Johannesburg - State-owned freight and rail transport company Transnet may have committed fraud when it paid Gupta-linked firm Regiments Capital R7.5 million when it was a supplier development partner of multinational investment bank JP Morgan.
Dr. Jonathan Bloom, who was contracted by Mncedisi Ndlovu and Sedumedi Attorneys to investigate malfeasance at Transnet, told the commission of inquiry into state capture that R7.5m paid to Regiments for arranging cross currency swaps on the R12 billion club loan borrowed from a consortium of lenders.
He said Regiments was not appointed to do cross currency swaps but JP Morgan was and that the company was unjustified and unwarranted to invoice Transnet for payment of R7.5m.
”It was fraud, unjustified and unwarranted,” Bloom said.
According to Bloom, it was unclear why Regiments was paid R7.5m by Transnet when the company was JP Morgan’s supplier development partner.
"Regiments could never been part of the transaction,” he explained.
Bloom said the R12bn swap happened in two tranches, first the R4.5bn in December 2015 and the remaining R7.5bn in March 2016.
Swaps involve changing the interest rates for the loan from floating to fixed.
He said there was a belief that there not sufficient capacity and skill at Transnet to perform these transactions but that this was not the case.
Bloom said it was unwarranted to fix such a large portion of Transnet’s debt.
"To fix R4.5bn, and a further R7.5bn appears to not have been justified and was ill-advised,” he said.
The commission has previously heard that JP Morgan was appointed to hedge the financial risks (credit and currency risks) of Transnet’s purchase of 1 064 locomotives in April 2015.