Public Protector Busisiwe Mkhwebane failed to warn the SA Reserve Bank of the seismic contents of the so-called Ciex report into soft loans paid to Bankorp which became part of Absa.
Bank staff told HuffPost SA on Thursday they were taken aback when Mkhwebane released the report at a press conference on Monday without the courtesy of sending it to them first. The central bank received the reports hours afterward.
Complainants and implicated parties, whether in court judgments or Chapter 9 institution reports, get first sight of reports as a courtesy.
In interviews that formed part of the investigation at the Reserve Bank, the central bank team had asked Mkhwebane to give them sufficient notice of at least 10 days if her report contained market sensitive information and recommendations.
"This was completely disregarded," said a bank official, adding this is "extremely mischievous".
Mkhwebane's report recommends that parliament amend the Constitution to change the Bank's mandate from protecting the value of the Rand to the following clause: "The primary object of the South African Reserve Bank is to promote balanced and sustainable economic growth in the Republic, while ensuring that the socio-economic well-being of the citizens are protected."
The bank will seek an urgent review of the Public Protector's recommendations in the next week and a half, said a Bank representative, adding they found it a "crude and unsophisticated" report. In addition, it will also oppose the findings of the report in separate legal action.
In a statement, the Reserve Bank said: "She [Mkhwebane] has ordered remedial action directing Parliament to effect a constitutional amendment to the Reserve Bank's powers. This had an immediate and negative impact on the markets and the exchange rate of the Rand.
"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."
Price stability protects the poor and working class by shielding from run-away prices and shielding the value of earnings. Rich people are often insulated from inflation.
Markets reacted swiftly and the Rand took a beating after the Public Protector's report was released on Monday. In addition, all three agencies -- Fitch, S&P and Moody's -- warned that any attempt to interfere with the independence of the Reserve Bank would harm South Africa's credit rating.
The country is skirting at triple junk status. Only Moody's has not downgraded South Africa to sub-investment grade rating, although it is on review.
Mkhwebane attached a copy of her letter to SA Reserve Bank governor Lesetja Kganyago in her response to Huffington Post. She added: "The Public Protector discharged her constitutional mandate and cannot comment on how the market react or what caused the market to react.
"In terms of the principles of administrative law once the Public Protector discharged her mandate she became"functus officio" and she cannot revisit her decision."