Standard Bank says the Competition Commission's currency manipulation case against it, which it is challenging in the competition appeal court, is based on tenuous grounds.
The bank's heads of argument, written by senior counsels Arnold Subel and Margaretha Engelbrecht, say the commission was wrong to add Standard Bank to the list of nearly 30 local and international banks that it accused of conspiracy to manipulate the rand between 2008 and 2013.
Standard Bank argues it cannot understand why the Competition Commission included it in its complaint referral on the basis of a single online “chat” between two bankers.
It said after a successful exception to the pleadings, the commission had to make its case of a single overarching conspiracy afresh. The new referral affidavit showed the factual basis for the case against Standard Bank remained the single bilateral “chat”, the bank said.
The rand manipulation case came to a head last month when the Competition Commission briefed parliament's standing committee on finance on its findings.
British bank Standard Chartered has admitted to playing a role in currency manipulation and agreed to pay a settlement fine of R42m.
MPs bayed for blood, calling on the implicated banks to face the strongest possible sanctions.
The Competition Commission's affidavit said the banks joined a “conspiracy” to discuss how to manipulate the currency between 2007 and 2013. This involved traders sharing information on bid-offer spreads, their respective trading positions, offsetting trades, and manipulating bid-offer prices.
It said Bryan Brownrigg and John Wood were employed by or were representing Standard Bank and authorised by it to trade the dollar/rand currency pair on its behalf. It said Brownrigg was an implicated participant with Barclays Capital trader Peter Taylor, in a chatroom discussing bid-offer spreads.
But Standard Bank denies this.
“Even if the commission's allegations are accepted as correct, and it was true that Brownrigg was a trader for Standard Bank South Africa and Taylor was a trader for Barclays Capital, both of which are denied, this communication cannot, without more, form the factual basis for an allegation that … Standard Bank South Africa knowingly entered into a single overarching conspiracy with 27 other banks.”
It said the competition tribunal adopted the wrong procedure in adjudicating the dismissal application as an exception, without giving notice of its intention to do so.
“It declined to determine the case brought before it and dismissed Standard Bank South Africa’s application on the basis of its assessment of selective facts — almost exclusively those pleaded by the commission in its new referral affidavit but not those deposed by [the bank] in the dismissal application and not controverted by the commission in its answer.”
Standard Bank said the tribunal decision should be reviewed and set aside on various grounds, and called for the court to substitute the order of the tribunal with its own.
If the court dismisses the review, it must consider the appeal, and uphold it on the basis that the factual material before the tribunal demanded dismissal of the complaint referral as against Standard Bank SA
— Standard Bank
“If the court dismisses the review, it must consider the appeal, and uphold it on the basis that the factual material before the tribunal demanded dismissal of the complaint referral as against Standard Bank South Africa.”
Absa, another accused bank, said it was co-operating with the commission; while Nedbank has denied any anticompetitive behaviour or price fixing.
If the competition appeal court doesn’t dismiss the bank's case, it will return to the competition tribunal where a trial process will get under way. It is not yet known when the court will hand down a ruling.
Last month, the National Treasury said in response to the currency manipulation fallout that it was working to advance several legislative reforms, such as the review of the Financial Markets Act (FMA) and the Financial Sector Regulation Act as part of the “twin peaks” reform, as well as the Conduct of Financial Institutions Bill.
“The draft FMA Bill, which is under development, proposes that foreign currency is included in the definition of security. Second, providers of over-the-counter securities are to be brought under the Financial Sector Regulation Act as a licence category.
"[This is] subject to the new FMA, which will be integrated into the Financial Sector Regulation Act as well as relevant conduct provisions under the Conduct of Financial Institutions Bill,” the Treasury said in a statement.
But it downplayed accusations that the manipulation of the currency by those acting on behalf of the accused banks would have influenced the depreciation of the rand since 2013, saying this was driven by broader changes in the economy.
Standard Bank and 15 other banks want the competition appeal court to dismiss the case. If this fails, the matter will resume before the Tribunal where the filing stage of the main matter will have to be completed before the main matter is heard.
