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  What really annoys me is that banks get these fat fines (for collusion as well as FICA) but no-one actually benefits, except for the Treasury trough. Employees of banks and other "affected parties" ge...  

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Banks depict rand probe as vague, embarrassing

BofA says antitrust authorities lack details on collusion, while JPMorgan says competition regulators have no jurisdiction.

Some of the banks accused of manipulating trades in the rand are objecting to the complaint by South Africa’s Competition Commission, calling it vague and embarrassing, and demanding it be amended or dropped

“The commission has failed to plead the material facts necessary to sustain the allegation that there was an agreement, or agreements,” between the lenders of colluding to fix the value of the currency, lawyers for Bank of America Merrill Lynch said in a documents published on the Pretoria-based Competition Tribunal’s website on Wednesday. “The necessary details of any such agreement(s) — i.e., when, where, how and by whom they were concluded — are also lacking.”

The New York-based lender was named among 14 banks as respondents in the Competition Commission’s complaint. Others include HSBC Holdings, BNP Paribas, Credit Suisse Group, JPMorgan Chase & Co, Standard Bank Group, Investec and Nomura International. Citigroup agreed to pay a R69.5 million ($5.2 million) administrative penalty for allegedly participating in the trades, while Barclays Africa Group is exempt from a fine because it blew the whistle on the traders’ alleged actions. 

In separate papers filed with the Competition Tribunal, which adjudicates cases brought by the commission, BNP Paribas also called the complaint against it “vague and embarrassing” for saying that a defendant represented Standard Bank’s New York unit and Barclays Plc at the same time. It said there were no allegations that the banks carried out prohibited practices within South Africa or if they had any effect in the country.

Seeking settlement

In its response, JPMorgan argued that the commission has no jurisdiction over the bank, which is registered in the US, while Credit Suisse termed an allegation that traders for the group of banks “operated predominantly in the United States of America and in South Africa” as “so vague as to be meaningless.” It called another allegation “incomprehensible.”

The commission has submitted its papers “where it argued why it has jurisdiction and or why it can’t give further details,” spokesman Sipho Ngwema said in an emailed response to questions. “Importantly, some banks have settled with us admitting liability and more banks are talking to us with the view of reaching a settlement.”

The South African probe is the latest investigation into alleged rigging by the world’s biggest banks of the $5.1 trillion-a-day market for products tied to foreign exchange, which has resulted in more than $10 billion of penalties since Bloomberg first wrote about the manipulation in 2013.

No denials

“If there are those who think they can kick for touch and engage in delaying tactics — time is going to catch up,” Ngwema said. “We have presented the basis of our case at the tribunal and they must engage on the merits. Interestingly, I am not aware of any of them that have denied involvement in the cartel.”

While the commission recommended the banks be fined 10% of turnover, the maximum allowed, the tribunal will determine a penalty based on the revenue from their foreign-exchange units that may have been affected by the alleged practices and the period over which the transgressions took place.

From 2007 to 2013, the period in question, the rand depreciated 33% against the dollar. During that time, Thabo Mbeki was ousted and Jacob Zuma was installed as president and the country also suffered the global financial crisis and an ensuing recession.

© 2017 Bloomberg

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Mark Swanepoel

Mark Swanepoel

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Well, if there is nothing there, just cooperate, the investigation will soon be over … and the banks will soon be on their way to making more money from extorting the public as allowed under the laws. But, if I was the investigator, I would not take the word of a banker …its always best to verify. If, they have nothing to hide, they have nothing to worry about. Isn’t that their usual mantra? So, let’s see…that can’t do any harm. Their response though leads me to believe there is something there. So, let’s see, what it is.

What really annoys me is that banks get these fat fines (for collusion as well as FICA) but no-one actually benefits, except for the Treasury trough. Employees of banks and other “affected parties” get nothing for whistle-blowing – just the opposite in fact – they are hung out to dry. 10% of turnover could well mean that an innocent employee doesn’t get his / her bonus at the end of the year.

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