I am intrigued: South Africa’s minister of finance, Pravin Gordhan, doesn’t know how much the country’s taxpayers contribute to being downgraded to a possible “junk status”.
“Minister Gordhan, how much does it cost South Africa to be rated?”, I asked Gordhan moments after he delivered the interim budget speech on October 30 in Parliament.
“I don’t know, ask my assistant.”
I asked her. “I don’t know,” she replied. “Post your question to our media department.”
Now more eager than ever to get an answer, I turned to Trevor Manuel, the former minister of finance, accompanied by his wife, Maria Ramos, posing the very same question.
“I don’t know, ask Pravin,” Manuel replied. “And so by the way, why do you ask, does it matter?”
Yes, Mr Manuel, it does.
I requested my colleague, Wiseman Khuzwayo, to follow up after the famous medium-term speech. No reply from the Treasury at the time of going to print.
As editor, I also followed up and spoke to Ntsakisi Maswanganyi from the Treasury’s communication unit, who told me she was “aware of the request, but somebody will come back to me”.
I told her I was working on a deadline. By the time of going to press, nobody came back to me, or my colleague, Wiseman.
The good, the bad, or the ugly?
Who is S&P Global Ratings? Research shows the following:
* David Wyss, the chief economist at S&P until July 2011, noted to a reporter on August 17, 2011: “The credit agencies don’t know any more about government budgets than the guy in the street who is reading the newspaper.”
* The Securities Exchange Commission is investigating whether an intent to downgrade the US by S&P was leaked prior to the public announcement, since the stock market fell sharply for no apparent reason a day earlier, fed by rumours of an impending downgrade.
* In 2015, S&P paid $1.5 billion to the US Justice Department, various state governments, and the California Public Employees’ Retirement System to settle lawsuits alleging its inaccurate ratings defrauded investors.
* S&P acknowledged making a $2 trillion error in its justification for downgrading the credit rating of the US in 2011, but stated that it “had no impact on the rating decision”.
* “A judgment flawed by a $2trln error speaks for itself,” said a spokesman for the US Department of the Treasury.
Dear readers, there are more of these. Just google S&P. Worse is yet to come.
Who is S&P, and can we allow an institution with “a proud history of more than 150 years” to dictate our future, while enriching itself?
Interesting is that S&P owns the S&P Dow Jones indices, the world’s largest, global resource for index-based concepts, data and research.
“We cover 99 percent of the world’s total market capitalisation and harness 135 billion data points a year.
“We aspire to be more than a financial intelligence provider. We want to be a catalyst for growth, transparency and value creation in the global capital markets.”
And: S&P Global recently reported third quarter 2016 results with revenue of $1.44bn, an increase of 9 percent compared with the same period last year. Net income and diluted earnings per share were $892 million and $3.36m, respectively, which included a pre-tax gain of $722m from the sale of JD Power.
On Thursday, April 28, 2016, S&P Global’s common stock began trading under its new stock symbol SPGI. The company’s common stock has traded on the New York Stock Exchange (NYSE) since 1929.
The point is S&P dominates the world financial markets in times when most or all financial information about companies and countries is easily available.
Having had a global footprint for more than 150 years, S&P became the “leading rating agency”, dictating the future of countries, while making millions as a listed company on the NYSE.
Financial scam
Is this insider trading, front running, or simply the world’s biggest financial scam of all time?
The Wolves of Wall Street right on our doorstep.
And we shiver about “state capture” Mr Gordhan? Junk status, for this country and we are paying for it?
As the editor of Business Report, I kindly request: Can we see an S&P face please? A name. A person. Or is this just another “amorphous market” we need to deal with?
* Adri Senekal de Wet is the editor of Business Report.
BUSINESS REPORT