Investec is Fighting to Escape South Africa’s Rand Manipulation Case

South African private banking group Investec says it has asked the Competition Commission to withdraw its referral in a long-running case alleging manipulation of the rand-dollar exchange rate, saying it believes there is no viable case against it.

If the commission declines, Investec said it would approach the Competition Tribunal with the same request.

The move follows a presentation by the Competition Commission to parliament’s Portfolio Committee on Trade and Industry last week, when the regulator said it planned to prosecute seven banks, including Investec, in the rand manipulation case.

The Constitutional Court in June cleared the way for prosecution of the remaining banks after a decade of legal challenges and appeals.

The Competition Commission launched the cartel case in 2015 against 28 local and international banks, alleging that traders colluded to manipulate the buying and selling prices of the rand against the U.S. dollar.

The regulator alleged that traders took turns buying or selling currencies, allowing participants to trade without competitive interference.

Investec said it had not participated in the interlocutory applications that ultimately reached the Constitutional Court.

“This approach was taken on the advice of senior counsel, who recommended proceeding directly to the merits of the referral, on the basis that the case against Investec was weak,” the banking group said.

Investec remained a formal respondent in the referral despite sitting out the legal challenges before the Competition Tribunal, Competition Appeal Court and Constitutional Court.

The bank said it nevertheless believed that findings from those proceedings would apply to its case.

The Constitutional Court’s judgment, handed down on June 30, largely upheld the Competition Appeal Court’s ruling, Investec said.

In relation to South African banks, the Constitutional Court dismissed the Competition Commission’s complaints, according to Investec.

“The Constitutional Court found, based on the Competition Commission’s own pleadings, that it had not established a prima facie case of those South African banks participating in a single overarching conspiracy to fix the rand/US dollar exchange rate,” Investec said.

“Based on the judgments of both the Competition Appeal Court and the Constitutional Court, Investec does not believe that the Competition Commission has a viable case against it.”

Investec said the facts relating to its case were similar or identical to those considered in relation to other South African banks that had been removed from the referral.

It therefore invited the Competition Commission to withdraw the referral against it.

“Should the Competition Commission decline to do so, Investec intends to approach the Competition Tribunal with the same request,” it said.

The Competition Commission initially brought the case against 28 banks. Several banks were subsequently cleared, while others settled or cooperated with the regulator in exchange for leniency.

The remaining respondents include BNP Paribas, JPMorgan Chase, JPMorgan Bank, HSBC Bank plc, Standard Americas, Investec Bank and Investec Limited.

Investec is the only major South African bank remaining among those facing prosecution, according to the report.

If Investec succeeds in having the referral withdrawn, the commission would be left with five banks to prosecute.

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