Banks’ role in enabling graft under scrutiny after South African commission publishes part one of its state capture report

South Africa’s banks are bracing themselves for further findings of the judicial commission of inquiry into allegations of state capture after the first part of its report recommended that authorities investigate Nedbank and its employees over their alleged roles in a corrupt contract.

Nedbank strongly denies wrongdoing in the contract that involved Airports Company SA (ACSA) and Gupta-linked financial advisory and investment company Regiments Capital.

Part one of the report indicated that banks may have played an integral role in enabling graft, and more revelations may follow. Acting Chief Justice Raymond Zondo who is leading the inquiry says he will hand over the second part of the report at the end of January and the final report at the end of February.

Bank involvement

Nedbank along with Standard Bank had separate interest rate swap contracts with ACSA according to the inquiry which is also known as the Zondo Commission.

These were negotiated via Regiments, which earnt substantial sums from providing transaction advisory services to ACSA for the contracts, which the report says involved the advisory firm paying kickbacks to the airport operator’s former treasurer, Phetolo Ramosebudi.

Disturbing feature

The report is specific in its allegations and describes one particular “disturbing feature of Nedbank’s involvement in these transactions”.

The Nedbank dealers who engaged with Regiments Capital in relation to the ACSA transactions were Mario Visnenza and Moss Brickman according to the report.

It says Visnenza and Brickman appear to have had an arrangement with Eric Wood of Regiments Capital. In this arrangement the Regiments Capital ‘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 the airport operator.

Bank denial

Nedbank has issued a statement denying wrongdoing and says it “fully support[s] the establishment and work of the Zondo Commission and its aim to expose corruption, fraud, and state capture in South Africa”.

The bank says it is currently conducting a comprehensive review of the commission’s findings and recommendations and based on an initial review, no adverse findings have been made against Nedbank in terms of the first part of the report.

Commission failed to consult

Nedbank also points out that the commission ran out of time before submitting its report to the presidency and as a result did not obtain the bank’s evidence in respect of the allegations.

“There has been no wrongdoing on the part of Nedbank in relation to these transactions” according to a statement issued by the bank which says it will continue to fully cooperate with any further investigation undertaken by the appropriate authorities.

South Africa’s Judicial Commission of Inquiry into allegations of State Capture, Corruption and Fraud in the Public Sector including Organs of State Report: Part 1Vol. 1: Chapter 1 can be found here.


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