British multinational bank Standard Chartered was recently fined R42.7 million by the Competition Commission after it admitted to engaging in currency manipulation between 2007 and 2013.
Pressure continues to mount on the South African Reserve Bank (SARB) and national Treasury to communicate a clear message on the damage caused and repercussions for banks that were involved in the dollar-rand exchange manipulation scandal.
This comes as politicians, including former president Thabo Mbeki, have called for banks complicit in the scheme to be brought to book.
Treasury argued that the alleged actions of the banks were not the main cause of the local currency substantially losing its value over the past decade, or the weak economy, instead it was due to the energy and logistics crisis.
SARB Governor Lesego Kganyago said the question should not be directed to them but to the Competition Commission.
Almost 30 commercial banks are under fire for alleged price-fixing involving the South African local currency.
British multinational bank Standard Chartered was recently fined R42.7 million by the Competition Commission after it admitted to engaging in currency manipulation between 2007 and 2013.
Citibank paid an administrative penalty of R69.5 million in March 2017, while Barclays PLC, Barclays Capital and Absa were co-operating with the commission in exchange for leniency. Many other banks have denied colluding to inflate their profits.
Redge Nkosi, an executive director at Firstsource Money, said the two discussion points centred on whether the fines were substantial enough and whether the cost of the rand manipulation impacted the economy.
“We should also be addressing the policies that allow the country to have a currency that is free and can easily be manipulated by outside forces,” Nkosi said. The policy needs to be revisited on a permanent basis and the focus should not only be on the fines implicated banks will be liable for, he said.
“While (the fines) are useful, in my view it is just a short-term measure as we should be digging into the root causes of this manipulation and where this will take us going into the future.
“This takes us into the monetary policy space in this country.”
The cost to the economy and to people as a result of currency manipulation was high, he said, and there should be a change in legislation to ensure that penalties include the suspension of banking licences until a full account is provided.
Banking groups that are repeat offenders on currency trading should have their licences fully removed, he said.
Mbeki, speaking on the sidelines of an event in Cape Town on Sunday, said the claims were worrying. He called on the Competition Commission to get to the bottom of the issue, saying it was important that action be taken against the culprits.
The SACP called on the government to move beyond fines and to prosecute those manipulating the currency exchange rate, describing it as “corruption, a criminal offence, an act of economic sabotage, and regime change conduct”.
“The recent developments, including the Competition Appeal Court ruling and the subsequent filing of a new charge sheet in 2020 by the Competition Commission against the 28 banks, underscore the urgency and importance of punishing currency manipulation”, it said.
Cosatu’s Matthew Parks said the union was deeply angered by the shocking findings.
“Those persons involved in these criminal activities in the banks must be charged, prosecuted and held accountable.
“A slap on the wrist of R42.7m for one bank and R69.5m for another is unacceptable compared to the losses and damage done. All the banks must be held accountable,” Parks said.
The Mercury