South Africa’s Competition Commission on May 19 announced it was investigating 11 companies for allegedly colluding to fix the price of the rand when carrying out confidential client orders.
Who is being investigated?
BNP Paribas, BNP Paribas South Africa, Citigroup Inc., Citigroup Global Markets (Pty) Ltd., Barclays Bank Plc, Barclays Africa Group Ltd., JP Morgan Chase & Co., JP Morgan South Africa, Investec Ltd., Standard New York Securities Inc. and Standard Chartered Bank.
What were currency traders allegedly doing?
The Competition Commission says they were using electronic messaging software to communicate and possibly collude with one another. This meant that traders from various banks, when receiving orders from clients for currencies, could chat with counterparts at other banks and charge customers an agreed price for a specific amount of currency.
What has the banking regulator said about it?
The country’s banking regulator, which is part of the South African Reserve Bank, said on the same day the probe was announced that the investigation followed a complaint against foreign-currency traders. The source of the complaint wasn’t disclosed.
How does the South African investigation connect to probes in the U.S. and U.K.?
Six of the world’s biggest banks this week agreed to pay $5.8 billion, with five of them agreeing to plead guilty to currency-rigging charges in the U.S., just one of several sets of fines for the practice. The South African Competition Commission said its probe follows “similar investigations launched by other competition authorities in other jurisdictions.”
What powers does the Competition Commission have?
It can get approval from a High Court to search premises, including computer data, and seize the information it needs.
What penalties could banks found to have colluded face?
The commission says on its website that “the penalty for participation in a cartel is a fine of up to 10 percent of the firm’s annual turnover.” The law defines a firm as “a person, partnership or a trust.” Customers who may have suffered harm as a result of the collusion could also sue for damages.
Could there be criminal charges?
While the amended Competition Act allows for fines and jail terms for individuals, the government hasn’t yet activated those parts of the law.
Is the Competition Commission effective?
Its track record suggests it is. The boss, Tembinkosi Bonakele, and the head of the cartels division, Makgale Mohlala, have both been in the job for 10 years. They have succeeded in proving collusion in the country’s bread and flour industry, among cement producers, and by construction companies bidding to build stadiums for the 2010 soccer World Cup.