‘Banks dodging accountability’

The Competition Commission said it is “absurd” that major commercial banks have suggested that their alleged involvement in currency-rigging did not have an impact on the South African economy and the public at large.

The competition watchdog has also argued, through its lawyer Dali Mpofu, that it’s pursuing its case against bank traders in the spirit of accountability – in line with the constitution, particularly the Competition Act.

“Our constitution talks about the value of accountability. What it really says is that corporates must account to the public more particularly when it comes to allegations of malfeasance and corruption,” Mpofu argued.

The commission and commercial banks have been duking it out at the Competition Tribunal, where the competition authority’s case against currency traders is being heard for five days ending tomorrow.

The case, in which more than 30 individuals linked to 23 banks are accused of rigging trades in the rand-US dollar currency pair to allegedly boost profits, was referred to the tribunal in February.

However, the merits of the case haven’t been heard as the tribunal is still hearing technical issues including exceptions or objections by banks to the charges.

The commission is pushing for a 10% fine on yearly turnover against Standard Bank of SA, Investec Bank, Bank of America, Merrill Lynch International, BNP Paribas, JP Morgan Chase, HSBC Bank, Macquarie Bank, Barclays Capital, Standard New York Securities, Nomura International, Credit Suisse Group and others.

The commission found that from at least September 2007, banks had a general agreement to collude on prices for bids, offers, and bid-offer spreads for the spot trades in relation to currency trading. The commission’s case was completed in April 2015.

However, banks have argued that the commission is relying on broad accusations that lack hard evidence – as they have not been given clear examples of individual traders participating in alleged currency-rigging.

They have also argued that the commission does not have the jurisdiction to bring charges as some banks are foreign entities, and that trading in the rand does not have broad consequences for the economy as traders use it to purely trade in other currencies.

Mpofu rejected these objections, saying the banks are “dodging to face the music” by raising various objections.

Regarding the commission’s jurisdiction, Mpofu said geography limitations do not apply, considering that markets are global and linked in their nature.

The commission is gunning for banks to settle with it. Meanwhile, Absa has applied for leniency.