The alleged collusion by some of South Africa’s leading banks alongside their international counterparts to manipulate the Rand has been described as a quintessential example of a transnational cartel. This assertion was made by Advocate Tembeka Ngcukaitobi SC, representing the Competition Commission, during a hearing at the Constitutional Court.

Ngcukaitobi articulated a compelling narrative, stating, “They targeted our sovereignty – our rand – driven by profit. We are the only ones who have an interest in prosecuting them.” His remarks come as the Competition Commission seeks to overturn the majority of findings of the Competition Appeal Court (CAC), particularly regarding the jurisdiction over the international banks involved.

The court, which heard arguments on Tuesday, is expected to deliberate until Friday. A critical point of contention revolves around the extent of the commission’s authority to act against foreign banks implicated in what is alleged to be a single overarching conspiracy related to rand manipulation.

The suggestive conspiracy reportedly includes local giants such as Standard Bank, Nedbank, and First Rand Bank, who are accused of colluding to manipulate the exchange rate of the Rand against the US dollar. Ngcukaitobi’s argument hinges on whether the commission has the jurisdiction to enforce regulatory action on banks without a local physical presence, termed peregrinus.

According to the Cape Times, during the hearing, Ngcukaitobi emphasised that the impact of alleged rand-fixing has tangible consequences for South African consumers, particularly when purchasing imported goods. He stated, “Price manipulation has a permanent effect. It introduces a permanent structural price. A distortion affects the value of imported products.”

The discussion included critical legal considerations, with judges questioning the enforceability of any potential orders against foreign banks in South Africa. Ngcukaitobi assured the court that many implicated institutions maintain a presence within the country, thereby allowing for compliance measures should the court rule in favour of the commission.

Listening to arguments regarding the CAC’s previous ruling that denied the majority of implicated banks a case to answer, Ngcukaitobi insisted that all involved were, or should have been, aware of the collusion occurring in private chatrooms among agents manipulating the rand/dollar exchange.

The advocate vigorously defended the commission’s position, asserting that even local banks that claimed no participation in the conversations within the chatrooms could not distance themselves from the effects of collusion. “They did not have participants in the chatrooms, but if your trading pattern fits the fact patterns in the chatrooms, you are in the SOC,” he argued, underscoring the systemic nature of the alleged conspiracy.

As the proceedings unfold, Ngcukaitobi has laid out a clear challenge: to recognise that South Africa is uniquely positioned to seek justice in this matter, given its direct effects on the nation’s economy. He observed, “It is often straightforward to prosecute firms accused of cartel conduct, as the conduct is usually clear. But cartels have evolved over the years; they are now bigger and transnational.”

Ngcukaitobi concluded by arguing that the CAC’s judgment contained legal errors and implored the Constitutional Court to allow the matter to proceed to trial, where the merits of the case could be thoroughly examined.

IOL

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