The curious case(s) of Mkhwebane and the Reserve Bank
The Reserve Bank has been given a glimpse into the rabbit hole that is the office of the public protector
Public protector Busisiwe Mkhwebane is looking into eight cases involving the Reserve Bank. They range from seemingly spurious complaints to the downright bizarre accusation that the Bank was engaged in, or ignored, money laundering in the placement of bonds in the late 1990s and early 2000s.
Finance minister Tito Mboweni was the governor of the Bank from 1999 to 2009.
What is not on the list is almost more interesting. Speculation has been rife that Mkhwebane is probing the way the Bank conducts monetary policy and why it hasn’t granted more licences to black bankers.
In her 2017 Absa-Bankorp ruling, Mkhwebane attempted to force the Bank — which critics say should cut the repo rate more aggressively to support the economy — to add the promotion of economic growth to its primary role of targeting inflation.
The courts rejected the report, but the underlying policy issue — whether the Bank is too hawkish — remains pertinent. Economists fear that the Bank, which is constrained by rising fiscal and ratings risks, could come under intense pressure to cut rates this year.
But fears of renewed calls for a mandate change at the ANC’s midyear national general council were largely assuaged at the weekend, when the ANC reaffirmed the Bank’s role, mandate and independence in its annual policy statement.
Yet none of this appears on Mkhwebane’s immediate radar, judging from the list of investigations she is considering. They include:
• A request from J Koorbanally in November 2019 that she "investigate alleged money laundering regarding the reissuing and placements of bonds in 1996, 1997 and 1998 and the splits done in 2001, 2002 and 2003 by the SA Reserve Bank and the banking sector". This complaint is still being assessed, says Mkhwebane’s spokesperson, Oupa Segalwe.
Jeff Koorbanally, who refers to himself as a forensic financial auditor, has publicly accused the Bank of "state capture, sabotage and economic terrorism" relating to the Absa-Bankorp saga. Online, he relies partly on the discredited Ciex investigation upon which Mkhwebane based her report into the issue, which was overturned by the courts.
• A 2016 complaint by Z Tolosi that the Bank had failed to issue a report regarding a 2015 probe into property syndicates running illegal property auctions.
• Allegations of alleged bias and "victimisation" against a Dr E Ndou, who complained in 2019 that the Bank’s grievance process had failed to address his concerns.
• A 2015 allegation that the Bank had unreasonably denied business to R Olivier’s banknote security printing company and a 2018 complaint that the Bank had prejudiced him by placing his picture at its entrance.
• A 2013 complaint from D Pienaar relating to delayed feedback from the Bank about questions relating to the Spitskop investment scheme that the Bank had declared illegal.
• A 2012 request by K Lethoko for an investigation into the alleged failure by the Bank to protect investors in the Spitskop scheme.
• A request from Selby Mokgotho, the CEO of VBS Mutual Bank from 1999 to 2004, to investigate the role of the Bank in the liquidation of VBS.
All the complaints originate from private citizens, notes Segalwe. "Claims and insinuations that the public protector is targeting the Reserve Bank are therefore unfounded."
He points out that in 2018/2019 Mkhwebane entertained more than 1,200 complaints against the department of home affairs, 455 against the department of justice & correctional services and 291 against the police. As the Bank is an organ of state like any other, investigations into it "should not raise eyebrows", he adds.
But what has raised eyebrows is Mkhwebane’s contention that the Bank is not co-operating with her VBS probe.
And of the eight cases, the Bank has only been apprised of the VBS and 2015 Olivier investigations, which it has addressed properly with her and for which it is awaiting her response, says Bank spokesperson Thoraya Pandy.
Though the Bank is aware of the Ndou allegations, it has no record of Mkhwebane having referred the matter to it. It also has no knowledge of her investigations into any of the remaining matters.
"The Bank has always fully co-operated with the public protector and assisted her in her investigations, notwithstanding whether they appear to be curious, spurious, strange or otherwise," says Pandy. "It cannot, however, address investigations of which it is unaware, or which have not been referred to it."
On the VBS matter, Ghalib Galant, co-ordinator of access-to-information NGO Right2Know, says the premature commentary by Mkhwebane about an ongoing investigation and the conduct of the party being investigated "calls into question the integrity of the process and undermines faith" in her office.
Wits University adjunct professor Michael Sachs thinks Mkhwebane’s conduct is undermining both her office and the Bank. He nevertheless feels "there is no credible threat".
"[Mkhwebane] is puny compared to the Bank," says Sachs, who raises the issue of her competence (she’s been found in court to be "inept").
"The Bank is in a very strong position with very strong leadership, and its independence is guaranteed in the constitution. It won’t collapse in a heap."