In recent days, the Competition Appeal Court (CAC) made a decision that sent shockwaves through the financial world, dismissing charges against 23 of the 28 banks accused of colluding to manipulate the South African rand. This ruling has raised eyebrows and stirred concerns about the transparency of the banking sector and the efficacy of regulatory oversight.
The Competition Commission had initially referred 28 banks to the Competition Tribunal in 2015 for price-fixing involving the rand. The manipulation, according to the Commission, influenced the exchange rate of the South African rand, impacting various sectors of the economy. The eight-year-long case against major local and international banks alleged rigged trades involving the rand/dollar pair. However, the CAC dismissed the charges citing reasons such as a lack of evidence, jurisdictional issues, and overreach. The Competition Commission, in response to the CAC’s ruling, noted the judgment and mentioned that it is currently considering its next course of action.
This has left many expressing deep concern over the dismissal, questioning why banks like FNB, Standard Bank, and Nedbank were let off the hook when others, like Standard Chartered, had already faced fines for similar wrongdoing. Standard Chartered, one of the 28 banks prosecuted by the Commission for manipulating the USD/ZAR currency pair, entered into a settlement agreement, paying a fine of R43 million in 2023 for its involvement.
It has also been argued that market manipulation of this scale likely involves most, if not all, of South Africa’s major banks, emphasising the need for transparency and confidence in the financial system. It is clear that decisions like these erode public trust in both the banking system and the regulatory bodies overseeing them.
Experts have expressed concerns about the regulatory competency displayed in the handling of the case. Sifiso Skenjana, the Managing Director and Chief Economist at ESG Analytics, suggested that the alleged irregular conduct by the banks should be investigated by other financial regulatory bodies, such as the Financial Sector Conduct Authority (FSCA), the Financial Intelligence Centre (FIC), and SARS. Wits professor Alex van den Heever raised concerns about the Competition Commission’s inability to build a strong case and emphasised the potential implications for future financial crimes.
Political parties, including the SACP and the National Freedom Party (NFP), expressed deep concern over the manipulation of the rand by banks, both local and international. The SACP called for corruption charges and prison sentences for individuals involved, while the NFP demanded a thorough commission inquiry to investigate the extent of manipulation and its ramifications on the economy. The NFP also emphasised the need for a transparent and stringent regulatory framework to prevent such manipulations in the future.
The recent ruling by the CAC on the rand manipulation case has undoubtedly ignited debates about transparency, accountability, and the effectiveness of regulatory bodies in South Africa’s banking sector. As stakeholders continue to assess the fallout from this decision, the need for a robust and transparent regulatory framework becomes increasingly apparent. The public’s trust in the financial system and regulatory bodies hinges on their ability to ensure accountability and prevent future instances of market manipulation.