The Competition Commission of South Africa (CCSA) has filed a new lawsuit against 28 banks (local and international) including Nedbank and Rand Merchant Bank, for the manipulation of the currency exchange rate between the Dollar($) and Rand (R).
According to a disclosure made by the CCSA on June 2nd, 2020, the new charges against the banks were filed in line with an earlier ruling from the Competition Appeal Court.
Initially, the Competition Commission filed charges of currency manipulation, colluding to fix prices, and dividing the market against the banks, five years ago in the Competition Appeal Court (CAC).
However, in several court sittings, in 2019, the CAC requested that the Competition Commission reinforce its application against the banks with more evidence and also present a new charge sheet.
Some of the banks appealed to the court for dismissal of the charges brought against them, on the grounds that SA’s competition authorities did not have jurisdiction over their activities that occurred outside of the country.
But later in February 2020, the Competition Appeal Court turned down the banks’ legal demand.
According to the Competition Commission, the new charge sheet presents more evidence around the mode of operations in the currency manipulation syndicate and the effects of the currency racket on South Africa.
Furthermore, five more banks were freshly accused of the financial crime, which includes the Nedbank Group, Rand Merchant Bank, (which is constituted by RMB Holdings), and FirstRand Bank, and Standard Americas Inc.
Although individual traders that were involved in the manipulation scheme have been relieved of their duties, the Commissioner of the CCSA, Tembinkosi Bonakele said the banks must also answer for their actions in the crime.
‘’The banks must file their answers to these charges, which have now been further substantiated. These charges will not go away,” Tembinkosi Bonakele said.
He also urged the South African authorities to take responsibility in this case by getting to the bottom of these serious allegations wherever they occurred.
Currency manipulation involves banks deliberately stiffening the growth of a particular currency in the foreign exchange market for their personal gains. The ripple effect usually creates more debts and high trade imbalance on the books of the central banks of the country.
It would be recalled that in 2017, American bank-Citibank was the first to plead guilty, and arrived at a settlement agreement with the South Africa commission to pay a fine of R69.5 million for being part of the currency trading cartel,
Locally, Absa, Standard Bank and Barclays were implicated. Other banks include Bank of America, Merrill Lynch International Limited, BNP Paribas, JP Morgan Chase & Co, JP Morgan Chase Bank N.A, Investec Ltd, Standard New York Securities Inc. HSBC Bank Plc etc.
