If there is one topic that the extreme left in SA goes into fits of hyperbolic over-the-top phantasmagorical hysteria about, it is banking. 

All over X, bots judder and shake and go wild when they are alerted to anything about SA banks – and, somehow, the Absa lifeboat, Maria Ramos, Tito Mboweni and a familiar crew always seem to come up as the hate figures extraordinaire.

The Independent Media group gleefully fans these flames – something which may or may not have to do with the fact that no respectable bank wants to bank their controlling shareholders’ money. 

On Wednesday, The Star reported that “according to media reports”, currency manipulation costs South Africa R1-trillion a day. Since SA’s total economic output for a year is R8-trillion, that would seem to be unlikely.

This would be par for the course in SA’s hurly-burly politics, and we would all go about our business. But then, out of the blue, in her briefing on the most recent Cabinet meeting on Monday, Minister in the Presidency Khumbudzo Ntshavheni was asked about the decision of international bank Standard Chartered to plead guilty in the long-running Competition Commission case against 28 local and international banks for manipulating the rand. 

And she just lost it. 

This is the first part of her response to the question, verbatim: “We have maintained over the period that the performance of the economy and the performance of the rand has been manipulated by the private sector who has no interest in the development of this country [and] who continue to engineer and do machination [sic] to make sure that the government collapses.”

Nevertheless, the economy was resilient, but “there must be consequences and there will be consequences”, she said. 

So, it is the position of a voice of the President of South Africa, no less, that the private sector has no interest whatsoever in the development of the country and is – and has been for years now – engineering its collapse. 

I mean, this is just beyond irresponsible of her. More than irresponsible – it’s illogical. 

As Mark Barnes queried in our podcast this week, why would banks try to collapse the economy of the country? They are absolutely dependent on the economy. It’s certifiably nutso to suggest differently. 

Ntshavheni has now added her name to the list of the bonkers and nutters who understand really nothing about the Absa lifeboat, the banking industry, the nature of currency trading or, for that matter, the Competition Commission’s court case. 

Every time they open their mouths, they illustrate their ignorance further.

Allow me to try to explain very briefly the Competition Commission’s case against the 28 banks. This is an eight-year-old case, and the piles of pleadings are huge; I mean really huge. So, a little latitude is needed. 

The first thing to know is that this is a currency manipulation case involving currency traders. It wasn’t about the deep state or some conspiracy trying to destroy countries; it was about some traders trying to profit from their currency bets. That’s all.

What happened is that, in 2014, US regulators discovered currency traders from a range of international banks were discussing their trades on two Bloomberg terminal chat groups. The banks were rightly smacked over the knuckles for this collusion and they eventually paid $3.4-billion in fines. The banks involved were all the big ones: HSBC, Citigroup, JPMorgan, Royal Bank of Scotland and UBS.

One of the currency pairs involved was the rand-dollar pair, so the admission of guilt extracted by the US authorities was handed over to the SA government sometime in 2017, just in case there was anything they wanted to investigate. 

Well, this was like manna from heaven for the SA government which, in 2017, was heavily involved in allegations of State Capture, while the banks were closing the accounts of the Guptas. What a wonderful diversion! 

So, without questioning anyone or doing any real prep, the Competition Commission announced it was bringing a case against both local and international banks. 

You could tell it was a little dodgy because, soon after that, an organisation called the Black Empowerment Foundation – in which one Edward Zuma was the prime figure – brought criminal charges against local bank executives. And from that moment, Zumaites and their progeny have been all over this case.

When the case against the banks was eventually brought by the Commission, the facts against the international banks were pretty irrefutable. For a start, they had already admitted wrongdoing, after all. So that’s something. 

But there is one crucial issue: since many of these banks don’t operate in SA, to demonstrate jurisdiction, the Commission has to show that there had been some material effect on SA itself.  

The case against the local banks, on the other hand, is pretty tenuous – from my non-legal point of view. 

In most cases, currency traders of local banks were not members of the Bloomberg chat groups in question. Absa’s situation is a bit odd, because at the time, it was owned by Barclays, which was involved, so Absa is involved by association. 

In Standard Bank’s case, for example, there was a single discussion in a different chat room where a request for price on the currency pair was requested. But it was made not to a currency trader, but to a bank salesman. The salesman quoted a price, as salesmen do every day, and that was that. 

Local banks can’t say anything publicly – this is a court case, after all – but my guess is that they are absolutely furious about this case. Just furious. 

But every time the Competition Commission has been forced to redraft its case, which has happened a lot – and which is why the case has taken eight years – they have doubled down by adding more banks. 

In Standard Bank’s case, there was at least a purported discussion in a chat room they could point to, even if it wasn’t pertinent. In the case of Nedbank and FNB, the commission isn’t even alleging a chat group discussion. 

So last week, all the anti-bank zealots were overjoyed when Standard Chartered decided to settle because, to them, it demonstrated the inherent guilt and evilness of all of SA’s banks, and Maria Ramos’ culpability. 

What was ignored is that Standard Chartered long ago acknowledged liability in the US case, so the only issue was whether the jurisdictional defence would hold up.

What the anti-bank nutters failed to notice was the quantum of the fine: R43-million. Is there any way I can explain how little R43-million is in Standard Chartered’s life? The company has a market cap of $17-billion. 

The fine is a tiny fraction of the legal costs involved in continuing the case. It’s a tiny fraction, for that matter, of what the Competition Commission has spent over the past eight years conducting the case. 

If all the commission wants is a few million bucks, the temptation for the foreign banks to just take the slap on the wrist and walk away must be enormous. 

Bear in mind, the commission is claiming 10% of the bank’s annual turnover, so what they settled for in Standard Chartered’s case is chump change by comparison.

For the local banks, there is more at stake, which is why the outcome of the case before the Appeal Court is so important. 

The banks have asked the court to instruct the Competition Commission to drop the investigation into the banks against whom they have no case, since the commission itself seems unable or unwilling to do that. We will see how that turns out in due course.

In the meantime, to say this is embarrassing for the commission, the SA government and everybody else involved, is a huge understatement. 

How the government can be begging these banks – local and international – to support all kinds of local investment, while also taking them to court on the flimsiest of charges, speaks to the power of the ignorant and paranoid anti-bank zealots in government, the misguided logic of whom Ntshavheni has now helpfully revealed. DM