S. Africa Anti-Graft Ombudsman Must Pay Central Bank Legal Costs

(Bloomberg) -- South Africa’s top court ruled that the nation’s anti-graft ombudsman acted in bad faith and was personally liable for a portion of the legal fees incurred by the central bank when it sought to review her findings that questioned its mandate.

Public Protector Busisiwe Mkhwebane should pay 15% of the Reserve Bank’s costs, the Constitutional Court ruled in Johannesburg on Monday, upholding an earlier finding by the High Court that Mkhwebane had appealed.

The judgment read by Sisi Khampepe is a stinging blow to the ombudsman and comes as she faces accusations of bias and challenges to various findings she has made, including against President Cyril Ramaphosa and Pravin Gordhan, the minister of public enterprises.

Ramaphosa announced Sunday he will seek an urgent judicial review of her report that found he violated the constitution and executive ethics code by misleading lawmakers about a campaign donation. Since she took over the office in 2016, Mkhwebane has been accused of bias by the High Court, and almost a third of the reports issued during her tenure are facing legal challenges.

The Constitutional Court upheld the High Court’s finding that Mkhwebane acted in bad faith and that she exceeded the bounds of her potential indemnification under the Public Protector Act, Khampepe said. Mkhwebane’s “entire model of investigation was flawed” and she was not honest about her engagements during the investigation, which included meetings with the State Security Agency, according to Monday’s ruling.

The cost order relates to a 2017 report in which Mkhwebane said Absa Group Ltd. owed the state more than 1 billion rand ($72 million) after it unduly benefited from government support when it bought Bankorp from Sanlam Ltd. after the central bank helped keep the lender afloat in the days before apartheid ended. The Public Protector also proposed changing the Reserve Bank’s inflation-targeting mandate, a bid scrapped by the High Court in August of that year.

The court ordered Mkhwebane’s office to pay Absa’s legal costs for the application and said she should cover a portion of the central bank’s expenses personally.

To contact the reporters on this story: Rene Vollgraaff in Johannesburg at rvollgraaff@bloomberg.net;Amogelang Mbatha in Johannesburg at ambatha@bloomberg.net

To contact the editors responsible for this story: Benjamin Harvey at bharvey11@bloomberg.net, Rene Vollgraaff, Gordon Bell

©2019 Bloomberg L.P.