The Congress of South African Trade Unions (Cosatu) added its voice on Thursday to support the decision by the Competition Commission to appeal the bewildering court judgement dismissing the Commission’s “alarming findings” that domestic and foreign banks actively manipulated the value of the rand.
Some banks, including Standard Chartered, singled out by the Competition Commission, have already admitted colluding to fixing the rand between 2007 and 2013 and paid fines. However, others are digging in, saying they were not involved in rand manipulation.
The Competition Commission is now appealing at the South African Constitutional Court against the Competition Appeal Court’s judgment, which upheld the appeal by the majority of the respondent banks accused of price-fixing and division of markets in contravention of the Competition Act.
“The CAC order, therefore, released 17 respondent banks from the complaint referral before they answered the allegations against them and restricted the Commission’s case to only four respondent banks. In its current application for leave to appeal, the Commission is appealing the CAC order to the Constitutional Court against 13 respondent banks,” said the Competition Commission in a statement on Tuesday.
Cosatu said, “The Federation was deeply angered by the shocking findings by the Competition Commission that 27 domestic and foreign banks actively manipulated the value of the Rand between 2007 and 2018.”
The Commission found this may have cost the economy, workers, the state and businesses a massive R1 billion. This meant loans by South African companies and government in foreign currency were charged at much higher rates.
Money for investing in growing the economy, paying workers, creating jobs, investing in critical infrastructure and rebuilding public services was lost to this shameful currency manipulation profiteering, it added.
The labour union said, “This is not the first-time banks have been found wanting in this regard. Those persons involved in these criminal activities in the banks must be charged, prosecuted and held accountable. A slap on the wrist of R42.7 million for one bank and R69.5 million for another bank is unacceptable compared to the losses and damage done. We are pleased that two banks admitted their guilt. Others must follow suit and all must be held accountable.”
Cosatu further said the South African Reserve Bank needed to explain how these activities took place under its watch and what they did to hold the banks accountable and what were they doing to prevent a recurrence.
“Treasury and the Financial Intelligence Centre too must explain what they did to prevent such crimes, to hold those accused accountable and to prevent recurrences,” it added.
Cosatu said if the government did not act, then the country should not be surprised when South Africa continued to be grey listed by the international community.
“If we sweep this under the carpet, then we should not be shocked when it happens again,” it said, adding that Cosatu would be engaging on this matter with government to ensure action happens and the guilty were held accountable.
Swell of support for the appeal
Zwelinzima Vavi, the general secretary of South African Federation of Trade Unions, said on Wednesday that the union supported the Competition Commission’s appeal to the Constitutional Court in its bid “to hold the local and international banks accountable for the rand/dollar manipulation” over the period in question.
Corruption Watch’s stakeholder relations and campaigns lead, Melusi Ncala, told Business Report by phone that the rand manipulation saga was a mirror of the multifaceted nature of corruption in South Africa.
“Rand manipulation basically indicates that corruption is indeed a quite complex issue. It’s multifaceted. It involves networks. It crosses between public and private sector,” said Ncala.
Worse still, corruption, as exposed by the admittance of guilt by some of the banks that were involved in the manipulation of the rand “can be quite opaque”, hence, there is need for stern efforts and action to deal with it.
Corruption Watch said it was “good for the Competition Commission to satisfy itself, given the importance of this matter” by taking the CAC order to the Constitutional Court.
It said the rand manipulation saga “speaks to one of the fundamentals of the South African economy” amid reports that the impact of the underhand dealings between banks’ forex dealers ran into trillions of rand.
”When (we) consider that these banks are facing serious allegations about how they manipulated, allegedly, the currency, we know it’s a matter that definitely needs to be exhausted so that people also on the ground can be satisfied,” said Ncala.