The South African Federation of Trade Unions (SAFTU) welcomes the settlement agreement struck between the Competition Commission and Standard Chartered Bank (SCB), in which SCB agreed to pay R42 million. This is long overdue, given that the Commission had lodged this case over 7 years ago. In the United States, where the SCB and other culprits had manipulated the US Dollar with multiple currencies in several pairs, it was fined $40 million (an equivalent of R727,5 million).
This litigation has taken 8 years, with these banks playing hide-and-seek and evading being held accountable in South Africa. It is especially outrageous for these Banks to evade the law in our country when they have already accepted guilt and paid fines in the United States of America and the United Kingdom. For many years, the banks have argued that the Competition Tribunal has no jurisdiction, using this to delay being held accountable for their actions in the currency manipulation, probably with the hope that it would help them evade the rule of law altogether. These nefarious hopes were dealt a blow when in March this year, the Competition Tribunal ruled that it has jurisdiction to preside over the matter. SAFTU welcomed this decision then, and we hope that many of these banks will be fined like Citibank and SCB without further delay.
In previous statements, SAFTU has repeatedly called for a harsh punitive action against the 28 banks that are accused of manipulating the currency trading involving ZAR/US Dollar in the forex market. Between 2008 and 2013, the 28 banks including Citibank and Standard Chartered Bank ¾ which have settled with the Competition Commission already ¾ manipulated the “USD/ZAR currency pair by fixing bids; offers; bid-offer spreads; the spot exchange rate; and the exchange rate at the FIX.”
The conversation on how they were fixing the currency trading is engrained in a published settlement agreement struck in the United States in 2019, between New York State Department and Standard Chartered Bank. The conversation reveals nothing but the nefarious motives of these banks that colluded to fix currency prices, as they endeavoured to disadvantage other traders and customers in pursuit of maximised profits for themselves. It must be noted that quite often, such actions have negative impact even on a country’s trade and consequently the economy.
So much for the people who claim to preach liberalism and free competition. Their actions in the USD/ZAR manipulation, and the manipulation of other currency pairs during the same period, were shown to betray the very principles they lecture us on – liberalisation and competition. Indeed, their behaviour as our Competition Commission and the New York State Department correctly said, were non-competitive.
However, their collusive behaviour is not surprising nor shocking. Marxist political economy teaches us that under capitalism, competition is gradually replaced by tyranny of the monopoly businesses. This was the classic example of monopoly bankers. Just like monopoly producers, they bully the smaller competitors and customers by fixing prices. In 2000s, the Blue Ribbon owner blew whistle on how oligopolies in the bread production were colluding to fix prices bread between 1999 and 2007. For all the pretences in championing a free market economy, these incidents among others, shows that we are living under a planned economy. The only difference is that this is not a socially planned economy, but an economy planned by few profiteers for the purpose of maximising their profits.
SAFTU calls on the Competition Commission to ensure that it penalises all the 28 banks, including impose heavy fines on local banks that were part. Such behaviour, if repeated, has the potential to sabotage the country’s balance of payment and growth prospects. Besides, commercial banks are nothing but chartered banks of the Central Bank, and must be shown that whatever illusions they harbour, they are not powerful than the state.
