Transnet Pursues Nedbank for Billions Over State Capture-Era Swops

Transnet, South Africa's state-owned port and rail company, along with the Special Investigating Unit (SIU), is preparing for a formidable legal confrontation against Nedbank. At the crux of the dispute lies a contentious interest rate swop deal dating back to 2015/2016, a period plagued by the specter of state capture. In a twist of financial complexity turned sour, Nedbank appears to be on track to siphon billions of rand in profit unless Transnet can unsettle the standing deal, which it was allegedly maneuvered into by the now-infamous state capture operatives.

The impending courtroom skirmish promises to rake through the records as Transnet and the SIU are intent on recovering a staggering R2.7 billion. These figures emanate from court papers indicating that Transnet has, up until May this year, indulged Nedbank with more than R10.5 billion based on these controversial credit swops, a number that will continue to burgeon if unrestrained.

However, the details run deeper and more sinister. Allegedly, Nedbank officials expertly navigated Transnet into a series of variations to the original 2009 International Swops and Derivatives Association (ISDA) Master Agreement. The court documents reveal 2015 Fund Mirror Swops that Transnet argues held no commercial logic, with Nedbank receiving unwarranted financial advantages above market rates.

Complicating matters is a Nedbank club loan facility agreement that, as stated, necessitates Transnet's disclosure of hedge intentions on interest rates, effectively granting Nedbank retaliatory matching rights. This particular clause was not mirrored in agreements with other lenders such as Absa Bank, Old Mutual’s Specialised Finance, Futuregrowth, and the Bank of China – all members of the syndicate funding the infamous procurement of 1,064 locomotives from China.

Notably, the fallout from these swaps has Nedbank purportedly netting more than R2.7 billion – derived as the differential between what Transnet paid under the fixed interest rate swop and what it would have under a variable rate agreement. Furthermore, the fixed rates under the swops are predicted to outweigh variable Johannesburg Interbank Average Rate (Jibar)-linked rates till their 2030 term date, pointing to monthly fiscal hemorrhaging for Transnet and monumental gains for Nedbank.

Beyond mere speculation, Transnet and the SIU's claims are founded on alleged collusion and manipulation. The then head of Transnet's treasury, Phetolo Ramosebudi, is accused of conspiring with Nedbank's Moss Brickman, betraying internal treasury advice and enforcing a fixed interest rate that favored the bank. Regiments Capital, notorious for its role in state capture, is scrutinized for its exclusionary negotiation of these swap agreements on behalf of Transnet.

The court documents argue that these financial maneuvers were a distinct component of the state capture strategy, graft-laden and purpose-built to divert Transnet's funds for the captor's gain, with Nedbank benefitting in the process. On a brighter note, Transnet has indicated the recovery of over R1 billion from state capture losses, reinstating these funds into debt offsets and revenue-stimulating ventures.

With the SIU citing Covid-19 disruptions and concurrent state procurement probes as reasons for the claim's delay, the scale of the state capture saga unfolds. Transnet remains resolute in its legal stride against the alleged corruption, upholding its statutory obligation to upend fraud-tainted contracts and judiciously manage its litigation expenses.