The African Transformation Movement (ATM) is forging ahead with its plans to have Parliament establish an inquiry into the allegations of rand manipulation involving national and international banks.
The banks were accused of engaging in “conduct considered the most egregious in competition law”.
The alleged conduct related to fixing and manipulating the rand/dollar exchange rate, which has a central and crucial role in the South African economy.
The Competition Commission alleged 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.
In its submission to National Assembly Speaker Thoko Didiza for a Parliamentary inquiry, ATM leader Vuyo Zungula said: “Given the recent developments and the significant concerns raised by the dismissal of the Competition Commission’s case against the majority of implicated banks, we believe this inquiry is crucial for maintaining public confidence in our financial system and economic governance.”
His draft resolution noted that “the Competition Commission’s investigation, known as the ‘Forex Cartel’ case, has been ongoing for eight years, yet the Competition Appeals Court recently dismissed the case.
“These developments necessitate a thorough parliamentary inquiry to uncover the full extent of these allegations and their implications for the South African economy and public confidence in our financial system.”
Zungula said the ATM recognised that the alleged manipulation could have significant impacts on exchange rates, imports, exports, foreign direct investment, public and private debt, and company balance sheets.
“Further (the draft resolution) recognises the potential harm to South African consumers, businesses, and financial markets, and the importance of restoring and maintaining trust in our financial system.
“(It) acknowledges the need to review the regulatory oversight mechanisms governing financial markets and foreign exchange transactions, identifying any regulatory gaps or failures that may have allowed the alleged manipulation to occur.”
The party, through the resolution, said it also seeks to assess the role and effectiveness of the Competition Commission in handling this investigation, “including any procedural or evidentiary shortcomings, and evaluating whether the commission’s resources and powers are adequate for investigating complex financial crimes”.
Parliamentary spokesperson Moloto Mothapo confirmed the request had been received and was being processed.
Policy analyst Nkosikhulule Nyembezi said: “What makes the proposed parliamentary inquiry relevant and historically significant is the disappointing outcome of the Competition Commission’s investigation ... which has been ongoing for eight years, only to be recently dismissed by the Competition Appeals Court and thus setting free all but four banks, citing jurisdictional issues and perceived overreach.
“Many are accusing the competition authorities of excessive generosity towards the banks and there is no satisfaction in saying that public confidence in the authorities has collapsed.
“There are two traditional means by which we hold banks responsible for their actions. They face the judgement of their customers and peers in self-regulatory processes, and they are subject to discipline by the law enforced by statutory bodies.
“Those are mostly legal and financial evaluations, and there is still a large realm where banks are their bosses, unchecked in the way that they use their power – able too often to abuse it.”
Cape Times