Seventeen banks including such names as JP Morgan, Barclays and HSBC have been accused of rigging the South African Rand. Tembinkosi Bonakele, competition commissioner has said he will seek to prove widespread collusion and will be investigating more financial services and there will be “stiff” penalties if those Banks or individuals are found guilty. He stated he was “fascinated” by “the very casual way” in which the alleged collusion between Bank traders had taken place which predominantly had taken place through electronic platform.
Penalties can be as much as 10% of a company’s turnover, this type of fine could cause significant damage to any Bank.
The investigation comes as South African President Jacob Zuma and the governing African National Congress turn up the heat to break the dominance of the county’s largest four bank. Zuma wants them to lend to more black clients. Zuma may have a somewhat personal vendetta after lenders closed accounts tied to his friends the Gupta family, who have been accused of using the relationship with Zuma influence government contracts.
It would not be a surprise to me if all the aforementioned banks settle on their fines which will be no doubt be distinctly lower than the 10% of turnover fine that can be administered. In fact, the alleged traders involved may not even lose their jobs provided alleged current practices cease. It will no doubt be another case of getting a hand caught in the cookie jar and receiving only a minor slap on the wrist.
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