Cape Town - The decision of the Competition Tribunal in which it dismissed applications and objections brought by various local and foreign banks to escape prosecution on currency manipulation allegations in what came to be known as the “Forex Cartel case,” has been welcomed by the Competition Commission.
On Thursday the Tribunal ruled that it has jurisdiction to hear the so-called “Forex Cartel case” in which foreign and local banks are implicated in alleged collusion to manipulate the Rand-Dollar exchange rate.
In its order the Tribunal said the banks stood accused of engaging in conduct considered the most egregious in competition law.
The Commission had said in its case that the manipulation impacted on the exchange rate of the Rand which, in turn, affected various parts of the South African economy including imports and exports; foreign direct investment; public and private debt and company balance sheets.
It said the manipulation had attendant implications for the price of goods and services as well as financial assets.
As far back as 2013 the UK’s banking regulator The Financial Conduct Authority (FCA) joined the Swiss regulator, FINMA, in investigating allegations of collusion between traders in what was then already being described as a widening global investigation into possible manipulation of the foreign exchange markets.
At the time media reports suggested they used instant messaging services to work together to fix exchange rates. Hong Kong authorities were also looking into the matter.
The Tribunal’s ruling in the “Forex Cartel” case, brings the number of banks facing prosecution of collusion to manipulate the Rand-Dollar exchange rate to 28 foreign and local banks.
The banks include Nedbank, and FirstRand Bank. The Cape Argus reached out to the two banks for comment on Friday.
Nedbank did not respond to the Cape Argus, while a spokesperson for FNB, which is a division of FirstRand Bank, said she had forwarded our request of comment or response to a colleague at RMB, another division of FirstRand Bank which is responsible for Forex trading.
RMB said in a statement that they had noted the decision of the Competition Tribunal. “The Tribunal’s finding relates to procedure, and not whether there was involvement in the alleged conspiracy.
“RMB maintains that it was not part of any conspiracy to manipulate the USD/ZAR exchange rate and will continue to defend the matter. We are consulting with our legal team on the way forward.”
In the case, the Commission alleges that between 2007 and at least 2013, the 28 banks from multiple jurisdictions in Europe, South Africa, Australia and the United States of America conspired to manipulate the South African Rand.
It alleged they did this through information sharing on electronic and other platforms and through various coordination strategies when trading in the rand-dollar exchange rate..
Thursday’s ruling was the second major setback for the banks in about a week after the Competition Appeal Court (CAC) ruled in favour of the Commission by denying Standard Bank access to the Commission’s evidence.
mwangi.githahu@inl.co.za