ME RIGHT, YOU WRONG
Our world is becoming increasingly binary, where people take a stand not for rational reasons but to define themselves against the other
ne of the things on my pretravel checklist and I’m sure it’s on yours too, if you’re lucky enough to get opportunities to travel is to preauthorise my credit cards for use in the countries I’m travelling to.
This week I’m in Taiwan, otherwise known as the Republic of China. An autonomous country in what used to be called the real world, but actually a hugely contested place in terms of its relationship with the People’s Republic of China (PRC), or China as most of us call it. When I searched for Taiwan on Standard Bank’s drop-down list of countries, it came up as “Taiwan (province of China)”.
I don’t want to get into the politics of the One China principle, though it is nice to know that Standard Bank buys into the South African government’s pro-PRC policy. It’s probably salivating at the thought of a proper surveillance state, bless its bankerly heart. But it did make me think how weird it must be to live in a country, a nation, where most of the world views you as a mirror image of another country, the same thing, just a little bit refracted. On the flight over two legs of about 10 hours each, which isn’t that much fun in economy class I read Naomi Klein’s new book, Doppelganger: A Trip into the Mirror World. The leitmotif threading its way through it is the way Klein, author of seminal works such as No Logo and The
Shock Doctrine, is often
Oconfused with Naomi Wolf, to the point where they have become doppelgängers. Indeed, the first sentence of Klein’s long Wikipedia entry is: “Not to be confused with Naomi Wolf.” And the first sentence of Wolf’s is: “Not to be confused with Naomi Klein.”
Wolf is not someone you want as your doppelgänger. The author of early-wave feminist books such as
The Beauty Myth is now a regular on US right-wing conspiracy talkshows and a crazy anti-vaxxer who thinks vaccinated people have been turned into zombies, and that their urine and faeces need to be quarantined or else they’ll contaminate our drinking water.
Being mistaken for her must be highly annoying. Klein describes it as a way of seeing your mirror self. “The more I looked at her ... the more I came to feel as if I were seeing ... a magnification of many undesirable aspects of our shared culture.”
One imagines that’s what Taiwan’s democracy sees when it looks across the strait at the authoritarian PRC.
Klein’s excellent book is also about the mirror world created by misinformation on the internet. “As I shadowed my double further into her world, she writes, “a place where soft-focus wellness influencers make”common
cause with firebreathing far-right propagandists all in the name of saving and protecting ‘the children I found myself confronting yet more forms of doubling and doppelgänging, these ones distinctly more consequential. Like the way that all of politics increasingly feels like a mirror world, with society split in two, and each side defining itself against the other whatever one says and believes, the other seems obliged to say and believe the exact opposite. The deeper I went, the more I noticed this phenomenon all around me: individuals not guided by legible principles or beliefs, but acting as members of groups playing yin to the other’s yang well vs weak; awake vs sheep; righteous vs depraved. Binaries where thinking once lived.”
Last week I wrote about Elon Musk’s latest attempt to break the usefulness of X, and a reader responded, quaintly, by writing a letter to the editor. The letter was also addressed to my fellow columnist Toby Shapshak, who also wrote about Musk. The writer said: “The unbridled hatred these two columnists hold for Musk is on full display.” And then blamed us for the decline of traditional media. So not the internet, then.
But the point is, he didn’t mention one fact or opinion he disagreed with. He just wanted to stand with Elon. This is, I think, the mirror world Klein talks about where people are driven to take a stand for the sake of defining themselves against the other, rather than for factual reasons.
I hope, if the time comes, that we make our decision on how to react to a PRC and Taiwan conflict, whatever form it takes, judiciously, rather than in the service of binaries where thinking once lived.
n April 2018, South Africa’s Competition Commission was named agency of the year in its region at an event in Washington, DC. This was largely because it was set to become the first competition authority worldwide to prosecute foreign exchange infringements in court.
Eight years and several appeals later, the commission may finally get to earn this award.
The Competition Appeal Court, which recently heard argument in the rand-rigging case brought by the commission against 28 local and international banks, is likely to produce a judgment in the caseabout-a-case before the end of the year.
The commission initiated its investigation in 2017, but the parties are still arguing about whether a trial should be allowed to proceed, and on what basis. The banks have argued that the commission’s pleadings are too vague, that the Competition Tribunal lacks jurisdiction over them, or that they have been improperly joined to the case.
In 2019, then tribunal chair Norman Manoim heard the banks’ objections and gave the commission one final opportunity to remedy its complaint referral, along with a list of instructions on precisely how to do so.
In essence, Manoim ruled that fairness required that the banks be faced with only one case to answer whether they were involved in a single overarching conspiracy to fix prices, thereby distorting normal competitive conditions in the international dollar/rand market from 2007 to 2013.
The commission alleges that the implicated traders colluded in Bloomberg instant messaging chat rooms by sharing competitively sensitive information and coordinating their trading activities. They would regularly agree on the bid-offer spread or spot rate for buying and selling the dollar/rand. They would manipulate the bid-offer prices on the platform by agreeing on the order of transacting, withholding their trades, or posting fake bids.
The commission alleges that the majority of the respondent banks employed a trader who was a member of either the Old Gits chat room or the ZAR chat room, claiming “overwhelming evidence” that these chat rooms were used by multiple traders to further the objectives of the conspiracy.
In the US, the three core members of these chat rooms Jason Katz (exBarclays), Christopher Cummins (exCitigroup) and Akshay Aiyer (ex-JPMorgan) have entered into plea agreements or been found guilty of contraventions of various laws arising from their forex trading conduct.
