Several parts of the country’s economy, including imports and exports, foreign direct investment, public and private debt, and company balance sheets, were among the hardest hit when 28 South African and international banks allegedly colluded to manipulate the rand/dollar currency valuation.

This is according to the Competition Commission which has set its sight on having Absa, Standard Bank, Nedbank, FirstRand, Investec, Standard Americas, Australia and New Zealand Banking Group, Commerz Bank (Germany), Macquarie Bank Limited (Australia), Barclays, Bank of America, HSBC Bank, Merrill Lynch Pierce Fenner and Smith, JP Morgan Chase, Credit Suisse Securities (US), among others, answer for the alleged collusion between 2007 and 2013.

This legal battle is before Competition Appeal Court (CAC) and is set to continue on Wednesday.

According to the commission, which referred the matter to the Competition Tribunal, the banks are accused of engaging in “conduct considered the most egregious in competition law.

“The alleged conduct relates to fixing and manipulating the rand/dollar exchange rate, which has a central and crucial role in the South African economy.”

In March, the Competition Tribunal ruled that it had jurisdiction to hear the so-called “Forex Cartel case” and dismissed a second round of exception, objection, and struck out applications brought by various banks, in response to the Competition Commission’s updated complaint referral, or charge sheet.

The commission alleges that between 2007 and at least 2013, 28 banks from multiple jurisdictions in Europe, South Africa, Australia and the US conspired to manipulate the Rand through information sharing on electronic and other platforms and through various co-ordination strategies when trading in the USD/ZAR currency pair.

It is alleged that the common objective of the participants was the manipulation and distortion of normal competitive conditions in the trading of the USD/ZAR currency pair through communication of competitively sensitive information relating to various steps of the value chain of setting foreign exchange.

They also observed patterns of behaviour by certain banks, which is said to be correlated to later observations of trends up and down in the FX rate.

The commission also set out in detail examples of how the employees of the banks, the traders, engaged with each other in chat rooms on digital platforms, the Old Gits chatroom and the ZAR chatroom and personally, over drinks.

Before the CAC , several banks argue that they were not involved in the chatrooms and, therefore, were not part of the alleged currency manipulation.

Legal representatives for Commerz Bank, argued: “The cases that the commission relies on (are) all cases concern(ing) appeal(s) from the high court, entirely different (in) principal. There was no extensive contact by any representative of this bank. It was not over any lengthy period. If CommerzBank was a part of this conspiracy, on the best evidence put forward by the commission it participated in one chatroom. The conduct is perfectly reconcilable.”

While lawyers for Macquarie Bank Limited said: “The third category (of allegations by the) commission refers to (it being) inhabited by people who had a history. We know nothing about these people. Based on attempts of the SOC, in other words (there’s) no suggestion from the commission which is alleged to emanate from my client.”

Nedbank said they were brought into the matter late, only being notified on May 28, 2020 about information which had come into the commission’s possession that allegedly implicated them.

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Banks under spotlight for alleged exchange rate collusion