Business leaders should be freed from the pressure of always having to outperform or kill competition, writes Victor Kgomoeswana.
The currency manipulation drama is making high-amplitude waves earlier than I thought.
Last Sunday, I guesstimated that a slew of protests and settlements would follow the findings by the Competition Commission that several banks had colluded to manipulate the rand-dollar exchange rate since 2007.
Little did I anticipate Citibank’s R70-million olive branch within 24 hours with more to come, including
an apology by the Barclays Africa Group.
The longer the queue gets of guilty multinationals into the confessional, the more I wonder: can any big multinational confidently deny ever being part of any cartel?
I doubt that very much.
This case of collusion by banks is not the first impropriety in financial services sector in the build-up to the 2008 credit crunch. JP Morgan Chase owned or financed five firms that collectively issued more than $295 billion in sub-prime loans around the same time.
UBS trader Thomas Alexander William Hayes was convicted of transgressions linked with the London Interbank Offered Rate (Libor) scandal in the second half of 2015.
Hayes could not have acted alone, though.
Libor is said to be the bedrock of $350 trillion in derivatives. This happened because several major banks of the world were submitting false interest rates, thus misleading the public and regulators about their creditworthiness.
Intriguing, is it not, considering that banks’ core business is lending, which allows them to pronounce on the creditworthiness of all of us?
Yet we all bow before London, as the seat of the global financial empire - which just happened to have been duped into calculating its interbank interest rate based on lies.
Flip the page, and you find cartels to fix the price of bread, among others, involving the likes of Tiger Brands.
In Mexico, a subsidiary of Coca-Cola and 15 distributors were fined $20m for allegedly trying to bully a 49-year old shopkeeper, Raquel Chavez, in 2005.
The story goes that the multinational wanted Chavez to take rival brands off her shelves or risk losing its promotional fridges.
When she refused, they threatened to stop supplying her with Coca-Cola products. She called the regulators and won.
Back in South Africa, the big five construction industry players are announcing practical details in reparation for their collusive behaviour in the building of the 2010 Fifa World Cup venues.
All these and more are decent businesses; probably run by decent people, in the main.
However, some of their employees or managers abuse their positions
to manipulate authorities, cut corners instead of complying with what is
supposed to be free enterprise,
where the consumers have the
right to choose.
Pricing is determined by demand, and competing suppliers fight fairly to win their patronage.
This competition, adherents of the free market system tell us, is good for the consumer who stands to pay less. Somehow, in the real world, those who are supposed to compete elect to collude, resulting in prices being fixed higher than they would be if there were no cartels.
It is easy and tempting to poke fun at those guilty of collusion.
However, a closer look at the varied array of culprits across industries
and geographies indicates that it
is a matter of when the next scandal breaks out; and no one can boldly declare that they will not be implicated.
Beyond the fines and the settlement discussions lies a deeper discussion. It is time we measured business success differently.
Unlike sportspeople, whose victory comes only when the other one loses, it is wiser to free business leaders from the pressure of always having to outperform or kill competition.
We should reward sustainable - not maximum - profits. This possibly explains banks hiring arts graduates; or why MTN recently employed an engineer - not a chartered accountant - as chief financial officer.
Risk management no longer means the possibility of debtors not paying us. It is the possibility of creditors emerging where we least expected them to. Things truly ain’t what they used to be; neither should we.
Wait a minute, Barclays Africa Group - is an apology all we get?
*Kgomoeswana is author of Africa is Open for Business. He is also a media commentator and public speaker on African business affairs. He writes a weekly column for African Independent - @VictorAfrica
** The views expressed here