Competition Tribunal confirms Citibank’s R69.5m FX penalty

The Competition Tribunal has confirmed Citibank’s settlement agreement of just under R70 million for its role in manipulating trade in the ZAR/USD currency pair.

The penalty of R69 500 860, recommended by the Competition Commission, does not exceed 10% of the North American bank’s annual turnover in South Africa.

The confirmation follows a hearing before the Competition Tribunal late last month, in which questions over the relatively lenient recommended penalty were raised.

At the time, the Competition Commission defended the recommendation, saying that it was determined using the Tribunal’s six-step methodology for calculating administrative penalties. Makgale Mohlala, cartels division manager at the Competition Commission, said that Citibank had also provided evidence necessary to prosecute other banks accused of forming part of the alleged forex cartel and had committed to provide witnesses at future hearings.

Still, the Competition Tribunal asked Citibank to disclose turnover in South Africa. The bank is understood to have provided this sensitive information to the Tribunal.

Citibank admitted to colluding with competitors to manipulate trade in the ZAR/USD currency pair between September 2007 and October 2013.

An investigation by the Competition Commission into the alleged misconduct found that currency traders at 18 local and foreign banks entered into agreements to directly or indirectly fix bids, offers and bid-offer spreads relating to trade in the currency pair. The traders were also found to have co-ordinated with each other to time their trades thus manipulating supply and demand.

Citibank is the first of the banks to reach a settlement agreement. Following the confirmation, Citibank will have 30 days in which to settle the penalty in full.

Moneyweb previously reported that Absa was granted corporate leniency after it came forward as a whistleblower and will not be liable for any penalties.

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