The National Freedom Party (NFP) has called for a commission of inquiry to investigate the extent of the recent rand/US dollar pair currency manipulation case involving some 28 local and international banks.
Between 2007 and 2013, the banks are alleged to have fixed prices of bids, offers and bid-offer spreads in relation to spot trades of ZAR currency pairs through bilateral and multilateral communications using instant messaging platforms and other means of communication.
The Competition Commission earlier this month reached a settlement agreement with UK-based multinational bank Standard Chartered Bank (SCB), who admitted liability to the manipulation of the USD/ZAR currency pair, and agreed to pay an administrative penalty of R42 715 880.
Other banks are awaiting the outcome of their appeal before the Competition Appeal Court seeking an order to set aside a Competition Tribunal order of March 30 which ordered them to file their answers to the complaint by the commission referral.
The NFP expressed deep concern over the “severe impact that this manipulation has had on South African workers, businesses, and the overall economy”.
“The burden carried by the workforce due to the manipulation of the rand, resulting in retrenchments, reduced salaries, and economic instability, is unacceptable and deplorable,” the party said, adding that the misconduct had raised serious questions about the stability of the country’s economy, the welfare of South African workers, and the integrity of its financial systems.
NFP leader in Parliament, Ahmed Munzoor Shaik Emam, said: “We vehemently condemn any attempts at destabilising our economy or orchestrating regime change through unethical financial practices. The manipulation of the rand by major banks should be a matter of utmost concern for the nation as a whole.”
In light of the far-reaching impact of currency manipulation, they called for a comprehensive criminal investigation into the matter.
“The NFP demands accountability from both the banks and the regulatory bodies responsible for oversight.
There must be a transparent and stringent regulatory framework to prevent such manipulations in the future and ensure the protection of our economy and citizens,” added Shaik Emam.
UWC senior lecturer in competition law in the Department of Mercantile and Labour Law, Dr Tinashe Kondo, said cartel activity is on the radar of not only the competition authorities, but also the legislators.
“Markets, left to their own devices, can act in manners atypical to ordinary market conduct in order to maximise profits. And therefore, it is thus the role of the competition authorities and the legislators to remain responsive to the ever-changing competition abuses.
Section 73A provides that a director, or a person with (or purporting to have) management authority, commits an offence if they cause a firm to engage in cartel activity, specifically, price fixing, market allocation and collusive tendering or acquiesce (having knowledge of the actual conduct) the firm into engaging in cartel conduct.
“Nevertheless, s 73(4) of the Competition Act contains an important caveat. It provides that the Competition Commission ‘may not seek or request the prosecution of a person for an offence in terms of this section if the Competition Commission has certified that the person is deserving of leniency in the circumstances’ and ‘may make submissions to the National Prosecuting Authority in support of leniency for any person prosecuted for an offence in terms of this section, if the Competition Commission has certified that the person is deserving of leniency in the circumstances’.
“This is to say that, in this matter, one (or more) of the directors of Standard Chartered Bank may escape liability of this provision in the event that the Competition Commission is of the view that that person is deserving of leniency.”