Share

4% vs 10% ... Oops, was that extent of leniency supposed to be confidential?

accreditation
Citibank.
Citibank.

The extent of leniency shown to Citibank in the currency collusion case was supposed to be confidential, the Competition Tribunal heard on this week.

However, Competition Commissioner Thembinkosi Bonakele already told Parliament last month that the R70 million penalty Citibank would pay came to 4% of its South African revenue in 2015 – compared with the maximum 10% fine it would have faced if it did not settle and cooperate.

This full fine would have been in the region of R175 million.

At a hearing to ratify Citibank’s settlement this week, the Tribunal asked for this same percentage, but was told that it was confidential and could not be mentioned in a public hearing.

Tribunal member Fiona Tregenna asked the commission’s head of cartels, Makgale Mohlala, to explain how the R70 million penalty was arrived at and how much less than the maximum 10% fine this amounted to.

Mohale said the percentage (4%) was confidential – an assertion echoed by Citi’s lawyer at the hearing, Isabel Goodman.

The difference between 4% and 10% is an indication of the level of concession given to Citibank for cooperating with the commission’s investigation, which will include providing witnesses to testify against other banks.

“It is by its nature designed to entice, so we do not insist on a higher penalty,” said Mohlala.

“We need evidence ... someone to walk us through what happened behind those closed doors.

“We need witnesses on our side to help. There is a price to pay for that,” he said.

When Mohala’s boss, Bonakele, appeared before Parliament’s economic development portfolio committee last month he also revealed that the commission approached Citibank to settle specifically because it was a relatively small player in South Africa.

Absa and its parent Barclays were the first to approach the commission offering evidence in exchange for leniency, which was why they would seemingly not pay a fine at all.

Damage

Deputy chair of the Competition Tribunal, Enver Daniels, pressed Mohlala repeatedly to explain what the actual effect of the collusive practices would have been.

Goodman, representing Citi, said that the quantum of the damage was “not proved” and would be part of the forthcoming hearing of the case.

“Were you able to determine exactly how much money was involved?” Daniels asked Mohlala.

Mohlala said that this number was “huge”, but added that the commission had “not determined how much”.

“What, in the commission’s view, has been the impact on South Africa?” pressed Daniels.

Mohlala answered that a study was necessary to determine these “finer details”.

His vague answers echoed those of his boss – Bonakele – in Parliament last month.

It would require a “far more detailed study” to establish how the collusion between currency traders affected South Africans, he told MPs then.

Bonakele said the extent of the damage done was still largely “anecdotal”, but he also dismissed the idea that consumers might not have been meaningfully affected.

“No one can argue there was no harm. By how much, I don’t know. The only issue that can be debated is whether this had a long term effect on the value of the currency. For how long can you sustain that and what volumes do you need?”

The manipulation also went both ways, said Bonakele.

“You might want it [the rand] cheaper today but that doesn’t mean you want it cheaper in the long term. Maybe it is the other way around,” said Bonakele.

He also told MPs that the commission would not necesarily have to come up with an estimate of the harm done in order to prosecute the banks for cartel conduct.


Dewald van Rensburg
Business journalist
City Press
p:0117139001
w:www.citypress.co.za  e: dewald.vrensburg@citypress.co.za
      
 
Sign up for City Press' morning newsletter On a Point of Order here


We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Voting Booth
City Press aims to deliver quality journalism to our readers. We aim to bring you groundbreaking news across different beats of the publication. Which beat do you enjoy reading most from us?
Please select an option Oops! Something went wrong, please try again later.
Results
News
64% - 119 votes
Politics
24% - 44 votes
Entertainment
2% - 3 votes
Opinion
5% - 9 votes
Sports
6% - 11 votes
Vote