By Lehlohonolo Lehana.
The Competition Commission has approached the Constitutional Court in the ongoing saga that the banks conspired with each other to manipulate the foreign exchange rate in respect of the US Dollar and the Rand.
In June 2020, the Commission had referred the case regarding the alleged rand fixing against 28 local and foreign banks to the Competition Tribunal.
The banks were ordered by the Tribunal in March 2023 to file their answering affidavits in response to the Commission’s complaint referral, but objected to the Tribunal order and appealed it to the Competition Appeal Court (CAC).
The CAC, in its judgment last year, released several banks from the complaint referral before they answered the allegations against them and restricted the Commission’s case to only the four respondent banks.
In its current application for leave to appeal, the Commission is appealing the CAC order to the Constitutional Court against 13 banks. These banks include Standard Bank of South Africa, Nedbank Limited and FirstRand Bank Limited, while the bulk are foreign banks.
The matter was heard before 10 Constitutional Court judges who are newly appointed Deputy Chief Justice Dunstan Mlambo and Justices Rammaka Mathopo, Owen Rogers, Jody Kollapen, Zukisa Tshiqi, Steven Majiedt, Leona Theron, Nonkosi Mhlantla and acting ConCourt Justices Cagney Musi and Katharine Savage.
During the proceedings, Advocate Tembeka Ngcukaitobi has told the Constitutional Court that the same traders accused of manipulating the rand have already been convicted in the United States, underlining the seriousness of the cartel allegations facing local and international banks in South Africa.
He was arguing on behalf of the Competition Commission, which wants the apex court to overturn a ruling by the Competition Appeal Court that cleared most banks of wrongdoing in the rand-rigging case.
“The only admissible allegations are those contained in the commission’s pleadings,” Ngcukaitobi argued, warning that banks had tried to introduce new facts under the guise of dismissal applications.
He said this approach undermined the Competition Tribunal’s ability to prosecute cartel cases.
“It has become almost impossible to prosecute cartels because we never get to the merits of the case. We are always held up in procedural objection after objection.”
The commission accuses several global and local institutions of colluding between 2007 and 2013 to manipulate the rand-dollar exchange rate through information-sharing in secret chatrooms.
Ngcukaitobi described the case as a “classic example of the evolution of cartels”, saying collusion had grown more complex and transnational.
“Cartels are now bigger, complex, and transnational. They do not respect borders or products in pursuit of profit. What we have here is something unique: they targeted the sign of our sovereignty, the rand, in a perverse scheme driven by profit motives.”
South Africa, he said, had a special responsibility to pursue the case.
“Perhaps for this reason alone, our institutions are the only ones with a legal interest in the prosecution of this cartel. At the heart of it is the rand.”
Drawing on European precedent, Ngcukaitobi urged the Constitutional Court to adopt the doctrine of a “single overarching conspiracy”, which allows competition authorities to prosecute sprawling collusion cases involving multiple players, strategies, and jurisdictions.
‘It is not necessary to find that each bank participated in every form of conduct,” he explained. “One conducts a holistic assessment.”
“What matters is whether the conduct pursued an identical anti-competitive object, with common participants, common features, and common means.”
Ngcukaitobi told the court that the CAC made several errors in law in its judgment and if the ConCourt ruled in favour of the commission, the matter regarding the merits can then go to the trial stage.
Investec is the only South African bank not to appeal, while Standard Bank, FirstRand, and Nedbank maintain their innocence, saying the allegations have already cost them heavily in both money and reputation.
Due to the similarity of issues being dealt with, the ConCourt has combined all three cases into one hearing. Argument will be heard from 19-22 August.