Nedbank Pays Transnet R600 Million To Settle Gupta-Linked State Capture Dispute

Nedbank Group has quietly paid Transnet R600 million in a confidential commercial settlement, bringing an end to a year-long legal battle over interest-rate swap transactions linked to state capture.

The agreement, confirmed in a joint statement on Tuesday, was concluded without any admission of liability. Both parties said the decision helped them avoid drawn-out litigation and maintain their long-standing business partnership.

“Transnet SOC Ltd (‘Transnet’) and Nedbank have agreed a commercial settlement of their ongoing litigation,” the statement read.

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“In terms of the settlement, Nedbank Group has agreed to pay Transnet an amount of R600 million. Nedbank’s payment to Transnet is made without admission of liability and in full and final settlement of the dispute.”

Both institutions reiterated their previous positions regarding the matter and described the resolution as being in the national interest.

They stated, “Transnet and Nedbank 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 infrastructure investment and economic growth.”

Dispute Rooted in Interest-Rate Swaps Linked to State Capture

The legal action stemmed from interest-rate swap deals concluded in 2015 and 2016 during Transnet’s multibillion-rand locomotives procurement programme. These transactions featured prominently in the Judicial Commission of Inquiry into State Capture.

A year ago, Nedbank had prepared for a lengthy court battle as Transnet and the Special Investigating Unit (SIU) sought to recover R2.7 billion. They argued that the swaps formed part of a broader scheme that diverted public funds to Gupta-linked entities and claimed the bank should account for its role.

The swaps were arranged under the guidance of Regiments Capital, a firm associated with the Gupta family.

The judicial inquiry found the transactions potentially corrupt, though Nedbank consistently maintained it had no knowledge of any alleged collusion between Regiments, Transnet officials or the Guptas.

Former Nedbank CEO Oversaw Period in Question

Interest-rate swaps are financial instruments used by major institutions to manage interest-rate exposure, with only interest-payment obligations exchanged.

In testimony before the commission in 2019, Transnet executive manager for governance Peter Volmink said the capture of Transnet occurred through processes designed to bypass controls, including deviations from open bidding.

The disputed transactions took place during the leadership of former Nedbank Group chief executive Mike Brown, who led the bank from 2010 until retiring in May 2024. Over his 15-year tenure, Brown earned just under R515 million, averaging about R94,000 per day.

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