South African Reserve Bank

Chase Bank limits cash withdrawals

In March 1985 when Chase Manhattan Bank led a string of banks to the South African Reserve Bank and demanded their money back, the economic pressure on South Africa intensified dramatically. Some speculate that Chase’s move was what really pulled the rug out from under the Afrikaner government.

Threats of disinvestment were loud and insistent then and companies from Kodak, to Mobil and Barclays bank started to withdraw from South Africa.

Today the same bank, responsible for the rape and looting of South Africa, Chase Bank, has moved to limit cash withdrawals while banning business customers from sending international wire transfers from November 17 onwards, prompting speculation that the bank is preparing for a looming financial crisis in the United States.

Numerous business customers with Chase BusinessSelect Checking and Chase BusinessClassic accounts have received letters over the past week informing them that cash activity (both deposits and withdrawals) will be limited to a $50,000 total per statement cycle from November 17 onwards.

The letter reads;

Dear Business Customer,

Starting November 17, 2013:

– You will no longer be able to send international wire transfers. You will still be able to send domestic wires and receive both domestic and international wires. We’ll cancel any international wire transfers, including reccurring ones, you scheduled to be sent after this date.

– Your cash activity limit for these accounts(s) will be $50,000 per statement cycle, per account. Cash activity is the combined total of cash deposits made at branches, night drops and ATMs and cash withdrawals made at branches (including purchases of money orders) and ATMs.

These changes will help us more effectively manage the risks involved with these types of transactions.

Another letter received by Peak to Peak Charter School, a college in Colorado, states that the option to send both international and domestic wire transfers has been withdrawn from Chase business savings account holders.

Other Chase business customers confirmed they had also received similar or identical letters.

“I’m a Chase customer with both of the type accounts mentioned and got the letter posted,” wrote one.

“I have been a loyal customer of Chase for 11 years and I received the letter for my business and when I called about this I was told basically piss off and find another bank!” added another.

Chase is obviously very keen to make it hard for their customers to have any kind of control over their savings and is trying to prevent them from sending dollars abroad, prompting concerns that Cyprus-style account gouging could occur in America.

The move to limit deposits and withdrawals while banning international wire transfers altogether is a bizarre policy and will cripple many small and medium-sized businesses with Chase accounts. Buying stock from abroad in any kind of quantity will now become impossible for many companies, while paying employees will also be a headache.

Why has Chase announced such a ludicrous and restrictive policy change and is it related to the potential for a US debt default?

Speculation is rife that the bank is preparing for some kind of economic crisis by “locking down” its customers’ money. Although most still expect a deal to be struck to prevent a US debt default, its impact would “shake financial markets to a degree not seen since the Great Depression,” according to experts.

Others fear the move to restrict international wire transfers is part of a plan to protect against a near-future collapse of the US dollar.

Whatever the truth behind the policy change, Chase really needs to publicly explain its reasoning in order to quell the speculation.

The bank’s reputation was already under scrutiny after an incident earlier this year where Chase Bank customers across the country attempted to withdraw cash from ATMs only to see that their account balance had been reduced to zero. The problem, which Chase attributed to a technical glitch, lasted for hours before it was fixed, prompting panic from some customers.

Earlier this month it was also reported that two of the biggest banks in America were stuffing their ATMs with 20-30 per cent more cash than usual in order to head off a potential bank run if the US defaults on its debt. – praag/prisonplanet.com

Billionaire Shuttleworth loses SA exchange control case

Billionaire entrepreneur Mark Shuttleworth’s bid to have South Africa’s entire exchange control system declared unconstitutional has failed.

The High Court in Pretoria on Thursday dismissed Shuttleworth’s application to strike down the whole of Section 9 of the Currency and Exchange Act and all of the Exchange Control Regulations as unconstitutional.

Judge Francis Legodi dismissed Shuttleworth’s application to set aside the imposition of a R250 million levy he had to pay to get some of his assets out of the country in 2009 and for the Reserve Bank to return his money.

The court also dismissed his application to declare invalid the Reserve Bank’s policy of not dealing directly with members of the public but insisting that they should communicate through bank dealers.

The judge however granted an order declaring Section 9(3) of the Currency and Exchanges Act as well as certain portions of the Exchange Control Regulations unconstitutional.

Section 9(3) gives the President not only the power to amend or suspend any part of the Currency and Exchanges Act, but also the power to amend or suspend any other Act of Parliament.

Judge Legodi said this was an extraordinary wide power and effectively vested in the President the power to amend or suspend any Act of Parliament irrespective of whether that other piece of legislation dealt with currency, banking or exchange.

“This provision has the potential to unravel the healing wounds of the past when laws were changed at the stroke of a pen by one individual.

“This can never again happen in a constitutional and democratic South Africa.

“…Clearly no President in the living Supreme Law of the land (the Constitution) can ever wish to act as it is envisaged in Section 9(3).

“This does not even need a programme of liberalisation of the system of exchange controls as envisaged by the Minister of Finance,” he said.

