Competition commission welcomes ruling that it can fine foreign banks in forex scandal
CAPE TOWN - The Competition commission on Friday said the competition appeal court has set aside an earlier finding that there was no jurisdiction to fine international banks if they were found guilty of colluding on forex trading in the Rand Dollar case.
The tribunal had ruled last year that if the commission was successful in its case against the international banks implicated in the matter, they could be ruled anti-competitive but would not face a financial penalty.
The banks, which include Merril Lynch, Credit Suisse and JP Morgan, however appealed that ruling, contending the local authorities had no jurisdiction to issue any order against them, including one of anti-competitive conduct.
The commission also challenged the order, on different grounds, and on Friday, the Cape Town-based court found in its favour, holding that the banks could be fined if the investigation yielded sufficient evidence against them.
The commission is seeking an order that the banks breached the Competition Act and be fined ten per cent of their annual turnover.
The court on Friday also dismissed an application by Investec Limited to declare the investigation vexatious and unreasonable.
The investigation targets 23 banks, which include local banks, foreign banks with a presence in South Africa and foreign banks with no presence in the country, for allegedly rigging rand and dollar trading prices, using electronic chatrooms to collude with competitors.
The commission alleges that as far back as 2007, the banks manipulated the price of bids and offers by, among others, creating fictitious bids and making agreements to refrain from trading at certain times.
"They assisted each other to reach the desired prices by coordinating trading times. 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," the commission said on Friday.
The commission said though it filed papers against the banks in February 2017, only one, HSBC, had filed responding papers on the merits of the case. It is disputing participating in the alleged manipulation.
Since the investigation began in 2015, Citibank has paid a fine of R69 million and Absa escaped a fine after apologising and agreeing to cooperate with the probe.
The local probe flowed from a global forex rigging scandal in which dozens of traders were fired after it was discovered that banks had colluded for as long as a decade to manipulate exchange rates.African News Agency