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2 minute read
21 Feb 2017
2:37 pm

Only Citibank has sought settlement – Competition Commission


The commission last week lodged a Competition Tribunal application implicating the banks in illegally fixing the rand-dollar exchange rate.

AFP/File / Timothy A. Clary
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No other banks implicated in the currency rigging scandal have yet followed Citibank’s lead and sought a settlement agreement with authorities, the Competition Commission said on Tuesday.

Commissioner Tembinkosi Bonakele told MPs: “There are no other settlements, and there are no discussions to settle with other banks at this stage.”

Bonakele said there was no deadline for banks to approach the commission but noted that whoever came forward first to offer information that would provide useful in investigating the trading cartel, would be in a better position to reach a settlement deal.

“If one comes at ten and then another comes at 12, then we have to see,” he said after a briefing to members of Parliament’s portfolio committee on economic development.

He added that banks were “free to take legal advice and decide how they respond” to calls from the commission for full disclosure.

London-based Citibank on Monday agreed to pay a settlement of R69.5 million, which is estimated at about 10 percent of its annual turnover in South Africa. In doing so it became the first of 18 local and international banks linked to the forex trading cartel to cut a deal with authorities.

The commission last week lodged a Competition Tribunal application implicating the banks in illegally fixing the rand-dollar exchange rate.

The commission found that Citibank and its competitors had agreed to collude on prices for bids, offers and bid-offer spreads for spot trades.

MPs suggested that the sum was low, to which Bonakele responded that such a deal was weighed in terms of what information the commission could get in return to enable it to go after culprits.

“Fairness is a matter of judgment. Sometimes you have to make these calls because you have a bigger case to run,” he said.

“There are some compromises we had to make technically in order to move forward.”

Two Citibank traders were convicted in the United States earlier this year after pleading guilty to currency manipulation.

Bonakele said the rand was one of the most traded currencies in the world, with some 70 percent of that trade happening outside South Africa. He agreed with members of the committee that South Africa must have suffered damage because of the illegal trade, especially importers who had to pay for goods with a weakened rand.

However, he was not aware that anybody was considering civil action against banks who colluded to drive down the value of the currency, or sure whether their actions had a lasting impact on the strength of the rand.

According to Bonakele, it was clear that the illegal trade was happening as far back as 2007. The commission began its investigation in April 2015 and knew last year that it would proceed against those banks involved.

“We knew before the end of last year already that we would be pressing these charges against the banks.”

He declined to give any information about parallel cases being pursued by authorities abroad, saying he did not wish to compromise foreign colleagues’ investigations.