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UPDATE 1-South African watchdog discussed cenbank mandate with presidency - court papers
September 12, 2017 / 2:33 PM / 10 days ago

UPDATE 1-South African watchdog discussed cenbank mandate with presidency - court papers

* Central bank says no legitimacy for consultations - papers

* Opposition demands Mkhwebane quits

* Mkhwebane spokeswoman says no conspiracy, guided by law (Adds more details)

By Olivia Kumwenda-Mtambo

JOHANNESBURG, Sept 12 (Reuters) - South Africa’s anti-graft watchdog consulted President Jacob Zuma’s legal advisers on a proposal to change the central bank’s mandate, the bank said in court papers, describing her lack of disclosure of the meeting as a “glaring omission”.

Public Protector Busisiwe Mkhwebane, whose job is to ensure proper conduct in public office, triggered a political row and a plunge in the rand when she proposed changes to the mandate in June to promote growth rather than currency and price stability.

The central bank’s General Counsel, Johannes De Jager, said in an affidavit filed to the High Court on Monday that Mkhwebane was required under the constitution to conduct her investigations independently and impartially, and discussions with the presidency destroyed that independence.

“There is no legitimate basis on which this ought to have been discussed with the presidency,” De Jager said in the affidavit.

Mkhwebane is not accused of breaking the law, pending a ruling by the court. She is expected to file an answering affidavit with the court to respond to the accusations.

A presidency spokesman was not immediately available for comment. Mkhwebane’s spokeswoman Cleopatra Mosana said her consultations with the presidency were “guided by the law” and not part of any “conspiracy”.

However, the main opposition Democratic Alliance said the consultation undermined her independence and it would be asking parliament to remove her as Public Protector.

“The DA has, from the get go, had serious doubts as to Mkhwebane’s suitability for the vital role of Public Protector. She has confirmed these doubts,” the party said in a statement.

“NOTHING SINISTER”

Mkhwebane made the proposal to change the central bank’s mandate as she announced her findings that the apartheid government that ended in 1994 had breached the constitution by supplying Bankorp, which was bought by Absa in 1992, with a series of bailouts from 1985 to 1995.

Absa is now owned by Barclays Africa Group and Mkhwebane said the bank had to pay 1.125 billion rand ($87 million).

The central bank challenged in the High Court both recommendations - that its mandate be changed and that Absa pay the money.

While the court in August quashed Mkhwebane’s proposal to change the central bank’s mandate, the issue of the bailout is still before the court.

It is unclear why Mkhwebane included the recommendations on monetary policy at the end of an investigation into Bankorp.

However, De Jager said Mkhwebane met Zuma’s legal advisers and the State Security Agency before releasing her findings.

Mkhwebane did not disclose her meeting with the presidency on June 7 “to discuss the new remedial action in her final report”, his affidavit said, describing the her failure to do so as a “glaring omission”.

“The meeting traversed the Public Protector’s proposed remedial action to amend the constitution to deprive the Reserve Bank of its role in protecting the value of the currency,” De Jager said.

“The fact that this topic was even discussed with the State Security Agency indicates that the Public Protector’s investigation was aimed at undermining the Reserve Bank,” he said adding this showed that Mkhwebane’s recommendations had “an ulterior purpose”.

Mosana said the presidency was consulted to give all parties involved in the matter, which included the South African government that is now headed by Zuma, an opportunity be heard.

“There is nothing sinister about the Public Protector meeting the presidency because the (bailout) involved the South African government ... there is no conspiracy,” Mosana said. ($1 = 12.9471 rand) (Reporting by Olivia Kumwenda-Mtambo; Editing by Alison Williams)

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