The Competition Commission on Friday welcomed the decision of the Competition Tribunal in which it dismissed objections brought by various local and foreign banks to escape prosecution on currency manipulation allegations.
Competition Commissioner Doris Tshepe said, “The decision by the Tribunal affirms the Commission’s view that there is collusion that the banks must answer to. The prosecution of this matter has been going on since 2017 and the banks have not answered to the allegations against them. This decision provides the banks with an opportunity to do so.”
The Tribunal ruled in the Commission’s favour to add nine other banks in the complaint referral of the “Forex Cartel” case, bringing the number of banks facing prosecution of collusion to manipulate the Rand/Dollar exchange rate to a total of 28 foreign and local banks.
The nine banks added are local banks (Nedbank Group; Nedbank Ltd; FirstRand; FirstRand Bank) as well as international banks (HSBC Bank USA, National Association; Merrill Lynch Pierce Fenner and Smith; Bank of America; Credit Suisse Securities (USA) and Standard Americas).
If the banks are found guilty, the Tribunal has the right to levy a fine of up to 10% of in-country annual turnover. This as local banks’ turnover amounts to billions of rand.
Since April 2015, the Commission has been investigating a case of price fixing and market allocation in the trading of foreign currency pairs involving the Rand.
The Commission alleges that between 2007 and at least 2013, 28 banks from multiple jurisdictions in Europe, South Africa, Australia, and the US conspired to manipulate the South African Rand through information sharing on electronic and other platforms and through various co-ordination strategies when trading in the USD/ZAR currency pair.
The Tribunal also dismissed all the various applications/objections brought by 15 banks, including Standard Bank, Nedbank, and FirstRand Bank to stop prosecutions against them for fixing the South African Rand / US Dollar currency pair. The Tribunal further ruled that it has jurisdiction to hear the case against the banks.
The Commission said, “Yesterday’s ruling is the second major setback for the banks in about a week after the Competition Appeal Court (CAC) ruled in favour of the Commission by denying Standard Bank access to the Commission’s evidence. The CAC ruled that Standard Bank can have access to the Commission’s evidence only after it has answered to the allegations against it.”
In the judgment handed down on Thursday, the Tribunal dismissed a second round of exception, objection, dismissal, and strike-out applications brought by the various banks, in response to the Commission’s amended complaint referral.
As part of its reasons for the decision, the Tribunal stated that: “The respondents are accused of engaging in conduct considered the most egregious in competition law. Furthermore, the alleged conduct relates to fixing and manipulating the Rand/Dollar exchange rate, which has a central and crucial role in the South African economy.”
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