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The forex scandal (also known as the rand manipulation scandal in SA) is a 2013 scandal that involves the revelation, investigations and subsequent payment of fines by banks that colluded for at least a decade to manipulate exchange rates on the forex market in other jurisdictions.

There is no need to indicate that with the exception of three, the same banks that have co-operated with other jurisdictions have refused to co-operate with the Competition Commission in SA, more than eight years after the commission initiated its own investigations.

Market regulators in Asia, Switzerland, the UK and the US began to investigate the $4.7-trillion (it will be staggering if it’s converted into rand) per day foreign exchange market after Bloomberg News reported in June 2013 that currency dealers had been front-running client orders and rigging the foreign exchange benchmark WM/Reuters rates by colluding with counterparts and pushing through trades before and during the 60-second windows when the benchmark rates are set.

This behaviour is reported to have occurred daily in the spot foreign-exchange market and, according to currency traders, went on for at least a decade. At least 15 banks, including Barclays (read Absa in SA), HSBC, Goldman Sachs, Citigroup, JPMorgan Chase, Deutsche Bank, Lloyds, Royal Bank of Scotland (RBS), Standard Chartered, UBS and the Bank of England co-operated with investigations by regulators.

For SA investigations by the Competition Commission, its affidavit in court points out the players in this scandal as — in addition to Absa, Citibank and Standard Charter that have already admitted their part in the scandal — Standard Bank SA, Investec, Nedbank, RMB/FirstRand, Commerzbank, ANZ, Standard Americas, Nomura, Macquarie, BoA, Credit Suisse, HSBC, BNP Paribas, JPMorgan, Citibank and Barclays.

The question that begs to be asked, which I will respond to later, is why the banks that have already co-operated with regulators in other jurisdictions have not rushed to co-operate with the Competition Commission in SA. It has been almost seven years since the charges were filed.

I don’t want to attempt to explain what they are alleged by the Competition Commission to have done (as per the affidavit, which is in the public domain), but briefly allude to what they have conceded to investigators in other jurisdictions. At the centre of the investigations were transcripts of electronic chat rooms, in which senior currency traders discussed with their competitors at other banks the types and volume of trades they planned to place.

The chat rooms had names such as “The Cartel”, “The Bandits’ Club”, “One Team, One Dream” and “The Mafia”. Imagine if this scandal had involved the government or a parastatal in SA. We would by now have known (correctly so), who the traders were, what they allegedly did with the bonuses and who their current employers are after they had correctly been fired. In addition, there would have been (correctly) a NGO or even two actively prosecuting government for its failure to act speedily to deal with thuggery of this magnitude.

According to Nick Mathiason of the Bureau of Investigative Journalism (London), by December 2014 the monetary losses caused by manipulation of the forex market were estimated to be as much as $11.5bn a year for Britain’s 20.7-million pension holders. The manipulation affected parties all around the world, for more than a decade. Did SA media even investigate the cost of the manipulation to SA pensioners, whose funds are traded in the forex market? The manipulations’ overall estimated cost is not yet fully known, but the extent of fines and damages paid so far (outside SA) are indicative.

So what are the fines paid in other jurisdictions by these banks? It is reported that on November 12 2014 the UK's Financial Conduct Authority (FCA) imposed fines totalling $1.7bn on five banks, specifically Citibank ($358m), HSBC ($343m), JPMorgan ($352m), RBS ($344m) and UBS ($371m). The FCA determined that between January 1 2008 and October 15 2013 the five banks failed to manage risks around client confidentiality, conflict of interest and trading conduct.

On the same day, the US Commodity Futures Trading Commission (CFTC), in co-ordination with the FCA, imposed collective fines of $1.4bn against the same five banks for attempted manipulation, and for aiding and abetting other banks’ attempts to manipulate global foreign exchange benchmark rates to benefit the positions of certain traders. The CFTC specifically fined Citibank and JPMorgan $310m each, RBS and UBS $290m, and HSBC $275m.

