Competition commission resolute in bank collusion hearings
After two days of exhaustive hearings into the allegations of collusion by major banks, the Competition Commission remains confident of its case.
Despite some banks arguing it is everything from “vexatious” to “so overwhelmed by its own case” that it cannot keep track of the details, the commission remains determined to have the merits of the matter heard.
“We are very confident in our case. We think that nothing changes,” the commission’s divisional manager of cartels division, Makgale Mohlala, said on Tuesday.
The first leg of the competition tribunal’s hearings into the matter began this week. It is devoted to dealing with the numerous exception applications brought by the banks before the merits of the case can be heard.
In February 2017, the commission referred 23 banks to the tribunal for price-fixing and market allocation in the trading of foreign currency pairs involving the rand.
Most of the banks are claiming amongst other things, that the facts provided in the tribunal’s referral of the charges to the commission are so sparse that they simply do not know what case to answer, and as a result, the matter must be dismissed.
A number of the foreign banks are also arguing that the tribunal has no jurisdiction over them and cannot enforce any decision it makes regarding them.
But according to Mohlala, the commission simply does not agree. “Our view is that because the banks were manipulating the rand and when you manipulate the rand the effect is felt in South Africa and the law says we have jurisdiction over economic activities that have an effect in South Africa,” he said.
The commission does not agree that is has not provided sufficient “particularity” in the charges levelled against the banks.
The commission’s referral affidavit provided the details it was required to under the law said Mohlala. After complaints from the banks, the commission decided to go beyond “what the law requires of us” he said and supplement its referral documents.
“But the complaints don’t stop, they persist,” he said, adding that “these exceptions are really a way of blocking the case being heard on merits.”
He emphasised that Citibank had already settled with the commission and had provided evidence and witnesses, as had Absa and Barclays which have applied for leniency in the matter.
“These are the witnesses that were part of this manipulation together with the representatives of these banks, so they have first hand knowledge of what was going on,” he said. “Our case remains in tact which is why we continuously say we must get to a point where we deal with merits.”
The commission began its arguments late on Tuesday, with Advocate Dali Mpofu’s opening statements aimed at providing a constitutional grounding to the commission’s opposition to the exception applications.
Mpofu also made some cross-cutting remarks in response to some of the issues being interrogated — including on the question of the tribunal’s jurisdiction.
Referring to the Competition Act, Mpofu began by saying, “The first thing that needs to be said is that, what we are dealing with here is an anti-corruption piece of legislation.”
“It must be borne in mind that corporate corruption is no better, or worse than public sector corruption. Therefore as our constitution talks about the value of accountability, what it really says is that citizens, corporate and natural must account to the public, more so when it comes to allegations of malfeasance and corruption.”
In interpreting the statutes during the proceedings, it had to be borne in mind that they are aimed at protecting the public from corporate corruption said Mpofu.
This informed the commission’s position on the need for things like extra-territoriality when interpreting the law. This was especially important given the age of the internet and the rise of cybercrime, he added.
In response to the banks’ assertions that the commission had not been able to prove with enough detail or “granularity” that the questioned trades made by the banks had an effect on the rand, Mpofu argued the emphasis had to be on what effects the alleged activities have on the economic welfare of the people within the country.
“If the outcome of the respondents actions was to devalue the rand, can you really say then, that you must plead the effect with more granularity? Because the effect must be self evident,” he explained.
The commission will proceed with more detailed responses to the banks on Wednesday.