Shuttleworth, who now lives on the Isle of Man, has blamed the existing system of exchange control in South Africa for “forcing” him to emigrate from South Africa in 2001.

He had assets worth over R4.27 billion in South Africa when he emigrated, but transferred the assets out of the country in 2008 and 2009, each time subject to the payment of a ten percent “exit charge”.

Government abandoned the levy a year after Shuttleworth moved the remainder of his assets out of the country.

Judge Legodi ruled that Shuttleworth had not proved that his constitutional right to lawful, reasonable and procedurally fair administrative action had been infringed or that the Reserve Bank’s so-called “closed door policy” was unfair.

He said the object of the 10 percent “exit charge” was to limit the adverse consequences of the outflow of funds on the external balance of payments necessary to maintain South Africa’s macro-economic health and to promote financial growth and stability.

“The idea of such discouragement cannot be said to be bad and an unconstitutional policy.

“…Imagine what will happen to this country if the wealthiest men and women … were allowed to take their wealth out of the country with impunity every time when the country is in economic grief or when there is a change of government or leaders in the government.

“It could have a devastating effect on the country as a whole,” he said.

He ruled that the decision to charge the levy had been made by the Minister of Finance and that the Reserve Bank had no discretion to exempt anyone from it.

Shuttleworth had chosen not to attack the Minister’s decision, and the court could therefore not make a final determination on the issue, he added.

Judge Legodi dismissed Shuttleworth’s contention that the exchange control process was unconstitutional because it lacked fixed guidelines, saying the system required a flexible, speedy and expert approach to ensure that proper financial governance prevailed.

He ruled that certain portions of the Exchange Control Regulations were unconstitutional, including the blanket prohibition on any transactions involving foreign currency, gold or other assets readily convertible into foreign currency, because it prohibited the right to free trade.

Regulation 3(1) C, which prohibits paying a person residing outside the Republic – making most modern-day internet transactions illegal – was also struck down, as was the section forcing one to disclose the nature of the goods one wished to purchase when one obtained permission.

The court gave government twelve months to amend certain sections of the regulations. – Sapa

Mark Shuttleworth’s court application could sink SA exchange control

Billionaire entrepreneur Mark Shuttleworth’s bid to have South Africa’s exchange control system declared unconstitutional could have a devastating effect on the country, the SA Reserve Bank (SARB) said on Tuesday.

Jeremy Gauntlett SC, for the SARB, argued that the order sought by Shuttleworth in the High Court in Pretoria was “the most radical court order imaginable”.

“He quite deliberately decided to attack the heart of the scheme and seeks to bring down the pillars of the temple,” said Gauntlett.

“If the applicant succeeds in striking down Section Nine of the Currency Act and declaring all orders and rules unconstitutional, there would be no inhibition on removing capital from this country at all.

“Section Nine is the heart of the exchange control system and he wants to knock [it] down.”

Gauntlett said Shuttleworth claimed it was in the interest of all South Africans to destroy the entirety of the exchange control system in the country.

“He couldn’t get his money out of the country. Now he wants to pull the whole system down. Why should this financial refugee, living on the Isle of Man, speak on behalf of the entirety of South African society?”

Apart from his constitutional challenge to the exchange control system, Shuttleworth wants the court to set aside the levy of more than R250 million he had to pay to get some of his assets out of the country in 2009, and to order the SARB to return the money.

He further seeks an order declaring that the SARB’s so-called “closed door policy” of insisting that members of the public communicate with it through the intermediation of authorised banks is unconstitutional and invalid.

Shuttleworth has blamed the existing system of exchange control in South Africa for “forcing” him to emigrate in 2001.

He had assets worth over R4.27 billion in South Africa when he emigrated, but he transferred the assets out of the country in 2008 and 2009, each time subject to the payment of a 10 percent “exit charge”.

The government abandoned the levy a year after Shuttleworth moved the remainder of his assets out of the country.

Gauntlett argued that Shuttleworth’s application on the levy should be dismissed because he had attacked the wrong decision-maker, as the SARB was only carrying out a decision announced by the finance minister during a speech in Parliament in 2003.

He said the minister’s decision was authorised by statute, and the primary reason for the levy was to dissuade capital flight out of the country and not to raise revenue.

He said the context was that foreign exchange reserves were vulnerable, and that few countries were able to look at a flight of capital comfortably. If a crisis developed overnight there would be the need for swift action.

“There are sophisticated economic forces at work, and there’s a need for fast action for the purpose of protecting the currency. There’s nothing wrong with such a legislative scheme.”

If you have to engage the public before you make a regulation, all regulations in the country could be struck, Gauntlett said.

“When you control foreign exchange, you cannot conceivably say: ‘Let’s put up a billboard somewhere and consult the public.’ You cannot do things that day because people will take their money and go.”

He said these were the realities of how legislatures worked.

“This argument is nonsense on stilts. It was decided it [the 10 percent exit levy] was no longer needed, but that may change,” Gauntlett said.

Judge Francis Legodi reserved judgment. – Sapa