However, the timing of the release of the Competition Commission’s explosive findings on the price has been described as awkward and suspicious by some industry stakeholders.
Yesterday, the commission announced it had referred the collusion matter to its tribunal for prosecution. It had found that from 2007 the commercial banks had a “general agreement to collude on prices for bids, offers and bid-offer spreads for the spot trades in relation to currency trading involving dollar currency pairs”.
The banks included Bank of America Merrill Lynch International, BNP Paribas, JPMorgan Chase, Investec, Standard New York Securities, HSBC Bank, Standard Chartered Bank, Credit Suisse Group, Standard Bank of South Africa, Commerzbank, ANZ, Nomura International, Macquarie Bank, Absa Bank, Barclays Capital and Barclays Bank.
“They reached agreements to refrain from trading, taking turns in transacting and by either pulling or holding trading activities on the Reuters currency trading platform. They also created fictitious bids and offers, distorting demand and supply in order to achieve their profit motives,” the commission said.
The banks were liable for the payment of an administrative penalty “equal to 10% of their annual turnover”, and commissioner Tembinkosi Bonakele said referring the matter to the tribunal would afford the banks an opportunity to “answer for themselves”.
ANC spokesperson Zizi Kodwa said the matter must be treated as a crime and that corruption in the private sector was no longer a perception but a reality, which impeded the radical transformation of the economy. “The findings of the commission (put into question) the credibility, trust and independence of these institutions and whether they can still be trusted to act independently,” he told The Star.
“This is a heist by the banks against poor people in South Africa. We must thank the commission for having made these revelations. There must be a concerted effort to deal with corruption in the private sector,” Kodwa added.
He said the findings came on the heels of the “big scandal by Absa” pertaining to the apartheid-era bailout. “We need an alternative if we really want to implement radical economic transformation. We must change these institutions and their ownerships. This is an embarrassment, it’s scandalous.”
Economist Dawie Roodt said the commission’s timing on the matter was “a little bit awkward for me” as it came a few days after the ANC Youth League had marched to the Absa headquarters in central Joburg, demanding that it pay back the money.
The march followed the release of the public protector’s report that Absa benefited from an apartheid-era bailout to the tune of R2bn.
Roodt said the problem with the country’s financial sector was it didn’t have enough competition and it was difficult to obtain a trading licence.
He said the public would probably never know what happened regarding the collusion scandal. “What’s probably going to happen is that the banks will eventually pay some admission of guilt. Let the case be heard in an open court, and if they are found guilty, they should be fined and given a criminal record,” he said.
When asked what lessons could be learnt, Roodt said: “It is this: we don’t need stricter regulations in the financial sector. There should be fewer regulations and more participants. It would make it difficult to manipulate prices if there were quite a number of players.”
DA spokesperson on economic development Michael Cardo said the party took note of the referral of the matter to the Competition Tribunal and would wait for the law to take its course. “But the timing of the announcement does seem a little suspicious, coming hot on the heels of Zuma’s State of the Nation Address, in which he made it clear that the competition authorities would be used as one of the main tools of ‘radical economic transformation’.”
United Democratic Movement leader Bantu Holomisa said: “The commission has a reputation of not being wrong in its findings, so it’s going to be difficult for those banks to convince us otherwise.”
See Business Report