By Lehlohonolo Lehana.
The Competition Appeal Court (CAC) on Monday, dismissed the Competition Commission’s eight-year case against three SA banks and most of the foreign banks, leaving just few foreign banks whose traders pleaded guilty in 2015 to charges of colluding to fix the rand in the New York foreign exchange more than a decade ago.
The case ignited a firestorm of political posturing late last year, with accusations from several parties that the banks were responsible, through manipulating the currency, for the dire economic conditions in the country.
The commission had named 23 banks through three additional supplements to its original referral to the Tribunal.
Most banks had complained about the vagueness of the case brought by the commission and asked authorities to dismiss the allegations. Standard Bank Group said there was no evidence that it had participated in collusion and that the case was so contradictory and vague.
The CAC lambasted the Commission’s weak case, emphasising that it was granted a final opportunity in 2020 to reconfigure the referral affidavit.
Among the inadequacies of its case was that the Commission had joined holding companies to the case in a referral affidavit instead of the actual registered banking entities.
There was no costs order.
South Africa-based banks that challenged the commission at the Competition Appeal Court, includes Nedbank, FirstRand, Standard Bank, or their holding companies.
Standard Bank has welcomed the decision: “Standard Bank has always maintained that the Group is wholly committed to the rule of law, respects the important role of institutions, and upholds South Africa’s Constitutional democracy, and our Constitutional obligation to ensure that our country improves the quality of life of all citizens.
Standard Bank noted that in its ruling, the Competition Appeal Court concluded that the case against Standard Bank “does not get out of the legal starting blocks”.
“Standard Bank remains committed to supporting the work of regulators, including the Competition Commission,” it added.
Only five commercial banks, mostly foreign banks, will now proceed in the commission’s case and possibly face prosecution through a trial. The banks include JPMorgan Chase, HSBC, BNP Paribas, and Credit Suisse, which pleaded guilty to charges brought by the US Department of Justice a decade ago.
The other bank set to face prosecution is Investec, which did not join other banks in asking the commission, at the Competition Appeal Court, to show them evidence that their currency traders were part of the alleged “single overarching conspiracy” to manipulate the rand from 2007 to 2013.
In March 2023, the Competition Tribunal, which acts as a court on competition and antitrust matters, ruled that it was ready to hear the merits of the commission’s case, which was launched in 2017. However, the banks approached the Competition Appeal Court, arguing that they needed evidence on a series of issues before the case could begin.
There are now few banks that the commission can now prosecute in its case.
UK-headquartered Standard Chartered recently entered into a settlement agreement with the commission and admitted wrongdoing. It agreed to pay an administrative penalty of R42.7-million. Citibank paid an administrative penalty of R69.5-million in March 2017, while Barclays plc, Barclays Capital, and Absa were cooperating with the commission.
The Competition Commission is yet to issue a statement and in response to Fullview’s inquiry, the commission said it is still studying the judgment.
“The Commission is still studying the judgement and will in due course communicate its next course of action,” said spokesperson Siyabulela Makunga.