Three local banks and 14 large foreign banks have been referred to the Competition Tribunal for prosecution and are accused of price-fixing the rand.
They allegedly did this by creating fake trades to change supply and demand of the rand. They are also accused of using trader chat rooms to schedule specific times to trade or withold from buying and selling to manipulate the price.
The ANC has spoken about the banks as engaging in a “profit-driven assault” on the rand.
The EFF has called for the their licences to be revoked so that Standard Bank‚ Investec‚ Absa and 14 foreign banks may no longer work in the country.
With all this name-calling of banks… are the they guilty?
No‚ the banks are accused of price fixing.
The Competition Commission acts as an investigator — like the police and National Prosecuting Authority. They build a case and refer it to the Competition Tribunal‚ which acts as a court to determine innocence or guilt.
The tribunal will hear the case.
Could the directors‚ CEOs or traders be criminally prosecuted if price fixing did occur?
Perhaps. In May last year the law was changed‚ allowing managers and directors to be held criminally liable for breaching the Competition Act and price fixing. Before May‚ only companies‚ not people‚ could be criminally prosecuted for collusion.
But the directors or traders would have had to be involved in price fixing after the law changed. It is not clear if banks are accused of price fixing after May. The investigation began a year before that in‚ April 2015‚ and goes back as far as 2007.
Lara Granville‚ director of competition law at Cliffe Dekker Hofmeyer‚ said: “Criminal liability cannot apply retrospectively… In this case‚ the Commission alleges that the conduct began in 2007 – that was prior to the coming into force of the criminal provision of the Competition Act. If the alleged conduct is found to have taken place after May 2016‚ then it could be subject to criminal prosecution.”
What did the Reserve Bank investigations into foreign exchange trading find?
Between October 2014 and October 2015‚ the reserve bank investigated local exchange trading and found certain client information was not kept confidential‚ but the bank “found no evidence of serious and widespread misconduct in the South African foreign exchange market“.
The Reserve Bank saw scope for improvement in overall market conduct and made several recommendations in this regard.
Are the banks being targeted by the government?
There are suggestions by political parties that the timing of the announcement to prosecute banks came too soon after President Jacob Zuma’s State of the Nation Address in which he said he would use the Competition Commission authorities to help redistribute economic wealth.
Democratic Alliance spokesman on economic development Michael Cardo said: “The fact is that there is a cabal of ANC ministers in the cabinet‚ clustered around the Gupta-lackey‚ Mosebenzi Zwane‚ that wants to do battle with the banks‚ regardless of the economic fallout. And it was clear from President Zuma’s State of the Nation Address last week that he intends using the competition authorities as a tool of his populist and destructive agenda of “radical economic transformation”.
The DA said it was ‘suspicious’ of the timing of the announcement to prosecute banks.
What does Zuma say about the competition law in his Sona speech?
“Last year‚ I signed into law a provision to criminalise cartels and collusion and it came into effect on May 1. It carries jail sentences of up to 10 years. We are now stepping up our actions to deal with the other challenges‚ namely economic concentration.
“In this way we seek to open up the economy to new players giving black South Africans opportunities and make it more dynamic‚ competitive and inclusive. This is our vision of radical economic transformation.”
What next for the banks?
The tribunal will now hear the case involving 17 banks in what lawyers say could be a long‚ drawn-out case.
The tribunal has been asked by the commission to fine 15 of the banks 10% of their annual turnover for breaching the Competition Act.
Bank price-fixing case explained
Three local banks and 14 large foreign banks have been referred to the Competition Tribunal for prosecution and are accused of price-fixing the rand.
They allegedly did this by creating fake trades to change supply and demand of the rand. They are also accused of using trader chat rooms to schedule specific times to trade or withold from buying and selling to manipulate the price.
The ANC has spoken about the banks as engaging in a “profit-driven assault” on the rand.
The EFF has called for the their licences to be revoked so that Standard Bank‚ Investec‚ Absa and 14 foreign banks may no longer work in the country.
With all this name-calling of banks… are the they guilty?
No‚ the banks are accused of price fixing.
The Competition Commission acts as an investigator — like the police and National Prosecuting Authority. They build a case and refer it to the Competition Tribunal‚ which acts as a court to determine innocence or guilt.
The tribunal will hear the case.
Could the directors‚ CEOs or traders be criminally prosecuted if price fixing did occur?
Perhaps. In May last year the law was changed‚ allowing managers and directors to be held criminally liable for breaching the Competition Act and price fixing. Before May‚ only companies‚ not people‚ could be criminally prosecuted for collusion.
But the directors or traders would have had to be involved in price fixing after the law changed. It is not clear if banks are accused of price fixing after May. The investigation began a year before that in‚ April 2015‚ and goes back as far as 2007.
Lara Granville‚ director of competition law at Cliffe Dekker Hofmeyer‚ said: “Criminal liability cannot apply retrospectively… In this case‚ the Commission alleges that the conduct began in 2007 – that was prior to the coming into force of the criminal provision of the Competition Act. If the alleged conduct is found to have taken place after May 2016‚ then it could be subject to criminal prosecution.”
What did the Reserve Bank investigations into foreign exchange trading find?
Between October 2014 and October 2015‚ the reserve bank investigated local exchange trading and found certain client information was not kept confidential‚ but the bank “found no evidence of serious and widespread misconduct in the South African foreign exchange market“.
The Reserve Bank saw scope for improvement in overall market conduct and made several recommendations in this regard.
Are the banks being targeted by the government?
There are suggestions by political parties that the timing of the announcement to prosecute banks came too soon after President Jacob Zuma’s State of the Nation Address in which he said he would use the Competition Commission authorities to help redistribute economic wealth.
Democratic Alliance spokesman on economic development Michael Cardo said: “The fact is that there is a cabal of ANC ministers in the cabinet‚ clustered around the Gupta-lackey‚ Mosebenzi Zwane‚ that wants to do battle with the banks‚ regardless of the economic fallout. And it was clear from President Zuma’s State of the Nation Address last week that he intends using the competition authorities as a tool of his populist and destructive agenda of “radical economic transformation”.
The DA said it was ‘suspicious’ of the timing of the announcement to prosecute banks.
What does Zuma say about the competition law in his Sona speech?
“Last year‚ I signed into law a provision to criminalise cartels and collusion and it came into effect on May 1. It carries jail sentences of up to 10 years. We are now stepping up our actions to deal with the other challenges‚ namely economic concentration.
“In this way we seek to open up the economy to new players giving black South Africans opportunities and make it more dynamic‚ competitive and inclusive. This is our vision of radical economic transformation.”
What next for the banks?
The tribunal will now hear the case involving 17 banks in what lawyers say could be a long‚ drawn-out case.
The tribunal has been asked by the commission to fine 15 of the banks 10% of their annual turnover for breaching the Competition Act.
Would you like to comment on this article?
Register (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Trending
Latest Videos