C O M M I S S I O N O F I N Q U I RY I N TO S TAT E C A P T U R E
H E L D AT
PA R K TO W N , J O H A N N E S B U R G

10

1 6 M AY H 2 0 1 9

D AY 9 4

20

16 MAY 2019 – DAY 94
HEARING RESUMES
C H A I R P E R S O N : G o o d m o r n i n g M r M o k o e n a , g o o d m o r n i n g e v e r y b o d y.
A D V P H I L L I P M A K O E N A S C : G o o d m o r n i n g C h a ir.
CHAIRPERSON :

W e a r e s t a r t in g a b o u t f iv e m i n u t e s la t e a n d I th i n k

y e s t e r d a y t o o w e w e r e s t a r ti n g a f e w m i n u t e s l a te r th a n w e s h o u l d h a v e
s t a r t e d a n d fo r a ll o f t h a t I a m r e s p o n s i b l e . W e a r e g o i n g to t r y a n d d o
b e t t e r. T h a n k y o u . Ar e y o u r e a d y to p r o c e e d ?
A D V P H I L L I P M A K O E N A S C : W e a r e r e a d y C h a ir.
CHAIRPERSON : Thank you.
10

ADV PHILLIP MAKOENA SC : Mr Mahomedy before we move on to the
n e w to p ic y e s t e r d a y I w a s r e f le c ti n g o n y o u r e v i d e n c e in r e l a ti o n to t h e
a c q u is i ti o n o f t h e l o c o m o ti v e s a n d I t h i n k o n e o f t h e a s p e c t s th a t w e
d i d n o t to u c h o n is th e q u e s t io n o f t h e p r i c i n g .

C a n y o u g iv e u s a

s e n s e a s t o fr o m t h e t i m e w h e n Tr a n s n e t e n g a g e d C S R u p u n t il t h e t i m e
w h e n w e a r e n o w r e fe r r i n g t o in te r m s o f t h e l o c o m o t iv e s w h a t w a s t h e
p r i c e d i ff e r e n c e ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : G o o d m o r n in g C h a ir.
C H A I R P E R S O N : G o o d m o r n i n g M r M a h o m e d y.
MR MOHAMMED SULEMAN MAHOMEDY :
20

Tr a n s n e t h a d a c q u ir e d

p r e v i o u s ly l o c o m o ti v e s f r o m v a r i o u s e n t it i e s .
A D V P H I L L I P M A K O E N A S C : Ye s .
MR

MOHAMMED

SULEMAN

MAHOMED Y :

And

as

we

provided

t e s ti m o n y to t h e 9 5 l o c o m o ti v e s t h a t w e r e p r o v id e d o r th e a g r e e m e n t
w a s s i g n e d s o m e w h e r e i n 2 0 1 2 t h a t w a s a t a p r ic e o f R 2 8 . 2 m il li o n a
lo c o m o t iv e .

T h e 1 0 0 l o c o m o t iv e s w h ic h w a s in 2 0 1 4 w e p a i d R 4 4

Page 2 of 182

16 MAY 2019 – DAY 94
m il li o n f o r t h o s e lo c o m o t iv e s .
A D V P H I L L I P M A K O E N A S C : In t w o y e a r s ?
MR MOHAMMED SULEMAN MAHOMEDY :

W it h in tw o y e a r s .

And the

2 0 – in 2 0 1 4 w e a ls o a t th e t i m e th e n s ig n e d t h e c o n tr a c t f o r t h e 3 5 9
w h ic h is p a r t o f th e 1 0 6 4 a n d t h a t p r ic e is ju s t o v e r R 5 0 m il li o n a
lo c o m o t iv e . S o in a tw o y e a r p e r i o d o n e s e e s t h e p r i c e o f l o c o – t h is –
a s i m il a r lo c o m o t iv e y e s t h e r e a r e s p e c i f ic a ti o n d i ffe r e n c e s b e t w e e n th e
lo c o m o t iv e b u t t h e p r i c e h a s m o v e d fr o m R 2 8 m i ll io n t o R 5 0 m i l li o n o r
ju s t o v e r R 5 0 m il li o n a l o c o m o t iv e .
10

A D V P H I L L I P M A K O E N A S C : Ye s . .
MR MOHAMMED SULEMAN MAHOMEDY :

A lr i g h t th a t is th e – s o r r y

t h a t w a s t h e e le c tr i c l o c o m o tiv e w i t h C h i n a S o u t h R a il .
A D V P H I L L I P M A K O E N A S C : Ye s . N o w m a y I th e n r e f e r y o u t o p a g e
1 9 o f y o u r s t a t e m e n t a n d w e a r e ju s t a b o u t to a d d r e s s a n e w t o p ic o n
p a r a g r a p h 5 .6 w h i c h y o u h a v e t e r m e d a s t h e i n t e r e s t r a te s w o p s w h ic h
w e r e p r e ju d i c i a l t o Tr a n s n e t .

