Banks ‘colluded for eight years’

Minister welcomes prosecution

MINERAL Resources Minister Mosebenzi Zwane has welcomed the decision by the Competition Commission to press ahead with the prosecution of nearly 20 local and international banks who are suspected of collusion in currency manipulation.

Zwane said yesterday that the decision vindicated his views that the banks needed to be investigated for bias against certain clients.

“We trust this matter will be speedily resolved, as it also directly affects the mining sector,” he said. “Most significantly, it has a direct impact on our objective of radically transforming the mining sector and increasing ownership by black people.”

Zwane’s call comes as the fallout over the claims continues, as claims have also emerged that some of the implicated banks approached the graft agency with information into the alleged rigging of the rand.

On Wednesday, the Competition Commission said it had recommended that nearly 20 local and international banks be prosecuted for alleged collusion in what it called a co-ordinated trading in the South African and US currencies.

Yesterday, the commission released its affidavit, claiming the implicated banks had for a period of at least eight years colluded, using a complex web of co-ordinating by posting fictitious bids and offers on the Reuters trading platform to create a false impression of oversupply of either the US dollar or the rand.

The commission said its inquiry centred on an instant messaging chat room called “ZAR Domination”, which was allegedly used by the banks to co-ordinate trading activities when giving quotes to customers who buy or sell currencies.

Among the implicated banks are Nomura Inter- national, Standard Bank, Investec, Barclays’ local unit, Absa, HSBC, JP Morgan Chase, BNP Paribas, Bank of America Merrill Lynch, Standard New York Securities, Australia and New Zealand Banking Group, Standard Chartered Bank, Barclays Capital, Macquarie Bank, Credit Suisse Group, Commerzbank and Barclays Capital.

Reuters reported yesterday that Barclays and Citigroup had apparently approached the commission’s investigators with the information.

“Barclays and Citigroup offered to co-operate with the investigation,” one source said, adding that if the information they provided led to a successful prosecution of other members of the alleged cartel, they could be exempted from any fine.

Yesterday Barclays reiterated its statement made earlier in the week that it would co-operate with the regulators, while Citigroup was not available for comment.

Barclays and Citigroup were not on the list of banks which the commission recommended should be fined, but it did name them as members of the alleged rigging group.

The developments elicited an unusually stern rebuke from the national Treasury, which said it viewed the allegations in a very serious light.

Bank stocks retreated on the back of the allegations.

Mosebenzi Zwane