The government will act against bank collusion, Jacob Zuma says
The President was commenting on the price-fixing scandal involving three of SA’s biggest banks — Standard Bank‚ Absa and Investec
President Jacob Zuma has weighed in on the price-fixing scandal involving three of SA’s biggest banks — Standard Bank‚ Absa and Investec.
The three banks have been implicated among more than a dozen banks in widespread collusion relating to the price-fixing of the rand.
Following a two-year investigation into the scandal, the Competition Commission has now referred the matter to the Competition Tribunal for prosecution. The Commission is seeking an order declaring that the banks are liable for the payment of an administrative fine equal to 10% of their annual turnover.
Responding to the debate on his state of the nation address (Sona) on Thursday, Zuma said the government was prepared to act against market abuse, price-fixing and collusion in the private sector in order to protect the economy.
"Yesterday [Wednesday] the Competition Commission announced that it has concluded an investigation into price-fixing and market allocation in the trading of foreign currency involving the rand, covering the period from 2007, and found that some banks have a case to answer," Zuma said.
"This matter is still under investigation. As stated in the Sona, government is prepared to act against market abuse, price-fixing and collusion in the private sector in order to protect our country’s economy."
Zuma said the Competition Commission could impose fines on companies but the effect was far-reaching as it distorted the economic system.
According to a Reuters report, the banks used an instant messaging chat room called "ZAR Domination", to co-ordinate their trading activities when giving quotes to customers who buy or sell currencies.
ZAR is the code for the rand used in financial markets. The banks implicated include Bank of America Merrill Lynch International, BNP Paribas, JP Morgan Chase and Nomura.