Only a few months after SA banks were accused of running a trillion-rand currency manipulation scheme and being part of a grand private sector conspiracy to undermine government, a Competition Appeal Court judgment has been published that hopefully brings a halt to the hysteria.
Central to the saga was the Competition Commission’s decision to lodge a case against 28 local and international banks that were accused of manipulating the rand. The genesis of the story seemed solid enough. A few years ago a range of international banks had been found to be engaging in fixing the all-important Libor borrowing rate, to the detriment of every market participant.
Coincidentally, in the investigations relating to the Libor scandal, evidence emerged of another scandal relating to the fixing of the exchange rates of currencies such as the rand. The conclusion of the investigation resulted in convictions for affected banks and their rogue traders.
In response to the developments in the international arena the SA authorities decided to pursue a case on the basis that the rand was one of the affected currencies. The Competition Commission pursued a case of cartel conduct, with a view to convincing the Competition Court that such practices violated the local Competition Act.
In lodging its case the commission decided to go for a single case involving all of the banks, citing them as co-conspirators in a single overarching conspiracy. That approach might have been motivated by the need to manage resources, but it introduced a steep hurdle for the commission to get over — it had to illustrate just how the banks had actually conspired.
Fatally for the commission, its case was laden with fundamental errors, such as citing banks or bank holding companies that actually had no foreign dealing authorisations, and also incorrectly citing individuals who were not dealers and associating dealers with banks they had never worked for.
The decision by the Competition Appeal Court to dismiss the bulk of the case against 23 banks leaves the commission with the difficult call of deciding whether to proceed with just the remaining banks or hope another forum will accept its case against all of the banks.
Whichever way it proceeds, lingering questions about the wisdom of its approach to the case will need to be addressed. Given the significant latitude offered to the commission — it was given a rare chance to refine its case — it is curious how it ended up with a case so laden with flaws.
For the legislators, the case also serves as a reminder that when it comes to cross-border crimes and infringements there are still glaring gaps between the capacity of law enforcement instruments across different countries to deal with similar issues.
In the currency manipulation case the ability of the US Securities & Exchange Commission to pursue a successful case is premised on the legal instruments it has been provided, which leaves little room for escape for rogue dealers. Had the case against the now-convicted banks been initiated in SA, one wonders whether the same convictions would have occurred and whether the penalties would have been similar.
Given the borderless nature of international economies these days, questions about learning from and adopting the best accountability instruments from across the globe have become increasingly important. Until that sense of accountability equilibrium is found, cases like Steinhoff and the currency manipulation will leave South Africans frustrated.
Other countries seem to have the ability to extract justice for white collar crimes, yet SA remains paralysed even when the harm caused to the country is undisputed, as it is in the Steinhoff saga.
• Sithole (@coruscakhaya) is an accountant, academic and activist.
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