Rand manipulation case complete overreach by CompCom – economist

The Competition Commission’s case against South Africa’s big banks and their international counterparts was an example of complete and total regulatory overreach, as it had nothing to do with competition. 

This is feedback from economist Dawie Roodt, who told SAfm that it is nearly impossible to prove these kinds of cases as they are highly technical. 

Roodt made these comments in response to the Competition Appeals Court (CAC) dismissing the Competition Commission’s case against 23 of the 28 banks accused of manipulating the rand-dollar exchange rate.

The ruling, therefore, dismissed the claims against Standard Bank, Nedbank, and FirstRand.

This leaves just Investec and the four foreign banks whose traders pleaded guilty to charges brought by the US Department of Justice years ago.

Investec remains in the case because it did not join the application to the CAC to prevent the case from going ahead.

The CAC dismissed the charges against some banks and financial institutions for various reasons.

This included a lack of jurisdiction to prosecute some international banks and an incorrect attempt to prosecute holding companies not involved in the alleged trades. 

In addition, some charges were dismissed for lack of evidence, with the court stating the commission should have been more thorough in setting out its case.

Dawie Roodt
Efficient Group chief economist Dawie Roodt

Roodt said the dismissal was “no surprise – absolutely no surprise”.

“These cases are extremely difficult to prove to start off with, and I am pretty sure it is not worth it for the banks even to try to collude and manipulate the currency.” 

He did say that it was still possible that some individual traders could have colluded and tried to manipulate the currency but was certain that the banks would never collude at a management level. 

“I think this was a complete and total overreach by the Competition Commission. Its job is to ensure that we have a competitive business environment that is fair. It is not its job to ensure that certain values are achieved with regard to specific assets,” Roodt said. 

“The Competition Commission must focus on ensuring that we have a competitive business environment in South Africa, which we do not have,” he said. 

Ultimately, it is not necessary for the Competition Commission to follow up on these sorts of cases that they are almost guaranteed to lose. 

“They have been unsuccessful in a few cases recently, and they thought it was going to be easy as the banks are not liked by the public. However, this was not the case.”

Wits professor Alex van den Heever

Roodt’s comments echo those of Wits Professor Alex van den Heever, who told the SABC that the rand manipulation case became a political issue rather than a matter of holding alleged bad actors to account. 

“The concern that I have is that it was made a political issue in which banks were attached as forming part of a systematic attack on South Africa. That was completely uncalled for, and the National Treasury made clear that it was not the case,” Van den Heever said. 

“The fact that we had this political huff and puff instead of getting one with the work of actually regulating is a concern to me because people had not done their work, and we need regulatory authorities with the capacity to do this work,” Van den Heever said. 

Standard Bank, South Africa’s largest bank by income, welcomed the ruling while maintaining its commitment to the rule of law.

“Standard Bank remains committed to supporting the work of regulators, including the Competition Commission. Standard Bank reiterates its belief in and respect for South Africa’s institutions generally and its well-functioning and sound judicial system,” the group said.

“Standard Bank has always maintained that the Group is wholly committed to the rule of law, respects the important role of institutions, and upholds South Africa’s Constitutional democracy,” the statement said. 

In its ruling, the court concluded that the case against Standard Bank “does not get out of the legal starting blocks”.

The Competition Commission said in a statement it is studying the ruling and still believes there is a case that needs to be answered.