Fixing of forex deals angers Treasury

THE Competition Commission’s decision to prosecute major local and international banks for manipulating the foreign exchange market has been followed by outrage from the government.

The National Treasury said yesterday that this pointed to poor market conduct practices at the offending institutions.

The 17 banks that were investigated included Absa, Barclays, Standard Bank and Investec and a host of international institutions.

The Treasury said if proven to be true, “it would confirm the pervasiveness of unbridled greed within the ranks of the forex trading sections of banks even after evidence that such behaviour has potential to collapse national and global financial systems. This has to be punished and brought to an end!”

At the time that the collusion allegedly took place — from 2007 to 2015 — no market conduct supervision was in place, said the Treasury. While the SA Reserve Bank was a prudential banking supervisor, it did not monitor market conduct.

Absa, Citigroup and Barclays will not be targeted for fines, the commission said, which bank sources confirmed it was because they have co-operated with the regulators.

The two local banks probed by the commission and facing a penalty once the case heads to the Competition Tribunal – Investec and Standard Bank – face a cumulative R69.7-billion in fines, representing 10% of their annual turnover for each year they have breached the Competition Act.

The commission’s investigation is the latest move in a number of high-profile legal actions executed across the world in the wake of an ongoing probe by the US justice department (DoJ).

Yesterday, the commission confirmed it had worked “very closely” with its counterparts in other jurisdictions but did not specify the DoJ. One leading competition lawyer said yesterday that the local authorities would have had to work closely with the US DoJ justice department and others in preparing their case.

A number of leading global banks have pleaded guilty in the US to the charges at the centre of the commission’s case.