State capture company got R227m 'for work Transnet should have done itself'
Gupta-linked company Regiments Capital allegedly scored R227m for carrying out loan swaps on behalf of Transnet – a task the state-owned company's treasury team was more than capable of doing itself.
This according to Transnet's acting chief executive, Mohammed Mahomedy, who was testifying at the state capture inquiry on Thursday.
Mahomedy said that by 2015, Transnet had entered into a number of loan transactions with various foreign financial institutions. The loans, obtained from Germany, Canada and the Chinese Development bank, amassed to more than R30bn. This excluded another loan, a "club loan", for R12bn sought from five institutions.
All the loan transactions were granted at floating rates.
According to Mahomedy, in December 2015, then Transnet treasurer and state capture-implicated Phetolo Ramosebudi recommended that the floating interest rates on the club loan be converted to a fixed-interest rate.
This was despite members of his team warning against the move as it would incur a greater financial obligation for Transnet.
"Regiments were paid by the Transnet Second Defined Pension Fund an amount just over R227m for the execution of these swaps. The Transnet treasury team had the capability to do this work," Mahomedy said.
"Executives should have identified this as an immediate red flag."
His testimony is continuing.