South African Chamber of Commerce chief executive Kevin Wakeford has questioned the credibility of the commission investigating last year’s fall of the rand after the public was barred from a portion of Friday’s final hearing.
Shortly after the commission heard the closing remarks of Finance Minister Trevor Manuel, its chairman John Myburgh granted a request by the South African Reserve Bank (SARB) that any parties not involved in a review process of hedging transactions by Deutsche Bank for three South African companies leave the commission room.
The commission resumed an hour later with SARB’s legal representative, Phillip Ginsburg, reading a statement from the central bank’s exchange control department (Excon).
The statement said Excon had resolved its concerns with Deutsche Bank Johannesburg and Deutsche Securities about the details of structured finance deals worth over R3-billion undertaken by Deutsche’s London branch on behalf of Sasol, Nampak and M-Cell.
”Excon is of the opinion that the review proceedings have resolved the concerns which have been raised by Excon and, accordingly that this matter has now been satisfactorily finalised,” Ginsberg read.
Deutsche had told the commission that its London branch, as a non-resident, did not have to disclose its dealings.
The SARB had been investigating the Deutsche deals since October.
Excon said the hearings were kept confidential for policy reasons, because the proceedings fell within section 33 of the SARB Act of 1989.
”Accordingly such information cannot be made available to any party other than those involved in the review proceedings.”
Wakeford, who was at the hearings on Friday, wrote to President Thabo Mbeki in January with information he received from an unnamed and highly placed source about deals by Deutsche which he thought were undermining the currency.
Mbeki established the commission shortly afterwards. His office said the President had received information from various sources that dubious transactions may have contributed to the 37% fall in the rand in 2001.
Wakeford said SARB’s move defeated the initial intentions and duties of a public commission of inquiry.
”The rapid depreciation of the rand last year must be considered as the single biggest disruption to our economic well-being in the last decade,” he said.
”In light of this, surely the contents of the review proceedings are critical for the maintenance and extension of both the credibility and integrity of the commission, and that of South Africa as a credible and ethical trading and investment destination.
”Ordinary South African citizens and businessmen and women have a right to know what happened, and the contents of ‘the satisfactory resolution’ of the review proceedings conducted by the SARB.”
Wakeford said it seemed paradoxical that evidence of such magnitude and critical nature be withheld and kept confidential in the final public hearing of the Myburgh Commission.
”The parties to this ‘confidential’ agreement, namely the Reserve Bank, Deutsche Securities and Deutsche Bank Johannesburg, owe it to all South Africans to make public the contents of their resolution.
”Many of our members have suffered a loss and erosion of wealth as a consequence of the events in the currency markets during 2001.”
He said all South African businesses had a right to scrutinise the contents of the ‘review proceedings’ so that they could formulate an opinion on these matters.
”The Minister of Finance’s statement today indicated that irregularities might have taken place in the application of exchange controls. He also indicated that one cannot have a situation where a few benefit at the expense of the many.
”Against this background, the failure of the parties to the ‘review proceedings’ to disclose the contents thereof makes an absolute mockery of democracy and fairness in our society.
”It would seem tragic if the commission lost credibility, and was unable to continue with its positive and constructive role in its final deliberations.”
Manuel in his closing remarks to the commission reaffirmed government’s commitment to a gradual relaxation of exchange controls and brushed aside calls for a ”big bang” approach to forex relaxation.
”A sustainable development path requires that certain conditions be in place before proceeding to full capital account convertibility,” he said.
Myburgh said the commission’s final report would be made available ”as soon as possible”.
Justice Minister Penuell Maduna said at the release of the commission’s interim report earlier in May that the final report would be released at the end of June. – Sapa