The Competition Commission says implicated banks in the alleged rand manipulation have generated about a trillion rand a day between 2007 and 2013, the Divisional Manager for Cartels at the Competition Commission Makgale Mohlala told the Competition Tribunal this week.
Five of the 28 banks have admitted to taking part in the alleged foreign exchange manipulation 16 years ago. The other banks have gone to the courts to appeal whether South Africa’s competition authorities have the jurisdiction to prosecute or have the material facts to prosecute.
“Either way it has an effect because at any given time in the trading market, there are buyers and sellers. South African firms that want to buy internationally, they’ll need to acquire the dollars in order for them to buy in the international market. If they buy in dollars that are expensive because of the manipulation, they are losing money. South Africans that want to sell in the international market, have to sell using dollars, so if they have to sell using a dollar that has been weakened by manipulations. They are losing money. So, we have tried to quantify ultimately the card because the trading itself and the rules and it’s here can give some additional figures the trading itself it talks about trillions a day,” says Divisional Manager for Cartels for Competition Commission Makgale Mohlala.
It is believed that the 2013 cartel made a trillion rand a day due to price-fixing and market allocation by the 28 local and international banks. This week, the Competition Commission signed a settlement agreement with one of the banks implicated in the foreign exchange case.
Standard Chartered Bank agreed to pay an administrative penalty of R42.7 million. However, trade union Giwusa says this is a slap on the wrist considering how much these banks made a day.
“We do mean that the penalty and of course the punishment does not match the crime. But more than that, I submit an amount travesty of justice. To many working-class and middle-class, people who bear the brunt of this criminality and that is not only in terms of the swindle, you know, on the current such, but also its consequences in the form of an increased, you know, cost of imports and which have created a cost of living crisis for the majority of people in this country,” says Giwusa President Mmametle Sebei.
The South African Federation of Trade Unions on the other hand have welcomed the penalty enforced by the commission. However, the union calls for more banks to be fined for their ill actions.
SAFTU national spokesperson Trevor Shaku says, “It is especially outrageous for these banks to evade the law in our country when they have already accepted guilt and paid funds in the United States of America and the United Kingdom. for many years, the banks have argued that the competition tribunal has no jurisdiction. using this to delay being held accountable for their actions in the currency manipulation, probably with the hope that it would help them evade the rule of law. these nefarious hopes were dealt a blow when, in March of this year, the competition tribunal ruled that it has the jurisdiction to preside over the matter.”
The Competition Commission says the banks need to answer for their actions in the courts. This is after, the commission granted three banks leniency and settled with just two banks.
The penalty fees for the two banks amount to over a hundred million.
Competition Commission SA spokesperson Siyabulela Makhunga explains, “The appeal seeks to set aside the order of the Competition Tribunal, which ordered that all of these banks must begin to take a decision, corporate citizenship that they must come before the tribunal and answer to the allegations that in the period covering 2007 up to September 2013.
“They have been accused of contravening section 41b of the Competition Act in that they’ve manipulated the US dollar, and South African rand currency pair, and that they’ve divided markets and allocated customers. So, it is in the interest of millions of Africans that we begin to provide answers whether or not there was a single orchestrated conduct by these banks and whether or not the matter was in the 1st place, appealable, and this is what we’re going to leave to the collective wisdom of the three justices that have been presiding over the matter in the next few days.”
Thursday was the last day to conclude the second round of a lengthy battle between the Competition Commission and the banks.