Billion-rand fines for banks dismissed as unlikely

STANDARD Bank could have to pay tens of billions of rands after its traders allegedly fixed the price at which they bought and sold the rand.

But legal and financial experts believe that the chances of banks accused of price fixing actually having to pay such huge fines are unlikely even if they are found guilty of collusion.

The Competition Commission called on the tribunal on Wednesday to rule that 15 banks should pay 10% of their annual turnover for all the years traders allegedly colluded on the rand price.

Its investigation started in April 2015 and goes back to 2007.

Absa is exempt from a fine because it has cooperated with the commission.

One of its staff was reportedly the whistle-blower.

Intellidex analyst Stuart Theobald said that if there was any possibility of a real fine the banks’ share price would plummet, but the prices had barely changed since the announcement.

This was because the market was not expecting such large fines to be paid.

It could be a very difficult case to prosecute, he said, as the trades took place offshore‚ according to the Competition Commission.

Lawyers confirmed to Times Media that the Competition Act gives authorities jurisdiction over activities that take place in or have an economic effect on South Africa.

Fullard Meyer director Mitch Morrison said this meant banks that were not in the country might be able to blow off regulators.

Some of the banks cited do not have a physical presence in South Africa.

“Even South African banks may be able to use the fact that trades took place offshore as a defence‚” he said.

Wits University associate competition law professor Kasturi Moodaliyar said that as long as the conduct had an economic effect in South Africa‚ the competition authorities would have jurisdiction over those companies.

But the real economic effect of the trades could be hard to prove.

The domestic banks cited in the case‚ Investec and Standard Bank, might settle with a negotiated fine to avoid a long drawn-out prosecution if trends could be relied on.