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Transnet was manipulated to benefit key individuals, Zondo inquiry hears

Transnet acting group chief executive Mohammed Mahomedy described how the company incurred R1.4 billion in interest rate fees, so a Gupta-linked company could earn more than R200 million in service fees.

FILE: A screengrab of Transnet acting group chief executive Mohammed Mahomedy at the Zondo commission of inquiry into state capture on 15 May 2019.

PRETORIA - Transnet acting group chief executive Mohammed Mahomedy told the state capture inquiry the parastatal was manipulated to benefit key individuals and had the backing of willing internal participants.

Mahomedy described how the company incurred R1.4 billion in interest rate fees, so a Gupta-linked company could earn more than R200 million in service fees.

The executive concluded his evidence at the Zondo commission in Parktown on 16 May.

Mahomedy said Transnet was captured when local consulting companies were inserted into the parastatal to identify opportunities and design schemes to siphon money out.

He said the company was manipulated by both internal and external willing parties, who designed complex financial instruments to cover their tracks.

Mahomedy referred to what many other state capture witnesses described. He said internal governance structures were weakened and key accountability processes were bypassed.

Earlier, he revealed how Regiments Capital was paid more than R200 million to facilitate a loan interest rate swap, which costs the company more than R400 million a year in additional interest payments.

Mahomedy revealed email correspondence which suggests Nedbank only sought official approval to execute an interest rate change on a loan, months after that change had been made.

Mahomedy testified about irregularities related to several large projects and loans obtained during the tenure of the previous board.

Mahomedy read from an email from a Nedbank official to a Transnet executive: “Our compliance is requesting a letter that essentially states that Transnet has looked at the transaction and the rates concluded, and that Transnet is satisfied with the pricing and value of the transaction.”

But he says the changes had already been made: “Our observation on this particular email is that the request for the authority that’s made in this email on 16 March is posted transactions being executed in December 2015.”

Former Transnet strategy manager Francis Callard is due to take the stand on Friday.

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