The South African Reserve Bank Amendment Bill, approved by the nation’s Cabinet, will ensure the bank’s "independence is not tampered with," Gordhan told reporters in Pretoria today. It responds to concerns "about the manner in which certain private shareholders are conducting themselves."
Shareholder Michael Duerr clashed last year with former central bank Governor Tito Mboweni at a meeting to which a barefoot Duerr came dressed in traditional Bavarian shorts called lederhosen and demanded to discuss the bank’s annual financial statements. At the same meeting, shareholder Mario Pretorius accused Mboweni of making a racist comment, a claim the South African Press Association reported was dismissed by the Equality Court in March.
Duerr, a German national, and Pretorius have been pushing for the bank to increase its dividends, a call that has been rejected by bank Governor Gill Marcus. The Reserve Bank is one of nine central banks around the world that have private investors, who are allowed to own a maximum of 10,000 shares that entitle them to 50 votes at annual general meetings. They receive a fixed dividend of 10 cents a share.
‘Laughable’
Complaints that shareholders are compromising the bank’s independence are "laughable," Pretorius said by telephone from Pretoria. "If Mr. Gordhan wants to change the laws, I’m bound by them. While the law stands, I have rights and obligations as a shareholder." The bank pays out 2 million rand ($270,000) a year in dividends, which it hasn’t increased to account for inflation, Pretorius said. Marcus said in a letter to central bank’s investors last month that some shareholders are acting against the national interest by trying to profit from holding stock.
"Certain shareholders might be circumventing the law and accumulating" shares "to improperly influence decision making at annual general meetings and improperly interfere in operations of the bank itself," Gordhan said. The legislative changes will prevent shareholders from controlling voting rights through relatives and close associates, he said.
Court Challenge
Duerr said any bid to undermine shareholders’ rights would be challenged in court.
"They lost it with this case," he said in a telephone interview. "This is in stark contravention to international investment treaties and international law. We won’t take this."
Gordhan also announced plans to increase the size of the bank’s board to 15 from 14 members and to raise the number of members it appoints to four from three.
The new law will give the president the power to reappoint the bank’s governor and deputy governors for periods of less than five years and establishes a panel that will vet appointments to the board, Gordhan said.
The government plans a more comprehensive review of the overall legislative framework within which the central bank operates, which will be completed within three to six months, Gordhan said.
Laws currently regulating the central bank, which was established in 1921, date back to 1989. The public have until May 17 to comment on the new legislation, following which it will be submitted to Parliament for approval.
