Early Settlement in Rand-Rigging Probe Seen by Ex-Regulator

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South African antitrust authorities will probably reach a settlement with some of the world’s biggest banks accused of rigging trading in the rand, according to David Lewis, former head of the Competition Tribunal.

“We will probably quite early on in the process see a settlement and an admission,” he said June 23 in an interview in Johannesburg.

The regulator announced the probe May 19 into lenders including Citigroup Inc. and JPMorgan Chase & Co. The move followed similar investigations into currency rigging in the U.S. and U.K. that have resulted in billions of dollars of fines. Six banks agreed to pay $5.8 billion in a settlement with the U.S. Justice Department announced May 20.

The banks cited by the South African regulator have either declined to comment on the investigation or pledged their cooperation.

“People are over-awed by the nature that it’s these great global banks and this little competition authority,” Lewis said. “I think it’s going to be pretty much a slam dunk, actually.”

South Africa’s Competition Commission will probably follow the lead of U.S. and U.K. regulators, and may share intelligence with them, according to Lewis, who was chairman at the Pretoria-based body from 1999 until 2009.

No Approach

Traders used an online chat-room called “ZAR domination,” its name inspired by the rand’s international code, to collude at a cost to bulk buyers of the currency, Tembinkosi Bonakele, head of the antitrust body, said in an interview May 29. The Tribunal that Lewis used to run rules on findings by the Commission.

“We have not been approached by any of the banks for any type of negotiation of a settlement,” Mava Scott, a spokesman for the Competition Commission, said by phone from Pretoria Wednesday. “The investigation is underway and it’s continuing at an advanced stage.”

Bonakele probably wouldn’t have announced the investigation without being “pretty persuaded,” said Lewis. “They seem to have very strong evidence. I think this will probably turn out to be a bit of a gift for the competition authorities.”

The alleged rigging took place outside South Africa, according to the Reserve Bank. This won’t have a bearing on the Competition Commission’s case, according to Lewis.

“As long as the impact is on the South African market, it does not matter where it happened,” he said.

The 11 subjects in the rand-rigging case are JPMorgan, JPMorgan South Africa, Citigroup, Citigroup Global Markets (Pty) Ltd., BNP Paribas SA, BNP Paribas South Africa, Barclays Plc, Barclays Africa Group Ltd., Investec Ltd., Standard New York Securities Inc. and Standard Chartered Bank.

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