Nedbank sued by Transnet and the SIU
The Special Investigating Unit (SIU) and Transnet announced on 26 July that they jointly instituted legal proceedings against Nedbank to set aside interest rate swap transactions that occurred at the height of state capture.
These transactions took place in 2015 and 2016 between Transnet and Nedbank, and involved an agreement between the two to swap the interest rate on existing loans for numerous future interest rate payments based on financial derivatives.
The SIU and Transnet allege that Nedbank profited in excess of R2.7 billion, and they are seeking to recover the amounts that they claim “were unduly paid by Transnet to Nedbank under the transactions.”
The Zondo commission of inquiry into state capture highlighted concerns for further examination.
While Nedbank was not directly implicated by the commission’s findings, it was recommended that Nedbank’s participation in certain deals be investigated further.
In 2021, an amaBhungane report titled State Capture: The Case against Nedbank reported that the bank collaborated with the controversial firm Regiments Capital, paying it over R95 million in commissions for directing public sector clients, like ACSA and the City of Johannesburg, towards Nedbank’s financial products.
These arrangements, which also included undisclosed additional millions from Transnet deals, often increased costs for Regiments’ (a firm supported by the Guptas) clients without their knowledge.
“The interest rate swap transactions featured under the report of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector and formed part of a greater scheme to misappropriate and divert public funds from Transnet to Guptalinked entities,” the entities said in a statement.
Transnet and the SIU said that they collaborated closely in preparing the court proceedings, and this included the SIU uncovering “evidence critical to the case.”
Transnet and the SIU believe “that the interest rate swaps are void and unenforceable under the Public Finance Management Act, alternatively contravene section 217 of the Constitution, and are contrary to public policy.”
They added that they believe there is sufficient basis for the relief sought and that Nedbank “must account for its involvement and conduct in the swap transactions.”
In April, Nedbank hinted at the threat of litigation linked to state capture.
Nedbank has previously said that the bank “was not, and could not have been, aware of the apparent collusive relationships that the Regiments Group had forged with senior officials at Transnet, or the links that the Regiments Group apparently had with the Guptas.”
BusinessTech reached out to Nedbank for comment, however, did not receive a response by the time of publication.
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