Standard Chartered Bank (SCB) has admitted to engaging in the manipulation of the rand alongside 17 other banks accused of engaging in unethical conduct.
On Wednesday, the bank became another commercial bank that admitted to wrongdoing and agreed to pay a penalty of R42 million to the Competition Commission for its role in conspiring to rig trades involving the US dollar-rand currency pair.
The commission announced on Wednesday that it had entered into a settlement agreement with Standard Chartered, which “admitted liability” and agreed to pay an administrative penalty of R42.7m.
The commission said it welcomed the latest landmark settlement agreement with the British multinational bank in which the bank acknowledged and admitted to a currency manipulation case and agrees to pay an administrative penalty of R42.7 million.
Commission spokesperon Siyabulela Makunga said this was a victory for South Africa.
He added that the settlement came at a time when respondent banks were appearing before the Competition Appeal Court (CAC) seeking an order to set aside a Competition Tribunal order of March 30 which ordered respondent banks to file their answers to the complaint referral.
The hearing for the appeals and reviews before the CAC is set down for November 13 to 16.
In 2015, the commission began investigating market manipulation in currency pairs involving the South African rand by various local and international banks before reaching this settlement with one of the banks involved in its investigation.
SCB is one of 28 banks prosecuted by the commission for manipulating the USD/ZAR currency pair. This settlement has ended an eight-year-long litigation between the commission and SCB over the currency manipulation allegations after Citibank N.A already settled the same conduct with the commission in 2017.
According to Competition Commissioner Doris Tshepe, the bank’s settlement agreement has been filed with the tribunal for confirmation, which was set down for hearing today, 15 November.
“The commission welcomes SCB’s decision to reach a settlement on this matter and encourages other respondent banks to consider settling the complaint against them. Further, this settlement affirms the commission’s pursuit of allegations related to the manipulation of the USD/ZAR currency pair, given the ultimate impact of the currency manipulation on the value of the South African Rand,” Tshepe said.
Makunga indicated that Standard Chartered also admitted wrongdoing to charges relating to the manipulation of currency trades including the rand — ending a long-running dispute with South Africa’s competition regulator.
It has been reported that in 2019, Standard Chartered entered into a similar settlement agreement with US authorities, admitting to wrongdoing relating to the manipulation of currency prices and paying a fine of $40-million (R536 million at the time).
Competition lawyers viewed Standard Chartered’s settlement with US authorities as a boost to the commission’s case as it would be difficult for the bank to fight currency manipulation charges after admitting wrongdoing in another jurisdiction.
One Wednesday, advocate Tembeka Ngcukaitobi told Judge Dennis Davis that all the banks were all complicit in their attempts to manipulate the rand through a chatroom they used as the platform for their scheme.
“It is also true that there is one chatroom that was used for manipulation. It is immaterial how many times some of these banks participated in the manipulation. The fact of the matter is that they did and they were aware of the purpose of the chatroom,” Ngcukaitobi told Judge Davis.