The alleged currency collusion with which the Competition Commission has charged 28 banks did not influence the rand exchange rate and is not the cause of the rand’s decline over the past decade, the Treasury said on Friday.
The Treasury released a statement as politicking around the commission’s eight-year-old case intensified, while SA’s big banks have come out to challenge the “false and inaccurate” notion that the currency was manipulated to “collapse the economy” — as minister in the presidency Khumbudzo Ntshavheni claimed a week ago.
In parliament’s standing committee on finance on Friday evening, MPs lambasted banks and suggested that price manipulation that took place offshore between 2007 and 2013 was to blame for a weaker currency and had damaged SA’s current economic growth.
Treasury official Christopher Axelson said there is no evidence that the price-fixing, which he explained ended in 2013, strengthened or weakened the rand.
“It is highly unlikely that there are large impacts on the currency today from [what occurred] back in 2013,” he said.
However, two MPs, who appeared to struggle to grasp the explanations, repeatedly blamed banks for weakening SA’s economy and accused them of making “billions and trillions” of rand as a result.
ANC MP Dorothy Mabiletsa said: “We now have endless poverty in our country, and unemployment, inequality and economic exclusion because of this thing.”
Another Treasury official then explained that the reasons for SA’s weak growth included “significant constraints in our economy”, such as load-shedding and logistics challenges.
Standard Bank said in a statement that it had not manipulated the value of the rand, nor engaged in any anticompetitive or criminal conduct.
“All such claims are false. Standard Bank will continue to use every avenue provided to it in law to defend itself against these false allegations,” the bank said. “Standard Bank’s long-run performance depends on the success of the economy and on the economic wellbeing of our clients.”
Nedbank, which was added to the case only five years after the commission initiated the case against the original international and local banks, said on Friday that it denies it was involved in anticompetitive behaviour and the Competition Commission has failed to provide any evidence to support the allegations of currency manipulation.
“There is no evidence, either from Nedbank’s own investigations or presented by the commission, of any Nedbank traders participating in any of the chat room conversations or in any conspiracy in respect of rand trading,” the bank said.
FirstRand said on Sunday: “We welcome the comments contained in National Treasury’s statement on Friday clarifying the main drivers of rand weakness. The bank denies the allegation that it was involved in a conspiracy to manipulate the rand and continues to defend its position in the courts.”
Most of the banks have taken the case on appeal on the grounds that the commission has little or no evidence for the “single overarching conspiracy” it alleges took place in online chat rooms in the New York foreign exchange market between 2007 and 2013.
The commission reached a R42m settlement with UK-based Standard Chartered Bank during public hearings at the Competition Appeal Court last week, prompting Ntshavheni’s comments.
Standard Chartered was one of a handful of international banks charged by the US department of justice in 2015 with forex market misconduct, prompting the commission to launch its collusion case and add multiple other local and foreign banks to the charge sheet.
The Treasury is understood to have become increasingly concerned about SA’s banks being blamed for the economy’s current woes, despite the fact that the alleged misconduct was many years ago and is extremely unlikely to have moved the rand exchange rate even at the time.
In its statement on Friday, the Treasury said it has noted Standard Chartered’s admission of misconduct with concern and views it in a serious light.
“However, while the wrongdoing described by the Competition Tribunal harmed individual clients, it would not have influenced the depreciating trend of the currency since 2013, the level of which is driven by broader changes in the global and domestic economy.
“The value of the currency today, which has depreciated against the dollar, and the resulting impact on prices, should not be attributed to these instances of misconduct between 2007 and 2013,” it said.
The Competition Appeal Court is expected to rule early next year on whether the case should go ahead.
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