10/07/2017 06:04 SAST | Updated 10/07/2017 06:04 SAST

Mkhwebane's Report Is 'Unconstitutional And Undemocratic', Says Parliament

Parliament has joined the Reserve Bank in taking the public protector's Absa report to court.

Mike Hutchings / Reuters
Public Protector Busisiwe Mkhwebane listens during a briefing at Parliament in Cape Town, South Africa October 19, 2016.

Public Protector Busisiwe Mkhwebane's instructions to Parliament in her report into the Absa bailout package are "unconstitutional, not a remedy, ... undemocratic", Parliament said. On Sunday, Parliament announced that it too would be opposing the report in court.

Mkhwebane recommended that Absa should pay back R1,15 billion to the fiscus, and that the Reserve Bank's mandate should be changed.

According to IOL, Parliament has joined the Reserve Bank's court application to have the report overturned. Finance minister Malusi Gigaba is also opposing the report in court, as is Absa.

The Sowetan reported on Monday that Gigaba told the court, there was no rational foundation for Mkhwebane's recommendation.

"It's not as if there's a contradiction between the protection of the currency and the necessity to address socioeconomic challenges facing the country," Gigaba said.

In June, the Reserve Bank filed its papers in court. Bank staffers told Huffington Post that Mkhwebane's office had not given the Bank a look at the final report before releasing it, as is customary.

The Reserve Bank said: "She [Mkhwebane] has ordered remedial action directing Parliament to effect a constitutional amendment to the Reserve Bank's powers. This had an immediate and negative impact on the markets and the exchange rate of the rand.

"The amendment would, if effected, strip the Reserve Bank of its key competency to protect the value of the currency and the well understood role that central banks play in securing price stability. The remedial action proposed will have a negative impact on the independence of the Reserve Bank."

Speaker of the National Assembly, Baleka Mbete filed an affidavit supporting the Reserve Bank in court on Friday.

Parliament reportedly said Mkhwebane's "order" encroaches on Parliament's domain, "negates section 74 of the Constitution which sets out the special requirements for amending the Constitution, and her amendment perverts the separation of powers.

"In addition to the remedial action set out in the public protector's order and the precise wording posited as a replacement for the current section 224 of the Constitution, the public protector added that the Reserve Bank and the chairperson of the portfolio committee must submit an action plan within 60 days on their implementation of her order," Parliamentary spokesperson Moloto Mothapo reportedly said.

According to Fin24, Mbete also says the effect of Mkhwebane's amendment would be to remove the primary objective of the Reserve Bank, which is to protect the currency.

"It does not allocate this function to anybody else. It leaves the currency unprotected."