No more settlements for banks caught up in rand price-fixing scandal

The South African Competition Commission says it is “no longer interested” in any settlement discussions with banks implicated in a major forex scandal that broke earlier this year.

At least a dozen local and international banks were identified by the Commission in February 2017, after an investigation from mid-2015 found that traders had colluded in fixing the price of the rand.

It was alleged that currency traders had been buying and selling US dollars in exchange for the rand at fixed prices. This was accomplished by making false sales to drive up demand, or colluding to agree not to trade for specified periods of time.

Commissioner Tembinkosi Bonakele said at the time that the collusion was widespread, and happened very “casually” through electronic platforms, such as group chats.

Reuters reported that the implicated banks used an instant messaging chat room called “ZAR Domination”, to coordinate their trading activities when giving quotes to customers who buy or sell currencies.

Bonakele told reporters this week that some of the implicated banks had approached the Commission discreetly to discuss a settlement, but these talks are now being rejected.

“We are no longer interested in those discussions,” he said.

Among the named banks, Absa, Standard Bank and Investec emerged as being part of the collusion.

Absa was granted conditional immunity in the matter, for being the first to come forward and cooperate fully with the investigations into the matter.

Standard Bank, meanwhile, declared it would not be setting aside any cash for a potential Competition Tribunal fine, as its internal investigations had not revealed any wrongdoing.

Other banks, such as Citibank, agreed to pay settlement penalties. Citibank paid a R70 million penalty, which is significantly less than the full punishment of a 10% penalty fine of annual turnover.

Lawyers for Bank of America Merrill Lynch, meanwhile, called for the whole probe to be dropped, saying the investigation was “vague” and embarrassing for the Commission.

Read: 3 South African banks face massive fines for price-fixing and collusion

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No more settlements for banks caught up in rand price-fixing scandal