Secondary

Nedbank denies any wrongdoing in Acsa transactions

Nedbank denies any wrongdoing in Acsa transactions

Nedbank says it committed no wrong in relation to the interest rate swap transactions it concluded with Airports Company SA (Acsa) between 2009 and 2011.

The bank was responding to Acting Chief Justice Raymond Zondo’s recommendation that the law enforcement agencies should investigate Nedbank and its employees for their alleged role in a “corrupt” contract involving Acsa and the Gupta-linked Regiments Capital.

Volume 1 of part 1 of Judge Zondo’s report addressed the capture of SAA.

According to the report, Phetolo Ramosebudi developed a “corrupt relationship” with Regiments while he was Acsa’s treasurer from 2007 to 2011. He went on to become SAA’s treasurer from January 2012 to February 2015.

Between 2010 and 2013, Ramosebudi issued invoices, in the names of entities controlled by him or his brother, to Regiments for about R9.1 million. The invoices were emailed to Niven Pillay or Eric Wood, who were partners of Regiments.

Regiments did not pay all of these invoices, but paid Ramosebudi, or the entities linked to him, about R5.1m over the same period, the report said.

“Mr Ramosebudi was unable to provide any explanation for these invoices and payments and repeatedly raised his right against self-incrimination when questioned in relation to them.

“It seems clear that these payments to Mr Ramosebudi were a corrupt quid pro quo for Mr Ramosebudi’s role in allowing Regiments Capital to extract more than R50m in gratuitous payments that were funded by Acsa.”

Additional ‘fees’ extracted from Acsa

In 2008, Acsa engaged Regiments to advise it on funding structures. Although Regiments had been appointed on terms that provided for a specific fee, “with the collusion” of Ramosebudi, Regiments arranged to extract more than an additional R50m at the expense of Acsa, according to the report.

It says the additional Regiments “fees” were:

  • R13 165 348, which was invoiced by Regiments to Nedbank in relation to a R2 billion interest swap between Nedbank Capital and Acsa and recovered by Nedbank from Acsa over the life of the transaction.
  • R10 784 561.88, which was invoiced by Regiments to Nedbank in relation to a R1.5bn interest swap between Nedbank Capital and Acsa and recovered by Nedbank over the life of the transaction.
  • Additional amounts totalling R11 420 477.82 invoiced by Regiments annually to Nedbank from March 2011 to March 2019 in respect of the same R1.5bn interest swap between Nedbank Capital and Acsa, which amounts were recovered by Nedbank over the life of the transaction.
  • R22 260 782.28, which was invoiced by Regiments to Standard Bank in relation to a R1.75bn interest swap between Standard Bank and Acsa and recovered by Standard Bank from Acsa over the life of the transaction.

The report said Ramosebudi assured Standard Bank that Acsa was willing to enter into these arrangements in terms of which Standard Bank would pay Regiments “fees” that would be repaid by Acsa over the life of the transactions.

“There is no evidence to suggest that anyone at Acsa, other than Mr Ramosebudi, was aware of these arrangements. On his own version, Mr Ramosebudi was not authorised to enter into arrangements like these for the payment of additional ‘fees’ to Regiments Capital.”

‘Disturbing feature’

Judge Zondo said Nedbank’s involvement in these transactions had “a disturbing feature”:

  • Mario Visnenza and Moss Brickman, the Nedbank dealers who engaged with Regiments in relation to the Acsa, appear to have had an arrangement with Wood in terms of which the Regiments “fee”, which was to be repaid by Acsa over the life of the transaction, would be matched by an equivalent amount to be paid to Nedbank by Acsa.
  • Nedbank’s arrangement therefore incentivised Regiments, which was Acsa’s agent, to act contrary to its principal’s interests by increasing the margin payable by Acsa to Nedbank, thus increasing its 50% share of this margin.
  • There was no evidence that Nedbank sought proof from Acsa that it had authorised the arrangement in terms of which Nedbank, as Acsa’s counterparty, would pay the “fees” of Acsa’s agent, Regiments, up front and recover these “fees” from Acsa over the life of the transaction. There was also no evidence that Nedbank informed Acsa that Regiments was being incentivised to increase the margin payable by Acsa to Nedbank.

He said the arrangement between Visnenza and Brickman, on the one hand, and Wood, on the other, seemed to contravene section 6(b)(ii) of the Prevention and Combating of Corrupt Activities Act.

Judge Zondo said his commission had intended to canvass these issues with Nedbank in evidence at the hearings, but the time for hearings ran out before this could take place, so Nedbank’s version in relation to these transactions has not been heard. “This is a matter which requires further investigation by the appropriate authorities.”

Recommendations

He recommended that the law enforcement agencies investigate the role of Brickman, Visnenza and Nedbank in relation to the contracts with a view to:

  • The National Prosecuting Authority prosecuting Brickman, Visnenza and/or Nedbank on charges under section 6(b)(ii) of the Prevention and Combating of Corrupt Activities Act if the investigation reveals that such prosecution is warranted.
  • The Asset Forfeiture Unit recovering Nedbank’s profits under the interest swap contracts under Chapter 5 or 6 of the Prevention of Organised Crime Act, unless Nedbank has a valid defence to such recovery claims.

He did not recommend that the law enforcement agencies investigate Standard Bank. However, he said Acsa should take steps to recover from Regiments, Ramosebudi, Wood and Pillay and failing them, Nedbank and Standard Bank, the amounts paid to Regiments under the interest swap contracts and any additional losses suffered by Acsa on those contracts.

Nedbank’s response

Nedbank said was conducting “a comprehensive review” of Judge Zondo’s findings and recommendations.

“Based on our initial review, no adverse findings have been made against Nedbank in terms of the first part of the report.”

Nedbank said it remained of the view that there has been no wrongdoing on the part of Nedbank in relation to the transactions the bank concluded with Acsa between 2009 and 2011.

“We will continue to fully co-operate with any further investigation undertaken by the appropriate authorities in this regard.”

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