Nedbank has agreed to pay the state-owned rail and port operator Transnet R600 million to resolve a long-running legal dispute stemming from interest-rate swap deals concluded over a decade ago. The substantial settlement, which comes without any admission of liability from the banking group, represents a major victory for Transnet, which has consistently argued that Nedbank was responsible for significant losses incurred during transactions that allegedly benefitted the infamous Gupta-linked firm, Regiments Capital.
The R600 million payment concludes a legal battle that escalated last year when Transnet and the Special Investigating Unit (SIU) launched a R2.8 billion lawsuit against the bank, as reported by The Financial Times. This suit followed the breakdown of earlier mediation talks, primarily due to Transnet’s insistence that Nedbank acknowledge its role in corrupt conduct related to the interest-rate swap transactions executed in late 2015 and early 2016. In its initial response, Nedbank firmly rejected the lawsuit, maintaining that it was not willing to accept responsibility for the systemic governance failures that enabled the looting of the state-owned entity by Gupta-aligned individuals and companies.
The lender issued a statement confirming the resolution, maintaining its previous assertions regarding the litigation. Nedbank emphasised that the settlement enables both parties to continue developing their longstanding business relationship, which is deemed crucial for advancing infrastructure investment and economic growth within South Africa. Furthermore, the bank affirmed that its internal governance procedures were followed correctly during the transactions in question, based on both internal and independent external reviews commissioned by the board and management. The bank remains satisfied that there is no evidence of any misconduct, corruption, or collusion by any of its staff, according to a statement carried by Reuters.
Transnet’s success in securing the significant payment will be viewed as a crucial step in its ongoing efforts to recover funds lost during the state capture era. The settlement structure suggests that Nedbank achieved its preferred outcome by settling the matter financially while protecting its reputation through the non-admission of guilt. The interest rate swap transactions were a key focus of the judicial commission of inquiry into state capture, corruption, and fraud in the public sector. The final report from the commission, led by former Chief Justice Raymond Zondo, recommended that certain transactions involving Nedbank where Regiments acted as an adviser to Transnet should be subject to further investigation, a recommendation which underpinned much of the subsequent legal action. This settlement will be closely monitored by the South African financial markets, as institutions continue to navigate the clean-up from the pervasive corruption detailed in the Zondo Report, as noted by Bloomberg.