EDITORIAL: Bankorp case will define limits of protector’s power
Just as the Nkandla case served to clarify what the public protector has the power to do, so the Absa/Bankorp case will, we trust, make crystal-clear what she cannot do — which is to amend SA’s Constitution.
The Reserve Bank and Absa are launching court challenges to Public Protector Busisiwe Mkhwebane’s Absa/Bankorp report, with its outlandish and dangerous recommendation that Parliament amend the mandate of the Bank — a mandate set out in the Constitution.
Parliament itself has now announced its intention to also take the report on judicial review on the grounds that Mkhwebane’s recommendation usurps Parliament’s powers under the Constitution.
It is an unusual move by Parliament, but a welcome and essential one. It shows yet again that SA’s legislators are starting to find their voice and exercise their oversight power. It shows too that for all the state capture and erosion of institutions, SA still has institutions — Parliament included — capable of standing up to the predations of those who apparently care little about inflation and the damage it does to poor people.
The Bank’s core, constitutional mandate is to "protect the value of the currency in the interests of balanced and sustainable growth". That mandate is common to almost all the world’s central banks. Whether the instrument they use is inflation targeting, as SA does, or some other mechanism, the aim is the same: to hold on to the value of the rands or dollars or ringgit in people’s pockets so they don’t find their buying power eroded and so economies don’t suffer the negative consequences of prices that spiral out of control.
In her report on the "lifeboat" with which the Bank bailed out ailing Bankorp in the 1980s, Mkhwebane concludes that the Bank’s price stability mandate should be deleted and that the Bank should, instead, be charged with looking after the welfare of South Africans — as if the Bank wasn’t doing just that already.
This is scary stuff — even more so because the only apparent justification for it in the report is an outpouring of ideological commentary about how SA should really just have a state bank creating money, not all these pesky private-sector banks that the central bank might occasionally be tempted to bail out to preserve the stability of the financial system.
Whose agenda Mkhwebane might be serving with her findings is not clear. But the tone of her report and recommendations cannot be good for the credibility of an office Mkhwebane’s predecessors built into an independent and highly regarded institution — one that provided essential checks and balances on the rising tide of corruption and capture that has eroded SA’s political and economic fabric in recent years.
A key issue now for Parliament is that the public protector’s recommendations on remedial action are binding, as a result of the 2016 court ruling on the Nkandla matter, which found that President Jacob Zuma had to pay back the money, as then public protector Thuli Madonsela had recommended.
That presents Parliament with a problem: Mkhwebane’s binding remedial action would usurp its powers under the Constitution, which empowers Parliament to control its own internal arrangements, proceedings and procedures.
Parliament is standing up for its constitutional rights. So too is the Bank, which has also been advised that the remedial action falls outside the public protector’s powers and is unlawful.
All of which is not good for the credibility of the public protector as an institution — but should give us hope and faith that at least we have other robust institutions to defend the Constitution and economy.