The two companies have ended litigation proceedings over allegations of corruption relating to interest rate swap transactions a decade ago.
South African logistics company Transnet and financial services firm Nedbank have agreed to end litigation proceedings over allegedly corrupt interest rate swap transactions. The two companies announced that they had reached a confidential commercial settlement on Tuesday (25 November).
Transnet launched its litigation against Nedbank in July last year, proceeding jointly with the South African Special Investigating Unit (SIU) in the Johannesburg High Court.
The two claimants sought to have interest rate swap transactions between Transnet and Nedbank from 2015 to 2016 set aside as void and unenforceable under the South Africa Public Finance Management Act, alleging that Nedbank profited by over ZAR 2.7 billion (USD 157.8 million) from the dealings. The two parties also argued that the transactions violated section 217 of the South African constitution and were “contrary to public policy”.
The SIU and Transnet additionally sought to recover the money unduly paid to Nedbank by Transnet under the transactions.
The interest rate swaps formed part of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector Including Organs of State – also known as the Zondo Commission – published in January 2018.
After an investigation, the transactions were linked to a wider scheme to divert and misappropriate public money from Transnet to entities linked to the allegedly corrupt Gupta family, which had been implicated in the Zondo Commission of conducting state capture, and reportedly advised Nedbank on the transactions.
Under the settlement, Nedbank is set to pay Transnet ZAR 600 million (USD 35 million). The financial services group emphasised that the payment would be made “without an admission of liability” and in complete and final settlement of the dispute.
In a joint statement, the two parties said that each “stand by their respective previous statements in respect of their litigation”. However, they agreed that they “have a long-standing relationship, and the settlement of this litigation allows them to continue to develop this important relationship in the national interest and for the furtherance of the infrastructure investment and economic growth”.