“SOUTH Africa’s antitrust probe into rand fixing collapses”, “South African banks are not colluding to destroy the country”, “South African banks cleared in landmark rand manipulation case; Competition Appeal Court criticises ‘inadequate’ evidence”, read the headlines after the Competition Appeal Court (CAC) ruling in the currency manipulation case.
While these headlines may be easily associated with the CAC ruling, and even be deemed as fact, it is imperative to look at the judgment through a different lens, where you would realise that it is folly to state categorically that the banks have been cleared of collusion.
The CAC was scathing of the way the Competition Commission presented its case, citing insufficient evidence in some matters and technicalities in numerous matters.
One of the key technicalities noted in the CAC ruling was that the commission wrongfully added several entities to the case.
The CAC stated in its ruling: “In summary this Court has come to the following set of conclusions: A holding company which is not registered as a bank, not authorized to trade in foreign currency and whose role is simply shown to be that one of the subsidiaries traded in foreign currency cannot on this alone be included in the referral affidavit. Accordingly, the twenty fourth respondent, (Nedbank Group) the twenty sixth respondent, (FirstRand Limited), the eleventh respondent (Credit Suisse Group), the twenty first respondent, (BANA), were incorrectly joined in the referral affidavit and their opposition to the Commission’s attempt to join them in these proceedings must succeed.
“The Tribunal’s finding that the referral affidavit which was placed before the Court when it made its 2020 order could be reconfigured to pass legal muster could include further banks subsequent to the initial referral to the Tribunal must be set aside. That means that the twenty fifth (Nedbank Ltd), twenty seventh and twenty eighth respondents (FirstRand Bank Ltd and Standard Americas Inc) which were only cited in June 2020 were improperly joined. Their application to set aside the joinder must succeed.”
This ruling does not clear the banks of the allegations of collusion to manipulate the rand but means that the commission erred in its processes, which resulted in the banks getting off on a technicality.
The chief executive of Future Forex, Harry Scherzer, said it was highly concerning to see the likes of FNB, Standard Bank, and Nedbank being let off the hook due to a lack of direct evidence when Standard Charter had already been fined for its wrongdoing and many other international and local banks were still being questioned.
“Market manipulation of this scale is likely to involve most, if not all, of South Africa’s major banks, so it feels like a real let-off, and it’s likely due to the size of the legal teams of these banks. The public deserves transparency and confidence in the financial system, and decisions like these erode the trust that citizens place in the banking system as well as the regulatory bodies that govern them,” he said.
The Competition Commission said it noted the judgment by the CAC … following appeals, review, and dismissal applications brought by 23 of the respondent banks against the decision of the Competition Tribunal.
“The Commission is currently considering the judgment and consulting its legal team before deciding on the next course of action,” it said.
The Commission needs to effectively go back to the drawing board, rework this case, and correct all the technicalities associated with it.
Apart from the banks being accused of collusion by the Commission, businessman Bret Lang, a former operator of a now-defunct Johannesburg-based multimillion-rand aircraft company, also shared his own experience of what it is like to have his business run into the ground by banks that allegedly colluded to deceive him and destroy his legacy.
Lang accused Nedbank, Standard Bank, Absa, WesBank, and Investec, of having committed racketeering by allegedly orchestrating the collapse of his R600-million business 14 years ago.
Apart from Lang, business magnate Dr Iqbal Survé and the Sekunjalo Group have also taken the banks to the commission on claims of collusion. The commission is still investigating.
sizwe.dlamini@inl.co.za