The Constitutional Court will deliver a final verdict on the Competition Commission’s decade-long battle to prosecute local and international banks accused of manipulating the rand, after wrapping up a three-day hearing that could redefine the boundaries of SA competition law.
The commission turned to the apex court to decide on the case after a bruising loss at the Competition Appeal Court (CAC), which dismissed its case against 17 banks in January 2024.
The ruling dealt a blow to the commission’s plans to impose penalties of up to 10% of each bank’s SA turnover, which could amount to billions of rand, should it have successful prosecutions in the saga. The case stems from allegedly unlawful conduct that took place for six years.
Adv Tembeka Ngcukaitobi, for the commission, argued on Thursday that his client met legal requirements to have most of the banks tried for alleged “permanent structural damage” to the rand, which skewed about R35-trillion in trade flows.
He argued the case rests on a single, overarching conspiracy: traders at multiple banks used private chat rooms to share competitively sensitive information and manipulated the dollar-rand currency exchange rate to make profits for the banks in 2007-13.
Ngcukaitobi told the court the commission was able to link several international banks to the syndicate through “chief architect” of the syndicate Jason Katz’s employment trail.
Katz pleaded guilty in the US in 2017 to price-fixing in the foreign-exchange market in 2007-13. His employment trail runs from Standard Americas in 2001-10, to BNP Paribas in 2011-013, a brief stint at ANZ in 2013, and earlier roles at Barclays.
While at those firms, he participated in a chat room dubbed “Gitz”, which the commission said was the nerve centre of the currency manipulation syndicate.
Aside from Katz, Ngcukaitobi argued Gavin Cook, who allegedly acted as a trader for Bank of America, and Christopher Hatton, who allegedly worked for HSBC and Credit Suisse Securities, were the “masterminds” of the rand manipulation.
Ngcukaitobi argued that the ruling by the Competition Appeal Court (CAC) that the traders’ participation in the chat room was not a substantial ground to prosecute and make a finding that the banks were part of the cartel was incorrect.
“They have been excluded from the [conspiracy] by the CAC on very flimsy justification,” he argued.
“This case bears the hallmarks of an international cartel that cannot be effectively prosecuted without an SOC [single overarching conspiracy] doctrine and without extraterritorial powers.
“The approach taken by the banks as to jurisdiction is actually to promote impunity. It is to defunct the only jurisdiction in the world with the closest connection to the suit.”
Jurisdiction was a contentious point during the hearing, with the banks arguing the commission bungled its own case, and jurisdiction could not be part of the grounds for the appeal because the matter was decided by the Competition Appeal Court.
The commission did not appeal the judgment, which ruled the Competition Tribunal — the adjudicator of antitrust cases — had no jurisdiction to prosecute foreign entities with no SA branches.
Banks argued the law principle of res judicata applied, which means the commission could not appeal the jurisdiction question before the top court.
Alfred Cockrell, for HSBC Bank, argued that should the apex court rule the competition tribunal had jurisdiction to hear the case, it would set a precedent that conflicts with the court’s previous judgments.
Ngcukaitobi pushed back against FirstRand and Nedbank’s case that they were not linked to the chat rooms and that mere analysis of their economic conduct was not a substantial ground to accuse them of unlawful conduct.
He also told the court Standard Bank was the “most aggressive litigant of all the banks”.
“It has taken every procedural point right up to this court. Standard Bank says it has investigated the matter but never tells us what it found in the investigation,” Ngcukaitobi said.
The bank is linked to the case through its employee Bryan Brownrigg, who the commission alleges shared sensitive information with Barclays Capital trader Peter Taylor on September 19 2012 in a chat room dubbed “ZAR Domination”.
The bank accused the commission of being “ignorant” and failing to establish solid facts despite brazen allegations, which caused a R8.5bn dent to its share price in the first few days of publishing the allegations.
He argued that for the past 10 years, the commission’s case has been stuck in procedural litigation by the banks.
“In those circumstances, we ask that you uphold the appeal and that you direct the parties that are yet to plead to do so without delay.”
Judgment was reserved.
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