Page 109 - Monocle Quarterly Journal Vol 1 Issue 1 Q4

BANKING: the lASt BAStIoN of democRAcy
a problem with the fact that the sovereignty of South Africa is being pinched upon by US tax law without negotiation. e reason FATCA is able to exert such power is that its punishment for non-compliance is a restriction on trading with US banks. Russian banks, as an example, are severely restricted from trade with US banks following sanctions issued against them after the Russians invaded Crimea and the Eastern Ukraine. Now, I don’t agree with the invasion, but I don’t see how Gazprombank, or its investors for that matter, are at fault.
Banks are being restricted and held liable for the costs of implementing complex anti-money laundering systems. Banks are no longer able to use client deposits to help with funding of investment banking and trading. ey’re prone to enormous nes – research shows more than USD 138 billion dollars worth, just in G8 countries, in the last nine years. Bank CEOs regularly fall upon their swords – the most recent example being John Stumpf from Wells Fargo. Given all of this, the economic argument for banks to be utilities, like a power grid, is strong, especially from an investor’s perspective.
Banking and the State
But – and it’s a big but – to be e ectively extensions of the state would yield greater danger to our purpose. In our own country, state organs are at war with each other over legal minutiae that can only embarrass us as a nation. We can’t talk state interference without starting with the Guptas. As one example: various state agencies forced Glencore to sell Optimum Coal, into a kind of state fund, and they then sold it to the Guptas for nothing. is coal mine is supposed to be part of our state assets and we, as tax payers, own it.
In fact, there are many, many very suspicious transactions that can be seen in the Guptas’ bank accounts – accounts that were closed by the banks at which they were held. Pressure was placed on Finance Minister Pravin Gordhan to interfere in this matter. He refused, saying he should not be compelled to take a position against two parties in a matter that has nothing to do with the Minister of Finance. He made use of a very important part of the law in which he is allowed to ask the High Court to support his choice.
Any responsible bank would wish to close those accounts, in any country, as a private institution and a commercial entity under a capitalist system. e banks should be in a position to remove themselves from risky
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