This dispute relates to interest rate swaps arranged by Gupta-aligned Regiments Capital in 2015 and 2016. From Moneyweb.
Nedbank has pulled out of mediation talks with Transnet over interest rate swaps arranged in 2015 and 2016 intended to fix loan rates for the purchase of locomotives.
The transaction, arranged by Gupta cronies at Regiments Capital, was extensively covered in the Zondo report on state capture.
Read: ConCourt denies Regiments Capital’s bid to appeal liquidation
Nedbank issued a statement on Tuesday saying it had decided to pull out of mediation talks with Transnet, adding there was little likelihood of the matter being resolved amicably.
The bank previously denied media reports that it had pocketed R780 million in financing and hedging a portion of Transnet’s deal to acquire 1 064 locomotives.
“Nedbank participated in the mediation process (which was a confidential, facilitated negotiation) in an attempt to resolve the dispute between the parties amicably and to avoid potentially drawn-out and costly litigation, for both parties, over transactions which Transnet regards as tainted by corruption,” says the statement.
The bank says it is not aware, nor is there any evidence before it, of collusion or corruption by Nedbank or its staff, despite numerous requests for such evidence.
“Nedbank rejects any attempt by Transnet to blame the bank for its own governance failures.
“Nedbank 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, which were first reported in the media around May 2016 – after the swaps had been concluded.”
Escalation
Regiments was appointed as transaction advisor to Transnet in 2012 under then-CEO Brian Molefe and CFO Anoj Singh for the acquisition of 1 064 locomotives. The acquisition was originally expected to cost R38.6 billion but escalated to R54 billion.
Nedbank says Regiments, not the bank, was the advisor on the deal. It did not advise on the interest rate swaps related to the deal, and no fees passed between it and Regiments.
“The swaps were authorised by Transnet’s mandated officials, were documented using industry-standard ISDA legal agreements and confirmed and settled directly between Transnet and Nedbank. Nedbank believes the swap transactions were commercially sound and the bank’s margin was reasonable for the risks assumed,” adds Nedbank.
Listen/read: Nedbank in the spotlight for alleged corruption
“Considering internal and independent external reviews commissioned by them, the Nedbank board and management remain satisfied that Nedbank internal governance procedures were followed in respect of the transactions and that there is no evidence of any Nedbank staff dishonesty, corruption or collusion.”
Nedbank acted as the credit intermediary between Transnet and its own pension fund and says the swaps served their intended purpose as highly effective hedges against interest rate movements. Subsequent interest rate movements, which had a negative effect on Transnet cashflows and close-out values, could not have been predicted at the time.
The 15.5% return on equity earned by Nedbank on these deals over the life of the transactions was “fair, reasonable and appropriate”, says Nedbank.
