Cape Town - Mineral Resources Minister Mosebenzi Zwane on Friday said the decision by the Competition Commission to refer 17 banks to the Competition Tribunal for foreign exchange rand rigging “vindicates the call made last year for an investigation into the banks”.
"We trust that this matter will be speedily resolved, as it also directly affects the mining sector. Most significantly, it has a direct impact on our objective of radically transforming the mining sector, and increasing ownership by black people," said Zwane in a statement.
The minister is part of an inter-ministerial committee tasked by President Jacob Zuma to investigate why South Africa’s top four banks had blacklisted the Guptas and their company Oakbay Investments.
The blacklisting matter is now part of a court battle between the Guptas (and Oakbay Investments) and Finance Minister Pravin Gordhan, the hearing of which is set to be heard on March 28 2017.
On Thursday, Deputy Minister of Finance Mcebisi Jonas added his affidavit to the case, repeating his assertion that the Guptas had offered him the job of finance minister for a bribe of R600m.
This and other allegations of state capture and corruption have been cited by the banks, who filed affidavits in the case as to why they blacklisted the accounts.
There was little detail regarding the blacklisting before the flurry of affidavits brought to light the matter following Gordhan’s court application in October 2016, in which he sought legal protection from the courts. Gordhan claims that Oakbay tried to get him to intervene against the banks, despite being told that this would be illegal.
Preceding this, Zwane – acting without Gordhan who was also on the committee – drafted recommendations for the president to instigate a commission of inquiry against the banks due to the matter.
He erroneously released the recommendations as being signed off by Cabinet on the evening of September 1. However, the Presidency immediately distanced Zuma and the Cabinet from the recommendations.
“Evidence presented to the IMC (inter-ministerial committee) suggested that all of South Africa’s economic power vests in the hands of very specific institutions, institutions who have shown that their ability to act unilaterally is within their mandate and is protected,” said Zwane in September. “These institutions are owned by private shareholders and report to National Treasury who in turn do not need to act on information provided to it.”
The Presidency said Zwane's remarks were issued in his personal capacity and not on behalf of the task team or Cabinet. "The unfortunate contents of the statement and the inconvenience and confusion caused by the issuing thereof, are deeply regretted,” it said.
However, Zuma later came to Zwane’s defence in Parliament on November 23. He said the fact that South Africa’s four big banks acted “simultaneously” could suggest there had been collusion.
“To any ordinary person that is not an ordinary act. It suggests there is something. They (the banks) can’t act together in the same way. It gives a feeling that something is going on here. Now if you are a government, you have to intervene in many things if the image of the country is put into problems (sic)."
While the matters of collusion regarding the Guptas and foreign exchange trading are different, the matter is seen as playing into Zuma’s 2017 State of the Nation address (SONA), where he referred to new draft legislation that will target the highly concentrated areas of the economy.
The day after his SONA, Zuma blamed South Africa’s top four banks for controlling the economy.
“If you have got four banks - major ones - and they take everything; they don’t want you to do anything,” he said on SABC’s Morning Live, which is sponsored by Gupta-owned newspaper, The New Age.
Political analyst Daniel Silke told Bloomberg that the banks’ “credibility is now questioned on the issue of currency manipulation, when indeed their credibility is also being questioned in terms of their stranglehold over the South African economy, in the words of President Jacob Zuma”.
“This plays into an existing negative narrative about the ethics and role of the big banks in the South African economy.”
The move to prosecute the 17 banks (which doesn't include FirstRand and Nedbank) is badly timed for South Africa's top four banks, who are trying to keep the moral high ground after blacklisting the Guptas due to allegations of state capture.Read Fin24's top stories trending on Twitter:
That is the message from Adrian Saville, the chief strategist at Citadel Investment Services & Cannon Asset Managers.
“The timing for banks couldn’t be worse,” he told Bloomberg on Thursday. “They’ve been trying to capture the moral high ground on the Gupta issue. It comes at a time when they’re trying to demonstrate impeccable behaviour. It makes a case for intervention.”