In addition, international media reports indicate that on May 20 2015 the five banks pleaded guilty to felony charges imposed by the US department of justice and agreed to pay fines totalling more than $5.7bn. Four of the banks, including Barclays, Citigroup, JPMorgan and RBS, pleaded guilty to manipulation of the foreign markets. While the others had already been fined in settlements from the November 2014 investigation, Barclays had not been involved and was fined $2.4bn.

UBS also pleaded guilty to committing wire fraud and agreed to a $203m fine. A sixth bank, Bank of America, while not found guilty, agreed to a fine of $204m for unsafe practices in foreign markets. On November 18 2015 Barclays was fined an additional $150m for automated electronic foreign exchange misconduct. 

Interestingly, all these banks are being investigated by the SA Competition Commission for the same things they have already admitted guilt to in one form or the other, with the exception of Barclays (and Absa), Citibank and Standard Chartered, which are refusing to co-operate with our regulator. What is more curious is that there are no social justice activists nor the so-called vigilant media clamouring to ask them critical questions to hold them to account. Instead, the focus is on how a so-called junior minister dares challenge those responsible for corporate crime to be held to account, when the government is confronted with so many challenges.

There is an attempt to delegitimise the government’s attempts to seek recourse for corporate crime because the government must apparently be solely preoccupied with resolving the challenges confronting it. The unsaid narrative is that this government must not dare demand recourse for the poor South Africans who were badly affected by the rand manipulation. We don’t even know if the market has recovered from the actions of those banks.

What are the challenges confronting this government that delegitimises it from even speaking for the poor against corporate criminals that have already conceded and paid fines in other jurisdictions? What of Standard Bank SA, which has already lost several court challenges against the Competition Commission on the rand manipulation scandal, but has yet to file its affidavit responding to the commission’s affidavit? (SIM TSHABALALA: Banking on the rule of law.)

The question is why it is not filing its affidavit if it did not manipulate the rand, or is Standard Bank’s position the same as that of Bank of America and Barclays in the US? Does SA’s top bank not want to compensate the poor for its conduct? It is also entitled to use the courts to drag this matter out, hoping we will have collective memory loss because there is nobody to accuse it of Stalingrad antics.

What is clear from court rulings in SA so far is that the competition authorities have jurisdiction over this matter, and as the Competition Tribunal ruled in March, “the commission’s referral, read holistically, sets out sufficient alleged facts to make out a prima facie case of an SOC [single overarching conspiracy] between foreign and local banks”.

I will not only list the challenges confronting the government but also use the opportunity to explain progress made even when judged by independent institutions with outstanding international standing.

When it comes to the challenge of persistent load-shedding, until the last few days there would have been consensus that electricity minister Kgosientsho Ramokgopa has a handle on the situation and estimated time to resolution. As is the nature of the beast, a major setback took the country back to stage 6. But I am certain there is no point in explaining that the overall time estimated to have energy security stabilised will not be affected.

In the discussions about load-shedding there is no mention of the relief that will be brought when Karpowership finally plugs its power to the grid now that it has won environmental approvals for two of its projects. Yes, there is another appeal against the Richards Bay project to ensure the whales are protected from the noise that will be made by the vessel when supplying electricity to keep the economy going.

I am among the first to acknowledge the active contribution of the private sector under the CEO Initiative to resolve the country’s electricity crisis through the National Energy Crisis Committee that is co-ordinated by the director-general of the cabinet, Phindile Baleni.

Another area of immense challenge that government is confronted with and recently partnered with the CEO Initiative to resolve is the obstacles faced by the freight and logistics sector. To demonstrate the amount of progress that is being made, Transnet, as recently as November 20, detailed the extent of its problems and the time it will take resolve the immediate ones.

So that I am not accused of whitewashing the problems confronting the freight and logistics sector due to Transnet’s incompetence, let me repeat the state of the problems. At Durban port alone 71,000 goods containers are stuck with a waiting period of 21 days before offloading takes place, and more than 20 vessels are waiting at outer anchorage with berthing delays averaging up to 18 days. Transnet has undertaken to clear the backlogs by the end of February and brief the nation on the progress thereto every second week.

