Are South African banks getting away with riches at the expense of the poor?

File image: IOL

Inequality in South Africa across the socio-economic spectrum stubbornly remains one of the main hurdles to greater growth, inclusiveness and a better life for all citizens in the republic. 

In terms of the 2015/16 information submitted to the Employment Equity Commission, the representation of whites at top management level amounted to 72 percent while (black) African representation was at 10 percent. The representation of coloureds stood at 4.5 percent and Indians 8.7 percent. The report further provides that white South Africans, in particular males, are afforded higher levels of recruitment, promotion and training opportunities as compared, to the designated groups. At the level of gender at senior management level, males remain dominant at 67.6 percent and females at 32.4 percent.

The government is generally held accountable from many different quarters when it comes to issues of attracting foreign investment, the rand and employment/unemployment.

And so it should be.

It is, however, of vital importance to the national interest that bodies mandated to be watchdogs keep the citizenry in mind in the course of their work and in the administration of their duties.

A case in point is the rand rigging case which, surprisingly, has not got more South Africans angered. 

It is akin to the same deafening silence from almost everyone in civil society when the so-called big five construction companies were found to have colluded (or more accurately, acted in a corrupt manner) in landing contracts for the building of stadia for the Fifa 2010 World Cup.

As we continue to see in South Africa in the language most mainstream media uses to embed stereotypes – crimes committed by (usually) wealthy white men are described in the softer, gentler hue that the word collusion conjures versus that dark word: corruption, for example. 

We can only hope that this type of thinking does not permeate the thinking of the good and able people working at the Competition Commission.

In July, the Competition Tribunal will hold a hearing where banks accused of colluding to rig the rand currency will make their submissions.

To remind ourselves: more than a dozen local and foreign banks had colluded to coordinate trading in the rand and the US dollar using an instant chat room called ZAR Domination, a reference to the rand’s official currency market code.

The banks involved include Absa, Standard Bank, Investec, HSBC and Nomura International plc.The other banks named in the case were JP Morgan, BNP Paribas, Credit Suisse Group, Commerzbank AG, Standard New York Securities Inc, Macquarie Bank , Bank of America Merrill Lynch (BAML), ANZ Banking Group Ltd.

The Competition Commission has found that from about 2007 these banks had a general agreement to collude on prices for bids, offers and bid-offer spreads for spot trades in relation to currency trading involving the rand and the dollar.

It’s understood the banks helped each other to reach the desired prices by co-coordinating their trading times – and created fake bids and offers – to distort demand and supply, while also apparently taking turns in transacting by either pulling or holding trades.

As Global Research pointed out recently: “… developments in South Africa and internationally illustrates that the economic system of capitalism is controlled by an ever shrinking group of financial interests who operate as a matter of policy in contravention to the majority of people not only within the western industrialized states notwithstanding throughout the world. As the African Union member-states face escalating economic difficulties a re-emergent debt crisis is looming.

This burgeoning phenomenon of declining currency values and lack of credit availability portends much for the ability to strengthen both state and non-state structures in Africa. Escalating rates of poverty and lack of national and regional economic capacity will inevitably foster even greater dependency on the West and its transnational institutions.”

The ball, therefore, is squarely in the court of the Competition Commission which should send out the strongest message possible: that these kinds of crimes will not be tolerated in a developing nation like South Africa which is rebuilding itself after the ravages of apartheid.

Beyond fines, the commission should seek reparations for our citizens as the banks’ reckless, callous and corrupt actions impacted on the very lives of every person in this country.

The commission cannot allow these financial behemoths to spit in our faces and get away with a mere slap on the wrist.

South Africans need to rally against the real enemy of the people: these financial institutions which have for too long thumbed their noses at the law and regulatory frameworks and must not be allowed to continue to operate with impunity.

But as with the global financial crisis of 2007/2008 – created by financial institutions and wall Street – the bankers at the forefront of the crisis, walked away with golden handshakes. 

Recently, whistleblower Kevin Wakefield, who was made a pariah in financial circles for pointing out corruption in the sector, called for bankers to be arrested as he didn’t believe that monetary fines proved an effective deterrent. 

The question is: who will listen?

But let’s be clear about this – government is not anti-business as demonstrated by several meetings last year in the face of the threat of a credit ratings downgrade. 

Big business and government working together is key to the growth of the country, but regulatory checks and balances are needed to ensure that narrowed interests are guarded against and that the fundamentals of our roadmap for the future are adhered to as best we can.

We are a country, after all, who have overcome insurmountable odds and continue to fight the odds.

We have to once again show a collective strength in taking on a deceitful, corrupt and shadowy bank system intent on exploitative practices at the expense of the masses,

Let’s hope the Competition Commission can be our spearhead and that it delivers a meaningful blow that changes how these institutions operate in our borders.  

Achieving economic justice is one step we need to take in the direction of an all inclusive democracy, one which will overcome our crippling inequality.


Kashief Wicomb is National Vice President of the Progressive Professionals Forum