Rand probe may stem from whistle blower or ‘confession’

CompCom is investigating 11 entities, including local banks, for alleged collusion in trades involving the rand.

An investigation by South Africa’s anti-trust regulator into alleged foreign currency manipulation involving the rand may stem from a whistle blower or “a confession,” a central bank official said.

The Competition Commission informed the central bank of its investigations without sharing details of the probe, South African Reserve Bank Deputy Governor Kuben Naidoo told reporters Tuesday in Johannesburg.

“We have spoken with the banks and asked them to cooperate fully with the Competition Commission,” Naidoo said, as the central bank’s supervision department for banking released its annual report for 2014.

The commission said May 19 it’s investigating 11 entities, including local banks Standard Bank, Barclays Group Africa and Investec for alleged collusion in trades involving the rand. Finance Minister Nhlanhla Nene said May 22 he was “very concerned” by the allegations and wanted to understand the impact on the country’s financial system.

The antitrust agency spent a year building the case against the banks, competition Commissioner Tembinkosi Bonakele was quoted as saying by the Johannesburg-based Sunday Times. “We’ve got information ourselves through sources that we’re not at liberty to reveal,” Bonakele told the newspaper. “We were also aware of investigations elsewhere — the U.S., U.K. and Europe.” He didn’t say over what period the alleged collusion took place.

‘No obligation’

The central bank’s own review of foreign-exchange trading is underway “and we haven’t found anything untoward in South Africa,” Naidoo said.

The competition commission hasn’t spoken to the banks involved in the investigation, it said Monday.

“We don’t have to be in touch,” Mava Scott, a spokesman for the commission, said by phone from Pretoria. “We are under no obligation. Right now we are gathering evidence. Once we come to the conclusion that someone has a case to answer and we have enough to prosecute, then we will go and speak with them.”

Given the high-profile nature of the investigation, the commission has committed to working on it as fast as possible, Scott said.

Spokesmen for Standard Bank, Investec and Barclays Africa have said their banks will cooperate fully with the investigation. BNP Paribas SA, Citigroup, Citigroup Global Markets, Barclays Bank, JP Morgan Chase & Co. and a unit of Standard Chartered were also named in the probe.

Naidoo said at Tuesday’s briefing he didn’t know if the rand exchange rate had been manipulated. A misdemeanor may have affected the currency’s price and it was essential that people in the market have the confidence that the market is fair, he said. The extent of any malpractice wasn’t yet clear, he said.

“My sense is that the investigation is as a result of a whistle blower or a confession,” Naidoo said.

©2015 Bloomberg News

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