It is eight long years since the Competition Commission first took aim at the banks over the rand rigging case, and we’re still no closer to hearing the actual merits argued.
The commission first lodged a case in 2015, alleging that a number of traders at several banks had met in Bloomberg chat rooms, and secretly rigged trades in the rand/dollar currency pair.
Helpfully for the commission, this isn’t just a South African case. Several traders have already pleaded guilty in the US. This includes ex-Barclays trader Jason Katz. In 2017 he admitted, as part of a plea deal with the US department of justice, that he’d entered into “non-bona fide trades on an electronic forex trading platform for the sole purpose of manipulating prices”.
Citigroup’s Christopher Cummins took a similar plea deal, while former JPMorgan currency trader Akshay Aiyer was convicted in 2018, and sentenced to eight months in prison. Globally, several banks have also admitted guilt and paid big fines.
Yet in South Africa, this case drags on. This week, the Competition Appeal Court heard an objection from 13 banks to the Competition Tribunal’s 2021 ruling that they must answer the case that they were part of a “single overarching conspiracy” to rig the rand. And this isn’t even a hearing on the merits.
Why this delay? It seems blame lies on both sides. The banks have filed, as the Constitutional Court put it, a “veritable forest of interlocutory paper”, a tactic often used to prevent “disputes from being determined on their merits”.
It’s also true that the commission hasn’t helped to expedite this case by adding more banks to its initial charge sheet
The commission argues in its legal papers that each of the banks “has a case to answer, and yet they rely on every procedural trick in the book, and pursue every possible objection, in the hope that they will be let off the hook before being required to account for their conduct”.
But it’s also true that the commission hasn’t helped to expedite this case by adding more banks to its initial charge sheet — which now stands at 28, some of which aren’t even registered in South Africa.
To make its case of a “single overarching conspiracy”, it has to prove each bank was in on it. Each bank argues, reasonably, that the commission has to show their individual involvement. As one expert put it: “Are you part of the mob just because you happen to eat at the same restaurant as the Godfather?”
The Tokyo-based Nomura argued this week that the commission hasn’t even proved it is subject to South African jurisdiction, let alone anything more than that “it was occasionally present in a chat room with another suspected cartel member”.
To some, this suggests the commission overreached. Had it narrowed the case to the banks where the evidence is firmest, perhaps we’d be further along the road.
Yet there is evidence for which the banks should account. In the case against Aiyer, for example, prosecutors produced clips of traders saying “you should introduce me to the ZAR mafia” and “salute to the first co-ordinated ZAR effort”.
This is why some banks have already fessed up, and it seems Standard Chartered will enter a similar plea this week. But the question is, has the commission bitten off more than it can chew by claiming all 28 banks were involved in this conspiracy?
If the Competition Appeal Court agrees that the commission overreached, some banks argue that the entire case should be dismissed. If that happened, it would be a disappointment.
In South Africa, where accountability is a scant commodity. it would only reinforce the view that the powerful never have to face consequences.
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