South Africa's Top Banks Win Decade-Long Currency Fight, Face No Charges
Constitutional Court halts most prosecutions in South Africa's decade-long rand manipulation case.
Standard Bank, Nedbank and First Rand Bank will face no prosecution after South Africa’s Constitutional Court ended the Competition Commission’s decade-long legal battle over alleged rand manipulation. Justice Owen Rogers delivered the majority judgment on Tuesday, rejecting the commission’s appeals against most of the banks named in the case.
The commission had spent ten years pursuing 28 banks, both South African and foreign, on allegations that they colluded to manipulate the rand-dollar exchange rate for profit. Investigators pointed to coordination among local and international banks, some of whom participated in an instant chat room identified as “ZAR Domination.” The commission had recommended fines reaching ten percent of each bank’s South African revenue.
The legal challenge began in 2017, when the commission initiated prosecution proceedings. Foreign banks contested its jurisdiction. Local banks argued it lacked sufficient evidence. The case moved through the courts for years, with the Competition Appeal Court previously limiting prosecutions to four global entities. The commission appealed that decision, with its legal representative, advocate Tembeka Ngcukaitobi, arguing that the banks’ conduct had “weakened the rand” and continued to harm the country’s imports and exports of dollar-denominated products valued at approximately $2-trillion.
The Constitutional Court’s ruling proved decisive against the commission’s position.
Among the banks cleared were Bank of America Europe Designated Activity Company, Australia and New Zealand Banking Group Limited, Standard Bank of South Africa, Nomura, Commerzbank, Macquarie, HSBC Bank USA NA, Merrill Lynch Pierce Fenner and Smith Incorporated, Bank of America NA, Nedbank and First Rand Bank. Credit Suisse Securities, the Swiss investment bank, also won its appeal challenging the commission’s decision to include it in the litigation. The court found the commission’s case rested on incorrect factual assumptions and lacked the evidence necessary to justify further legal proceedings.
Standard Bank responded with a statement affirming its position since 2017. “The judgment affirms the consistent position maintained by the bank since the inception of this matter in 2017 and throughout these proceedings, that neither Standard Bank nor any of its employees was involved in a conspiracy to manipulate the rand,” the bank said. “Standard Bank affirms it conducts its business with integrity and in full compliance with all applicable laws and regulations. Standard Bank will continue to play a constructive role in South Africa’s financial markets and in supporting growth throughout the South African economy.”
By contrast, the commission’s appeal succeeded partially in the cases of JPMorgan Chase Bank and Standard Americas Incorporated. The commission will be permitted to pursue cases against BNP Paribas, JPMorgan Chase Bank, HSBC Bank and Standard Americas Incorporated. For the broader investigation, though, the ruling represents a substantial setback, leaving open the question of whether a decade of legal effort will ultimately yield any meaningful accountability in the currency manipulation case.
Q&A
Which South African banks were cleared of prosecution in the Constitutional Court ruling?
Standard Bank, Nedbank, and First Rand Bank were cleared of prosecution, along with most other defendants including Bank of America Europe Designated Activity Company, Australia and New Zealand Banking Group Limited, Nomura, Commerzbank, Macquarie, HSBC Bank USA NA, Merrill Lynch Pierce Fenner and Smith Incorporated, Bank of America NA, and Credit Suisse Securities.
What was the Competition Commission's original allegation against the banks?
The commission alleged that 28 banks, both South African and foreign, colluded to manipulate the rand-dollar exchange rate for profit, with some participating in an instant chat room identified as 'ZAR Domination.'
How long did the Competition Commission pursue this case?
The commission spent ten years pursuing the case, with legal proceedings initiated in 2017 and the Constitutional Court ruling delivered on Tuesday.
Which banks may still face prosecution after the Constitutional Court ruling?
The commission will be permitted to pursue cases against JPMorgan Chase Bank, BNP Paribas, HSBC Bank, and Standard Americas Incorporated.