The Economist, famously wrong on just about everything, disses Bitcoin

Written by Ciaran Ryan. Posted in Journalism

This article first appeared at Accounting Weekly.

I was waiting for The Economist to diss Bitcoin. Now that it has done so, I feel it is safe to buy. This smug, establishment BS factory is at it again. Reg Rumney tears into them here. Back in the 1980s, what was their solution to apartheid South Africa? Dump gold everyone! That’s real activism for you. Drive down the price of gold and the racists will surrender. This ship of fools just keeps on sailing, talking into the establishment bubble that is its base. How they have kept going so long with a track record as miserable as their’s is one of the wonders of our age.

The magazine that is famously wrong on just about everything is a trader’s best friend. You cannot take them seriously on anything. When it says go long, it is a dead certainty that the reverse will happen. The crypto naysayers have been at it for a decade, and they have been wrong every time.

Now listen to two guys who actually know a thing or two about cryptos, Marco Wutzer and Doug Casey. The real risk for everyone alive today is the sustainability of the fiat currency ponzi scheme that has made everyone poorer.

Understand this: there are those who are mortally threatened by cryptos. After reading this you would be a fool not to own some.

From International Man:

Nick Giambruno: I always tell my readers that owning Bitcoin lets you escape the matrix… the financial prison that governments have erected with fiat currencies, central banks, and privacy-killing regulations serving as the bars on the door. It’s like a Swiss bank account in your pocket.

Unlike paper currencies, Bitcoin is an inherently international asset. It has incredible utility as a value-transfer mechanism. You can take any amount of it in and out of any country. You don’t need permission from any government.

Bitcoin’s resilience to government interference terrifies politicians. This is why it’s such a disruptive and exciting technology. Still, not everyone thinks it’ll last.

Can the U.S. government—or any government—shut down Bitcoin?

Marco Wutzer: Governments can outlaw the use of cryptocurrencies such as Bitcoin in their respective countries and go after businesses and individuals that trade them.

However, no government on this planet has the power to shut down a globally decentralized and distributed network, such as Bitcoin.

That would involve coordinated and sustained action in all countries on the planet simultaneously. The notion that any entity can shut down a global network like Bitcoin is a fairy tale.

The unstoppable nature of cryptocurrencies is what makes them so powerful in the first place, and is one of the main reasons they are so superior to fiat currencies.

There are certainly third world countries that have outlawed cryptocurrencies. But these countries are, for the most part, completely irrelevant to the world economy and will simply fall further behind.

On the other hand, there are plenty of governments that realize the importance of cryptocurrencies and are actively trying to attract crypto businesses and investment funds to their countries. Switzerland, Singapore, Japan, the United Kingdom, the Netherlands, and Denmark are a few examples that come to mind.

Continue reading.

Equality court rules: no racism is acceptable

Written by Ciaran Ryan. Posted in Journalism

This article first appeared at GroundUp.

In a moment of anger, ANC member Velaphi Khumalo let rip on Facebook that South Africa needed to be cleansed of whites. He said whites needed to be treated as Hitler treated the Jews.

He was responding to an earlier racist comment on social media from Penny Sparrow, who referred to blacks as “monkeys”.

Both, no doubt, have come to rue their remarks. Both recanted. But Judge Roland Sutherland of the Equality Court in Johannesburg was not satisfied with Khumalo’s retraction, especially after Khumalo more recently decided it wasn’t hate speech after all.

On Friday, Sutherland declared that Khumalo’s remarks were hate speech and interdicted him from repeating them. He also ordered Khumalo to issue an apology to all South Africans.

The matter was first raised in the Roodepoort Magistrates’ Court (which also has an Equality Court) by the ANC. However, the South African Human Rights Commission (SAHRC) was unaware of this earlier hearing at the lower court, and brought it before the Equality Court in Johannesburg.

Given the large number of racist remarks on social media, the ruling should give keyboard warriors pause for thought.

These are the facts of the case: In 2016 Khumalo wrote on his Facebook account:

[We should] “cleanse South Africa of all whites. We must act as Hitler did to the Jews. I don’t believe any more than is a large number of not so racist whit people. I’m starting to be sceptical even of those within our movement ANC. I will from today unfriend all white people I have as friends from today u must be put under the same blanket as any other racist white because secretly u all are a bunch of racist fuck heads, as we already seen.”

In a subsequent posting he wrote:

“Noo seriously though u oppressed us when u were a minority and then manje (Zulu: now) u call us monkeys and we suppose to let it slide. White people in south Africa deserve to be hacked and killed like Jews. U have the same venom moss. Look at Palestine. Noo u must be bushed (burned) alive and skinned and your off springs used as garden fertiliser.”

Khumalo, who at the time worked as a sports officer for the Gauteng Provincial government, said he was reacting in anger to Penny Sparrow’s well-known Facebook post in 2016 wherein she referred to black people as “monkeys”. He said he was upset and hurt by the post and that no reasonable person could construe his remarks as an incitement to violence. He was reprimanded by his employer (but didn’t lose his job), and the backlash on Facebook was instant and ferocious. The ANC took the matter to court.

