Banking Association distances itself from rand manipulation scandal

Banking Association distances itself from rand manipulation scandal

The Banking Association South Africa (BASA) has distanced itself from the rand manipulation scandal which has seen more than 28 local and international banks being implicated in the manipulation of the South African rand from 2007 to 2013.

Two weeks ago, Standard Chartered Bank admitted to being part of the banks that participated in the scheme.

The UK-based bank was fined R43 million for manipulating the rand against the US dollar after pleading guilty to using illegal tactics to manipulate the rand. BASA said it is not party to the manipulation and banks found guilty of rand rigging should be charged for bringing the industry into disrepute.

“The Banking Association South Africa is not party to the ongoing case between some of its members and the Competition Commission regarding allegations that banks were involved in manipulating the rand during foreign exchange transactions. Furthermore, as an industry association, BASA is not a regulator and does not assume any legal regulatory or oversight role of its members. Individual banks account directly to their respective regulatory authorities,” BASA said in a statement.

It said banks involved in unethical behaviour risk being expelled from its association for having brought the industry into disrepute.

“BASA members are required to uphold good business practices and ethical governance. In cases where member banks are found to have brought the industry into disrepute, they can be expelled from BASA. In the event of wrongdoing to their policies, the relevant enforcement agencies must pursue laws to its full extent,” it said.

Former President Thabo Mbeki has also called for the banks involved in the scandal to be brought to book.

Mbeki, who was speaking on the sidelines of the Cape Town Conversation on Sunday, told journalists that the claims were worrying, adding that banks fingered in the scandal should be brought to book.

“The matter about the manipulation of the rand is nothing new, it happens with all of these tradeable currencies. I remember an instance when they did that in London with the British pound.”

Mbeki called on the Competition Commission to get to the bottom of the issue.

“I thought I saw that some of the banks are saying they are ready to co-operate, to tell the truth, including about who else was there.

“I think it’s very important that action should be taken against culprits, but I think it’s a very important process, and it’s important that some of the banks want to come clean.”

Meanwhile, although a cartel offence is in the books in terms of section 73A of the Competition Act in relation to the recent currency manipulation scandal, it is unlikely that directors at Standard Chartered Bank will be criminally prosecuted because some of the provisions are yet to enter into force. This is according to UWC senior lecturer in the mercantile law department, Dr Precious Ndlovu.

The National Treasury also noted with concern the admission of misconduct relating to the trading of the rand/US dollar currency pair.

Treasury said it will in 2024 introduce further legislation to ensure South African financial markets are “fair, transparent and operate with integrity”.

“The Conduct of Financial Institutions (CoFI) Bill will propose that over the counter (OTC) derivative providers are carried into the CoFI licensing activities and will be subject to the CoFI Act. This implies that requirements for good governance, transparency and managing conflicts of interest will continue to apply. The spot OTC market reforms will be considered as part of the review of the Financial Market Act Bill (FMAB). The OTC market participants will also be subject to core CoFI conduct requirements as part of the FMAB review,” Treasury said. | Additional reporting by Nicola Daniels

The Star