Somewhere between the bluster and the bust-up last week, Julius Malema reminded members of the National Assembly of their role in ensuring Parliament is a mechanism for accountability in government. “We will not allow a situation where there is a decision by the Constitutional Court and there are no consequences. If we allow that, we are rendering the Constitutional Court useless the same way they rendered the public protector’s office useless,” the commander-in-chief of the Economic Freedom Fighters said.
And he’s right.
Parliament has repeatedly flouted its oversight and accountability mandate, and the ANC has been complicit in undermining the constitutional functions of the National Assembly.
But a culture of good governance that is informed by functioning mechanisms of accountability is not exclusive to government. The same demands we place on the public sector must similarly be made in the private sphere — especially when the country’s economic muscle depends so much on how well, or not, private capital is moved through the system.
This week, the Competition Commission referred a collusion case to the Competition Tribunal for prosecution against 17 banks, including our own Absa, Standard Bank and Investec.
But wait, there’s more.
The commission is also seeking an order declaring that 14 of the banks implicated — Bank of America Merrill Lynch, BNP Paribas, JPMorgan Chase & Co, JPMorgan Chase Bank, Investec, Standard New York Securities, HSBC Bank, Standard Chartered Bank, Credit Suisse Group, Standard Bank of South Africa, Commerzbank, Australia and New Zealand Banking Group, Nomura International and Macquarie Bank — are liable for the payment of an administrative penalty equal to 10% of their annual turnover.
Should that penalty be paid, some analysts predict it would wipe out the national deficit.
The hefty penalty should be indicative of the seriousness of the offence.
The commission has previously uncovered collusion in the country’s bread and flour industry, among cement producers and by construction companies that submitted bids to build stadiums for the 2010 football World Cup. Each time, those involved were forced to pay fines. And each time, these powerful cartels were forced apart.
Last year, the Mail & Guardian reported that the break-up of four cartels in wheat and maize products, poultry and pharmaceuticals was likely felt most acutely by ordinary South Africans — the World Bank estimated that the smashing of cartels kept more than 200 000 people above the poverty line.
Studies estimate that if the cartels were still in place, wheat flour would have been between 7% and 42% more expensive, poultry prices would have been about 25% higher, pharmaceuticals between 10% and 15% more pricey, and maize about 10% more expensive.
Instead, the poverty rate was reduced by an estimated 0.4 percentage points. It may appear marginal, but there are real people’s lives improved behind those numbers.
Now we are faced with another possible cartel — one that stretches across banks and over seas, involving untold sums of money. And although all the cartels have been alarming in their callousness, this particular ring appears inured to any sense of decency. Anecdotes emerging from the Competition Commission’s findings this week include gung-ho traders swapping Mars Bars — yes, chocolate bars — for trades on the market.
It’s like a whole country’s fortunes were reduced to a playground game.
And yet inside those chat rooms, those traders were making decisions that will ultimately affect the welfare of ordinary people whose livelihoods ultimately depend on how well the markets perform.
The full effects of fixing prices and allocating markets during foreign currency trading over a prolonged period of time may actually never be quantified. But what we know for sure is that the Competition Commission has fingered a lack of oversight at three of our largest banks.
If the tribunal confirms the commission’s findings, the banks may well pay a hefty fine, but what then? The analysts tell us that these fines are handed out abroad and then life goes on.
And yet, it’s others who will continue paying the price for the malarkey.
Beyond the language of price-fixing and collusion, this type of behaviour by bankers amounts to taking food off the tables of South Africans. It is an act of theft. And although we now have legislation to criminalise such actions, there will be no jail time for those responsible because laws do not act retrospectively.
And it’s not just South Africa where the impunity of bankers holds people to ransom. In the United States just a few years ago, bankers were responsible for plunging the world into a financial crisis and yet the industry escaped with little more than a slap on the wrist. In the end, it was the American public purse that bailed out the banks — because the banks are too vital to our world, too important to the way things are.
If the Competition Tribunal goes on to confirm the findings of the commission, then the banks must surely receive the same condemnation that we seem to reserve for the misdemeanours of our public officials. Accountability is not the sole preserve of the government.
This piece is was originally published in the Mail and Guardian of South Africa