15/08/2017 12:53 SAST | Updated 15/08/2017 12:56 SAST

Public Protector's Image Takes A Hammering After Court Overrules Her Bid To Change Reserve Bank's Mandate

Critics have said Busisiwe Mkhwebane showed "unbelievable ignorance" and should resign.

Public Protector Busisiwe Mkhwebane.
Foto24 via Getty Images
Public Protector Busisiwe Mkhwebane.

The South African Reserve Bank (SARB) has won its court bid to overturn Public Protector Busisiwe Mkhwebane's recommendation that the Constitution be amended to change its mandate.

The judgment was delivered in the North Gauteng High Court on Tuesday following the SARB's application on August 1, reported Fin24.

Her recommendation was contained in a report into an apartheid-era loan from Sarb to Bankorp between 1985 and 1995, which Absa bought in 1992.

She recommended that Parliament considered amending the constitutional clause that seeks to protect the rand from inflation, from: "The primary object of the South African Reserve Bank is to protect the value of the currency in the interest of balanced and sustainable economic growth in the Republic" to: "The primary object of the Sarb is to promote balanced and sustainable economic growth in the Republic, while ensuring that the socio-economic well-being of the citizens are protected."

It provoked an outcry from the SARB, as well as Finance Minister Malusi Gigaba and Deputy President Cyril Ramaphosa, who said she did not have the powers to tamper with the Constitution or the independence of the SARB.

The reserve bank objected to her recommendation on several grounds, including that it fell outside her powers and that the remedial action breached the separation of powers because it encroached on Parliament's domain.

Mkhwebane previously told HuffPost SA that she was within her rights to recommend the remedial action to amend the Constitution.

Her office said: "The public protector is empowered, by section 182(1)(c) of the Constitution, to take appropriate remedial action with regard to any improper conduct in the state affairs or conduct in the state affairs which may result in any impropriety or prejudice."

"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," the Sarb said.

During the hearing David Unterhalter SC argued that the Public Protector misunderstood the role of the Reserve Bank. "The Public Protector has simply failed to appreciate the true role of the Reserve Bank and why it plays a critical role in maintaining financial stability and why it is critical to the economic welfare of South Africans," he said.

Corruption Watch's David Lewis previously told HuffPost SA that Mkhwebane's recommendation was an embarrassment to her office.

"At the minimum, you would expect her [Mkhwebane] to understand constitutional law. She has demonstrated a lack of understanding and caused a lot of anxiety," Lewis said.

"Frankly, [the decision] was an embarrassment to the office of the public protector by making decisions that everybody, and firstly her as a law student, should know would not stand up in court."

Mkhwebane also wants the government to recover more than R1 billion in alleged misappropriated public funds awarded to Absa in a series of apartheid-era bailouts.