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Phetolo Ramosebudi said he understood that the Regiments had a mandate from Acsa, prior to his appointment, to develop a financing plan for the company. (Photo: Gallo Images / Papi Morake)
The exchange of interest rates on multi-billion rand loans, leaked bidding documents, bank kickbacks and shell companies came to light in the Zondo commission on Thursday, with Regiments Capital taking center stage.
There have not been as many responses of “I ask not to answer the question so as not to incriminate myself” before the Zondo commission as heard on Thursday, November 26 from Former SAA president Dudu Myeni took the stand..
Hostile Dudu Myeni Refuses to Answer Questions About SAA and Her Made-Up Resume
Witness Phetolo Ramosebudi’s requests to withhold responses went into effect when the leader of the evidence, Matthew Chaskalson, submitted damning emails pointing to Ramosebudi leaking internal bidding information to the Gupta-linked company Regiments Capital while he was treasurer. in SAA, and received millions from the Regiments as he made money. through the exchange of interest rates on loans of billions of rand while he was treasurer of Compañía de Aeropuertos SA (Acsa).
Evidence was also presented suggesting collusion between Regiments and Nedbank at Acsa’s expense.
In contrast to his general requests to the chairman of the commission, Supreme Court Vice President Raymond Zondo, to exercise his right to remain silent when it came to SAA or the payments he received from the regiments, Ramosebudi was comparatively forthright when it came to answer questions related to financial arrangements. at Acsa, where he was treasurer since 2007 before moving to SAA in late 2011.
It is worth noting that Ramosebudi worked in asset management at Nedcor Group before joining the National Treasury in 1998, and worked for the Development Bank of Southern Africa (DBSA) from 1999 to 2002. Both Nedbank and DBSA appeared in evidence testing. Interest rates related to Acsa redemption of a loan of R1.5 billion.
The day began with Ramosebudi saying that he understood that the Regiments had a mandate from Acsa, prior to his appointment, to develop a financing plan for the company.
Although he authorized payments to the Regiments and helped receive fees from Nedbank and Standard Bank for the work he performed on Acsa’s behalf, he said he did not know if the proper procurement processes had been followed in the appointment of the Regiments, nor if the Regiments they were mandated to execute the financing plan that he was paid to develop, as Regiment was appointed prior to joining the company.
Chaskalson submitted numerous emails between Nedbank merchants, including Moss Brickman, and the head of the Regiments, Eric Wood, that involved interest rate swaps on a 1.5 billion rand DBSA loan designed by the Regiments on behalf of Acsa, with the 24 million rand fee for exchanges between variable and fixed interest rates shared equally between Nedbank and Regiments.
When asked if the Regiments received a fee from Acsa for providing advice to enter the DBSA loan, Ramosebudi said: “I think so.”
Chaskalson then produced emails between Nedbank and Regiments discussing the fees they would earn from the interest rate swap, as well as bills from Regiments to Nedbank, stating that they were taking money from both sides. Ramosebudi said he did not know about this.
I tell you that, at best, you were grossly negligent in allowing these transactions to take place without verifying that they had authority.
However, Ramosebudi’s alleged lack of knowledge was challenged by correspondence between the Regiments and Standard Bank, in which Standard Bank requested proof of its rate agreement with Acsa, to which Wood replied that Ramosebudi had been informed of the rate. of the Regiments.
When questioned, Ramosebudi said that Wood was indicating who he had reported the fee to, not who authorized it.
“I would not have known if it was authorized because I had not seen the mandate,” he said, to which Chaskalson said that Wood was citing Ramosebudi as the authority confirming that the Regiments could charge a fee of more than R10 million. He noted that Acsa would eventually pay this as part of the interest rate swap fee to Standard Bank, but Ramosebudi never checked whether the Regiments could take this fee.
However, Ramosebudi said he confirmed to Standard Bank that Regiments was conducting the transaction on Acsa’s behalf, prompting Zondo to raise the question of why the Regiments would even have to have a conversation about the fee if it fell within their existing agreement. Ramosebudi admitted that the fee may have been outside the terms of his agreement.
“I tell you,” Chaskalson said, “that, at best, he was grossly negligent in allowing these transactions to take place without verifying that they had authority.”
Ramosebudi argued that he believed there was value in the work the Regiments did, to which Chaskalson replied that even if that were the case, this was not how the procurement process worked; have an individual decide whether there is value in a transaction or not.
Ramosebudi diverted responsibility upward to Acsa’s chief financial officer and board, but later said he did not recall whether he had told anyone about the interest exchange fees that the Regiments were charging.
