MEDIA STATEMENT

Monday, July 10, 2017

In respect to a Report No:8 of 2017/18 on allegations of maladministration corruption,
misappropriation of public funds and failure by the South African Government to implement the CIEX
Report and to recover public funds from ABSA Bank

In her Report, the Public Protector found that an amount on R1.125 billion was an illegal gift
to Bancorp/ABSA Bank and the matter was referred to the Special Investigation Unit (SIU) to
approach the President to re-open and amend proclamation of May 1998, in order to recover
misappropriated public funds unlawfully given to Bankorp/ABSA Bank.

Subsequent to the issue of the aforesaid report, the South African Reserve Bank (SARB)
instituted an urgent High Court application to review and set aside of paragraph 7.2 of the
Report essentially dealing with the proposed amendment of the constitutional mandate of the
SARB.

Today, the Public Protector filed her Answering Affidavit in respect of SARBs Judicial Review
Application issued on 27 June 2017.

In her Answering Affidavit, the Public Protector explained the reasons for arriving at the
remedial action recommending the amendment of the Constitution. In this affidavit, the
Public Protector submitted that the mandate of SARB is narrowly stated in section 224(1) of
the Constitution, as there are central banks in other countries that have relatively multiple or
broader mandates, such as to include, as primary objects and not as consequential or
secondary objects, the promotion of full employment (job creation) and balanced economic
growth, or other socio-economic objectives. She further explain that the US central bank is

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one such example, including central banks of China, India and the United Kingdom which
has additional mandates other than just price or currency stability.

From the investigation conducted, it appeared to the Public Protector that the major
motivation for the lifeboat was the fear of a run on the banks, which could result in
adverse financial impacts and uncertainty amongst local and international investors and
depositors. It is not evident that the socio-economic well-being of South Africans, including
as regards the diversion of money that could have been used for job creation and other
socio-economic objectives featured in the assessment of whether or not the lifeboat ought
to have been extended.

In her view, such a failure to assess the other socio-economic objectives were probably
enabled, and could continue to be enabled, by the narrowly stated mandate of the SARB. If
left unchanged or reviewed, this narrowly stated mandate could continue to enable decisions
to be taken that prejudice the socio-economic interests of ordinary South Africans, including
as to the realisation of full employment or job creation. It was for this reason that the Public
Protector considered that a possible review and broadening of the SARB mandate would
provide a long-term effective remedy to possible prejudicial decisions by the SARB
underpinned by the narrowness of its mandate.

Having considered the legal advice from the Senior Counsel, which advice she accepted, the
Public Protector, Advocate Busisiwe Mkhwebane has decided not to oppose SARBs
review application.

Issued by:

Ms Cleopatra Mosana
Spokesperson
Public Protector South Africa
Cell: 072 321 7585
Tel: 012 366 7006
Email: cleopatram@pprotect.org