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Standard Bank: We are innocent

Apr 30 2017 06:01
Dewald Van Rensburg

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Johannesburg - Internal “inquiries” found no evidence that a currency trader employed by Standard Bank did, in fact, participate in the alleged foreign exchange price-fixing cartel comprising 18 banks, the bank said this week.

The bank has made an urgent application to the Competition Tribunal to compel the Competition Commission to produce its record of evidence against the banks, or at least against Standard Bank.

This follows an initial request for details of the evidence against it. The request was sent on February 22 – a week after it was announced that this case was being referred to the tribunal.

Without this information, Standard Bank claims it cannot engage or cooperate with investigators, with the intention of securing leniency when fines get handed out.

Another accused bank, London-based HSBC, has also filed its responding papers at the tribunal.

These are not yet publicly available, but in a media statement issued this week, the commission said the bank claimed that it had been falsely accused.

The banks and the commission have already agreed to a two-day hearing in July, where the foreign banks in particular will argue that the tribunal has no jurisdiction over their currency traders, who are not based in South Africa.

The banks also have until Wednesday to file further exemptions they may have.

“The commission believes that the case against the banks is very clear from its papers, and we will be resisting any attempts to delay proceedings at the tribunal on the basis of technicalities,” said Competition Commissioner Tembinkosi Bonakele.

According to Standard Bank, however, it is the commission that is delaying things by failing to produce the record of evidence from the start of its investigation, in April 2015.

The probe covers alleged collusion from as far back as 2007.

In an affidavit submitted this week, Jean Meijer, Standard Bank’s attorney in the forex case, said the commission “cannot reasonably contend that the production of the record in this matter is not a task that ought to receive its urgent attention”.

This week’s application contains letters exchanged between the bank and the commission, in which Standard Bank becomes more and more insistent about obtaining the evidence against it.

Meijer also claims that the commission blind sided Standard Bank by including it among the 18 banks being charged in the first place.

“Extraordinarily, Standard Bank became aware of the fact that it was alleged to be involved ... through the commission’s press release on February 15 2017.”

Meijer complains that the bank “was not provided the courtesy even of access to the referral affidavit before a media release containing damaging allegations was sent out”.

Standard Bank lawyers wrote to the commission the next week, saying it would prefer “to engage constructively ... but was in no position to meaningfully engage with the commission, since it had not been provided with any evidence of the conduct in which it was alleged to have engaged”.

They went on to state: “In the short time since the commission’s press release ... internal inquiries have been made and, at this stage, Standard Bank SA has found no evidence of improper or unlawful conduct.”

The commission’s Mfundo Ngobese wrote back, saying the now publicly available referral contained enough information to allow Standard Bank “to plead or consider its position”.

The referral had identified one Standard Bank trader, Bryn Brownrigg, as having colluded with traders at the other banks.

Even though the forex investigation was initially announced in 2015, that announcement mentioned only 11 banks, which did not include Standard Bank.

In August last year, the commission amended its investigation to include more banks, but according to Standard Bank, it did not realise at the time that it was even a respondent.

This is because the commission’s amendment cited Standard Bank only in an annexure to the application form for that amendment.

So, Standard Bank says it missed the fact that it was being investigated.

In another development this week, the tribunal made its settlement agreement with Citibank, relating to the bank’s involvement in the forex trading cartel, an order.

In the agreement, Citibank admitted that between 2007 and 2013, it had colluded with its competitors in respect of spot trading of rand currency pairs, in contravention of the Competition Act.

In terms of the agreement, Citibank has agreed to pay a penalty of R69.5m.

Citibank has also agreed to fully cooperate with the commission in relation to the prosecution of the other banks named in the currency rigging matter.

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