South Africa Graft Ombudsman Won’t Fight Central Bank Court Bid

JOHANNESBURG (Capital Markets in Africa) – South Africa’s anti-graft ombudsman won’t oppose the Reserve Bank’s court application to review and set aside her instruction to parliament to change the constitution and amend the central bank’s primary role.

Public Protector Busisiwe Mkhwebane considered legal advice and decided not to oppose the application the central bank filed on June 28, her office said in an emailed statement on Monday.

In a report last month, Mkhwebane instructed the legislature to start a process to change the nation’s constitution to make the central bank focus on the “socioeconomic well-being of the citizens” rather than inflation. Her comments caused the rand to slide as the change was seen by investors as a threat to the independence of the Reserve Bank. The decision means she may be leaving it up to the court to decide.

The anti-graft ombudsman has come under fire since the release of the report, with Finance Minister Malusi Gigaba saying the instructions about the Reserve Bank are irrational and exceed her constitutional powers.

“I accept that the powers of the Public Protector are subject to the constitution and the law,” Mkhwebane said in an affidavit filed at the High Court in Pretoria. “In those circumstances, it is not possible that the constitution would confer a power upon the public protector to undermine other provisions of the constitution.”

The Reserve Bank will proceed with its application to review Mkhwebane’s report and “evidential factual inaccuracies therein,” it said in a statement on its website. It’s consulting with its legal team about the Public Protector’s decision not to oppose the review of her instruction to change the constitution, the central bank said.

‘Political Antagonism’
“She is obviously deferring to the courts to determine whether her position is correct or within her mandate,” Bonita Meyersfeld, a law professor who heads the University of the Witwatersrand’s Centre for Applied Legal Studies, said by phone. “I don’t think it’s necessarily conceding or necessarily saying it’s over, but I think it does take the sting out of the political antagonism here.”

Mkhwebane’s report followed an investigation into an apartheid-era bailout by the regulator of Bankorp, which Barclays Africa Group Ltd.’s Absa bought in 1992 and instructed the lender to repay 1.125 billion rand ($84 million). Absa and the National Treasury have also asked the court to review Mkhwebane’s report and Parliament has filed an affidavit supporting the Reserve Bank’s application.

The Public Protector will oppose the review applications brought by Absa and Gigaba, spokeswoman Cleopatra Mosana said by phone.

Mkhwebane was appointed by lawmakers to replace Thuli Madonsela as Public Protector in September last year. Only the largest opposition party, the Democratic Alliance, voted against Mkhwebane’s appointment, citing her lack of experience and allegations that she worked for the government’s intelligence service.