Background
In 2020, the SIU was authorised by presidential proclamation to investigate transactions identified in the report of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector. The transactions under investigation formed part of a broader scheme to misappropriate and divert public funds from Transnet for the benefit of entities linked to the Gupta family.
Transnet and the SIU were of the view that the interest rate swap transactions were void and unenforceable under the Public Finance Management Act. In the alternative, they argued that the transactions contravened section 217 of the Constitution and were contrary to public policy.
The Review Application
Following the conclusion of the investigation, Transnet and the SIU jointly instituted review proceedings on 26 July 2024 in the Johannesburg High Court. The application sought to set aside interest rate swap transactions concluded between Transnet and Nedbank in 2015 and 2016, under which Nedbank had profited in excess of R2,736,094,704.82.
Transnet and the SIU also sought to recover the amounts unduly paid by Transnet to Nedbank under these transactions.
Settlement Agreement
On 26 November 2025, almost 18 months after the review proceedings were instituted, the SIU announced that a settlement agreement had been reached between Transnet and Nedbank regarding these interest rate swap transactions.
In terms of the settlement, Nedbank agreed to pay Transnet R600 million in full and final settlement of the dispute. SIU and Transnet will withdraw an application in the Gauteng Division of the High Court of South Africa in Johannesburg to review and set aside interest rate swap transactions concluded in 2015 and 2016.
Position of the Parties
The settlement agreement brings to an end the civil claim arising from the SIU’s investigation. It has been reported that the settlement makes commercial sense for Transnet, is in the public interest, and secures an actual cash recovery while preventing further losses to the state.
Nedbank has stated that the settlement was concluded without any admission of liability. The bank maintains that there was no evidence of dishonesty, corruption, or collusion by its staff, and that both parties stand by their respective litigation positions. Nedbank further indicated that the settlement allows the parties to preserve their long-standing relationship in the national interest, particularly in relation to infrastructure investment and economic growth.
Implications
While the settlement reflects progress in efforts to address state capture-related wrongdoing and provides for the recovery of R600 million in public funds, it also carries significant consequences. Approximately R2 billion of the amount originally claimed will remain unrecovered.
This raises an important question as to whether the SIU and Transnet should have continued with litigation in pursuit of the full amount, or whether the settlement represents the most appropriate outcome in the circumstances.
Read more
https://group.nedbank.co.za/news-and-insights/press/2024/statement-transnet-soc-limited-dispute.html
https://www.siu.org.za/transnet-and-siu-launch-proceedings-against-nedbank-on-swap-transactions