Ghosts of the Guptas still haunt Optimum coal mine

Written by Ciaran Ryan. Posted in Journalism

This article first appeared on Moneyweb.

Last week the Pretoria High Court dismissed an attempt by a Swiss-based company, Charles King SA, to stop the sale of the Tegeta-owned assets now under business rescue.

This was the 44th case against the business rescue practitioners involved in salvaging the wreckage of the Gupta’s Tegeta business empire. Tegeta owns Optimum Coal Mine, a share in the Richards Bay Coal Terminal and Koornfontein Mines.

There are suspicions that in 2017, the Guptas, recognising that they had reached the end of their state capture rope, put in place agreements that would allow them to buy the companies back for a song, or at least direct their disposal.

Charles King SA had a written agreement signed in 2017 to purchase Tegeta for R2.9 billion, with a down-payment of R66.7 million. Tegeta’s assets are probably worth 50%-100% more than this. That in itself has raised questions over the authenticity of the share sale agreement, and who was behind it. Why would the Guptas sell their prize assets at below market price?

The down-payment was made on October 22, 2017, but was R2.3 million short. When business rescue practitioners started looking into this payment, they discovered several anomalies. The very next day after receiving payment from Charles King, the money was withdrawn from the Tegeta bank account and used to pay salaries at Tegeta, Optimum and other Gupta companies. This is highly suspicious, as normal procedure in such a transaction would involve paying the deposit into a trust account pending settlement of the full purchase price and transfer of the shares. The Guptas used this money to fund operating expenses.

How banks routinely over-charge on vehicle loans in arrears

Written by Ciaran Ryan. Posted in Journalism

This article first appeared in Moneyweb.

Eight years ago debt counsellor Fanie Grové started looking at vehicle loan statements from his clients and was staggered by what he saw: in every one of more than 80 cases he examined where the borrower had fallen into arrears, he says the bank was unlawfully overcharging interest.   

In some cases, the overcharge was 40-50% more than the interest allowable in terms of the National Credit Act (NCA), says Grové.

Considering the number of vehicles sold in SA each year – 557 000 last year alone – the implications could be huge. Wesbank, the market leader, reported R2.6 billion in profits from its SA retail activities last year.

The matter was raised with the National Credit Regulator in 2014 over a Standard Bank customer who missed some monthly payments in 2013. The NCR took the view that the bank was not in violation of the NCA and that it had calculated the interest correctly – despite the fact that the bank later reduced the loan amount payable by the client. The NCR’s dismissal of the case is puzzling to some in the debt industry. An actuary who reconstructed the bank statements and applied what he says is the correct interest charge found that the bank had overcharged the customer by 40%.

Standard Bank spokesman Ross Lindstrom says charging interest on interest when a client falls into arrears on a vehicle loan is “in line with the contractual agreement, which complies with all relevant legislative requirements.”

Why did the bank then reduce the client’s loan amount? Is this not an admission of wrongdoing? “Definitely not an admission of any wrongdoing, as this was an attempt by Standard Bank to assist the customer,” says Lindstrom.

Banks are clogging the system, says court

Written by Ciaran Ryan. Posted in Journalism

From GroundUp. This is Part 2 of a two-part series. Part 1 is here.

A full bench of the Pretoria High Court ruled last week that magistrates’ courts should be the first port of call for banks seeking judgment against their clients. On Wednesday we explained the arguments in the case that dealt with access to justice for distressed debtors. But another important part of the case was how these applications to the court by banks have clogged up the high courts. 

The Pretoria High Court judges said the number of new cases coming before the Pretoria High Court had increased to nearly 100,000 in 2016 from 74,000 in 2012. In the Johannesburg High Court the case load is more stable, increasing to nearly 50,000 in 2017 from about 48,000 in 2012.

The two courts had about the same number of judges: 40 permanent judges and 23 acting judges in Pretoria, and 38 permanent judges and 24 acting judges in Johannesburg. Judges sat in court almost every day and were forced to write judgments after hours or on weekends, the judges said.

“This results in inordinate delays in delivering judgments. Obviously this is an untenable situation that needs to be addressed in the interests of justice,” reads the Pretoria High Court judgment.

They said judges were also taking longer in trial preparation due to changes to court rules allowing for reserve prices to be set in cases where repossessed homes are sold at auction. All this resulted in delays of four to five months for cases to be heard. The problem was aggravated by banks bringing cases before the high court which should properly be heard in the magistrates’ courts.

The judgment says it becomes untenable for a single judge to hear 80 unopposed matters (where the defendants put up no opposition) in a day. This has now been limited to 60 matters per judge per day.

Another victory for distressed debtors – court tells banks “take your cases elsewhere”

Written by Ciaran Ryan. Posted in Journalism

From GroundUp. This is Part 1 of a two-part series. Part 2 is here.

The Pretoria High Court struck another blow on behalf of distressed debtors last week. A full bench of three judges ruled that magistrates’ courts should be the first port of call for financial institutions seeking judgment against their clients, where matters fall within the lower courts’ monetary jurisdiction.

