The Economic Freedom Fighters (EFF) has called for tougher sanctions against banking institutions that played a role in a collusion by lenders to manipulate the rand.
IOL reported earlier this week that UK-based multinational bank Standard Chartered Bank (SCB), one of more than 20 financial entities to be prosecuted by the Competition Commission of South Africa for manipulating the USD/ZAR currency pairing, has admitted guilt and agreed to pay a R42.7 million fine.
While the SCB settlement agreement has been filed with the Competition Commission Tribunal for confirmation on Wednesday, the adjudication process with the remaining respondents, which include international and local financial institutions, continues.
The EFF led by Julius Malema lambasted the South African Reserve Bank, saying the apex bank has failed to oversee the banking sector in the country.
“The failure to deal with currency manipulation, however, is just a symptom of a banking sector that is a law unto itself,” said EFF national spokesperson Sinawo Thambo.
“The South African Reserve Bank has failed to oversee the banking sector because of friendship-based nepotism, which has led to the revolving door of staff members between the banks, the National Treasury, and the Reserve Bank.”
The EFF said tougher sanctions are needed for anyone found guilty.
“The EFF maintains that all those who admit guilt to the charges of currency manipulation must lose their banking licenses. Furthermore, the directors and staff members who were involved must also be prosecuted, and their assets must be seized,” said Thambo.
“Additionally, the EFF calls on the Competition Tribunal to fast-track the cases of the remaining banks that participated in this corrupt scheme that was designed to profit from the suffering of our people,” he said.
“Furthermore, it is concerning that the Competition Commission made their initial findings in 2017 and to this date, no one has been prosecuted and sent to prison, while many of those involved continue to enjoy the benefits of this corrupt practice.”
The eight-year litigation process between the Commission and SCB - which is the official shirt sponsor of England’s Liverpool Football Club, began in April 2015 when the Commission launched a complaint against it, and the other respondents, for allegedly agreeing to manipulate prices related to certain foreign currency pairs tied to the South African Rand (ZAR).
The EFF said currency manipulation has an adverse impact on the economy.
“Standard Chartered Bank admitted guilt to the charges of currency manipulation back in 2019. Currency manipulation has severe implications for exports and imports, and the valuation of the nation’s economy. As a result, it is the consumers who suffer the consequences of prices that are manipulated, as many of the products in South African shops are imported,” said Thambo.
“When the EFF raised the matter of currency manipulation, the former finance minister Tito Mboweni, and the National Treasury ridiculed the EFF, and denied that there was currency manipulation to protect Maria Ramos and the cabal in the banking sector, and refused to consider such treacherous and criminal conduct on the economy.”
On Wednesday, IOL reported that several parts of the country’s economy, including imports and exports, foreign direct investment, public and private debt, and company balance sheets, were among the hardest hit when 28 South African and international banks allegedly colluded to manipulate the rand/dollar currency valuation.
This is according to the Competition Commission which has set its sight on having Absa, Standard Bank, Nedbank, FirstRand, Investec, Standard Americas, Australia and New Zealand Banking Group, Commerz Bank (Germany), Macquarie Bank Limited (Australia), Barclays, Bank of America, HSBC Bank, Merrill Lynch Pierce Fenner and Smith, JP Morgan Chase, Credit Suisse Securities (US), among others, answer for the alleged collusion between 2007 and 2013.
This legal battle is before Competition Appeal Court (CAC) and is set to continue on Wednesday.
According to the commission, which referred the matter to the Competition Tribunal, the banks are accused of engaging in “conduct considered the most egregious in competition law”.
“The alleged conduct relates to fixing and manipulating the rand/dollar exchange rate, which has a central and crucial role in the South African economy.”
In March, the Competition Tribunal ruled that it had jurisdiction to hear the so-called “Forex Cartel case” and dismissed a second round of exception, objection, and struck out applications brought by various banks, in response to the Competition Commission’s updated complaint referral, or charge sheet.
The commission alleges that between 2007 and at least 2013, 28 banks from multiple jurisdictions in Europe, South Africa, Australia and the US conspired to manipulate the Rand through information sharing on electronic and other platforms and through various co-ordination strategies when trading in the USD/ZAR currency pair.
It is alleged that the common objective of the participants was the manipulation and distortion of normal competitive conditions in the trading of the USD/ZAR currency pair through communication of competitively sensitive information relating to various steps of the value chain of setting foreign exchange.