Media and banks must work together for the common good

Banks adopted a holier-than-thou attitude in closing Independent Media’s bank accounts, citing “reputational risks” as the reason. Yet, banks complicit in the malicious and immoral rand-fixing scandal, appear to be getting away with a mere slap on the wrist

Last week, Standard Chartered Bank agreed to pay a paltry R42.7 million admission of guilt penalty for manipulating the rand through fixing bids, offers and trades in alliance with other banks

Published Nov 30, 2023

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What’s good for the goose is good for the gander. Punishment must fit the crime. The two maxims must apply to errant banks.

Banks adopted a holier-than-thou attitude in closing Independent Media’s bank accounts, citing “reputational risks” as the reason. Yet, banks complicit in the malicious and immoral rand-fixing scandal, appear to be getting away with a mere slap on the wrist.

Last week, Standard Chartered Bank agreed to pay a paltry R42.7 million admission of guilt penalty for manipulating the rand through fixing bids, offers and trades in alliance with other banks. This is indeed pocket money fine for a major international bank.

Evidence points to a network of well-co-ordinated corrupt activity as banks colluded on prices in the trading of the rand in a six-year period, from 2007 to 2013. The Competition Commission estimates that close to R1 trillion was transacted daily in the illicit and manipulated foreign exchange trades by banks, among them Barclays Africa (now Absa), BNP Paribas, BNP Paribas South Africa, Citigroup Inc, Investec Ltd, Citigroup and Standard New York Securities Inc.

Standard Chartered became the second bank to pay a settlement after admitting to manipulating the rand. Earlier, Citibank also paid a settlement of R69.5m, with 26 other South African and international banks appearing before the Competition Tribunal over their involvement in the scam that affected remittances, employees and the economy at large.

By engaging in manipulating bid prices, offers and bid-offer spreads concerning spot trades involving rand currency pairs, banks place the country in economic peril. Was this not a classic case of deliberate fiscal sabotage, destabilisation and disruption?

When banks threatened to close Independent Media’s accounts, more than 2 000 employees were left in limbo month after month, uncertain of what the future held in terms of job stability. In any case, it is not the prerogative of banks to police lapses in what they consider editorial integrity.

In September, the Western Cape High Court interdicted Standard Bank until 2024 from shutting the accounts of Sekunjalo, of which Independent Media is a subsidiary. This was in a bid to save the livelihoods of staff.

It is nothing short of hypocrisy for banks to cite “reputational risks” for cutting off Independent Media’s banking services.

Were this true, then tens of thousands of government servants should not be getting pay packets at the end of every month. After all, scores of government and public sector institutions that are clients of major banks are entangled in scandals, controversies and corruption on a scale that makes the transgressions of private enterprises appear to be small change.

To be trustworthy and to equally apply the rationale of reputational risks, banks should find an inordinate number of government and public sector institutions ineligible for traditional banking services due to allegations of bribery, corruption and mismanagement of public funds. With such malfeasance, can there be a greater threat or danger to the good name or standing of a business or entity?

The damage done by currency manipulation hurt our economy in no small measure. Culpably involved banks must be served their just deserts for weakening the rand.

The announcement by the Treasury that it was ring-fencing the financial services sector to avoid a recurrence of the manipulation of the rand by banks must be welcomed. Further legislation is to be introduced to ensure South African financial markets are fair, transparent and operate with integrity.

Media freedom and financial stability are of paramount importance in a relatively young democracy. The two bastions of nation-building must support each other for the common good.

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