'Nedbank, Regiments fraudulently benefitted from Transnet'
The commission of inquiry into state capture has heard how Gupta-linked fund management company Regiments benefitted from an agreement between Transnet and Nedbank.
Dr. Jonathan Bloom, an expert from Multipurpose Business Solutions, concluded his testimony on Wednesday.
Bloom was hired by Mncedisi Ndlovu and Sedumedi Attorneys to investigate corruption at the state-owned enterprise.
According to Bloom, Regiments was paid R7.5 million for facilitating currency swaps after Nedbank and Transnet entered into an agreement to mitigate the risk of an R12 billion club loan.
The club loan was solicited in 2015 for the purchase of the 1064 Locomotives.
Bloom says Transnet agreed to a floating rate for the R12 billion loan from China Development Bank, Nedbank, Absa and others. This meant the interest rate on the loan was subject to change instead of being fixed.
The cross-currency agreement with Nedbank was to mitigate the risk of a floating interest rate.
"In terms of the payment of fees related to the cross-currency swaps, an amount of R7.5 million was paid by Transnet to Regiments for structuring and arranging the swaps. But Regiments was the supply development partner of JP Morgan. In other words, they worked together, but what is interesting is that JP Morgan was appointed to do conduct these transactions, so it is unclear why Regiments was paid R7.5 million by Transnet when they were supposed to be paid by JP Morgan," said Bloom.
He concluded that the payment amounted to fraud as it was unjustified and unwarranted.
Bloom told the commission that Transnet ultimately incurred substantial losses from which the company is still recovering.
Earlier, Transnet’s acting chief executive, Mohammed Mahomedy, testified that Nedbank walked away with R780 million from the agreement.
He conceded that Transnet would have avoided the losses if it had done its homework properly.