The South African Reserve Bank (Sarb) said on Tuesday that the Public Protector had no powers to direct Parliament to effect a Constitutional amendment to the powers of the Reserve Bank, saying that it would challenge her findings.

This comes after Public Protector Busisiwe Mkhwebane on Monday criticised Sarb for failing to recover more than R1-billion from Bankorp Limited/Absa Bank which was advanced as an “illegal gift” to the Bankorp group, which was bought by Absa in the early 1990s.

Mkhwebane released a report on the alleged failure to recover “misappropriated funds” in the erstwhile Bankorp lifeboat investigation.

She referred the matter to the Special Investigating Unit, which must in turn approach President Jacob Zuma to reopen the presidential proclamation R47 of 1998 “in order to recover the misappropriated public funds unlawfully given to Absa Bank in the amount of R1.125-billion”.

She further ordered remedial action directing Parliament to effect a constitutional amendment to the Reserve Bank’s powers.

Mkhwebane’s recommended remedial action had an immediate and negative impact on the markets and the exchange rate of the rand.

In a statement on Tuesday, Sarb said the amendment would, if effected, strip the 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.

Sarb said the remedial action proposed would have a negative impact on its independence.

“The Reserve Bank has consulted its legal team and has been advised that the remedial action prescribed by the Public Protector falls outside her powers and is unlawful,” Sarb said.

“The Reserve Bank has been advised to bring urgent review proceedings to have the remedial action set aside. The Reserve Bank has resolved to do so.”

Sarb said it would address its other concerns with the report and “evidential factual inaccuracies” therein, at the appropriate time. The bank said it acted in terms of its constitutional mandate in the interests of the welfare of all South Africans.