The Reserve Bank is responsible for bank regulation and supervision in South Africa. Its purpose is to achieve a sound, efficient banking system in the interest of bank depositors and the economy as a whole.

This function is performed by issuing banking licences to banking institutions, and monitoring their activities in terms of either the Banks Act (No 94 of 1990), or the Mutual Banks Act (No 124 of 1993) and the regulations relating thereto.

Recent reports on Sharemax Investments allegedly committing fraud by operating a pyramid or Ponzi scheme are disturbing, particularly when a reported 40 000 people have invested close on R4.5 billion in the various schemes promoted by the company.

The R1bn invested to complete the Villa property complex is one such example now under investigation by the Hawks.

The subsequent intervention by the Reserve Bank resulted in frozen investments and a massive building operation now being uncompleted and lying dormant.

The timing of the Reserve Bank’s intervention in Realcor Cape Investments, in the case of the Radisson Blue Hotel, also resulted in a partially completed and now stranded asset.

While we recognise that a fear of unintended consequences should not lead to paralysis, interventions by the Reserve Bank in property investment schemes with huge commercial investment values, without the bank having obtained a court order, need to be reconsidered.

I have written to Minister of Finance Pravin Gordhan to express my concerns and seek clarity on the interventions made by the Reserve Bank with regards to alleged contraventions of the Banks Act.

The determination by the office of the ombud for financial advisory and intermediary services that the directors of the investment companies in question could be held liable to claims from investors who suffered losses as result of the Ponzi scheme is to be welcomed.

We acknowledge that a separate process is under way to improve financial sector regulation as we move towards a twin peaks model with stand-alone regulators for prudential supervision, which will ensure that retirement funds are soundly managed; and market conduct supervision, which in turn will make cost structures more transparent, and protect policyholders from unfair practices and charges.

However, our most pressing concerns are the lost job opportunities resulting from stranded assets, and the fact that bona fide investors have been impoverished.

This will inevitably impact negatively on economic growth.

David Ross MP

DA Deputy Finance spokesman

Labour law is a brake on job stimulation

Your article “Factory output data warn of more job losses” (Business Report, February 8) refers.

Headlines such as this not only reflect the true situation and predict what is to come but also feed into the perception that strongly drives the business community.

It takes a strong investor to put money into a South African business when they read about the all-encompassing labour unrest coupled with the violence.

Almost every economist and strategist identifies labour unrest as one of the main risks to growth this year. One doesn’t need to be a rocket scientist to understand that the labour law system is not working.

We need a complete overhaul of our wage determination system and wage bargaining rules.

Our government needs to step in and fully understand that the harsh labour law environment can only act as a handbrake to job stimulation.

Michael Bagraim

Cape Town

Santaco airline will not get off the ground

Was it intentional that you used a picture of Santaco airlines above the GEPF story (Business Report, February 15) the day after the State of the Nation address?

Coincidentally Santaco is like many of President Jacob Zuma’s announcements over the years, of which few if any get off the ground. Santaco was launched with the obligatory party in November 2011 and there has been a deathly silence since. They parried queries with “we are waiting for our licence”, which the Civil Aviation Authority knew nothing about.

If Santaco actually ever flies commercially I will donate R1 000 to the charity of your choice, Mr Editor.

The blight in this country is that the government believes that once it has verbalised its ideas they will miraculously happen and fall out the sky although in Santaco’s case we hope it is the reverse.

Tony Ball


Australian wages cannot compare to SA

In the opinion piece “Vineyards will turn to machines as wages rise” (Business Report, February 12), Keith Bryer makes the statement that “Australian grape farmers use machines almost exclusively”.

Of course, the wages of grape pickers in Australia are relevant, so I looked it up.

In Australia, minimum pay in the agricultural sector is set by the Horticultural Award of 2010, which stipulates a minimum of A$15.96 (R145.43) an hour.

This is also the minimum wage in Australia. For an eight-hour day, the minimum wage would be R1 163.44. The piecework rate is 15 percent more.

In South Africa, the minimum wage for farmworkers has been set at R11.66 an hour, or R93.88 for an eight-hour day.

The reason for the low wages paid here is due to very high unemployment. But with or without machines, workers must be paid a living wage, a wage below the breadline is slavery.

I thought it would be useful to share this information, before jumping to conclusions.

