Publications
Partners
Johannesburg - Government must bar credit ratings agency Moody's from setting foot in South Africa, the ANC Youth League (ANCYL) said on Wednesday.
The league was addressing the media in Irene, Tshwane and the youth wing hit out at Moody’s over a penalty it recently incurred.
Earlier this month, Moody’s agreed to pay almost $864m to resolve a US investigation into credit ratings on subprime mortgage securities.
READ: Moody's slammed with massive $864m penalty
The US Justice Department and 21 states accused the company of inflating ratings on mortgage securities which were at the centre of the 2008 financial crisis. Moody’s, though, said its settlement doesn’t contain a finding it violated the law or any admission of liability.
Moody's currently has South Africa two notches above junk status along with a negative outlook.
"We don't want to see Moody's setting their ... foot in our country in the near future,” said deputy secretary general of the ANCYL Thandi Moraka at the briefing.
"We expect the government of the ANC to listen to us as when we are raising these issues,” said Moraka.
READ: Alert: South Africa is on Moody's watchlist
Moraka further said the penalty to be paid by Moody's for its role in the 2008 financial crisis "proves that they are not credible".
“Because we know that as we speak Moody's are suffering a legitimacy crisis and therefore the work they were doing here, it shows that they were driving a certain agenda. It was not a legitimate work that they were here for,” Moraka said.
The ANCYL further want a presidential commission to investigate if Moody's did not issue alleged fraudulent ratings against South Africa.
It also accused the US based ratings agency of holding South Africa to ransom.
"These financial corporates must be held accountable and they must pay for their criminality," said ANCYL secretary general Njabulo Nzuza.
Absa must 'pay back the money'
The league also wants the Public Protector to release the report into so-called ‘lifeboat’ given to Bankorp in the 1980s and 1990s. Bankorp was later bought by Absa.
According to a report by the Mail & Guardian, Public Protector Busisiwe Mkhwebane is investigating the bailout. A leaked preliminary report implies that interest payment on the loan is still outstanding.
Absa may be required to pay as much as R1.25bn for outstanding interest payments, said the report.
However, the issue has sparked debate in South Africa.
Former Reserve Bank governor Dr Chris Stals told Fin24 in a recent interview that the payment to Bankorp at the time "protected the South African financial system from major collapse".
He also said that both Bankorp and Absa paid the interest that was due to the Reserve Bank regularly and that Absa is not liable to pay the outstanding interest.
READ: Stals opens up on Bankorp bailout
However, the ANCYL said it believes there was criminality and fraud in the transaction and that the Reserve Bank was involved.
Nzuza said the ANCYL plans launching a series of campaigns to pressure Absa to "pay back the money". This includes getting the public to phone the bank’s call centre to ask them when they will ‘pay back the money’.
"This criminality must never go unpunished because it is what feeds white monopoly capital," Nzuza said.
Read Fin24's top stories trending on Twitter: Fin24’s top stories
