Mosebenzi Zwane, Don Quixote tilting at banking windmills

I applaud mines minister Mosebenzi Zwane for taking on the might of the banking oligarchs.  Last week he created a furore, which is still raging, after he said cabinet had decided a judicial commission of inquiry will be considered to investigate banks’ mandates over their handling of the Guptas accounts.

His statement caused “market uncertainty”.  The president repudiated his statement and said it was made in his personal capacity. 

In the National Assembly on Wednesday Zwane rejected DA finance spokesman David Maynier’s demand for his resignation.  Zwane said banks cannot unilaterally close people’s accounts, citing numerous letters he had received from people who had been affected.  He did not name the Guptas as being among those who wrote but we should assume they are.

It’s a minor matter that Zwane, who has no remit over the financial sector, issued a statement on behalf of cabinet about banks.  Why not, in the cabinet expertise is not required and he headed the inter-ministerial committee on the termination of the Gupta’s company Oakbay Investment’s accounts. 

Now twice the usual suspects – business, economists, media and politicians – are frothing at the mouth asking who is damn well running the country.  Why the uproar – because sacrosanct banks might be investigated? 

We know this is how the ANC runs the country – on automatic, not “Manuel” as we say in the Cape.  The president and cabinet put the ANC first, and Luthuli House instructs government on everything.  We know a well-known Saxonwold estate has, or had before the deputy finance minister’s revelations, revolving doors for ANC and cabinet members from where cabinet appointments are allegedly made.

Why persecute Zwane for speaking his mind when he spoke what may have been on cabinet’s and the ANC’s mind? 

Let me tell you something, ten years ago my bank – I don’t have shares in it but small savings – did what Zwane says they are doing.  Without my knowledge or approval they unilaterally closed my account and opened a new, entry-level one in its place.  I discovered this much, much later. 

(The bank shall remain nameless because I fear what Standard Bank did to former economist Chris Hart who fell foul for speaking plainly: my accounts might be suspended.)

The new account accrued lower interest and higher charges than the original.  I took it to the highest level at their regional office – the executive suite on the top floor.  They could not produce the authorisations they claimed I had signed because it did not exist.

They would investigate and refund lost interest and charges incurred.  However, by return email they were adamant they never meant “refund” – reimburse, compensate, pay back the money – and I should not interpret it as such.

It took 45 days, I daresay using incredibly complex computing algorithms and super-intelligent actuaries, to arrive at a figure that represented the alleged loss as a result of the original account’s closure.  I had seven days to approve the “gratuity” and sign an indemnity or else it would be withdrawn.  

(Note because I was not a banking science major, a month before it had taken me 45 minutes using Excel to arrive at a similar, modest amount.)

I rejected their ultimatum – why should I indemnify their unauthorised and illegal transactions that cost me money.  In an unsigned letter the Reserve Bank refused my request to investigate possible contravention of the Banks Act and Fica because “we do not get involved in disputes between banks and their clients”. 

Proven non-compliance of Fica an inter-personal “dispute”?  Has the banking cartel captured the Reserve Bank?  (Last week Cmde Jessie Duarte alluded to a “difficulty”, that is, the SARB is a “private company”.  How many Reserve Bank voting shares does the cartel own?)

Three years ago I wrote to Finance Minster Pravin Gordhan – the Indian “white knight”, “hero”, “brave Horatius”, and if his legions of supporters have their way,  soon to be “saint” (patron saint of unfulfilled austerity and fulfilled desires, vide Tzaneen buys mayor a R1.2m Merc) – asking why Treasury reportedly pressurised the Competitions Commission to drop their investigation into bank charges. 

It’s generally accepted charges in South Africa are among the highest in the world, which the banks deny of course.  But fees – money for jam – are a significant contributor to profits.

I wrote that after he took office in 2009 he expressed concern about bank charges and promised to look into it.  Instead, allegedly after banks threatened to consider their business interests in South Africa, he let them regulate it themselves.  No response.

However, after his intervention charges actually escalated with clients incurring new and higher charges across the board than before.  The introduction of Mzansi accounts, entry-level “cheap” accounts” (they’re not really – see above about the basic account I was switched to), did not hide the fact charges were increasing.  Despite this banks and Treasury claimed “progress” had been made.

Ironically, other charges are now capturing his saintly attention.  How does the idiom go – as the worm turns, or is it the early hawk catches the worm?

Let me be the devil’s advocate and ask who has really “captured” whom?  Former finance minister Trevor Manuel approved Barclays’ majority stake in Absa, Africa’s largest retail bank, a move that further concentrated the banking sector and reduced competition rather than opening it up.  Then Maria Ramos, his wife, became group chief executive of Absa.  Coincidence or what?

By the way, allowing Barclays back into the country in this way was as unwise as permitting Old Mutual, and other companies, to move head quarters to London, a decision that led to loss of confidence in the country as an investment destination and contributed to the devaluation of the rand – why should foreign companies invest when South African companies are leaving.  A rookie finance minister’s mistake; at the time I thought it was a bad idea.  Now both Old Mutual and Barclays have regretted their decision, as has Walmart.

The public are captive consumers with little choice.  Since 1994 the banking sector has remained static except for start-up Capitec, the only new one overcoming high barriers to entry. 

This is one of the fundamental limitations of our economy across all sectors, an economy characterised by monopolistic and oligarchic companies and practices, overregulation, inefficiencies and high input costs, among other things, dooming the economy to low growth, inflation and high unemployment. 

Barclays should have been allowed to return on condition it added diversity, infrastructure and competition to the sector and new jobs – the bricks and mortar of investment that’s harder to divest, not volatile “hot” money. 

But then we who may have smart ideas don’t have input into economic policy.  (Disclosure:  in the mid-90s I sent my CV to Treasury on spec hoping a brother from the Flats with a newish honours economics degree could add value to the department.  No response.  I guess Maria was all Trev ever needed ... and the arms deal.)

Why are banks sacred cows?  They are “world class” and important to the country’s financial stability, they say.   Well, so are other sectors like telecoms and manufacturing. 

But you don’t hear criticism of MTN and Vodacom, say, being considered an attack on the country’s stability.  They received a bollocking from all corners for price gouging and cartel practices, but banks are untouchable?

Zwane is the man.  He should have been around during my troubles.  I tip my hat to him for tilting at banking windmills.  They deserve it.  The inquiry on bank charges was scuttled by he who today is the man of the moment, our latter day Horatius. 

Perhaps an inquiry into the banking sector including concentration of the industry and barriers to entry would not be a bad thing for the economy and competition.  He is on to something.

Zwane’s motives are suspect, but hey, that’s par for the ANC course, which the market “factors in” anyway.  Why should he resign when his boss will not for spending taxpayer money on his Nkandla crib and contravening the constitution?  Misspeaking about a real or imagined judicial inquiry is small change in comparison.

Oh, I eventually got my money from the bank.  The chief executive, at least his legal department, blinked first and deposited the money in my account without further ado.