Rod Gurzynski


Put chicken imports into perspective

I refer to your report about imported poultry, “Davies ready to act on poultry import tariffs” (Business Report, February 13)


It is important to place chicken imports into perspective:

Imports of chicken products total only approximately 10 percent of local production of comparable products, hardly a credible threat to the survival of the local poultry industry as professed in the propaganda regurgitated by spokespeople for the SA Poultry Association.

This is a statistic that we can prove based on official statistics provided by the SA Revenue Service.

In addition, and of significant relevance to the debate, it should be noted that chicken imports have dropped substantially over the past few months, another point omitted from their media releases.

Another attempt to mislead relates to the incorrect statements regarding “cheap chicken imports” as referred to by yourselves in the report.

In fact, the opposite is true, and it is easily verifiable that the bulk of imported chicken is actually more expensive than locally produced comparable products.

So, where are these cheap imports? Why can local producers not compete?

If consumers are choosing to rather buy imported chicken than the local variety, there must be reasons other than price for these selections.

The large majority of local poultry is heavily injected with a brine solution. In many cases this brine exceeds 40 percent of the chicken meat in the relevant pack. Imported chicken has either no brine content, or minimal brining, nowhere near the levels of injecting so prevalent in South Africa. Perhaps local consumers are now aware of this fact?

Let us be clear that this is a huge issue, with the Department of Agriculture, Forestry and Fisheries having already published draft legislation aimed at limiting the amount of permitted brine.

The department has clearly indicated that local brining levels are deemed excessive, a fact that we agree with.

Any restriction imposed on imports will merely enable local producers to increase prices quite substantially, something they do not deny.

The result will be that impoverished consumers will be forced to pay more for basic protein foods. This is a harsh and worrying reality.

Such protectionist actions are inflationary and will always result in job losses across the wider economy. Then there is the cost to the fiscus in the form of lost customs duties. Import reduction will mean higher taxes for all.

We have great sympathy for the difficulties being experienced by local poultry producers and it is obvious that the industry has been hard hit by rising feed prices, massive electricity and other overheads, as well as high labour costs, with many of the main players suffering from the effects of recent strike action.

The poultry import industry is also a large employer of labour and certainly appreciates the difficulties of job creation and retention in the current economic climate, but we refuse to accept that an industry that supplies only about 10 percent of comparable products can be so instrumental in hurting the local industry.

One of the questions that needs an honest reply is why all their extra capacity cannot be used to drive exports? All we are told is that foreign countries will not give access to South African chickens.

We need to ask why. The media also needs to ask why. We would gladly lend our assistance and experience to help improve local exports.

At best, even a successful campaign against imports will bring the local poultry industry temporary relief, until it actually addresses its own business model issues, which are blatantly obvious.

That is really the crux of the matter.

David Wolpert

Chief executive, Association of Meat Importers and Exporters of SA

Davies and Patel miss point on weak rand

Annabel Bishop did Investec proud with her reasoned argument against devaluation of the rand, and hopefully pseudo economists Rob Davies and Ebrahim Patel will be educated by it.

Unfortunately, unlike her, they are the ones in a position to damage the economy with their superficial understanding around this issue.

There is one point she missed, which arises from behaviour and won’t be found in textbooks, centering on the greed and short-termism in which business and labour indulge.

When the rand drops the exporter rubs his hands at the thought of extra profit and, asking why should only his customer benefit, he pushes up the rand price.

As the factory gets busier the workers sense that the law of supply and demand has drifted in their favour and the owner will have no appetite to resist wage demands since he is too busy making money.

Rather than risking disruption he accedes to their demands and the inflationary cycle is reinforced. This, together with the other inflationary forces unleashed by devaluation, soon puts him in back to his original position prior to his windfall.

If we had a productive workforce, a confident investment-orientated business community, a work ethic, an economically literate government supported by a credible technical bureaucracy, a tradition of export competitive pricing and a lower profit expectation and entitlement, that might not happen.

But that is the reality. South Africa is not a Tiger, Eastern or otherwise.

Sydney Kaye

Caper Town

How many fingers in the bloated e-toll pie?

Now that the Hawks are investigating the construction industry for all the stadiums and bridges built, the e-tolls come to mind and the costs associated with it.

Should the Hawks not expand the investigation into it?

Looking at the cost of e-tolling, something is just as rotten.

And I wonder how many fingers are in that pie, hence the secrecy?

Just asking.

Shane Thomas