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Bankorp report: 'Mkhwebane a source of instability in financial system'

This was among the arguments heard on day two of the Reserve Bank, Absa and Treasury’s review of advocate Busisiwe Mkhwebane’s report on the apartheid-era Bankorp bailout.

 FILE: The Public Protector Busisiwe Mkhwebane. Picture: Thomas Holder/EWN.

PRETORIA - The Public Protector has been accused of failing to appreciate the role of the Reserve Bank as a lender of last resort and stepping outside of her competence when making findings related to the central bank's role.

This was among the arguments heard on day two of the Reserve Bank, Absa and Treasury’s review of advocate Busisiwe Mkhwebane’s report on the apartheid-era Bankorp bailout.

Mkhwebane found that Absa unduly benefited from a bailout and ordered the bank to pay back more than a billion rand.

Advocate David Unterhalter referred to the international practice of the central bank’s intervening to ensure the stability of financial systems.

“She has ventured views that are simply inconsistent with the Constitution and the separation of powers which is the important responsibility that the Reserve Bank has to discharge its function to secure financial stability as a lender of last resort.”

He says Mkhwebane never questioned the consequences of her remedial action.

“By calling into question this fundamental role of the Reserve Bank as a lender of last resort she has been a source of instability in the financial system.”

The Public Protector has also been accused of misleading the High Court and lying under oath by not disclosing the full details of her meeting with the Presidency.

The Reserve Bank is seeking a declaratory order against Mkhwebane for abusing her office and breaching the constitution.

Unterhalter identified discrepancies in Mkhwebane’s affidavit and notes she took of her meeting with the Presidency.

“The Public Protector has misled the court. No one can make false statements before a court on oath. And in our submission, the Public Protector has done so. Those false and misleading statements arise from the treatment that the Public Protector has given to her meetings with the President.”