Criminal operations in the financial sector
18 January 2017
The African National Congress Youth League has noted the series of revelations about the criminal conduct of numerous financial institutions, globally and locally, that have recently dominated news headlines. These revelations involve the role of the Ratings Agency, Moody’s, in causing the disastrous 2008 Financial Crisis. These revelations also stretch to the so-called CIEX Report, relating to how the Apartheid government colluded with private banks using public finances to boost their ailing balance sheets. We view these global and local dimensions of the debate to be an important platform for the country to seriously discuss the dangers to developments posed by the grip of financial institutions on the economy.
The ANC Youth League notes that the revelation about the role of Ratings Agency Moody’s in misrepresenting debt instruments in the build-up to the 2008 Financial Crisis comes at a point where the South African state is under immense pressure with constant threats of a ratings downgrade. The penalization of Moody’s provides undisputed evidence that there is a possibility for them to do this in our own country. The ANC Youth League has for sometime warned about the integrity of these agencies that have a huge task of valuing the credit worthiness of our country. These agencies that have been held in such high regards have been proven that they can are not honest and can plunge the country into financial disaster like they have done in the United States. South Africans must no longer trust these institutions in determining the state of our economy and the political choices that we should make. We must reject their immorality and call for them to never set foot in this country again.
With regards the local matter involving ABSA bank, the CIEX Report and the investigations of the Public Protector will most likely reveal the technical detail to an immoral corrupt project that have been for decades. The Apartheid government and its institutions openly pursued an accumulation strategy in the private interests of particularly Afrikaner capitalist networks. This was mainly organized around using public expenditure to build and sustain a series of Afrikaner institutions in finance, mining, manufacturing, agriculture and retail. The incident of Billions of Rands pumped into Absa during the dying moments of the Apartheid state is only a dramatic example of the grand scheme of systemic looting of public resources by white private capital as facilitated by the Apartheid government.
The ANC Youth League calls for the release of the report that we believe was intentionally hidden. Government must speedily start a process to recoup all amounts of money that will emerge in that trail. We will submit written applications to the office of the State President in advancing our call for an elaborate and detailed pursuit of these looted financial resources, starting with the matter involving the institutions that formed ABSA Bank.
We will continue to take strong political action and radical campaigns to have the government withdraw its accounts from ABSA just as we pursue them to repay the money that they are holding onto. If the government moves slowly in this regard we will also target them to put more pressure to move their accounts to Post Bank which should be operating as a State owned bank. This also proves that the independence of the reserve bank should come to an end as they collude to collapse and milk this country of billions. The independence of the Reserve Bank has played a huge role as a facilitator of criminality as evidenced by this ABSA matter.
However, the ANC Youth League wants to warn the South African public to not limit the scope of these investigations only to historical looting. We are of the view that the scope of the conversation must be extended to current patterns of racialized extortion of the public by the banks.
Access to loans, housing bonds and car finance is framed around a Credit Risk Assessment model that implicitly leaves black youth with the highest interest rates compared to everyone. It privileges white people in its reliance on credit histories, accumulated assets and dubious things like the location of your home for safety assessments. All of these things hit hard against black youth. It is a well-established fact that black people are concentrated in these so called risky settlements as a function of Apartheid’s racist spatial planning and that our credit histories are themselves informed by the exclusionary policies of that racist system.
Issued by Mlondi Mkhize, National Spokesperson, ANCYL, 18 January 2017
