Settlement with Citibank over involvement in Forex trading cartel

forex trading cartel
27 Apr 2017

The Competition Commission welcomes the Competition Tribunal’s decision to confirm, as an order of the Tribunal, its settlement agreement with Citibank NA in relation to the bank’s involvement in a forex trading cartel.

In the settlement agreement, Citibank admits that between 2007 and 2013 it colluded with its competitors in respect of spot trading of ZAR currency pairs, in contravention of the Competition Act. These competitors are the banks that are cited as the respondents in the complaint referral.

  • In terms of the agreement, Citibank has agreed to pay an administrative penalty of R69 500 860 (sixty nine million five hundred thousand eight hundred and sixty rand).
  • Citibank has also agreed to fully cooperate with the Commission in relation to the prosecution of the other banks. This cooperation includes providing evidence, written or otherwise, which is in its possession or under its control against the other banks facing prosecution – and to provide witnesses to testify in support of the Commission’s case against the other banks.

The Commission notes that so far, despite filing its papers to the Tribunal on 15 February against 17 banks, none of the banks have to date filed their answer to the case except HSBC which has filed papers, disputing that it participated in the cartel.

Subsequent to the Commission’s filing of its case, the Tribunal convened a pre-hearing on 10 March at which most of the banks indicated that they would be filing exception applications challenging the Commission’s case on the basis that it did not have jurisdiction to investigate and prosecute the matter. Further, other banks indicated that they require evidence in the Commission’s possession against them.

The Tribunal, by agreement of all parties, directed among others, as follows:

  • The Commission is to file a supplementary affidavit to its complaint referral by 31 March 2017;
  • Any banks wishing to file an exception applications should do so by 3 May 2017;
  • A second pre-hearing will be held on 23 June where further directives on proceedings will be given;
  • The hearing of the exception applications is set down for 20-21 July 2017.

The Commission has, in line with this directive, filed its supplementary affidavit explaining that it has jurisdiction over cartel conduct that affects the value of the Rand wherever it may have taken place.

The Commission notes that Standard Bank South Africa Ltd has filed an application to compel production of evidence against them.

“The Commission believes that the case against the banks is very clear from its papers and we will be resisting any attempts to delay proceedings at the Tribunal on the basis of technicalities. We therefore call upon the banks to file their answer to the case in the interest of the speedy resolution of this matter,” says the Commissioner of the Competition Commission, Tembinkosi Bonakele

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)

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