Antitrust boss digs in on rand collusion probe

Banks inquiry may be the biggest task to date

FOR evidence of collusion, South Africa’s antitrust boss needn’t stray far from his Pretoria office. Standing on a third-floor landing looking across a grand government campus in South Africa’s capital, Tembinkosi Bonakele, 39, slips a hand in his pocket and laughs as he says that the headquarters of the Competition Commissionwere built by a construction cartel he investigated and successfully fined.

“It was a bit embarrassing for the dti,” says Bonakele, referring to the Department of Trade and Industry, which commissioned the building.

The probe into collusion among builders resulted in a combined R1.5 billion penalty – the authority’s largest – for 15 South African construction companies in 2013, including Murray & Roberts and Aveng.

Since its inception in 1998, the commission has also extracted financial penalties from steelmaker ArcelorMittal SA and miller Pioneer Foods.

Rand investigation

Those successes have helped establish the reputation of an organisation now taking on some of the world’s biggest banks in a currency rigging probe that Bonakele announced on May 19.

His pursuit of alleged currency conspirators at banks dealing in the rand, including JPMorgan and Citigroup, might be bigger than any assignment the regulator had taken on to date, said Bonakele.

Traders used an online chatroom called “ZAR domination”, its name inspired by the rand’s international code, to collude at a cost to bulk buyers of the currency, Bonakele said.

The investigation follows global scrutiny of misconduct in foreign exchange markets. Six banks agreed to pay $5.8 billion (R70.4bn) in fines in a settlement with the US Justice Department announced last month. While Bonakele would not reveal what had prompted his inquiry, he said probes in other countries had helped motivate him.

The scale of his inquiry and the size and resources of the targeted organisations were not daunting, Bonakele said.

“We have won cases where we have one counsel against five,” he said. “I’m never worried about that. That’s the advantage of working for a public institution. You are able to go out there and get the information. Aided by the law, you should be able to bring justice. We’ve had many high-stakes games here.”

Fort Hare

The 11 subjects in the randrigging case are JPMorgan, JPMorgan South Africa, Citigroup, Citigroup Global Markets, BNP Paribas, BNP Paribas South Africa, Barclays Bank, Barclays Africa, Investec, Standard New York Securities and Standard Chartered Bank.

The banks have either declined to comment on the probe or said they would co-operate with the investigation.

Bonakele studied law at the University of Fort Hare, the Alice, Eastern Cape provincebased institution renowned for producing some of Africa’s most notable post-independence leaders, including Nelson Mandela and Robert Mugabe.

It was during a year-long stint at Clifford Chance in New York City that he developed a taste for antitrust law.

Within a year of returning to South Africa, Bonakele was recruited by the Competition Commission. That was a decade ago.

At the state-funded watch- dog, Bonakele is charged with scrutinising deals to protect Africa’s most developed economy from monopolies, work he relishes.

“You learn so much about how the business world works and how decisions are made,” Bonakele said. “You get inside the companies. You find gory details about them.”

Bonakele said he championed the creation of the cartels division and developed the commission’s leniency policy, which had encouraged companies to come forward and co-operate. Aspects of the commission’s work have attracted criticism. Some businesses felt the Competition Commission’s interpretation of what qualified as anti-competitive behaviour was too strict, Nedbank’s chief economist Dennis Dykes said.

“The fines can be very significant,” Dykes said.

“There has been a bit of a feeling that some of that money should maybe flow back to the victims of the higher prices,” he said.

And not everything has gone the way of Bonakele or the commission.

A fine of R534 million imposed on Sasol by the tribunal for alleged overpricing in the