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Commissioner grilled on banks collusion, impact on rand

Feb 21 2017 12:02
Liesl Peyper

Cape Town – Although the rand is one of the most traded currencies in the world, particularly among emerging market currencies, there is no evidence yet that the collusive practices of banks influenced its value, said Competition Commissioner Tembinkosi Bonakele on Tuesday.

Bonakele briefed Parliament on the Competition Commission’s decision to  refer a collusion case to the Competition Tribunal for prosecution against 17 banks, including three of South Africa's big banks.

Bonakele was asked whether the collusion could have caused the rand to trade at a meaningfully different value.

“Almost 70% of the rand is traded outside South Africa,” Bonakele responded.

“This suggests there has been a lot of speculation around the rand. It’s fair to say that the rand was really involved in a lot of evidence of wrongdoing. But we haven’t researched yet if it changed the value of the currency.”

He added that the price collusion conduct was widespread and involved multiple currencies.

READ: Citibank to pay R69.5m in rand rigging scandal

“But it would not be an exaggeration to say that the largest assault was on the rand.”

Asked if South African consumers were also affected by the collusion of traders, Bonakele said there’s definitely a link between consumers and the value of the rand.

“We can’t suggest there was no harm. When the currency is weak it will have an impact for example on importers of goods. There are the big buyers of currency for a variety of reasons so these would be the first affected people.”

Bonakele also denied that the announcement of the investigation into the banks was politically motivated.

“Were there any political considerations for the investigation? Absolutely not. It would be very risky for any authority to do that. I’m old enough to know when to press charges can be a big problem. We don’t do that.”

READ: Collusion case strengthens Zuma's hand in battle with banks

Bonakele said the investigation already started in 2015 and was a complex matter. “We knew charges would be pressed against the banks, but we were drafting papers etc and we were ready to refer the case to the tribunal on the 14th (of February).”

Asked about the kind of penalties would be in store for guilty parties, Bonakele said the commission would press for the maximum penalty, “both to deter and to show those who are involved if they don’t cooperate early there’ll be consequences”.

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