JOHANNESBURG – London-based Standard Chartered on Tuesday became the latest bank to settle with US anti-graft authorities over currency manipulation that took place over seven years.
The bank pleaded guilty to currency manipulation, which included the rand, between 2007 and 2013 and was fined $40 million (R536m).
The fine amounted to 10 percent of the bank’s $40 billion assets at its New York branch.
Superintendent Maria Vullo of the New York Department of Financial Services (DFS) said in a statement that the integrity of the global financial system was compromised when the hunger of profit-led bankers and traders led to their turning a blind eye to the kind of illicit activities uncovered by the department’s investigation.
“The DFS appreciates Standard Chartered’s co-operation in this matter and the bank’s acknowledgement of its critical obligation to ensure that its business is conducted lawfully,” Vullo said.
The DFS also found that Standard Chartered’s management failed to supervise the bank’s foreign exchange business effectively and ensure compliance with rules, regulations and laws.
However, it was not immediately clear how the admission of guilt would affect the investigation by the South African authorities.
Standard Chartered head of corporate affairs Geraldine Matchaba said they were aware of the statements with regards to the agreed Consent Order with the New York DFS.
“In relation to the South African ZAR allegations mentioned in the consent order, as previously advised, we are and continue to co-operate fully with the Competition Tribunal process on the ongoing competition investigation by the South African Competition Commission.
“As this is currently a legal matter, you will appreciate that we can’t say any more at this point in time except to assure you of our ongoing commitment to fully uphold the laws and regulations that govern the way we do business in South Africa,” she said.
In 2017, the Competition Commission recommended the prosecution of nearly 20 top local and international banks for collusion in the trading of foreign currency.
Spokesperson Sipho Ngwema said that, since February 2017, the commission had been engaged in protracted litigation with the rest of the banks, including Standard Chartered Bank, on pre-trial issues, such as the jurisdiction of the South African authorities and disclosure of the commission’s evidence.
“The commission will consider the impact of the order on the ongoing forex litigation with the banks in South Africa,” Ngwema said.
The commission said it found the banks had entered into agreements to collude on prices for bids, offers and bid-offer spreads for spot trades in relation to the US dollar/rand currency pair since 2007.
The commission has requested the Competition Tribunal to take 10 percent of 14 of the 17 implicated banks’ annual turnover as a penalty.
Besides Standard Chartered Bank, the other implicated banks include Nomura, Standard Bank and Investec Absa, HSBC, JP Morgan Chase, BNP Paribas, Barclays and Bank of America Merrill Lynch, Standard New York Securities, Australia and New Zealand Banking Group, Barclays Capital, Macquarie Bank, Credit Suisse Group, Commerzbank and Barclays Capital.
Absa is among the three banks that have admitted guilt in colluding on US/dollar trades.
US-based Citibank has been fined close to R70m after it also admitted guilt and agreed to provide the anti-graft agency with evidence implicating the other banks.
Additional reporting by Business Report Online.