Pillaging us by deceit

THE MANIPULATION of exchange rates is an issue that impacts on almost all facets of the country’s economy and the quality of life its citizens would lead. Yet this important market, which is estimated to be worth $5 trillion (R65.2trln) a day, remains largely unregulated, allowing the big players a virtual to do as they wish.

Any fraud in this market automatically determines the fortunes of everyone from the largest nation to the smallest consumer. Just as was the case with the collusive behaviour in the bread industry a few years ago, it is the consumer, especially the poor, who often get the short end of the stick. The country’s export market, which is one of the key sectors that employ thousands of workers, is adversely impacted when foreign exchange is tampered with. And a weak currency makes imports more expensive.

What adds salt to the wound is a lack of collective outrage in what in a different world would be seen as white-collar crime.

The mooted 10 percent fine for big banks found guilty of colluding in the trading of foreign currency does little to deter big business and multinationals to devise a more complex web of deceit to short change us. At the heart of this crime is the enrichment of a few at the expense of millions liable to be affected by wealth erosion.

The plundering of the country’s resources goes unabated in almost all sectors of our economy. It’s just under 3 years after 15 construction companies were fined R1.4 billion for “rampant” collusive tendering in the build up to the 2010 soccer world cup. And of course, there was the bread cartel. As the country jumps from one white collar scandal to another, the logical question is – how deep does the rot go and does the punishment fit the crime?

A disheartening fact that adds to this malady is that even docking 10 percent of these companies’ annual turnover does not substitute for the enormous financial benefit accrued.

Across the world we see companies and institutions who were found with their hands in the cookie jar coming back stronger than before. In the US, the new administration has set its sights on undermining the Dodd-Frank Wall Street and Consumer Protection Act, enacted in the wake of the 2008 financial meltdown to better regulate the financial services sector. The anticipated roll-back of this act means the big banks would again have a free rein to dictate the fates of billions.

Standard & Poor’s, one of the big rating agencies, in 2015 agreed to pay $1.4bn to settle allegations by the Justice Department that the credit ratings for high-risk mortgage securities misled investors before the 2008 financial crisis.

We must brace ourselves for more collusion in the months and years ahead.