The Allegations of Currency Manipulation
South Africa’s President Cyril Ramaphosa is facing growing calls to take action against the banks that allegedly manipulated the rand and the South African economy. The scandal has shaken the confidence of investors and the public in the country’s financial system.
According to the Competition Commission, a British multinational bank, Standard Chartered, admitted to engaging in currency manipulation between 2007 and 2013, and agreed to pay a fine of R42 million. The commission also accused 17 other banks, including Barclays, Citigroup, HSBC, and JPMorgan, of colluding to fix the price of the rand against the US dollar and other currencies.
The commission said the banks used online chat rooms and instant messaging platforms to coordinate their trading activities, and to manipulate the supply and demand of the rand. The commission estimated that the banks made billions of rands in profits from the illegal scheme, while harming the South African economy and consumers.
The Inaction of the Government
Despite the seriousness of the allegations, the government has been slow to respond. Many critics have accused Ramaphosa of being too soft on the banks, and of protecting their interests over those of the country.
Ramaphosa has not publicly commented on the matter, nor has he taken any steps to hold the banks accountable. His silence has been interpreted as a sign of weakness, or of complicity, by some observers.
Some analysts have suggested that Ramaphosa is reluctant to act on the banks because he is dependent on their support for his economic reform agenda. Ramaphosa has been trying to attract more foreign investment and private sector participation in the economy, as well as to liberalize the power sector and reduce corruption. He has also been seeking to secure a loan from the International Monetary Fund to help the country recover from the Covid-19 pandemic.
However, some of his reform initiatives have faced resistance from within his own party, the African National Congress (ANC), as well as from the trade unions and the opposition parties. Ramaphosa may fear that taking a tough stance on the banks could alienate his allies and jeopardize his chances of winning a second term as the ANC leader at the party’s electoral conference later this month.
The Implications for the Economy
The lack of action on the bank scandal has serious implications for the South African economy, which is already struggling with low growth, high unemployment, and rising inflation. The inaction could undermine the credibility and stability of the financial system, and deter potential investors and lenders from doing business with the country.
The bank scandal has exposed the vulnerability of the rand, which is one of the most traded and volatile currencies in the world. The rand has been subject to sharp fluctuations in response to domestic and global events, such as political uncertainty, policy changes, and commodity price movements. The currency manipulation by the banks could have exacerbated these fluctuations, and made the rand more susceptible to speculative attacks and external shocks.
The bank scandal has also damaged the reputation and trust of the South African banking sector, which is one of the most developed and sophisticated in Africa. The banking sector plays a vital role in providing credit and financial services to the economy, as well as in facilitating trade and investment flows. The banking sector could face legal challenges, regulatory scrutiny, and public backlash as a result of the scandal, which could affect its profitability and performance.
The bank scandal has also raised questions about the effectiveness and independence of the regulatory authorities, such as the South African Reserve Bank, the Financial Sector Conduct Authority, and the National Treasury. These authorities are responsible for ensuring the soundness and integrity of the financial system, and for protecting the interests of the consumers and the economy. The authorities have been criticized for being too lenient and passive in dealing with the banks, and for failing to prevent or detect the currency manipulation.
The Demands for Justice and Accountability
The bank scandal has sparked outrage and frustration among various stakeholders, who have demanded justice and accountability from the banks and the government. The stakeholders include civil society groups, consumer organizations, political parties, and legal experts, who have called for various actions and remedies.
Some of the actions and remedies that have been proposed or pursued by the stakeholders are:
- A parliamentary inquiry into the bank scandal, and the role of the government and the regulatory authorities in addressing it. The inquiry would aim to establish the facts and the extent of the currency manipulation, and to recommend appropriate sanctions and reforms.
- A class action lawsuit against the banks, on behalf of the consumers and the businesses that have been affected by the currency manipulation. The lawsuit would seek to recover the losses and damages that have been caused by the illegal scheme, and to deter future misconduct by the banks.
- A criminal investigation and prosecution of the banks and the individuals involved in the currency manipulation, under the Prevention and Combating of Corrupt Activities Act. The act criminalizes any conduct that influences or abuses the authority, power, or position of a public official, or that affects the public interest, in order to obtain an undue advantage or benefit.
- A boycott and divestment campaign against the banks, to pressure them to admit their wrongdoing, and to pay reparations and fines. The campaign would also aim to raise awareness and mobilize public opinion against the banks, and to support alternative and ethical financial institutions.
The Way Forward for Ramaphosa and the Country
The bank scandal poses a serious challenge and opportunity for Ramaphosa and the country, as they seek to rebuild and reform the economy in the aftermath of the Covid-19 pandemic. The challenge is to restore the confidence and trust in the financial system, and to ensure that the banks are held accountable and regulated effectively. The opportunity is to leverage the scandal as a catalyst for deeper and broader economic transformation, and to foster a more inclusive and sustainable growth model.
Ramaphosa has to balance the competing interests and expectations of his various constituencies, and to demonstrate his leadership and commitment to the rule of law and the public interest. He has to act decisively and transparently on the bank scandal, and to cooperate with the relevant authorities and stakeholders in addressing it. He also has to pursue his economic reform agenda, and to address the structural and systemic challenges that have hampered the country’s development and progress.
The country has to learn from the bank scandal, and to use it as a wake-up call and a turning point. The country has to demand and support more accountability and integrity from the banks and the government, and to participate actively and constructively in the economic recovery and transformation process. The country also has to diversify and strengthen its economic base, and to reduce its dependence and vulnerability on the rand and the banks.
