The banks and individual traders identified in the Competition Commission’s referral to the Competition Tribunal do not face the prospect of criminal sanction by the competition authorities even if found guilty of price-fixing and market manipulation in the foreign exchange market, says a Business Day report. The Competition Act was amended with effect from May 2016 to provide for criminal sanctions to be imposed on individuals for certain competition law contraventions such as those identified in the commission’s referral.

However, the contraventions identified by the commission took place between 2007 and 2013, predating the introduction of criminal sanction. Because it cannot pursue criminal sanction, the commission is expected to push hard for the maximum possible fine, notes the report. The banks that have been charged by the commission have 20 days from the date of referral to respond to the charges. Given the complexity of the matter it is likely that all the banks will request an extension, suggests Business Day. ‘Some of the banks will settle and reach a consent agreement with the commission, rather like the construction companies did,’ a lawyer is quoted as saying.

Full Business Day report (subscription needed)

Fines, however, are not enough, says the man who blew the whistle on currency manipulation 15 years ago and was widely condemned in financial circles for it. He maintains the banks should be criminally prosecuted. The Black Management Forum has also indicated its support for criminal prosecution as has Parliament’s Standing Committee on Finance, notes a Weekend Argus report. Kevin Wakeford reportedly told Independent Media that fines would not be sufficient against those involved. He said only a criminal prosecution would be sufficient. Asked whether he was vindicated by the commission’s report into collusion against the major banks, Wakeford said this was about ensuring there was justice. He said if the banks were found guilty by the Competition Tribunal, it would be a game changer in how banks behaved. ‘In this case there should be criminal prosecution, not just fines. The fines are paid with shareholder money. If you commit fraud, any form of market unfairness, you need to be brought to book and put behind bars,’ he said.

Full Weekend Argus report

A Sunday Times report names some of the traders who allegedly colluded – two Absa senior traders, Duncan Howes and John Daly; Investec’s Clint Fenton; US-based Jason Katz and Chris Cummins, who recently admitted in a New York court to conspiring to fixing prices in the foreign-exchange market. The commission’s cartel division manager, Makgale Mohlala, said the investigation kicked off when the commission was approached by a local bank, believed to be Absa, in 2015 and told what was happening. ‘We asked for the evidence and they produced chatroom evidence. From those chatroom conversations we were able to pinpoint who each individual was and where they worked,’ he said. Mohlala said that the commission approached the banks with the evidence it had gathered locally. ‘Like any other investigation when you have uncovered sufficient evidence of contravention of the law you approach the person or firm implicated and advise them that they had been implicated in certain conduct and they should decide whether to settle this or defer it for prosecution. The banks in this case said no, they are not going to discuss a settlement, and that is why we referred it for prosecution.’ Locally, the first person to spill the beans is believed to have been the Absa trader Howes, who was suspended in 2015 on full pay. The Sunday Times claims to have established that as part of the deal between Absa and the commission, Howes agreed to co-operate and disclose information.

Full Sunday Times report (subscription needed)