Washington, D.C. to deliver a speech on central bank independence at the Peterson Institute for International Economics. 

The controversial order to change the Constitution was included in the remedial report that Mkhwebane published in June 2017. The report found that Absa had to pay back R1.25bn in the co-called Bankorp bailout matter. This was later set aside by a court.

But included in the remedial action was also an order that the Constitution be changed to alter the Reserve Bank's mandate - with the Public Protector even providing the text for the updated section. 

The order resulted in a surge of criticism. The Reserve Bank instituted an urgent court application to have the section changing its mandate set aside. Mkhwebane, in the end, decided not to oppose the review application. 

'Lack of competency'  

Kganyago in 2017 said the report had exposed Mkhwebane's "lack of competency", and he continued in a similar vein this week. 

In a emailed copy copy of his speech, Kganyago said the Public Protector's order to change the law of the land was one of three major attacks on the bank's independence, and "the strangest" the bank had to deal with.

"[…] to our surprise, the finding included an order that parliament change the Constitution, so that the Reserve Bank’s mandate stopped being to 'protect the value of the currency in the interest of balanced and sustainable growth’.

"You may be wondering how an ombud's office goes from investigating a 30-year-old bank bailout to changing the Constitution," he said. 'We all wondered".

"Yet, although we were all surprised by the attack coming like that, we had not anticipated such a flagrant disregard of the law."

Kganyago said two other major attacks on the bank's independence included the VBS Mutual Bank matter - he described the mutual bank as a "crude Ponzi scheme" - and pressure on the SARB to grant the Gupta family a banking licence. 

"When we put the mutual bank into curatorship, we came under attack from people who said we were targeting this business because it was a black-owned bank," said the governor. "We were accused of undermining black excellence and protecting the interests of white capitalists. You know the saying that patriotism is the last refuge of scoundrels? Well, in South Africa, if you really need somewhere to hide, it’s not in patriotism but in race politics."

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