It was the stuff legends are made of. In 2001 the rand took an inexplicable plunge to lo se 42% of its value, mostly in the last quarter. While a declining rand was then seen as the one certainty in SA financial markets, the extent of the decline was a blow to slowly emerging confidence in SA's economic stability.
It was fertile ground for conspiracy theorists. Such a vote of no confidence from the global investing market shocked SA business. The response was predictable: the collapse of the rand wasn't a genuine vote of no confidence from the market - it was because nasty, unpatriotic companies and bankers had conspired to undermine the trading value of the currency.
A media frenzy over "Randgate" ensued, with many publishing "scoops" on what amoral bankers and their clients had conspired to do to the ailing rand. It was great sport - in darkened corners of Johannesburg's pubs and boardrooms, furious arguments raged over who dunnit and how big their profits were.
A commission of inquiry headed by advocate John Myburgh was appointed by President Thabo Mbeki to investigate the circumstances leading to the collapse of the rand. It later emerged that Mbeki had been nudged into action by a letter from the then president of the SA Chamber of Business, Kevin Wakeford . Among informed market-watchers, there was a collective groan of disbelief that the president had used such a weak premise to appoint a commission to chew up the time of bankers across SA. The great r and commission was under way - four months after the rand's low at the end of 2001.
The conspiracy theory went like this: Sasol, in its R1,3bn purchase of European chemicals company Condea in 2000, had conspired with Deutsche Bank to devalue the rand using techniques that were described as "dubious". The motive was profit. And it didn't stop there. Wakeford threw in the names BHP Billiton, Nampak and M-Cell as other possible culprits for the rand's weakness. As the credibility of his allegations began to buckle, he repeatedly claimed he was merely the "messenger" for an unnamed source. That source was never identified.
But the commission still captured the public imagination. Wounded SA pride now had a scapegoat.
Forensic investigators were appointed by the commission to search out wrongdoers among banks and other businesses. The media were flooded with analysis over who had done what and why. Questionnaires were sent out to all registered foreign-exchange traders, asking whether they knew of any transaction that had contravened exchange controls "in your organisations or in respect of your clients". The hunting pack was looking for witches and everyone - banks and clients - was nervous.
Banks, companies and an army of lawyers descended on the Sandton Convention Centre for the daily hearings. The legal fees clocked up at an alarming rate. When the saga had passed, one bank told the FM it had spent tens of millions on legal fees and management time. The commission itself cost taxpayers R16m.
Reserve Bank representatives, bankers, economists and financial directors paraded past Myburgh and his fellow commissioners, Development Bank of Southern Africa MD Mandla Gantsho and lawyer Christine Qunta. And by the end of it, the three could not reach consensus. In August 2002, a "majority report" by Myburgh and Gantsho was mysteriously leaked to the media. It was well-reasoned and definitive. And its early "release" cheated Qunta's minority report of the limelight. Qunta had taken a harder line, alleging that illegal activities could have occurred.
The Myburgh and Gantsho report became the orthodoxy, pouring cold water on all the conspiracy theories. The collapse of the rand had been due to entirely predictable influences: contagion from crises from Argentina to Zimbabwe; importers and exporters using legal leeway to benefit from exchange-rate changes; inflation; the Reserve Bank's policy stance; and the economic slump after September 11.
Only one allegedly guilty party was identified: a small diamond trading company called Equity Diamonds. The Reserve Bank independently investigated the Deutsche/Sasol deal, which resulted in a nonadmission of guilt fine equivalent to R500 000.
Since the inquiry, the rand has risen to levels last seen in early 2000. Global investors quickly spotted that it was deeply undervalued.
In the end, the whole exercise amounted to a very expensive economics lesson for the public.