B u t b e fo r e d o i n g t h a t th e r e a r e th r e e if

n o t f o u r is s u e s w h i c h I n e e d t o c a n v a s s w i t h y o u s o t h a t w e c a n b e a b l e
t o p r o p e r ly p l a c e y o u r e v i d e n c e i n c o n te x t .

T h e fir s t o n e if y o u c a n

e x p l a i n to u s w h a t a r e t h e s e i n t e r e s t s w o p s a lr i g h t?
20

And the second

o n e is t h a t w h e n o n e c o n s i d e r i n g t h i s i n te r e s t s w o p s w h a t a r e th e
f a c to r s th a t y o u m ig h t n e e d t o c o n s i d e r b e fo r e y o u e x e c u t iv e s u c h a n
in t e r e s t s w o p ? A n d t h i r d ly if y o u c a n e d u c a t e u s a b o u t t h e d is ti n c t io n
b e t w e e n t h e f l o a t in g in t e r e s t r a t e a n d t h e fi x e d in t e r e s t r a t e . A n d t h e n
la s t ly i f y o u a r e a b l e t o d o s o a ls o s h a r e w i t h u s t h e a d v a n t a g e s a n d
t h e d i s a d v a n ta g e s o f t h o s e t w o t y p e s o f in t e r e s t .

Page 3 of 182

O b v i o u s ly y o u w i ll

16 MAY 2019 – DAY 94
li n k t h e m t o t h e tr a n s a c ti o n s t h a t y o u a r e g o in g to b e a d d u c in g
e v i d e n c e u p o n . L e t u s t a k e t h e m n o w i n t u r n b e f o r e w e d e a l w i th t h e
s p e c i f ic s , t h e in t e r e s t s w o p s w h a t d o e s t h a t m e a n ?
MR MOHAMMED SULEMAN MAHOMEDY :

Thank you.

I th i n k th e –

C h a ir t h e f ir s t t h i n g i s th a t w e j u s t n e e d t o r e c a p t h a t Tr a n s n e t w e n t
in t o a n u m b e r o f lo a n tr a n s a c ti o n s a s w e e x p l a i n e d y e s t e r d a y. W e h a d
t h e K F W D e v e lo p m e n t B a n k L o a n w h ic h – o u t o f G e r m a n y f o r R 2 .7 6
b i ll io n a n d th e E D C th e C a n a d a E x i m t o g e t h e r w i t h In v e s te c f o r R 6 . 9 9 1
b i ll io n .
10

A D V P H I L L I P M A K O E N A S C : Ye s .
MR MOHAMMED SULEMAN MAHOMED Y :

T h o s e t w o h a d d ir e c t

r e l a ti o n s h i p s w i th t h e d e li v e r y o f t h e B o m b a d ie r l o c o m o ti v e s . W e t h e n
had

the

United

S t a te s

Exim

Bank

to g e t h e r

with

South

A fr ic a n

I n s ti t u ti o n s f o r R 5 . 7 b i ll io n w h ic h w a s d ir e c t ly a s s o c i a t e d w i t h t h e
G e n e r a l E le c tr i c l o c o m o ti v e c o n tr a c t . W e h a d t h e Z A R C l u b L o a n w h ic h
w e s p o k e a b o u t R 1 2 b il li o n . A n d t h e n w e h a d t h e C h i n a D e v e l o p m e n t
B a n k f a c i li t y w h i c h w a s f o r 1 . 5 b i ll io n d o ll a r s w h ic h w a s l a r g e ly f o r t h e
C h i n a S o u t h R a i l a n d C h i n a N o r th R a il l o c o m o ti v e s . T h e r e a s o n th a t is
i m p o r t a n t is b e c a u s e a s w e g o f u r t h e r i n t h e d i s c u s s i o n s a ll o f th o s e
20

p a r t ic u l a r lo a n tr a n s a c ti o n s w e r e w h a t w e c a l l fl o a t in g r a te s b u t w e w il l
a g a in d is c u s s t h a t . I t h i n k w e a ls o n e e d t o t a k e a s t e p b a c k . Tr a n s n e t
a s a b u s in e s s w o u l d r e q u i r e f u n d in g o n a ti m e b a s i s d e p e n d i n g o n th e
a c ti v i ti e s , th e c a p i t a l e x p a n s i o n e tc e t e r a . Tr a d i t io n a l ly w e c o u l d e it h e r
f u n d o u r b u s in e s s t h r o u g h t h e c a s h t h a t w e g e n e r a t e f r o m w i th i n t h e
b u s i n e s s a n d i t s o p e r a t io n s .

