UK bank coughs up R43 million for manipulating the rand

 ·15 Nov 2023

UK-based banking multinational Standard Chartered Bank (SCB) has agreed to settle with the Competition Commission for R42.7 million associated with the rand/dollar manipulation scandal that was exposed in 2017.

Standard Chartered was one of the 28 banks who were prosecuted by the commission for manipulating the rand/dollar currency pair between 2003 and 2013.

The bank has admitted liability in the case.

According to the commission, Standard Charterd participated in the manipulation of USD/ZAR currency pair by fixing bids; offers; bid-offer spreads; the spot exchange rate; and the exchange rate at the FIX.

Further, the bank participated in dividing markets by allocating customers in terms of which one trader withholds or pulls his/her existing bid or offer from the market to allow the other trader to execute and complete his/her trade.

“This conduct contravenes section 4(1)(b) (i) & (ii) of the Competition Act, 89 of 1998, as amended,” the commission said.

In February 2017, the Competition Commission referred a number of banks to the Competition Tribunal for price fixing involving the rand. The commission ultimately brought 28 banks under investigation, in what it called the “Forex Cartel” case.

The manipulation impacted the exchange rate of the South African Rand, which in turn affected various parts of the South African economy, including imports and exports, foreign direct investment, public and private debt, and company balance sheets, with the attendant implications for the price of goods and services and financial assets.

The Standard Chartered settlement comes as other respondent banks are currently appearing before the Competition Appeal Court seeking an order to set aside a Competition Tribunal order of 30 March 2023, which ordered respondent banks to file their answers to the complaint referral.

The hearing for the appeals and reviews before the appeal court is set down from 13 to 16 November 2023.

“This settlement ends an eight-year-long litigation between the Commission and SCB over the currency manipulation allegations. Citibank already settled the same conduct with the Commission in 2017,” the commission said.

Citibank settled for a penalty of R69.5 million.

The SCB settlement agreement has been filed with the Tribunal for confirmation, which is set down for hearing on Wednesday, 15 November 2023.

“The Commission welcomes SCB’s decision to reach a settlement on this matter and encourages other respondent banks to consider settling the complaint against them.

“Further, this settlement affirms the Commission’s pursuit of allegations related to the manipulation of the USD/ZAR currency pair, given the ultimate impact of the currency manipulation on the value of the South African Rand,” said Competition Commissioner Doris Tshepe.

Read: South Africa’s big banks to face the music for rand manipulation

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