Cape Town - There is a loud call from political players for urgent change in the financial services sector in the wake of a rand rigging scandal by major banks.
The African National Congress (ANC), tripartite alliance partner South African Communist Party (SACP) and the Economic Freedom Fighters (EFF) want the industry to undergo transformation.
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On Wednesday the Competition Commission referred a case involving 17 banks to the Competition Tribunal after they were accused of price fixing in international markets relating to the value of the rand to the dollar.
Banks implicated in the scandal include local players Absa, Investec and Standard Bank as well as big international players, including HSBC, Standard Chartered and Nomura International.
The ANC called for harsh sanctions to be implemented against any South African bank found guilty of collusion.
“To manipulate the currency is the biggest scandal and we think all banks, especially the repeat offenders like Absa if they are found guilty should be criminally charged for sabotage,” said ANC spokesperson Zizi Kodwa.
“These acts of corruption have crudely exposed the ethical crisis in the South African banking sector,” said the ANC.
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The ANC also described the act of manipulating the currency as an “attack” on the constitutional mandate of the South African Reserve Bank to protect the value of the country’s currency.
The party which says it’s taken a dim view on the allegations, lamented that this has happened on the back of the country calling on social partners to work collectively towards the goal of inclusive economic growth.
“This is further indication of how the markets are and can be manipulated by dominant oligopolies to cripple its functioning to suit their nefarious agendas,” said the ANC.
The ANC added that the Competition Commission’s suspicions raised more questions as to the extent to which the rand was being manipulated for “politically motivated intentions”.
The SACP said the fine suggested by the Commission is too lenient.
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"The 10% that the Competition Commission seeks from ... the banks and financial institutions to be held liable for from their annual turnovers is, though important, actually almost next to nothing compared to the crime that they have committed and its consequences on our economy and people."
It is of the view that stronger measures are needed, going forward, and the state must take leadership in bringing about those measures.
The SACP wants to see the transformation of the financial sector.
"There can be no radical economic transformation without transformation of the banking and financial sector," it said.
"In particular, the foreign and local private monopoly and oligopoly structure of the banking and financial sector dominant in our country must be brought to an end, by means of, among others, strongly asserting developmental state ownership and co-operative banks and financial institutions."
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The EFF said it will write to the South African Reserve Bank (SARB) to demand that the banking and operating licences of the banks be revoked.
"[W]e believe collusion around South Africa’s currency is treacherous and should be treated as such," said spokesperson Mbuyiseni Ndlozi.
It also called on the government to establish a state bank to insulate the country from what it described as "the callous thirst for maximum and immoral profits pursued by the existing banks".
The SARB said in a statement it viewed the allegations against the banks as a serious matter.
Some 30% of daily turnover in the rand takes place in South Africa, of which foreigners account for 58%, it said. In April 2016, the daily average worldwide foreign-exchange trading involving the rand was about $49bn, noted the SARB, citing Bank for International Settlements data, representing 1% of total turnover.
The Save South Africa campaign said it as concerned about private sector corruption as it is about corruption in the state.Read Fin24's top stories trending on Twitter:
"It is essential that justice is applied to public and private sector institutions that break the law or abuse their power."
It commended the Commission for their work, calling for the matter to be dealt with swiftly and without undue political influence.