Lewis sees early deal in banks probe
LOCAL antitrust authorities would probably reach a settlement with some of the world’s biggest banks accused of rigging trading in the rand, according to David Lewis, the former head of the Competition Tribunal.
“We will probably, quite early on in the process, see a settlement and an admission,” he said earlier this week.
The Competition Commission announced the probe on May 19 into lenders including Citigroup and JPMorgan Chase.
The move followed similar investigations into currency rigging in the US and UK that have resulted in billions of dollars of fines. Six banks agreed to pay $5.8 billion (R70.5bn) in a settlement with the US Justice Department announced last month.
The banks cited by the South African regulator have either declined to comment on the investigation or pledged their co-operation.
“People are over-awed by the nature that it’s these great global banks and this little competition authority,” Lewis said. “I think it’s going to be pretty much a slam dunk, actually.”
The regulator will probably follow the lead of US and UK regulators, and may share intelligence with them, according to Lewis.
Not approached
Traders had used an online chat-room called “ZAR domination”, its name inspired by the rand’s international code, to collude at a cost to bulk buyers of the currency, Tembinkosi Bonakele, the head of the antitrust body, said late last month. The tribunal, that Lewis used to run, rules on findings by the commission.
“We have not been approached by any of the banks for any type of negotiation of a settlement,” Mava Scott, a spokesman for the commission, said on Wednesday. “The investigation is under way and it’s at an advanced stage.”
Bonakele probably would not have announced the investigation without being “pretty persuaded”, Lewis said.
“They seem to have very strong evidence. I think this will probably turn out to be a bit of a gift for the competition authorities.”
The alleged rigging took place outside South Africa, according to the Reserve Bank. This would not have a bearing on the commission’s case, according to Lewis. “As long as the impact is on the South African market, it does not matter where it happened,” he said.
The 11 banks in the randrigging case are: JPMorgan, JPMorgan South Africa, Citigroup, Citigroup Global Markets, BNP Paribas, BNP Paribas South Africa, Barclays, Barclays Africa, Investec Limited, Standard New York Securities and Standard Chartered Bank. – Bloomberg