Transnet, South Africa’s state-owned freight transport and logistics company, together with the Special Investigating Unit (SIU), have launched legal action against Nedbank in the Johannesburg High Court. They aim to cancel certain interest rate swap transactions from 2015 and 2016, through which Nedbank allegedly made a profit of over R2.7 billion. Transnet and the SIU also seek to recover the money that Transnet paid to Nedbank under these transactions.
These financial transactions were scrutinized in the Judicial Commission of Inquiry into State Capture, also known as the Zondo Commission. This commission was established to investigate allegations of corruption and fraud in the public sector during former President Jacob Zuma’s administration. It uncovered extensive evidence of how state resources were misused to benefit private individuals and companies linked to the Gupta family.
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The Guptas
The Gupta family, originally from India, consists of three brothers—Ajay, Atul, and Rajesh Gupta. They moved to South Africa in the 1990s and built a sprawling business empire with interests in mining, technology, and media. The Guptas are accused of leveraging their close ties with President Zuma and other senior government officials to influence state decisions, win lucrative contracts, and divert public funds to their businesses. This phenomenon is widely referred to as “state capture.”
Transnet and the SIU argue that the interest rate swap transactions are void and unenforceable under the Public Finance Management Act. They also contend that the deals violate section 217 of the Constitution, which mandates that public procurement must be fair, equitable, transparent, competitive, and cost-effective. Moreover, they claim that these transactions are against public policy. As a result, they are demanding that Nedbank return the money paid by Transnet.
Critical evidence
The preparation for this case involved extensive collaboration between Transnet and the SIU, with the SIU uncovering critical evidence to support their claims. They assert that there is a strong basis for the court to grant the relief they are seeking and that Nedbank should be held accountable for its role in the transactions.
The outcome of this case could have significant implications for the ongoing efforts to address state capture and corruption in South Africa. It underscores the importance of accountability and transparency in public finance management and sends a message that improper conduct in public procurement will not be tolerated.
