The governing party and senior members of the government have accused local and international banks of a grand conspiracy to destroy the economy, revealing the ANC’s view of business as a malign force to be shaken down, a move that aligns with Luthuli House’s opportunism before the upcoming general election.
Minister in the presidency Khumbudzo Ntshavheni’s hot take, that “this [rand manipulation] is a demonstration that business has been active in wanting to destroy SA because, when you manipulate the rand you want the economy of the country to collapse”, is particularly breathtaking, even by the standards of paranoid Cold War kids in exile.
The minister’s comments show a complete disregard for the facts, as revealed in detail in the Competition Appeal Court hearing held regarding the commission’s complaint last week. As judge Dennis Davis noted, the rand is an incredibly intensively traded currency. One of the banks hauled before the court last week estimated that more than $6-trillion is traded daily.
So even if there was some collusion by a few traders in New York, Singapore or London on a few trades involving the rand, it would have no effect on the rand-dollar exchange rate. It’s bit like two forex shops on a street in New York deciding to fix the price of the dollars they exchange for unsuspecting SA tourists. There may be cartel conduct, but it certainly doesn’t affect the value of the SA currency, much less its economy.
It’s obvious to anyone who operates in the real world outside the comrade clown show that macroeconomic factors — load-shedding or the sudden removal of the finance minister for instance — have a far greater, and more direct, effect on the currency.
The minister’s comments also reveal that she didn’t bother to read the Competition Tribunal’s press release on the Standard Chartered settlement with the commission, which made it clear that Standard Chartered had agreed to provide the commission only with evidence “which is in its possession or under its control”.
Orchestrated PR
As Standard Chartered’s lawyer clarified at the tribunal hearing into this settlement, the bank no longer has any traders in its employ who were involved in the alleged “single overarching conspiracy” the commission claims stretched back to 2008.
The announcement of this settlement, carefully timed to coincide with the day on which the commission’s advocate took to the stand to try to salvage its case, was clearly a carefully orchestrated PR exercise. (Standard Chartered said it had been trying to settle the case for years.)
So what is going on here? Blatant electioneering, of course, in which the ANC tries desperately to blame the ongoing collapse of the domestic economy on the private sector (it’s the bad banks!). It’s a rather feeble effort though, particularly if one reads the Harvard Growth Lab study authored by Ricardo Hausmann, which comprehensively lays the blame at the door of the SA government.
The study found that collapsing state capacity is “the predominant driver of SA’s weakening economic performance and is at the heart of intensifying macroeconomic stress”. This, it says, is “felt across network industries (including electricity, rail, ports and water) as well as in the provision of security and the functioning of municipal governments”.
A friend in Ballito told me he can see ships waiting to enter Durban harbour from his front door, which is about 70km north of Pier 2. What the Appeal Court hearing last week did reveal, despite the bluster of the minister and the best efforts of the commission’s PR team, is the astonishingly thin nature of the case against many of the banks cited in the commission’s complaint.
Single chat
The commission is aiming to pursue offshore parent corporations that do not engage in forex trading. It alleges co-ordination by local branches of particular banks, but does not establish any facts linking them to the chat rooms purported to constitute the platform for the single overarching conspiracy. The commission’s case is based on discussions that have no connection to any SA bank.
Banks are alleged to have only been involved in a single chat, in one case, in the late evening of Boxing Day when it seems unlikely that anyone was manning the trading desk at all. There are no facts set out that suggest the participants in this chat actually knew about the alleged single overarching conspiracy and were attempting to join it.
The commission has not addressed the complaint against banks accused of conspiring in chat rooms since 2017, despite receiving assistance from Barclays, Absa and Standard Chartered. There is no indication of it seeking additional facts from those involved in the chat rooms.
This is despite the commission investing significant resources in addressing the complaint over the past six years, employing six counsel for an appeal court hearing, which costs nearly R150,000 a day. The commission’s latest annual report shows a sharp increase in case-related costs, with legal fees reaching R80.8m this year, compared with R58.8m in 2022.
One has to ask whether this case is an effective use of public money or just a helpful PR exercise the year before a crucial election.
• Avery, a financial journalist and broadcaster, produces BDTV’s ‘Business Watch’. Contact him at badger@businesslive.co.za.
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