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This interview was originally aired on RSG Geldsake (in English, with an Afrikaans introduction that has been translated here).
RYK VAN NIEKERK: An aggressive political standoff is developing between the private sector and the government following allegations that 28 banks manipulated the exchange rate of the rand between 2007 and 2013 – which led to the subsequent devaluation of the rand.
The standoff was initiated last week after the Minister in the Presidency, Khumbudzo Ntshavheni, said the bank’s conduct proved that the private sector sought the collapse of the government and the economy.
Read: The government does not need the private sector to collapse state capacity
This was in the context of British bank Standard Chartered’s admission of guilt in the case, and its agreement to pay a fine of R43 million.
Read: Standard Chartered settles forex rigging case after eight years in court
Apart from Ntshavheni’s remarks, members of parliament’s standing committee on finance lambasted the banks and said their conduct contributed to poverty and unemployment in the country. The ANC also issued a press statement demanding that the banks should be prosecuted and those found guilty be charged with economic sabotage.
However, Standard Bank Group CEO Sim Tshabalala issued a statement over the weekend where he strongly denied that the bank was ever involved in any currency manipulation, or party to any criminal activity. His remarks were also echoed by National Treasury which issued its own statement on Friday, denying that the alleged price fixing had any impact on the devaluation of the rand.
Lungisa Fuzile is on the line. He’s the CEO of Standard Bank SA. Lungisa, thank you so much for your time. This situation seemed to have exploded over the past week. What is your take on it?
LUNGISA FUZILE: The developments are unfortunate in the sense that there is absolutely nothing wrong with the Competition Commission exercising its legally derived mandate to ensure that all financial institutions, including our own, conduct themselves in a manner that’s appropriate, in a manner that is not calculated to rip off other economic agents.
However, having said that, the law is very clear on how such transgressions, when they have occurred, ought to be punished following a due process of investigation and testing the evidence in a situation such as a court – or the tribunal in this instance.
What has happened here now however is that in an instance where one of the original 28 banks having been investigated with the possibility of being charged, and those processes unfolding, one bank, Standard Chartered – which is different from the bank I work for, which is Standard Bank – [reached a settlement with the Competition Commission], and many people are making this mistake.
It is not Standard Bank that has settled with the American authorities and the South African authorities.
Standard Chartered, presumably weighing the evidence against itself and considering whatever else it considered, decided to pay a fine.
That happens, by the way, all the time where institutions that are being investigated for one or other transgression admit when they see the evidence against them. We did the same ourselves in Tanzania. That was before I even joined the bank.
Now, what has been unfortunate though, Ryk, is that when that institution admitted, an impression got created that all of the other banks have been found guilty – yet nothing could be further from the truth.
Standard Bank in this case, which I’m authorised to speak for, has not been found guilty of currency manipulation, has not made any admission to currency manipulation, and has not paid any fine in that regard.
And we feel very strongly, very strongly, that there hasn’t been any evidence presented to us to suggest that any of our people who are in the global markets area have participated in any wayward behaviour.
And therefore we are prepared to present our evidence in court, or our side of the story in court, as and when the process has reached that point.
What has been unfortunate however, is the characterisation of currency manipulation, even by those who did it – as economic sabotage, as being equivalent to treason and other extremities.
That is unfortunate because currency manipulation, even when it has occurred, is not tantamount to treason. It is just greed, where people want to make a quick buck.
It is egregious, it is intolerable. It is unacceptable. It has got to be frowned upon – but equating it to ‘treason’ is extreme.
RYK VAN NIEKERK: I think everybody would agree with you that the Competition Commission process must be allowed to continue and come to a conclusion. And if the case takes many years, then so be it. But why do you think there was this reaction – and such an aggressive reaction – from especially Minister Khumbudzo Ntshavheni, who actually said this is an effort from banks to collapse the state?
LUNGISA FUZILE: I don’t know Ryk, I can’t explain things that I really have no information on.
But let me say what I do know about the South African private sector, and I’m talking now more broadly and in general terms, but I’ll come to specifics as well. The South African private sector that I have now become part of for the past six years – and I’ve known this even before I joined that private sector, by the way – is patriotic.
It’s men and women who care about the future of this country. They care about the economic performance of South Africa because they understand the symbiotic interconnectedness between the prospects of the businesses that they’re charged with running and the prospects of the South African economy.
When the South African economy does well, it offers more opportunities for the businesses we’re running to grow, and off the back of that growth we can employ more people.
Employing more people means that our businesses can pay more taxes, but those people too can pay more taxes. It also means that the people who employ and those with services, as banks, can access finance when they need to start businesses, grow businesses. They can also of course afford acquiring homes, acquiring their first car, and paying whatever else they wish to finance through banks.
A growing South African economy is good for all South African businesses.
So there is no question therefore that we can be delusional and/or schizophrenic and wish that the South African economy would collapse on the one hand, but in that sea of chaos and collapse, that economic meltdown, if I may call it that, then our individual businesses will stand tall. It cannot happen.
