Nedbank to pursue counterclaim against Transnet
Nedbank has responded to the recent announcement by the Special Investigating Unit (SIU) and Transnet that they have jointly instituted legal proceedings against the bank to set aside interest rate swap transactions that occurred at the height of state capture.
“Nedbank will strongly defend the litigation against it and will pursue its counterclaims against Transnet and others,” said the bank.
They confirmed to BusinessTech that Transnet SOC Limited and the SIU had served them with review proceedings regarding interest rate swap transactions entered into between Transnet and Nedbank between December 2015 and March 2016.
It 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.”
However, Nedbank claims that this is “incorrect.”
“The sales margin earned by Nedbank in respect of the swaps was market related and amounted to less than R43 million.”
“The swaps were commercially sound, and the return on equity earned by Nedbank was fair, reasonable and appropriate at 15,5% over the life of the transactions,” said the bank.
Nedbank said that to date, “no evidence has been found, or presented to Nedbank, of any Nedbank staff dishonesty, corruption or collusion”.
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.
Nedbank hit back and said that Regiments Capital, not the bank, was Transnet’s appointed adviser.
“Nedbank did not advise Transnet on the swaps at all and did not pay any fees to the Regiments Group in respect of the swaps,” they said.
Nedbank said that it stands by its previous statement on the matter, where mediation between the bank and Transnet “ended after it became apparent that there is no likelihood of resolving the matter amicably despite extensive engagements.”
Corruption “was on the part of the Regiments Group and Transnet’s staff members and not Nedbank – Nedbank will not be held liable for any governance failures at Transnet,” said the bank.
It also said that considering internal and independent external reviews commissioned by [Transnet], the Nedbank Board and management “remain satisfied that Nedbank internal governance procedures were followed in respect of these swaps.”
They reiterated that “there is no evidence of any Nedbank staff dishonesty, corruption or collusion.”
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.”
Nedbank said that now that the matter is now pending before the courts, they will not be able to comment further.
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