South Africa recently discovered that 17 banks were colluding to manipulate the national currency to make super profits. Often, government officials are part of such scandals. What is needed is a unified, Africa-wide solidarity network from below and beyond borders working together to get governments and institutions to ensure that damaging profiteering is stopped.
In the global marketplace today, the strength and stability of a nation’s currency is hugely important. A currency’s performance ultimately impacts everything and everyone in the country, and beyond. When exchange rates shift, so does the price of commodities like food and fuel, which in turn impacts cost of living and employment. A fluctuating currency can have a chilling effect on foreign investment.
So, what then should happen when a government discovers that profiteering banks, which it has allowed to trade on its soil, have been manipulating the strength of their currency to make more money?
In South Africa, the national Competition Commission has found that 17 banks – three of them South African – had been colluding and manipulating trading of the South African currency the rand (ZAR) with the US dollar. The banks worked together illegally by discussing desired prices, coordinating trading times and taking turns to transact, hold or pull bids. These colluded trades would have affected anyone buying rands or using dollars to buy rands, such as African businesses and state-owned enterprises involved in international trade.
The two-year investigation showed that the collusion was a global effort across four continents as the multinational banks worked together to make as much profit as they could, despite the implications for South Africans and their economy.
So what will the government ultimately do about it? In this instance, the Commission recommends fines not exceeding 10 percent of the bank’s annual turnover in South Africa.
American banking giant, Citibank, which was found to have been manipulating the rand for profit for the past 10 years, has agreed to pay a penalty of just less than R70 million (around $5 million) in exchange for dishing the dirt on its co-collaborators. We don’t know how much money they made of their illicit dealings in the past decade – or exactly what that cost South Africans economically – but we do know that the bank raked in more than $87 billion last year alone. What impact is $5 million really going to have on its profit-by-any-means-necessary outlook?
Multinationals involved in irregular or illegal practices are known to prepare for penalties like this – they count it as the cost of doing business. Fines are not effective deterrents, particularly for financial institutions raking in billions of dollars annually. They simply work to make up the loss in subsequent quarters.
There are calls for criminal charges, including against senior bank executives in charge. In trade-related cases, prison time for corporate bosses are rare.
Indeed, in a news interview, a spokesperson declined to say whether the Competition Commission would recommend criminal prosecution for individuals involved. Discussions with parties are ongoing, is all he would offer.
Regardless, with everything we know about South Africa’s own history of unscrupulous dealings and impunity, we cannot simply trust government on its own, to see to it that justice is fully served. Civil society needs take the lead in ensuring that our governments are held responsible for holding companies fully accountable for their actions. In this instance, as in many of corporate exploitation, ordinary South Africans have paid the price, literally. The knock-on losses suffered by the country and its citizens as a result of decade-long currency manipulation are enormous.
While the statutory Competition Commission should be applauded for their investigative work here, the bigger issue is that these practices are systemic. It is the modus operandi of many corporates to push moral, ethical and legal boundaries so as to exploit markets, wherever possible, for maximum profit, regardless of how much it hurts communities.
And in a globalised business world, where there’s smoke, there’s probably wildfire. It is very possible, if not likely, that banks like these, operating in other African countries, are engaged in the same kind of collusion and currency manipulation, where profitable, at the expense of local populations.
Across the continent, big business generally shares a cozy relationship with many of our governments, in an environment where a culture of impunity is entrenched.
Authorities allow multinationals to evade accountability for unethical and illegal practices that are damaging to the economy and the people, and in some cases, even shield them from scrutiny and prosecution. It is hard to know just how prevalent this is because this relationship is not transparent.
What we do know is that, with our markets more inter-connected than ever before, we all feel the blow when big corporations behave in this way. And directly or indirectly, they are enabled to do so – and get away with it – by governments.
We can and should certainly oppose individual cases of manipulation and abuse like this when they are (rarely) exposed. But the reality is that the exploitative practices of the kind uncovered in South Africa are part of deeply entrenched operating norms in the financial world, with roots in colonialism. And any meaningful change in the way that conglomerates, like multinational banks, operate across our regions and will only be really achieved via a unified, Africa-wide solidary network of people and organisations, from below and beyond borders, working together to get our governments and institutions to ensure that such damaging profiteering is stopped.
We, as Africans, have to let the entire global system that supports this know that it can no longer be business as usual in Africa. And that call needs to include a diversity of affected voices from across the continent. The good news is an effective vehicle is now being built to take on this mission.
Africans Rising for Justice, Peace and Dignity is an emerging, pan-African movement of people and formations, working for peace, justice and dignity. This de-centralised, citizen-owned movement seeks to foster Africa-wide solidarity and unity of purpose, building support for local, national, regional and continental struggles.
Africans Rising was formed at a gathering of hundreds of representatives from civil society, trade unions, women, young people, men, people living with disabilities, parliamentarians, media organisations and faith-based groups, from across Africa and the African diaspora in Arusha, Tanzania in August 2016.
The movement’s founding document, the Kilimanjaro Declaration declares that Africa is a rich continent, with the wealth belonging to all, not just a narrow political and economic elite. Corporations, like the 17 banks named in the investigation and many unnamed others, are part of an economic elite, which manipulates and exploits our economic systems for their own gain, most with impunity.
The constriction of civic space in some countries means that not only are people denied the freedom to confront the political status quo but also the economic status quo and big business’ harmful strategies. This is where the extensive solidarity framework of a broad-based, Africa-wide movement of grassroots, national, regional and continental groupings can play a crucial role. We would need to work to expose similar abusive practices by financial institutions in other nations and integrate these efforts into a pan-African campaign for positive change.
As Africans, we have a right to economic integrity and freedom from corporate exploitation and manipulation, enabled by governments and a global financial system that largely excludes us, and our interests. Africans Rising seeks to restore these rights, working collaboratively towards shared goals that advance all our interests.
The movement will be officially launched on 25 May 2017, African Liberation Day.
You can join by signing the Kilimanjaro Declaration then participating in the launch and the critical mission to see all Africans rising for the #FutureWeWant and deserve.
* Kumi Naidoo is a global human rights activist and the launch director of Africans Rising for Peace, Justice and Dignity. Hilma Mote is the executive director of the Africa Labour Research and Education Institute (ALREI) and a member of Africans Rising's International Working Group.
* THE VIEWS OF THE ABOVE ARTICLE ARE THOSE OF THE AUTHOR/S AND DO NOT NECESSARILY REFLECT THE VIEWS OF THE PAMBAZUKA NEWS EDITORIAL TEAM
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