“The single overarching conspiracy comes about,” summarised Manoim, “because respondents are invited to join the platform and accept the invitation. It is the electronic equivalent of the pro
I
verbial smoke-filled room of cartel folklore.”
And yet, says one Sandton lawyer, “it’s quite a stretch to say that any inappropriate conversations between traders high on coke, caffeine and hubris amount to the banks themselves colluding. The incentive is individual bonus-based, so it’s not as if these traders were acting on instructions.”
The banks appealed against the Manoim decision, seeking an order from the Competition Appeal Court to dismiss the case. However, in early 2020, the court under its then judge president, Dennis Davis, upheld Manoim’s ruling.
The court ordered that, among other things, a new complaint referral must demonstrate that there was a single overarching conspiracy and that the behaviour of the banks to manipulate the dollar/rand had a direct and immediate effect on South African consumers and the economy.
The commission filed a new complaint referral in mid-2020. Once again, the banks objected to its case, including saying this time that the commission had not followed the tribunal’s and the Competition Appeal Court’s directions of how it should state its case.
The tribunal heard the banks’ objections only at the end of 2021 and then took a further 15 months to decide whether the new referral passed muster. In March 2023 the tribunal dismissed all the banks’ objections and dismissal applications. It found that the banks do have a case to answer and that the matter must go to trial on the basis of the single overarching conspiracy charge.
The banks appealed again. Davis has been brought back to hear the case with two others.
If they agree with the tribunal, as they did once before, the matter will go to trial unless the banks approach the Constitutional Court for relief.
There are two inferences that can be drawn from the fact that it has taken eight years to get to this point. The first is that the banks have expended an enormous amount of time and money trying to prevent the matter from going to trial. The second, based on the extent to which the commission has struggled to draft a nondefective referral, is that its case is thin, and it has been hoping firms would fold and rat on each other.
This is exactly what UK-based multinational Standard Chartered Bank (SCB) did in November. It is the only one of the 28 banks to have accepted a settlement in South Africa since Citibank settled in 2017 in exchange for a R70m fine.
US prosecutors have had more success. In the US in 2015, Citicorp, JPMorgan Chase & Co, Barclays Plc and the Royal Bank of Scotland pleaded guilty and agreed to collectively pay more than $2.5bn in fines for colluding in the euro/dollar spot market.
BNP Paribas USA folded in 2018 and was fined $90m after admitting to rigging emerging-market foreign exchange rates. SCB entered into a plea agreement in New York in January 2019 relating to the collusive conduct of four of its traders who were members of the Old Gits chat room.
Later that same year SCB made an offer of R18m to settle with the commission in South Africa. This was rejected, and in early 2020 the bank upped its offer to R34m, but this was rejected again. In late 2020 SCB offered to settle for R42m. The commission sat on this offer for three years before formally accepting it on November 13.
In terms of the settlement, SCB has admitted to a range of collusive forex trading actions involving the dollar/rand and must share evidence with the commission.
Competition commissioner Doris Tshepe says the commission has taken SCB’s capitulation as “affirmation” of its dogged pursuit of the case.
However, it is still going to be difficult for the commission to prove that the behaviour of the banks, even if they are found to have been guilty of price fixing, had a direct and immediate effect on the local economy. (This proof is necessary because any penalty imposed on the banks must be proportionate to the harm caused.)
Currency analysts are doubtful that the crooked trades of which the largest was $25m could have had anything more than a small, fleeting impact on the value of the rand. This is not just because the rand foreign exchange turnover on the spot market averaged about $26.8bn a day between 2007 and 2013, but because banks’ margins on forex trades are minuscule.
“The foreign exchange market is a very low-margin, very high-volume business,” explains one currency expert.
The average bank’s margin is less than 0.01% of the value of a foreign exchange trade for large corporate clients. When quoted as part of the dollar/rand exchange rate for the transaction, it equates to less than 1c in the rand.
Of course, even an increase of 0.5c on R1bn means an extra R5m for the bank, which would profit the trader as the average trader’s bonus is 2%-4% of the bank’s profit on their dollar/rand trade. So, if the trader, by dint of collusive conduct, is able to inflate the bank’s margin to 0.015%, while it may be significant for the bank, it doesn’t make a huge difference for the rand.
“I would be pretty sure that 90% of the manipulation would’ve affected the rand by less than 1c and it would have disappeared in minutes, because when you’re making a 0.01% profit margin, and even if you double it, the effect on the dollar/rand exchange rate would be very small,” he says.
The tribunal in its decision assumes that the impugned trades because they involved the price at which the currency was bought and sold would have had direct pricing effects on the dollar/rand exchange rate, thus affecting thousands of commercial transactions, including imports and exports, travel and tourism, and foreign direct investment.
It is this seemingly self-evident conclusion which presumably led minister in the presidency Khumbudzo Ntshavheni to accuse the private sector of seeking to “collapse” the government and the economy.
But JPMorgan Chase pointed out to the Competition Appeal Court that the commission has failed to show how the impugned conduct could have affected the published dollar/rand rate on any specific day (given that the largest transaction amounted to just 0.0001% of the daily trade), let alone hurt the broader economy between 2007 and 2013.
Even so, Davis is unlikely to dismiss the commission’s case outright. More probably, say several Sandton lawyers, is that he will do some serious pruning, possibly dropping the charges against some of the local banks and more obscure foreign banks. However, a core group which had traders active in New York markets between 2007 and 2013 are likely to face trial in the end.