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It is born out of that deep appreciation of this interconnectedness that we elected when asked – and of our own volition – to partner our government, to work with it, to fix the parts of the economy that require fixing so that the economy would perform.
Read:
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It is for that reason that we’re working on the energy issues. It is for that reason that we’re working on fixing transport and logistics in South Africa. Just this past week you saw that kilometres and kilometres of trucks are queuing, waiting to either drop stuff at the port or collect stuff from the port. We need to fix that.
Similarly, it is for that reason that we’re working with our government, collaborating, bringing together our strengths as partners – not one part being better than the other – but working together as partners with common interests, with shared interests, with a common destiny to make sure that we can fight crime, we can fight corruption.
And of course in that regard, more specifically, to help South Africa meet the requirements of FATF [Financial Action Task Force] and get us off the grey list. So that part I know for sure.
Just tomorrow [Tuesday] business will be meeting the government, led by our president. That process is about fixing South Africa. Now we can’t on the one hand work to fix South Africa and on the other hand work to collapse it.
We are not confused about who we are, where we come from, and where we wish to be over the next while.
RYK VAN NIEKERK: Where does this leave the relationship between government and the private sector? And Standard Bank is a major player in this whole effort from the private sector to assist government to resolve some of the issues. We see events of the past week leave that relationship …
LUNGISA FUZILE: Ryk, I’ve got no doubt in my mind that both sides, government and business, have leaders of stature. They’ve got leaders who understand that momentary setbacks, such as the one that we saw last week and which is spilling over to this week, are supposed to happen, or are things that can happen in a relationship like our government and business have, like our government and business are nurturing. But they cannot define the essence of that relationship, the substance of that relationship.
In fact, we ought to get back to the drawing board and refocus our attention, re-energise our relationship.
That does not mean that we’ve got to sweep this stuff under the carpet. It does mean that we’ve got to look each other in the eye and say: ‘How did we get here and, going forward, how do we avoid such [things] happening?’
I can tell you for free that something like this ought never to have happened. I’ll put it this way to you, by the way. Even if one person from either side has made a statement that doesn’t sit well with the other side, leaders are supposed to very quickly say: ‘What is this, and how do we stave it off and make sure that it does not unravel?’
I’m advised that leaders from business did reach out to government to say if this statement had been made, and if it is true, it calls for quick action and management of the situation to avoid it from unravelling.
Now I imagine that government didn’t see it necessary or didn’t understand the urgency the way business saw it, and we have ended with this thing running for a week and now spilling into another week.
But it helps that we’re meeting government tomorrow. Hopefully this matter will feature on the agenda and allow us a moment to reflect and quickly say, ‘How do we remedy this situation’, first, and secondly, ‘How do we make sure that we recover from it?’ And lastly, ‘How do we make sure that in future something like this never happens again?’
RYK VAN NIEKERK: Lungisa, you said there may be some confusion between Standard Chartered, the British Bank, which admitted guilt and will pay the R42 million fine, and Standard Bank. How big is this confusion between Standard Chartered and Standard Bank?
LUNGISA FUZILE: Ryk, thanks for asking me that question. It is so important to us.
That mistake gets made very often. It is for the very same reason, by the way, Ryk, that on the continent our own bank, Standard Bank Group, in some countries on the continent trades as ‘Stanbic’, not as Standard-something or Standard Bank. It is to avoid that confusion where the two businesses have a presence. This mistake we saw being made last week on social media. We saw it being made on some television stations. I must be quick to indicate that [it was] not by the presenters or the journalists.
Just last night I was telling one of my colleagues that I was watching a programme – I won’t say on which channel perhaps to protect them – and one of the people in the audience said: ‘Standard Bank agreed to pay a fine.’ Nothing could be further from the truth.
Standard Bank, which is the business I work for, which is the business that Sim Tshabalala is the Group CEO of, has not paid a fine, has not admitted guilt for currency manipulation.
And I’m told – actually today I was not listening to the programme because we were meeting two of the regulators the entire morning – that someone from the Competition Commission at the start of a programme made the same mistake.
Now that is more egregious than when the mistake is made by an ordinary citizen, harmful as it is both ways.
RYK VAN NIEKERK: Somebody from the Competition Commission itself?
LUNGISA FUZILE: Somebody from the Competition Commission made that mistake, but the person to their credit later corrected themselves.
But bear in mind, Ryk may be watching what is happening when the programme starts and he may carry on with his life and not hear the correction. That is very tricky.
So I would urge everyone who speaks on this matter to understand that the two institutions are different. The bank that has paid a fine both in South Africa and in the US is Standard Chartered, which is different from Standard Bank.
RYK VAN NIEKERK: Lungisa, thank you so much for your time. That was Lungisa Fuzile, the CEO of Standard Bank SA.
