Finance Minister to take Public Protector report on review

Thursday, July 6, 2017

Pretoria - Finance Minister Malusi Gigaba is to take the Public Protector’s report relating to Absa and the Reserve Bank on review.

“The Minister of Finance, Malusi Gigaba, has instructed counsel to institute review proceedings for the review and setting aside of the findings, remedial action and the entire report of the Public Protector,” said the Ministry of Finance on Wednesday.

The decision follows the release of Public Protector Busisiwe Mkhwebane’s report, ‘Alleged failure to recover misappropriated funds’, which was released last month.

The Ministry said the basis for the review is that the remedial action breaches the principle of legality and the findings of fact are not necessarily adequately connected to the evidence which was before the Public Protector.

“Prior to taking the above decision, the Minister engaged the Public Protector to gain a deeper understanding of the facts and evidence, which underpins some of the findings and conclusions against government. This was necessary because the investigation preceded the Minister’s tenure in office,” said the Ministry.

Mkhwebane released the report into the misappropriation of public funds pre-democracy at a media briefing in June. At the briefing, the Public Protector said government is allowed to recover R1.125 billion in misappropriated public funds from Absa Bank and its predecessor, Bankorp.

The Public Protector investigated the matter after the complainant, Advocate Pual Hoffmann, alleged that government and the Reserve Bank failed to implement the recommendations by UK-based asset recovery agency, Ciex, and to recover the money from Bankrop Limited, which eventually became a part of Absa, without providing reasons to that effect.

The Ciex report alleged that R24 billion was unlawfully given out to Bankorp from 1985 to 1992 by the Reserve Bank (as a “lifeboat”/gift). It then provided Absa with a further R2.25 billion in bailouts from 1992 to 1995.

At the briefing, Public Protector Mkhwebane ordered remedial action directing Parliament to effect a constitutional amendment to the Reserve Bank’s powers.

The Ministry on Wednesday said that during the Minister’s cordial and insightful discussions with the Public Protector, it became apparent that the Minister’s concerns about the report can only be practically addressed through judicial review proceedings.

“This was confirmed by the legal advice obtained by the Minister that the review is the appropriate course of action in light of the binding judgments of the Constitutional Court and the Supreme Court of Appeal.

“The Minister has not taken the decision to seek judicial review lightly. He has taken the decision primarily to protect the constitutional mandate of the South African Reserve Bank, an important institution created by section 224(1) of the Constitution to ‘protect the value of the currency in the interest of balanced and sustainable economic growth in the Republic’,” said the Ministry.

Minister Gigaba believes that the proposed constitutional amendment is not necessary.

South Africa’s Constitution does not contemplate the protection of the currency for its own sake, but specifically in the interest of balanced and sustainable economic growth. These two objectives of the Reserve Bank are mutually supportive and reinforcing, the Ministry said.

Role of the Reserve Bank

The Ministry said it was “notable” that the Public Protector’s report has generated a public discussion concerning the role of the Reserve Bank.

“The role of the Reserve Bank is a policy question. Its primary mandate is in the Constitution. There is no intention on the part of the Executive to amend the Constitution in any manner. In any event, the first port of call for any policy changes would not be the Constitution, but the pre-constitutional legislation which governs the Reserve Bank, the South African Reserve Bank Act 90 of 1989.”

Recommendations of the report

Concerning the recommendations of the report that the Special Investigating Unit should take steps to recover the “misappropriated public funds unlawfully given to Absa Bank in the amount of R1.125 billion”, the Ministry said Minister Gigaba is bound by decisions taken by his predecessors in this regard.

“The view of the Minister, consistent with the principle of State succession, is that he is bound by decisions taken by his predecessors in this regard. These matters will also form part of the judicial review proceedings to be instituted,” said the Ministry. -