This follows the ruling two weeks ago by a full bench of the Johannesburg High Court. That court ruled that repossessed homes must be sold with reserve prices at sheriffs’ auctions. This is to stop homes from being sold for a fraction of their market value.

Banks frequently go to the high courts for judgment against defaulting clients, even when relatively small amounts of money are owed.

The Judge President of the Pretoria High Court convened a full bench to decide whether the high court should entertain cases that should be heard by the lower courts just because both courts have jurisdiction under the law. He also asked the court to consider whether there is “an obligation on financial institutions to consider the cost implication and access to justice of financially distressed people” in deciding which court to use.

Why banks prefer suing in the high courts

A key reason why banks prefer suing in the high courts is to keep up pressure on a defaulting client. Armed with a high court judgment against a client in arrears, banks are able to keep alive the threat of sale in execution order, even if the borrower catches up on arrears. If they default a second time, the bank can sell the person’s home without again having to approach the court. This is less likely to happen in a magistrates’ court, where the order expires after a year.

The Pretoria High Court ruled that if banks brought their cases to the high courts when the lower courts had proper jurisdiction, the high courts could kick the cases down to the lower court. This would save legal fees for the debtor.

FSB whistleblower’s legal challenge hits the end of the road

Written by Ciaran Ryan. Posted in Journalism












This article first appeared in Moneyweb.

Pension fund whistleblower Rosemary Hunter’s campaign to force the Financial Services Sector Authority (FSCA), formerly known as the Financial Services Board (FSB), to investigate irregularities surrounding the cancellation of 4 600 pension funds was rejected in the Constitutional Court on Thursday (September 20).

Hunter achieved a few minor victories, including gaining access to the previously withheld reports by Judge Kate O’Regan and KPMG. She was also granted leave to appeal (though lost the actual appeal) and was found to have sufficient standing in court to represent the public interest. The court further softened the blow by refusing to grant a costs award against her.

But the big fight – to force an investigation into the so-called cancellations project and any prejudice suffered by beneficiaries – was lost on the grounds that the FSCA had already launched investigations by engaging O’Regan, KPMG and pension funds attorney Jonathan Mort. In a minority judgment, three judges said it was “common ground that the cancellations project was infested with unlawfulness” and that “the FSCA had a lax approach to lawfulness in the cancellations project.”

Hunter, a former political activist, was appointed deputy registrar of pension funds at the FSB in 2013. Within a month of starting her three-year contract, she started raising red flags over the wholesale cancellation of pension funds which have been found to still have unclaimed benefits and other assets. Many fund administrators have established special purpose unclaimed benefits funds to receive transfer of these funds, though others have been accused of making little or no effort to find the beneficiaries.

Hunter became a thorn in the side of FSB management and was offered R6 million to leave. She declined, choosing to see out her full three years. She was subjected to disciplinary proceedings that were abandoned by the FSB after a day and a half. Several investigations were launched to pronounce on the legality of the cancellations project, and whether there were any unclaimed benefits in these cancelled funds. KPMG and Mort found there were indeed unclaimed benefits and other assets in some of these cancelled funds, based on a limited sample reviewed by them.

Sun City prisoners accuse staff of cheating them out of canteen money

Written by Ciaran Ryan. Posted in Journalism

This article first appeared at GroundUp.

Inmates at Johannesburg’s “Sun City” prison say officials have stonewalled their attempts to open a fraud case against staff members for cheating them out of profits from the prison canteens.

They accuse the staff of profiteering at the expense of inmates and also of withholding profits from canteen sales supposed to go to the prisoners’ sport and recreational facilities.

Sun City prison has two canteens, one for staff and one for the nearly 3,000 inmates. Till slips from the two canteens appear to show that inmates are being charged 20% more than staff for the same items. Inmates say this is in contravention of Section 118 of the Correctional Services Act which prohibits any staff member deriving “any benefit or advantage from the sale or supply of any article to or for the use of any offender or correctional centre.”

Long-standing prison policy is to add a 5% mark-up on items sold at the inmates’ canteen, with this 5% profit going to sports and recreation. This is in addition to the 5% of total profits inmates are supposed to receive from the staff canteen.

However, it emerged in a recent South Gauteng High Court case that prisoners had not received any share of profits from the canteen since 2011.

Deputy chairperson of the inmates’ Participative Management Committee (PMC) at the prison, Lucas Mokholo, says a complaint was registered with the prison’s complaints official, and a request made to open a case of fraud against staff members for unlawfully profiting from goods sold through the inmates’ canteen. He says the complaint was met with silence from prison officials. The request to open a fraud case with SAPS (South African Police Services) has likewise been stonewalled, despite promises of assistance from prison officials.

In January this year Sun City inmates brought an action against prison officials in the South Gauteng High Court after it emerged that prisoners were going up to 20 hours between meals because of a shortage of manpower, the result of a labour dispute.

Prisoners were being fed both lunch and supper at 1pm each day, and had to wait till 8am the next morning for their next meal. Judge SM Wentzel handed down judgment in June with an order compelling prison officials to space meals throughout the day and serve “a hot meal of meat and vegetables in the evening to sustain them until breakfast the following mornings…”.