Special Hearings — Business Hearings — 1997-11-12

DR STALS: Yes, I think there are many many of the statements that you made there is a statement of fact that can certainly be challenged immediately.
 I certainly do not agree with what you say why the Reserve Bank was established.  I know it was established because of the gold dishes of the time and the fact that the world went of the gold standard and there were huge fluctuations in the gold price and the South African gold mining industry had serious problems to market the gold at this very big fluctuating price.
 It was a gold commission that advised the South Africa Government to appoint the central bank.  Now, yes, a part of it was also the intension that if you have your own central bank you can also develop the money market in South Africa and you can retain the savings of South Africa within the country in stead of transferring it to London.
 It was in absolutely no ways a clash with the Bank of England.  Our objective as matter of fact, the Bank of England gave us his - its full support and provided the first governor of the South African Reserve Bank, came from the Bank of England.  Mr Klegesh, who was born in Bloemfontein, but emigrated to the UK at the age of eight years and then came back to South Africa.
 So, I think the whole development of the - and the second point I must make is, South African Reserve Bank was the third central, no the fourth central bank that was established ... (power failure) ... 1914, seven years before the Reserve Bank, the bank of Japan existed as a kind of a commercial bank, more than a central bank and there was a central bank of Java in Surinama.
 The South African Reserve Bank was therefore the next central bank to be established outside of Europe with no moral of a central bank act or law at the time.  Therefore it was very much based on the Bank of England law, but that is just on the establishment of the bank.
 Your assumption that the Nationalist Party Government changed the South African Reserve Bank to an Afrikaner organisation, well, again I find that difficult to agree with.
 When I joined the South African Reserve Bank in 1955, almost no Afrikaans was spoken in the bank and the - I think it was a slow gradual process, but throughout the 42 years that I have worked in the South African Reserve Bank and that includes all that whole period that you are referring to, we've always had respect for the two official langues in the country.  
 Everything we published was published in both langues.  Board meetings took place on alternating bases in English and then in Afrikaans.  All the background documents were prepared for the one meeting in English, the next one in Afrikaans and I can assure you throughout this period and even up to today, there are, I would say, 50 percent English speaking, 50 percent Afrikaans speaking people in the Reserve Bank.
 Yes, it is true that more and more Afrikaans speaking people came to the bank.  Yes, and as far as the board of the bank is concerned, just remember, the Government appoint seven members, the shareholders elect seven members to represent shareholders on the board of the bank.
 So at least seven of the board members were always elected by the shareholders and not appointed by the Government.
 Furthermore, the Government very seldom changed the head of the bank, the governor of the Reserve Bank.  Dr De Swart, I don't know if you can remember when Mike De Kock became governor, but he stayed for 17 years and he became governor before the Nationalist Party took over in 1948 and he stayed until 1962 more or less.

UNKNOWN: Thank you, Dr Stals.

DR STALS: Good.  So I would just like to say I think we always respected the official languages in the bank and always applied the policy of using both the official langues in all the activities in the bank.

CHAIRPERSON: Thank you.  We have one last question.  If I can please urge upon you to be as concise as possible in your answer.

<UNKNOWN>: I just wanted to check one thing.  I see here in page seven of your submission, you are saying the bank joins other institutions who have apologised.
 I just wanted to know whether there are any specific policies or practices that you as a representative of the Reserve Bank are apologetic of today and the related one is this allegation that the Reserve Bank accelerated capital flight.
 So I just wanted to check with you whether had any knowledge of that.

DR STALS: What are we apologetic about, well, maybe we should not have administered the exchange controls on behalf of the Government so well and effectively.  Maybe we should not have been so devoted and so hard working at the time with the rescheduling of the South African foreign debt.
 Maybe then changes would have occurred at an earlier stage, but that is very difficult again.  The debt rescheduling;  our philosophy and our approach was, keep the bankers of the world as friends of South Africa, because one day we will need them again.
 It gave me great pleasure a few weeks ago - a few months ago to sign a loan agreement for the Reserve Bank in London with 35 banks in the Grocer's Hall, mostly the same banks that we met with ten years ago with the debt rescheduling on this occasion they gave South Africa a new loan of one and three quarter billion dollars.
 Ten years ago we met in the Butcher's Hall and not in the Grocer's Hall and then we signed a debt rescheduling arrangement.
 So, but this is I think more or less what we have in mind that maybe if the Reserve Bank followed different attitude with the some of the policies in the bank, the pressures on the South African economy could have been more at an earlier stage and changes could have occurred earlier and maybe in retrospect with the advantage of hind sight maybe that should have been a policy that we should have followed.
 Accelerated the capital outflows?  No, I don't know on what occasion when what form of acceleration of capital outflows.  Now, I think most of the time we spent many many hours in trying to keep money in South Africa and that was what the whole debt rescheduling was about and that was what all the sanctions controls were about.
 So, I can't think of what you may have in mind or may be referring to if you say the Reserve Bank accelerated the capital outflow.  It's a little bit difficult to answer that one, but I don't know what exactly the case was that you may be referring to.

CHAIRPERSON: Thank you, Dr Stals and your colleague for coming here this afternoon.  I hope that you will stay for the rest of the afternoon session and not disappear.
 Thank you very much.
Can I ask the Banking Industry to come forward.  Whilst they are coming forward, can I just remind people that tomorrow morning we'll be starting at eight thirty.  SANLAM will be starting the programme and there may be some re-organisation of the programme.  So, please, groupings that are appearing are tomorrow;  don't stick to the schedule.
 I also want to make an appeal.  We've had a very difficult - long day, I know, but there have been two individuals over there who we asked to actually listen to your submissions all day.  
 I want to go by our experience yesterday that at the end of the day and of course I'm sure the panel here would also want to leave right now, but it's our job to stay and I would like to appeal to you to actually grant the same courtesy that they've granted you all day in listening to their closing remarks.  
 Thank you very much.
BANKING INDUSTRY:  PRESENTATION

DR BORAINE: Mr Taki, you're a very brave man.  You've decided to come on your own, have you.  Welcome.  Would you take the oath or the affirmation?

MR TAKI: (Duly sworn in, states).

DR BORAINE: Thank you very much.

CHAIRPERSON: Mr Taki, you may proceed.