Bank collusion claims have boosted attack on Treasury

The most radical thing the president could have done in the state of the nation address was to quit. That alone would have jolted the markets into an upward spin last seen when Nelson Mandela was released from prison 27 years ago.

With the alleged collusion in the markets coming to light, it would have placed the economy on a different path.

The opposite trajectory is about to occur, with constant rumours of a play for the Treasury by President Jacob Zuma, the Guptas and related rogue elements in the body politic going into higher gear on the back of this crisis.

If it is true that Finance Minister Pravin Gordhan will be fired, turbulence in the market can be expected. For things to get better, they will have to get worse. This is applicable to the ANC’s political and economic fortunes. The markets will have to deal with a frontal attack on the Treasury that has now been bolstered by the allegation of collusion by the banks; an attack on the Reserve Bank led by the lunatic fringe; an ANC land reform policy schizophrenia fuelled by the fear of losing the initiative in holding on to political power; and a general attack on the banking sector followed by demands for its nationalisation. It resembles events in the mining industry in early 2002, when billions of rand left the country after the leaking of the draft mining charter. As they are doing now in metro economies, the markets may soon have to become accustomed to the ANC as opposition and a coalition national government post-2019.

All these factors, if fully manifested, will send the economy into a tailspin and point to policy uncertainty of the worst kind.

The Competition Commission, which has done sterling work exposing the alleged collusion, cannot persuade the Competition Tribunal to impose a harsher sentence than 10% of turnover, despite the political noise about this being proof of white-monopoly manipulation of the economy.

It will be interesting to see how it all pans out given the signing into law of legislative amendments that criminalise anticompetitive behaviour. SA is a tiny part of the market of most of the banks involved, so they may well take their investment elsewhere should they think they are being treated outside the established rules and are subjected to political discrimination.

Competition authorities are in a pickle as their mission is economic development, not dismantlement.

Many people agree the penalties are not harsh enough, as the president expressed in his address, but if that is the case, the law must change so that the rules are clear to all. The saga involving the banks does not change the fact that to implement radical economic policies, the government has to improve its relationship with capital, including being able to change the power relationships that would persuade business to play within the rules while lifting the silent moratorium on investment. This may well be the lever the government can use to force various sectors of the economy to invest as part of their atonement for wrongdoing.

One hopes cool heads in the economic subcommittee of the governing party will put their thinking caps on and abandon rhetoric in finding a clever way of not wasting this crisis. Their first order of business must be to ensure this crisis is not hijacked by Zuma and the sponsors of state capture. This is already being used to divert attention from the large-scale looting across state-owned enterprises. While it pales into insignificance against the collusion impact, it cannot be ignored. Theft is theft, no matter the scale, no matter who the thief is.

The question is: how do we best ensure the economy is the winner. Answering that honestly is the next best radical thing that can be done for the economy — besides Zuma quitting.

Tabane is author of Let’s Talk Frankly and a Power FM host.