South African Regulator Revives 5-Year-Old Rand-Rigging Case

(Bloomberg) --

South Africa's antitrust-watchdog revived a five-year-old case against banks that were accused of manipulating trades in the rand-dollar currency-pair.

The Competition Commission has compiled a new charge sheet against more than 20 lenders that allegedly colluded to fix prices and divide markets in the currency pair, mostly in New York, the regulator said in an email Tuesday. Nedbank Group, FirstRand Ltd.'s Rand Merchant Bank and Standard Bank Group's Standard Americas Inc. were added to the expanded scope of prosecution, it said.

This follows a Competition Tribunal ruling in June last year that ordered the commission, which investigates cases and makes recommendations to the tribunal, to clarify the charges. At the time, most banks said the allegations were error-ridden and too vague and contradictory to respond to. In February, the path for fresh charges was cleared when the Competition Appeals Court overturned a tribunal decision that banks without a presence in South Africa cannot be fined.

“The banks must file their answers to these charges, which have now been further substantiated,” Commissioner Tembinkosi Bonakele said in the statement. “These charges will not go away. Some of the individual traders involved in the currency manipulation have been dismissed, but their employers, the banks, are yet to be held accountable in South Africa.”

The new referral provides more details on the operations of the alleged currency manipulation cartel and the effects it had on South Africa, he said.

The step is the latest chapter in a saga that started in May 2015, when the commission alleged that banks including JPMorgan Chase & Co., BNP Paribas SA, Bank of America Merrill Lynch, Investec and Standard Chartered Plc colluded to rig the value of the rand against the dollar. The inquiry followed a global probe into currency manipulation that was exposed two years earlier, triggering investigations in the U.S. and the U.K., and resulting in billions of dollars in settlements.

Reviewing Charges

Nedbank is reviewing the allegations and “will respond in due course,” the Johannesburg-based lender said in an email. Standard Bank is reviewing the amended referral papers, it said.

Rand Merchant Bank investigated the allegations both internally and externally when they first emerged in 2015 and “identified no wrong-doing or unethical conduct on the part of the bank.” It will investigate the new information added to the commission's case, but is confident it had no part in the alleged conspiracy, it said.

In filings in May 2017, HSBC Holdings Plc and Investec said the commission named the wrong legal entities in its allegations. Standard Bank's South African unit and Bank of America Corp. said the traders the commission accused of manipulation on their behalf had either never worked for them nor traded the rand.

Citigroup Inc. agreed in January 2017 to pay a 69.5 million-rand ($4.1-million) fine for its alleged role in manipulating the rand, while Barclays Africa Group Ltd., which has since been renamed Absa Group Ltd., may be exempt from a penalty because it blew the whistle on the traders' alleged actions. Nomura International Plc, Commerzbank AG, Macquarie Group Ltd., Australia & New Zealand Banking Group Ltd. and Commerzbank AG were also identified in the probe.