Reserve Bank accuses Public Protector of dishonesty – pity her lawyers
- Pierre de Vos
- 29 Nov 2017 (South Africa)
Apart from the unlawful instruction to Parliament to amend the Constitution in order to change the mandate of the SARB, the Public Protector’s bombshell report on the Bankorp “lifeboat” is in many other respects a truly odd “legal” document: as if a Media Studies student wrote the Constitutional Law exam but did not notice that he was not writing the Media Studies paper.
For example, in her attempt to be seen to go after one of the banks (who happened to have closed various Gupta-linked accounts), the Public Protector was faced with a rather serious legal problem. What was to be done about the Prescription Act, which states that any debt owed to the state that arises from a loan prescribes after 15 years?
After all, in terms of the Act any debt that might arguably have been owed by Absa due to the “lifeboat” had expired several years ago and could thus not be recuperated. Not by the Special Investigating Unit (SIU), by the Hawks – or even by the Easter Bunny.
Not to worry. The Public Protector had a plan. She quoted an opinion from the Law Reform commission to declare the provisions of the Act unjust, before concluding that this meant she could ignore the law when imposing remedial action to order the recovery of the (legally non-existent) debt.
(For the trolls taking a minute out from cheering on Sipho Seepe’s “analysis” on ANN7: do not be confused. I am making no claim about whether ABSA benefited from the apartheid-era loan – which was clearly immoral and may also have been illegal. Nor am I disagreeing that it would be swell if those who benefited paid back the loan. I am merely pointing out that if there was such a debt, it had prescribed and it cannot legally be recovered.)
To use a slightly absurd example, the Public Protector’s move to get around the thorny issue of prescription was a bit like a politician who assaults his partner, then argues that he was legally entitled to do so and did not commit a crime by quoting a verse from the old testament of the Christian Bible or the lyrics of a rap song.
In its replying affidavit, the SARB picks up on this point, noting – in a delightfully understated way – that the Public Protector had originally advanced a “legally flawed rationale” to nullify the operation of the Prescription Act, before making the obvious point that:
“No one is above the law. The Public Protector, like any other organ of state, is required to work within the law. She is not empowered to impose remedial action that is inconsistent with the law.”
But the SARB also notes that in her most recent replying affidavit the Public Protector has now invented an entirely new argument to justify her flouting the Prescription Act. She now says that her remedial action never required the recovery of the debt from ABSA or others, but merely aimed to “advise and inform the state of the available remedies available” to it.
This, as the SARB points out, misconstrues what she originally ordered. Put differently, she is now attempting to mislead the court about what she had originally ordered in her report. In the original report, she instructed the SIU to approach the president to reopen its investigation to recover the funds from ABSA. She also instructed the SARB to co-operate with the SIU “in recovery of the misappropriated public funds”.
As the SARB also points out, it would in any event be irrational (I believe the colloquial word for it is dof) to instruct the SIU to start a process to recover funds which it was not legally entitled to recover as the debt had prescribed.
There are several other aspects of the original report (as well as of her legal responses to the review application) that suggest her lawyers may well have somewhat of a torrid time when they appear before the court for oral argument.
Some problems arise from the lack of candour displayed by the Public Protector in her report and during the litigating process.
For example, she did not disclose in her original report that she had two meetings with the Presidency after all the parties (including the president) had been invited (and had indeed responded) to the remedial action imposed in the preliminary report.
This is odd as the final report contains an entire section in which all the parties whom she consulted are supposedly listed. She also failed to make a transcript of these meetings when it is routine practice within her office to record interviews.
In his original response to the draft report, the president confirmed that the proposed remedial action contained in it left it to his discretion to appoint a Commission of Inquiry. The wording of the draft report also confirmed that that there was a recommendation – but no instruction – to the president to appoint a Commission of Inquiry.
However, when it came to light that the Public Protector had twice met with the Presidency after all the parties had already commented on the draft report (the second meeting only came to light in the Public Protector’s responding affidavit and was improperly not disclosed before), the Public Protector claimed in her papers that “from the discussion during our meeting” she concluded that directing the president to appoint a Commission of Inquiry would run into the same difficulties as the remedial action imposed by her predecessor in the State of Capture report.
The problem with this claim is that it is false. The draft remedial action did NOT direct the president to appoint a Commission of Inquiry. It required the president to “consider appointing a commission of inquiry”. As the SARB thus points out in its responding affidavit, it is difficult to see how the Public Protector could have followed a fair process, given that she met twice with the Presidency (in secret) after changing the remedial action in her report, but did not meet with any of the affected parties. (It is not helpful that she at first misled the applicants – and the court – by not disclosing the fact that these meetings had ever occurred.)
The SARB argues that this, on its own, shows that the entire investigation was done in bad faith. The SARB also claims that the Public Protector was neither candid nor forthright in her legal papers.
“She is required to be frank and candid with the court and to explain her conduct in a transparent manner. Ms [sic – yes lawyers can be bitchy] Mkhwebane has not done so. She has failed meaningfully to address the very serious accusations against her that she is biased against the Reserve Bank and pursued an ulterior purpose in her investigation.”
In conclusion, the SARB argues that the Public Protector’s conduct deserves serious censure as she had not been honest. She had failed to produce a complete record of her proceeding. Moreover, according to the SARB, she had made false statements in her affidavit.
These are serious allegations. If true, it would mean that the Public Protector had flouted her constitutional obligation (in terms of section 181(2) of the Constitution) to exercise her powers and perform her functions without fear, favour or prejudice. If true it would mean that she had been both incompetent and dishonest and had acted improperly to advance the interests of specific politicians, individuals, private companies, or families (living in South Africa, Dubai or elsewhere).
If true, it would obviously warrant (no, require) her removal from office. This means that for the Public Protector the stakes in this review application are extremely high. If the court confirms that she is dishonest and biased, at best (for her) her credibility would have been destroyed and at worst (for her), she would lose her job and be disgraced.
So, pity the lawyers who will have to argue the case on her behalf. They will have to contend with serious allegations that their client is incompetent and dishonest and would have to do this in the face of considerable evidence to the contrary. It would not be surprising if, during the oral hearing, her advocate finds him or herself in an impossible position. Don’t be surprised if her lawyer becomes as flustered and incoherent as a Tim Noakes acolyte at a grain auction. DM
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