Other measures include ramping up the movement of containers at Pier 2 from 2,500 to 4,000 a day over three months. In addition, Durban’s Pier 2 is about to commence a public-private partnership with Philippines-based International Container Services, and this partnership is expected to commence from April 2024. The logistics sector is another area where the government is working with the private sector to ensure a faster turnaround under the National Logistics Crisis Committee.

The capacity of the state has also been raised as an area of dismal performance by government, leading to poor service delivery. While there is a need to improve the capacity of the state, the narrative that seeks to project a continuously weakening state capacity is not supported by the facts. Recently, the auditor-general of SA presented the outcomes of the 2022/2023 financial year national and provincial audits, including a trend analysis for the last five years. This points to an encouraging trend of continuously improved performance, which indicates overall improvement in accountability, transparency, adequacy and effectiveness of controls, including:

  • The departments and institutions that have achieved unqualified audits with no findings (clean audits) have increased from 94 during 2018/2019 to 147 during 2022/2023, representing a year-on-year improvement;
  • The departments and institutions that have achieved unqualified audits with findings are 162, representing 39% of the audited institutions; and
  • The institutions and departments with disclaimed findings have decreased from 25 during the 2018/2019 reporting period to five during 2022/2023, representing only 1% of audited institutions.

Similarly, the Census 2022 results dispels the myth and narrative of a failed state. The data shows how the governing party has fulfilled its promise of a better life for all. We have achieved significant progress in addressing historical inequalities, despite the many challenges still facing our people, and this was not coincidental. Census 2022 reports improvements ranging from access to education (early childhood development to post secondary schooling), demonstrating a growing interest and investment in education and skills development for the future.

To housing, with statistics showing an increase in households living in formal dwellings from 65.1% in 1996 to 88.5% in 2022. The share of households in informal dwellings went down from 16.2% in 1996 to 8.1% in 2022. The share of people in traditional dwellings decreased from 18.3% in 1996 to 3.1% in 2022. These changes reflect a society that is improving its living standards despite having almost doubled its number of households since 1996.

 To the delivery of basic services such as access to clean water, electricity, sanitation and refuse removal: In 2022 more than four out of five households, or 82.4%, had access to piped water either inside their dwelling or inside their yard. In 2001 only 51.9% of people had access to a flush toilet and this increased to 70.8% in 2022. Census 2022 also indicate that the proportion of households using electricity as the main source of energy for lighting rose sharply from 58.1% in 1996 to 94.7% in 2022. It is a reason resolution of the electricity load-shedding is more urgent to resolve, so government can ensure South Africans, in particular the poor, can go back to enjoying use of electricity at a universal level.

All of these achievements are happening in a population that has increased to 62-million and an average population age of 28.8 years. It is therefore curious to refer to a “junior minister” and a “minister being elevated”, unless the implication is that leadership is based on age. By the way, if leadership is to be based on age, the majority of those who lead this country should be relatable to the average population of SA.

In any case, we are all aware that those who are thin on content opt to play the man and not the ball. But you can call me any name if it makes you sleep at night, I am not bothered. What is distasteful even for those low on substance is attempts to reduce a female to be a mere parrot for a man, even when that man is the president himself.

The notion that on my own I cannot express a view except when that view is sponsored by the president simply confirms the male chauvinism is bedevilling the media. It is a reflection of a society that fuels gender-based violence because women, in particular the younger ones, must be put in their place, and thus editors do not even feel ashamed to refer to a minister as a child or as a mere mouthpiece of a male president.

Thank you for deeming me worthy of your attention, but let us just engage on the content (not name calling). This time around the content is the work of the Competition Commission on the rand manipulation, and SA has not engaged with critical questions in relation to similar work in other jurisdictions.

• Ntshavheni is minister in the presidency.

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