By Nomalanga Gumede
In a recent turn of events, the case accusing South African big banks and their global counterparts of manipulating the rand has crumbled, leaving experts uneasy about the alleged irregular conduct and regulatory shortcomings.
The Competition Appeals Court (CAC) recently dropped charges against 23 banks and financial institutions involved in the Competition Commission’s investigation into alleged currency manipulation. This included major players like Standard Bank, Nedbank, and FirstRand. However, Investec and four foreign banks with traders admitting guilt in charges brought by the US Department of Justice remain in the spotlight. Investec’s continued involvement is due to its decision not to join the application for dismissing the case.
The CAC dismissed charges for various reasons, including the lack of jurisdiction for prosecuting some international banks and an incorrect attempt to prosecute holding companies not directly involved in the alleged trades. Some charges were also thrown out due to insufficient evidence, with the court urging the commission to be more meticulous in presenting its case.
Sifiso Skenjana, Managing Director and Chief Economist at ESG Analytics, emphasised that the issue extends beyond anti-competitive behaviour and called for investigations by the Financial Sector Conduct Authority (FSCA), the Financial Intelligence Centre (FIC), and SARS. This broader approach aims to shed light on whether manipulation occurred, going beyond the Competition Commission’s shortcomings.
Echoing these concerns, Professor Alex van den Heever from Wits’ School of Governance
expressed worry about the Competition Commission’s inability to build a solid case and demonstrate technical competency. He highlighted the potential consequences, allowing bad actors to evade accountability for financial crimes, especially in cases not flagged by US authorities.
Harry Scherzer, CEO of Future Forex, expressed his dismay at the lack of transparency within the banking sector and questioned the effectiveness of regulatory oversight. He raised concerns about major banks being let off the hook despite the global implications of market manipulation. Scherzer stressed the importance of transparency and public confidence in the financial system, criticising decisions that erode citizens’ trust in both banks and regulatory bodies.
In response to the ruling, Standard Bank maintained its commitment to the rule of law and expressed respect for South Africa’s institutions. The bank emphasised its dedication to supporting regulators, including the Competition Commission, despite the legal hurdles it faced.
As the controversy unfolds, the lingering concerns highlight the need for a more comprehensive investigation into the alleged irregular conduct, urging authorities to address the technical complexities and enhance regulatory capabilities to maintain public trust in the financial system.