The particular thing about the money that the Regiments made from the interest swaps is that the swaps did not appear in Acsa’s books, so if Ramosebudi did not tell anyone, they would not be collected. The money was paid to the Regiments by the banks, while by Acsa it was only reflected as payments to the bank.
Looking at Acsa’s books, it was not possible to see that Nedbank had paid R24 million to the Regiments of fees charged to Acsa, or that the Regiments had claimed R22 million in a loan of R1.7 billion from Standard Bank, Chaskalson noted. .
He then produced a series of emails from Ramosebudi to Regiments’ Wood from December 2009 to April 2011. These contained invoices to the Regiments on behalf of various companies owned by Ramosebudi, or in one or two cases from his brother Ramosebudi Psychology. These totaled R9.1 million.
The corresponding bank statements showed that between June 2010 and October 2013, the Regiments paid more than R5 million to Ramosebudi for various billed services, including the supply of liquor and catering to his company marketed as Venus Liquor, actuarial services to the company of Ramosebudi Riskmaths Consulting. and his company Rams Capital.
It was during the presentation of this evidence that Ramosebudi invoked his right not to incriminate himself.
Chaskalson then submitted an email trail from Nedbank, in which Ramosebudi’s carbon was copied, stating that on July 19, 2011, Acsa would have had to pay R 292.5 million if it had wanted to divest itself of the swaps of interest rates. Ramosebudi said that he could not remember this.
His request to invoke his right not to incriminate himself continued throughout the afternoon as Chaskalson focused on Ramosebudi’s tenure as treasurer at SAA from December 2011 to 2015.
Here, Chaskalson produced one email thread after another that pointed to Ramosebudi providing Wood with information on a tender to help the SAA group unlock capital.
Chaskalson then produced a spreadsheet that he said was an internal document for the Regiments that reflected the revenue generated by McKinsey’s advisory unit and the payments it had to make to business development companies, “usually shell companies created by Salim. Essa “.
The evidence submitted began with an email from Ramosebudi to Wood on October 14, 2013 containing a draft request for proposals related to the tender, which was very similar to the final request for proposal sent to bidders on November 19 , little more than a month. then.
Then, according to Chaskalson, using a methodology in which Ramosebudi first forwards the email from his SAA email account to his Rams Capital email account before forwarding it to Wood and others in the Regiments, he sent the criteria evaluation of the tender to the Regiments on October 28. 2013.
The next day, he sent an invoice from his company Rams Capital to Regiments for R375,606, which, according to bank statements, was paid in full on November 11.
Chaskalson then produced emails showing how, using the same methodology of first forwarding what he received in his SAA email account to his personal Rams Capital email account, Ramosebudi kept Regiments and McKinsey (with whom the Regiments formed a joint venture to bid for the tender). to date with what rival bidders were submitting.
It appears that Ramosebudi went so far as to use his influence to modify the bid evaluation criteria to suit McKinsey / Regiments, and helped keep his bid below R100 million so that he did not have to go to the SAA board.
It would appear that the McKinsey / Regiments joint venture charged between R70 million and R85 million to unlock R1.2 billion of funds for SAA, while a rival bidder, Boston Consulting Group, entered with two options; one for 14 million rand and the other for just over 10 million rand.
When it appeared that the tender evaluation was not leaning towards McKinsey / Regiments, Ramosebudi chimed in, expressing that he was “seriously unhappy with the way the tender was being run” in an email to his colleagues.
An email from McKinsey to SAA on February 26, 2014 expresses the company’s gratitude for receiving the work.
Chaskalson then produced a spreadsheet that he said was an internal document of the Regiments that reflected the revenue generated by McKinsey’s advisory unit and the payments it had to make to business development companies, “usually shell companies created by Salim. Essa “.
These shell companies, Chaskalson said, were used to funnel up to 50% of the revenue received from state entities.
He said that under the heading “SAA, March 15, invoice MK / SAA / 1001 Project for the optimization of the project’s working capital”, there was an amount of R6,241,500 (R6.2 million) including VAT, with a cut of R2,496,600 (R2.4 million) paid to a shell company called Hamex.
When asked if he knew that SAA money was being channeled to shell companies, Ramosebudi invoked his right not to incriminate himself.
The State Capture Commission of Inquiry will hear evidence related to Ramosebudi’s Transnet at 2 p.m. Friday, with former ANC Greater Johannesburg region treasurer Moloantoa Makhubo giving testimony in the morning starting at 10 a.m. . DM
