Photographer: Waldo Swiegers/Bloomberg

South African Antitrust Body Refuses to Release Rand Probe Records

  • Commission says improper for tribunal to ask it to give record
  • Standard Bank says Competition Commission ‘can’t play games’

South Africa’s Competition Commission has declined Standard Bank Group Ltd.’s request to release details of its investigation into currency manipulation.

The refusal is the latest chapter in a saga that started in May 2015, when the commission alleged that firms including JPMorgan Chase & Co., BNP Paribas SA and Standard Chartered Plc colluded to rig the value of the rand. The inquiry followed a global probe into manipulation of the currency market that began in the U.K. two years earlier.

Greta Engelbrecht, Standard Bank’s lawyer, told the nation’s Competition Tribunal on Monday that the lender’s request had been turned down on Sept. 4. She said the commission has “constructed reasons” not to surrender the records of its probe and asked the tribunal to set a time for the commission to release the documents.

“The Competition Commission can’t play games to delay the production of the record,” Engelbrecht said.

Monday’s development follows much to-ing and fro-ing between Standard Bank and the South African authorities.

After the commission recommended in February this year that more than a dozen banks be fined for allegedly manipulating the rand, the Johannesburg-based lender asked the body for a meeting that same month, but was turned down, according to papers filed with the Competition Tribunal, which adjudicates antitrust cases like a court. Standard Bank then requested the records of the commission’s investigation and was told by the end of March they were being prepared.

A lawyer for the commission, Tembeka Ngcukaitobi, told the hearing on Monday that it’s improper for the tribunal to question the commission’s subsequent refusal to surrender the documents.

‘The Nerve’

The commission argued that Standard Bank was leveraging its position as a litigant to try force the regulator to produce the record, that the lender’s application was an abuse of power and that it should have used other methods to try obtain the documents. Standard Bank argued that the commission had more than six months to grant its request, that it offers no compelling reasons for its refusal, that it’s delaying the production of the record for tactical reasons and that it’s within the tribunal’s rights to make a decision on the matter.

“We have plenty of reasons to think that Standard Bank is acting improperly,” Ngcukaitobi said. “Standard Bank still hasn’t filed its answering affidavit but they have the nerve to come and complain that the Competition Commission is playing hide and seek,” he said. The tribunal will give its decision in due course, Chairman Norman Manoim said.

There have been accusations of wrongdoing and errors of process on both sides. In filings in May, HSBC Holdings Plc and Investec Bank Ltd. said the commission named the wrong legal entities in its allegations of currency rigging.

Standard Bank’s South African unit, Bank of America Merrill Lynch International Ltd. and Standard New York Securities Inc. all said the traders the commission accused of manipulation on their behalf had either never worked for them or never traded the rand. The commission agreed in June to cancel formal hearings scheduled to start in July so that the regulator had time to amend its complaint.

Some Exemptions

Citigroup Inc. agreed in January to pay a 69.5 million-rand ($5.3 million) fine for its alleged role in manipulating the rand, while Barclays Africa Group Ltd. may be exempt from a penalty because it blew the whistle on the traders’ alleged actions. Nomura International Plc, Commerzbank AG, Macquarie Group Ltd., Australia & New Zealand Banking Group Ltd. and Commerzbank AG were also identified in the probe.

The commission recommended the banks be fined 10 percent of turnover, the maximum allowed competition law, with the penalty based on revenue from their foreign-exchange units. Aside from using a common trading platform, holding meetings and discussing strategy over the phone, the traders had an instant messaging chatroom called “ZAR Domination” where they would agree on their currency trades, according to the commission.

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE