Cosatu warns govt not to sweep rand manipulation scandal under the carpet

An employee counts mixed denomination rand currency notes at a Forex department. File

An employee counts mixed denomination rand currency notes at a Forex department. File

Published Nov 27, 2023


The Congress of South African Trade Unions (Cosatu) says it is deeply angered by the “shocking” findings of the Competition Commission that 27 domestic and foreign banks had actively manipulated the value of the rand between 2007 and 2018.

The commission found the rand manipulation may have cost the economy, workers, the state and businesses a painful R1 billion. This meant that loans by South African companies and government in foreign currency were charged for at much higher rates.

In a statement on Friday, Cosatu said if government did not act, then South Africa should not be surprised if the country continued to be grey listed by the international community.

“If we sweep this under the carpet, then we should not be shocked when it happens again,” it said.

Earlier this year, South Africa was added to the Financial Action Task Force’s “grey list“ of countries deemed to have deficient anti-money laundering controls in place for countering the financing of terrorism.

Being on the grey list means increased scrutiny and levels of complexity when dealing with foreign financial institutions and conducting cross-border transactions.

Cosatu said the commission’s findings meant that money for investing in growing the economy, paying workers, creating jobs, investing in critical infrastructure and rebuilding public services was lost to shameful, currency manipulation profiteering.

“This is not the first time banks have been found wanting in this regard. Those persons involved in these criminal activities in the banks must be charged, prosecuted and held accountable.

“A slap on the wrist of R42.7 million for one bank and R69.5m for another bank is unacceptable compared to the losses and damage done. We are pleased two banks have pleaded guilty. Others must follow suit and all must be held accountable,” it said.

The trade union federation said the SA Reserve Bank needed to explain how these activities took place under its watch; what they had done to hold the banks accountable; and, what they were doing to prevent a recurrence.

“Treasury and the Financial Intelligence Centre too must explain what they did to prevent such crimes, to hold those accused accountable and to prevent recurrences,” it said.

Cosatu said it would engage on this matter with government to ensure action was taken and the guilty were held accountable.

Meanwhile, the Banking Association of South Africa (Basa) says it is not a party to the ongoing case between some of its members and the Competition Commission regarding allegations that banks were involved in manipulating the rand during foreign exchange transactions.

“Furthermore, as an industry association, Basa is not a regulator and does not assume any legal regulatory or oversight role of its members. Individual banks account directly to their respective regulatory authorities,” it said in a statement last week..

“Basa members are required to uphold good business practices and ethical governance. In cases where member banks are found to have brought the industry into disrepute, they can be expelled from Basa.

“In the event of wrong-doing by employees or staff of individual banks, we expect banks to apply necessary sanctions according to their policies, and the relevant enforcement agencies must pursue the law to its full extent,” it said.