South Africa’s Constitutional Court on Tuesday brought a decade-long currency manipulation case to a close, clearing most of the 28 banks the Competition Commission had pursued since 2017 from any further prosecution.
The commission’s legal effort began when investigators uncovered evidence of alleged collusion in rand-dollar trading, centered on an instant messaging chat room labeled “ZAR Domination.” Based on those findings, the commission recommended fines of up to 10 percent of each bank’s South African revenue and launched proceedings against a broad field of local and international institutions. The litigation met sustained resistance almost immediately, with defendants challenging both the commission’s legal authority and its evidentiary foundation.
The majority judgment, authored by Justice Owen Rogers, sided with most of the accused banks. Standard Bank, Nedbank and First Rand Bank, three of South Africa’s largest financial institutions, were cleared. So were Bank of America Europe Designated Activity Company, Australia and New Zealand Banking Group Limited, Nomura, Commerzbank, Macquarie, HSBC Bank USA NA, Merrill Lynch Pierce Fenner and Smith Incorporated, Bank of America NA, and several others. Credit Suisse Securities successfully appealed its inclusion in the litigation entirely.
The commission’s partial success was narrow. The court permitted prosecution to continue against only four entities: BNP Paribas, JPMorgan Chase Bank, HSBC Bank and Standard Americas Incorporated.
By contrast, the commission had argued for a far wider scope of accountability. Its legal representative, advocate Tembeka Ngcukaitobi, contended during appeal proceedings that the banks’ conduct “weakened the rand” and continued to produce negative effects on South Africa’s imports and exports of dollar-denominated products, a sector valued at approximately $2-trillion. The commission maintained that the evidence justified prosecution across a broader range of defendants than the Competition Appeal Court had previously permitted.
The Constitutional Court disagreed. Its judgment indicates that the commission’s case against the cleared institutions rested on factual assumptions the court found to be incorrect and lacked sufficient evidentiary support to justify continued proceedings.
Standard Bank responded promptly. The bank said the ruling “affirms the consistent position maintained by the bank since the inception of this matter in 2017 and throughout these proceedings, that neither Standard Bank nor any of its employees was involved in a conspiracy to manipulate the rand.” It added that it “conducts its business with integrity and in full compliance with all applicable laws and regulations” and pledged to “continue to play a constructive role in South Africa’s financial markets and in supporting growth throughout the South African economy.”
For the Competition Commission, the outcome is a significant enforcement setback after years of litigation. The question now is whether the four remaining prosecutions, against BNP Paribas, JPMorgan Chase Bank, HSBC Bank and Standard Americas Incorporated, will yield the accountability the commission originally sought across a field nearly seven times as large.