Banks ‘not coming clean’ on collusion
Full cooperation has been promised to commission, but they have not volunteered information
BANKS being investigated for currency collusion remain tightlipped about the effect of the probe and whether they knowingly allowed the practice in the first place.
The standard response from the implicated banks, since the Competition Commission said it was investigating them, is that they “welcome the investigation and will fully cooperate”.
But commissioner Tembinkosi Bonakele said that the banks’ “cooperation” would not mean just answering the commission’s questions.
He said there was sometimes a misconception “that if you are answering questions, you are cooperating”.
Bonakele said he preferred companies to come forward with information instead of sitting back and waiting for the commission’s investigators. This route gives companies im- munity if the information is truthful and helpful.
Bonakele is essentially asking banks to come clean.
He said there had not been a “real demonstrative response” from the banks. He is yet to meet the heads of currency trading units.
Banks allegedly implicated in the currency collusion include Investec, Citigroup, JP Morgan SA, BNP Paribas, Barclays Africa and Standard Chartered.
Most of the banks declined to say whether they had started their own investigations into the matter, whether their systems failed them or if they had knowledge of the illegal dealing.
The alleged culprits, according to the commission, used the “ZAR domination” online chatroom, which enabled traders from different banks to coordinate trading when buying or selling currencies. The commission said such acts eliminated competition among traders.
The commission’s investiga- tion will run alongside probes by the South African Reserve Bank and the Financial Services Board (FSB).
The Reserve Bank and the FSB launched separate investigations in October last year to “review” how banks deal with foreign exchange trading.
The central bank said the in- vestigations did not suggest “any indications of widespread misconduct or malpractice”, but were intended to strengthen best practice in foreign exchange dealing.
The investigation, headed by James Cross, a former senior deputy governor, will be concluded by the end of this month.
It comes within a month of the central bank hitting the country’s big four banks with a R125million fine for failing to have suitable measures to ensure compliance with the provisions of the Financial Intelligence Centre Act (Fica).
Standard Bank was slapped with the highest penalty of R60million, FirstRand with R30-million, Nedbank with R25-million and Absa with R10-million.
Finance Minister Nhlanhla Nene is apparently alarmed at the investigations and wanted to know the impact on South Africa’s financial system, Bloomberg reported.