Banks back in the dock: Rand manipulation saga lands in Constitutional Court

Key topics:Competition Commission argues banks colluded to manipulate the rand.CAC dismissed most charges, citing weak evidence and jurisdiction.Constitutional Court hearing seen as test of regulator’s credibility.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Kerry Lanaghan.South Africa’s long-running Rand manipulation case is back in the spotlight as the Constitutional Court hears arguments over whether the Competition Commission can pursue charges against 13 local and international banks accused of colluding to fix the currency.According to MoneyWeb, the Commission told the court this week that there is sufficient evidence to establish a prima facie case of rand manipulation despite earlier setbacks in lower courts. Advocate Tembeka Ngcukaitobi, representing CompCom, argued that the alleged scheme bears all the hallmarks of cartel behaviour, though it is more sophisticated and transnational in nature.The saga stretches back to 2017, when the Commission first referred a complaint against 28 banks to the Competition Tribunal. The allegation was that, between 2007 and 2013, traders at these banks coordinated through chatrooms, telephone calls, and messaging platforms to manipulate the rand-dollar exchange rate. Two institutions, Citibank and Standard Chartered, have already admitted wrongdoing and paid fines in 2017 and 2023, respectively.But the case has struggled to gain traction. As Daily Maverick reported in February 2024, the Competition Appeal Court (CAC) dismissed charges against most banks, ruling that the regulator had failed to provide enough evidence of a single overarching conspiracy. The court also found that South African authorities lacked jurisdiction over several foreign banks with no domestic operations.In its judgment, the CAC highlighted serious weaknesses in the Commission’s case. It ruled that merely participating in chatrooms or messaging systems such as Bloomberg and Reuters did not automatically amount to collusion. The court also criticised the Commission for factual inaccuracies, such as linking traders to banks they had never worked for. As a result, charges against 23 of the 28 banks were dismissed, with only five - including BNP Paribas, JPMorgan, HSBC, Credit Suisse Securities, and Investec - left with a case to answer.Still, the Commission is determined to press ahead. The Citizen reported that Ngcukaitobi told the Constitutional Court that the CAC acknowledged enough evidence to show manipulation of the Rand, even if it limited culpability to a handful of banks. He further noted that several individuals in the South African case have already been convicted abroad for similar offences, particularly in the United States.Ngcukaitobi argued that the matter is unique in its scope and importance. Unlike the “classic” cartel cases involving fixing product prices - like bananas or oranges - this case allegedly targeted South Africa’s sovereignty. “For this reason alone, the judicial institutions of South Africa are the only institutions across the world that have a legal interest in the prosecution of this cartel; at the heart of it is the Rand,” The Citizen quoted him as saying.The Commission hopes the Constitutional Court will overturn the CAC’s jurisdictional ruling and allow the case against the 13 remaining banks - including JP Morgan Chase, HSBC, FirstRand, Nedbank, Standard Bank, and Bank of America - to proceed.For CompCom, the stakes go beyond this particular case. As Daily Maverick pointed out, the regulator’s credibility is on the line after years of criticism over handling complex cartel and white-collar crime prosecutions. By framing the Rand manipulation saga as an attack on national sovereignty and aligning it with international precedents, the Commission is seeking justice and defending its own institutional authority.The Constitutional Court hearings are expected to last four days, and judgment is likely reserved. Whatever the outcome, the decision will shape the future of competition law enforcement in South Africa and determine whether the alleged manipulation of the Rand finally gets its day in court.

Banks back in the dock: Rand manipulation saga lands in Constitutional Court

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