17 banks to be prosecuted in S. Africa for collusion

The South African Competition Commission said Wednesday they have referred 17 banks to their tribunal for prosecution of collusion.

Among the 17 banks, 3 of them are South Africa's biggest banks who face prosecution of collusion for price fixing of the South African rand.

The country's consumer watchdog has been investigating the banks for the past two years and has resolved to refer the case to the Competition Tribunal for prosecution.

The Competition Commission said the banks manipulated the price for bids and offers through an agreement to abstain from trading and creating fake bids and offers at given times. The collusion happened through groups chats.

The South African Banks involved in collusion includes Standard Bank of South Africa, Absa and Investec. The foreign banks involved are JP Morgan Chase Bank, Barclays Capital, Barclays Bank, HSBC Bank and Bank of America Merril Lynch International, among others.

Tembinkosi Bonakele, one of the Commissioners from the Competition Commission said "the referral of this matter to the tribunal marks a key milestone in this case as it now affords the banks an opportunity to answer for themselves."

The Commission said the banks had a general agreement to collude on prices for bids, offers and bid-offer spreads for the spot trades in relation to currency trading involving U.S. dollar and rand currency pair.

According to the Commission, some banks used trading platforms such as the Reuters currency trading platform to carry out their collusive activities. Some used Bloomberg instant messaging system (chatroom), telephone conversation and had meetings to coordinate their bilateral and multilateral collusive trading activities. The banks coordinated trading times and helped each other to reach desired prices.

The Commission applied to the Tribunal to declare that the 17 banks as having contravened the Competition Act and are liable for the payment of an administrative penalty equal to 10 percent of their annual turnover.

South African ruling party, African National Congress spokesperson Zizi Kodwa said the actions by the banks are an attack on the constitutional mandate of the South African Reserve Bank to protect the value of the South African currency.

"The African National Congress takes an extremely dim view of the activities of the listed banks, understanding the banking sector as being instrumental to our quest for economic growth and development," he said. Endit