The Banking Association of South Africa (Basa) said on Tuesday that the Public Protector has erred in making comments and recommendations about the Constitutional mandate of the Reserve Bank.
This comes after Public Protector Busisiwe Mkhwebane on Monday ordered remedial action directing Parliament to effect a Constitutional amendment to the powers of the South African Reserve Bank (Sarb), from targeting inflation to promoting economic growth.
Reacting to this, Basa managing director Cas Coovadia said Mkhwebane’s comments relating to the mandate of the Sarb were particularly alarming.
Coovadia said in a statement that the role and independence of the Sarb was critical in maintaining what little certainty remains in South Africa’s already fragile economy.
“In our view, the Public Protector has erred in making comments and recommendations about the Constitutional mandate of the Reserve Bank and its relationship with National Treasury,” Coovadia said.
“It is not the role of the Public Protector to pronounce on these matters. In her eagerness to demonstrate her independence and bare her teeth, she has gone too far.”
Mkhwebane criticised Sarb for failing to recover R1.125-billion from Bankorp Limited/ABSA Bank which was advanced as an “illegal gift” to the Bankorp group, which was bought by ABSA in the early 1990s.
She released a report on the alleged failure to recover “misappropriated funds” in the erstwhile Bankorp lifeboat investigation.
Mkhwebane’s recommended remedial action had an immediate and negative impact on the markets and the exchange rate of the rand.
Coovadia urged Parliament to confirm the independence of the Sarb and assure the public and investor community that this critical institution will not be compromised.
“The Sarb sits at the apex of a banking system that is highly regarded globally and we must do everything in our power not to cast doubt on a system that has served our country very well during difficult times, including the global financial crisis,” Coovadia said.
“We need to focus our attention on measures necessary to get the country out of junk status and the comments of the Public Protector are as regrettable as they are irresponsible as they distract our attention from this important task.”
Sarb said it would seek an urgent court review to have the Public Protector’s remedial action set aside.
Sarb said it had consulted its legal team and had been advised that the remedial action prescribed by the Public Protector falls outside her powers and is unlawful.