THE Minister in the Presidency Khumbudzo Ntshavheni suggested recently that the manipulation of the rand was part of the private sector’s attempt to collapse the government.
This statement came after the Competition Tribunal announced a settlement agreement with Standard Chartered, which admitted liability and agreed to pay an administrative penalty of R42.7 million.
There have been calls for tougher consequences against the banking institutions involved in the collusion.
Notably, this is not the first time that allegations of collusion by the banks have been raised, as Sekunjalo Investment Holding (Sekunjalo) also took the banks to the Competition Tribunal over allegations of collusion and abuse of dominance.
In its ruling, the tribunal found that the Sekunjalo Group had established prima facie evidence that the banks had engaged in a practice involving a concerted refusal to supply banking services to the Sekunjalo Group amounting to a restrictive horizontal practice in terms of section 4(1)(a) of the Competition Act.
This ruling was, however, appealed at the Competition Appeals Court (CAC), by Standard Bank and Mercantile Bank. And the CAC ruled on a technicality. The matter is now set to be heard at the Constitutional Court.
Sekunjalo has stated several times that the action of the banks is a concerted effort to shut down the company, largely because it owns a media house that gives an alternative view to that of the other media, which generally writes on the side of the current administration.
In September last year, Saftu national spokesperson Trevor Shaku said the banks were implicated in manipulating the rand/US dollar pairing in the foreign exchange market between 2007 and 2013. “If they want to close the Sekunjalo Group accounts, then the South African Reserve Bank must also close their accounts.”
A former operator of a now-defunct Johannesburg-based multimillion-rand aircraft company also shared his own experience of what it is like to have his business run to the ground by banks that allegedly colluded to deceive him and destroy his legacy.
Bret Lang accused five banks, Nedbank, Standard Bank, ABSA, WesBank, and Investec, of having committed racketeering by allegedly orchestrating the collapse of his R600 million-worth business 14 years ago.
If charged and prosecuted successfully, according to Lang, the banks might be fined R1 billion or their senior managers sentenced to life imprisonment.
If the private sector, which is dominated by a privileged minority, can collude to collapse the government, then collapsing a company could be a walk in the park for them. This is the unfortunate truth because they don’t care about the number of livelihoods they will destroy.
Makgale Mohlala, head of cartels at the Competition Commission, said in an interview with the SABC that between 2007 and 2013, 28 banks engaged in the manipulation of the rand and US dollar currency pair.
The manipulation involved fixing bid-offer spreads and spot trades. Mohlala clarified that the collusion occurred through chat rooms where traders communicated and executed strategies. He further emphasised the importance of dismantling the cartel.
How the cartel was run:
- Nature of Collusion:
- Communication Through Chat Rooms:
- Agreement on Currency Values:
- Profit Maximisation:
- Chat Room Evidence:
- Whistleblower's Role:
- Settlements and Penalties:
- Remaining Banks and Legal Proceedings:
sizwe.dlamini@inl.co.za