Treasury slams banks snared in global forex collusion
Publish date: 17 February 2017
Issue Number: 4170
Diary: Legalbrief Today
The Competition Commission’s decision to prosecute major local and international banks for manipulating the foreign exchange market has been followed by outrage from the government, with the Treasury saying it pointed to poor market conduct practices at the offending institutions, notes a Business Day report. The 17 banks investigated included Absa, Barclays, Standard Bank and Investec and a host of international institutions. The Treasury said that if proven to be true, ‘it would confirm the pervasiveness of unbridled greed within ... banks even after evidence that such behaviour has potential to collapse national and global financial systems. This has to be punished and brought to an end!’ At the time that the collusion allegedly took place – from 2007-15 – no market conduct supervision was in place, said the Treasury. While the Reserve Bank was a prudential banking supervisor, it did not monitor market conduct. Twin peaks legislation, being processed by Parliament, had been proposed to fill this gap, it said. Absa, Citigroup and Barclays will not be targeted for fines, the commission said, which bank sources confirmed was because they have co-operated with the regulators. The two local banks probed by the commission and facing a penalty once the case heads to the Competition Tribunal – Investec and Standard Bank – face a cumulative R69.7bn in fines, representing 10% of their turnover for each of the years they have breached the Competition Act. The commission’s investigation is the latest move in a number of high-profile legal actions executed across the world in the wake of a continuing probe by the US Justice Department. The commission confirmed yesterday that it had worked ‘very closely’ with its counterparts in other jurisdictions. One leading competition lawyer said the local authorities would have had to work closely with the US Justice Department and others in preparing their case.