ICYMI: 'Banksters' must do time, says whistle-blower

Kevin Wakeford File picture: Independent Media

Kevin Wakeford File picture: Independent Media

Published Feb 19, 2017

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Cape Town – The man who blew the whistle on currency manipulation 15 years ago and was widely condemned in financial circles for it, wants the banks implicated in a Competition Commission report on collusion to be criminally prosecuted. The Black Management Forum (BMF) has also indicated their support for criminal prosecution as has Parliament’s standing committee on finance.

Kevin Wakeford told Independent Media that fines would not be sufficient against those involved.

He said only a criminal prosecution would be sufficient.

In the commission’s report three local banks, Absa, Standard Bank and Investec, have been implicated while some of the international names include the Bank of America Merrill Lynch, JPMorgan, BNP Paribas, the Credit Suisse Group, HSBC Holdings and Nomura Holdings.

Asked whether he was vindicated by the Competition Commission’s report into collusion against the 17 major banks, Wakeford said this was about ensuring there was justice.

“At the end of the day it’s not about my vindication but ensuring there is economic justice,” he said.

He said if the banks were found guilty by the Competition Tribunal, it would be a game changer in how banks behaved.

“In this case there should be criminal prosecution, not just fines. The fines are paid with shareholder money. If you commit fraud, any form of market unfairness, you need to be brought to book and put behind bars,” he said.

Allegations of manipulation in the currency markets involving the rand are not new.

In 2001, when the rand plummeted from R7.60 to R13.84 to the dollar, Wakeford, who was the South African Chamber of Business (Sacob) chief executive, blew the whistle and accused the private sector of involvement.

Then-president Thabo Mbeki set up the Rand Commission to investigate. However, it was shut prematurely and Wakeford was fired by Sacob. Investigative journalist and author Barry Sergeant would later write a book, The Assault on the Rand’ based on Wakeford’s accounts,which was published in 2013.

Sergeant died on February 4, 11 days before the collusion report was released. President Jacob Zuma has called for tough action against the banks implicated in the commission’s report and cabinet ministers have urged similar action.

The Treasury has described the conduct of the banks as “unbridled greed”, and also called for action.

The ANC and other parties in the opposition want action.

In 2015, UK and US authorities fined several banks a combined $5.6 billion (R73bn) for collusion.

Zuma told the Assembly during the State of the Nation address last Thursday that a law dealing with collusion had come into effect in May.

The law provides for criminal prosecution of the parties involved and jail sentences of up to 10 years.The BMF congratulated the Competition Commission.

“The BMF is of the view that this complaint referral is a further indicator of the commission’s ability to tackle inequalities in a complex global monetary system.

“It hopes that such investigation and complaint referral sheds light on the respondents’ compliance with various banking governing policies such as the Third Basel Accord and the Financial Markets Act No 19 of 2012.

“In addition, bring to the fore the clandestine manner in which banks operate in order for there to be more transparency in the banking system.”

The BMF was also in favour of the banks being prosecuted, saying that “should criminalisation of such conduct be applicable in terms of the recent introduction of section 73A of the Competition Act, the commission and the National Prosecuting Authority should seek that such sanctions are additionally imposed”.

“The new criminalisation section makes it an offence for a director of a firm or a person having or purporting to have management authority in a firm to cause the firm to engage in, or knowingly acquiesce to the firm engaging in, collusive conduct.”

On Friday, Parliament’s standing committee on finance said it welcomed the commission’s “long-overdue investigation into possible banks’ collusion on the manipulation of currency trading and its decision to refer this to the Competition Tribunal for prosecution”.

“Obviously, the banks have to be given a fair chance to respond to the allegations and the tribunal needs the space to make an independent decision on the matter. But if the banks are found guilty of wrongdoing we hope the tribunal will take appropriate strong action.

“After all, it’s the poor and low-income earners who would have suffered disproportionately from any market abuse,” said Yunus Carrim, chairperson of the committee.

Carrim said if there has been wrongdoing, not just the banks, but the individuals responsible should be acted against.

He said the committee had noted the strong action taken elsewhere in the world, not least in the US and UK, when similar actions of wrongdoing were proved.

The committee is of the firm view that the Competition Commission’s investigation has reinforced the need for the finalisation of the Financial Regulation Bill before the National Council of Provinces at the moment, and other legislation to regulate the banks more effectively in the public interest.

Carrim said that consideration may also have to be given to whether further regulation was required should the banks be found guilty.

“The investigation also highlights the concerns about four banks controlling about 90% of the market and the need to create space for new entrants, not least the Postbank.

“As soon as the Competition Tribunal has completed its work, the finance committee will consider the issue in a structured way, but meanwhile it is likely to emerge in the committee’s public hearings on transformation of the financial sector that begin on March 14,” said Carrim.

Weekend Argus

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