South African Banks Dodge Major Legal Bullet as Competition Appeal Court Throws Out Forex Collusion Cases

A recent ruling by South Africa's Competition Appeal Court (CAC) has dealt a significant blow to efforts aimed at maintaining transparency and trust within the country’s banking sector. The court dismissed allegations of forex collusion against the majority of the 28 banks implicated in the “Forex Cartel” case. The CEO of Future Forex, Harry Scherzer, expressed deep concern regarding this decision, which has let major players such as FNB, Standard Bank, and Nedbank off the hook without direct evidence, despite the ongoing scrutiny of several local and international banks.

The case had its genesis in 2015 when the Competition Commission accused 28 banks of colluding to manipulate the rand, with extensive implications for the South African economy. Political parties and the public alike have voiced outrage, fearing serious ramifications for economic stability, the well-being of workers, and overall financial integrity in the nation.

The CAC’s judgment, handed down on January 8, 2024, followed a series of appeals, reviews, and applications that had been filed by the banks in question, including giants like Bank of America Merril Lynch and HSBC. Of the 23 respondent banks, the CAC dismissed appeals from only four, while upholding the appeals by 19 others.

The Competition Commission has communicated its acknowledgment of the CAC's decision and is contemplating its next steps, which may include further legal recourse. The commission initially referred the banks to the Competition Tribunal in 2015 with allegations that the banks had fixed prices concerning the rand and engaged in market division, conduct that runs afoul of section 4(1)(b) of the Competition Act.

The South African Communist Party (SACP) has been outspoken in its call to hold individuals accountable with corruption charges and heightened fines for the banks involved, while the National Freedom Party (NFP) demands a thorough commission inquiry to probe the banks’ manipulation of the rand.

The NFP leader in Parliament, Ahmed Munzoor Shaik Emam, has harshly criticized the accused banks, pointing to the dire consequences faced by South African workers and businesses due to this alleged manipulation. The NFP insists on accountability not only from the banks but also from regulatory entities that oversee financial operations within the country.

The public discourse ensuing from this ruling centers around the perception of leniency towards big financial institutions and ever-growing skepticism towards the financial system's regulatory mechanisms. This landmark ruling by the CAC thus not only impacts the individual banks involved but also reverberates through the trust corridors of South Africa's banking system, the confidence in regulatory institutions, and the integrity of the nation’s financial systems at large.