Page 4 of 182

16 MAY 2019 – DAY 94
A D V P H I L L I P M A K O E N A S C : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : O r w e w o u l d h a v e to b o r r o w
m o n e y a n d t h a t is d o n e t h r o u g h fi n a n c i a l i n s t it u ti o n s b o t h l o c a l ly a n d
g l o b a lly. W h e n o n e h a s to e n g a g e w i th f in a n c i a l i n s ti t u ti o n s th e r e a r e a
f e w fa c to r s t h a t y o u h a v e t o l o o k a t a n d i t i s n o d i ff e r e n t t o a n
in d i v i d u a l b o r r o w i n g m o n e y f o r w h e th e r i t i s a h o m e o r a c a r w h e r e y o u
lo o k a t f ir s t a n d fo r e m o s t y o u lo o k a t w h a t is th e i n t e r e s t r a t e ?
W h e t h e r th a t i s a ff o r d a b le t o y o u s o t h e c o m p a n y i n th is c a s e w h e n –
w h a t is th e r e p a y m e n t t e r m s ? W h a t is t h e m a t u r i t y p e r io d ? A n y o th e r
10

f e e s t h a t t h e le n d e r is a c t u a ll y c o n s i d e r i n g o r w i ll in c l u d e a n d w h a t a r e
t h e c o ll a te r a l a n d g u a r a n t e e s th a t t h e l e n d e r w i ll b e r e q u ir i n g ?

Now

w h e n w e l o o k a t a ll o f t h a t y o u w i ll l o o k a t i t y o u w i ll t h e n d e c id e a n d
a s s e s s w h e th e r t h is i s a l o a n t h a t y o u w a n t t o e n g a g e i n .

One

a d d it i o n a l t h in g fr o m a n i n s ti t u ti o n p e r s p e c ti v e l ik e Tr a n s n e t w e w il l a s k
w h e t h e r t h e r a t e i s f lo a ti n g o r f ix e d .
A D V P H I L L I P M A K O E N A S C : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY :

A f l o a t in g r a t e is s i m p ly a

v a r ia b le r a t e . M e a n in g t h a t i t h a s a li n k t o a n in d e x . Tr a d i ti o n a lly i n
in s t i tu t io n s li k e Tr a n s n e t it w o u l d h a v e a li n k to w h a t is c a ll e d J I B A R ,
20

the Johannesburg Inter Bank Rate.
A D V P H I L L I P M A K O E N A S C : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY :

I n a n in d iv i d u a ls ’ c a s e i t

w o u ld b e p r i m e a n d i t is e it h e r p r i m e p l u s o r p r i m e m i n u s .

I t is a

s i m il a r e x a m p l e . S o w h e n w e lo o k a t th e f lo a ti n g r a te a s I s a i d i t w o u ld
b e li n k e d t o J I B A R . I t w o u l d s a y J I B A R p lu s a n u m b e r o f b a s is p o in t s

Page 5 of 182

16 MAY 2019 – DAY 94
or ex percentage.
in c r e a s e .

A n d i f J I B A R in c r e a s e s t h e n y o u r in t e r e s t w i ll

I f J I B A R d e c r e a s e th e n y o u s h o u l d s e e a d e c r e a s e i n y o u r

in t e r e s t r a t e . W h e n w e ta lk a b o u t a fi x e d r a te it is e s s e n t i a l ly l o o k i n g
a t t h e t e r m o f t h e a g r e e m e n t a n d t h e n a p p ly i n g a r a t e o f i n t e r e s t t h a t is
n o t c h a n g e a b le o v e r t h e p e r i o d o f t h i s l o a n o r t h e p e r i o d o f t h e
a g r e e m e n t . N o w t h e r e is a f e w f a c t o r s a r o u n d a f ix e d r a t e . T h e fir s t is
t h a t i f it is a l o n g te r m l o a n t h a t y o u h a v e t a k e n th e fix e d r a t e w o u ld
o r d i n a r i ly b e h ig h e r th a n y o u r fl o a t i n g r a t e b e c a u s e th e b a n k o r t h e
fi n a n c i a l i n s t i tu t io n t h a t is l e n d in g m o n e y o n a fix e d r a t e w i ll h a v e to
10

f a c to r in th e r is k o f w h e t h e r t h e r a te i s g o i n g to m o v e i n w h ic h d ir e c ti o n
t h a t r a t e is g o i n g to m o v e . A n d t h e l o n g e r t h e t e r m t h e g r e a t e r t h e r is k
t o t h e b a n k b e c a u s e t h i s is n o w b a s e d o n a n u m b e r o f v a r i a b l e s t h a t
c o u l d a ff e c t t h e in t e r e s t r a t e .

I n t h is c a s e in a l l o f t h e lo a n s t h a t w e

o u t li n e d e a r l i e r o n Tr a n s n e t e n g a g e d w i th t h e l e n d e r s o n a f l o a t in g r a t e
b a s is . M e a n i n g th e s e h a d a l l b e e n l i n k e d t o s o m e i n d e x . E i th e r J I B A R
w h ic h i s J o h a n n e s b u r g o r L I B O R w h ic h is t h e L o n d o n I n te r B a n k R a te .
CHAIRPERSON :

A n d f lo a ti n g i n t h i s c o n te x t fl o a ti n g in t e r e s t r a t e s

m e a n s th e s a m e a s l ik e f l u c tu a ti n g i n te r e s t r a te ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s .
20

CHAIRPERSON : Ja.
M R M O H A M M E D S U L E M A N M A H O M E D Y : S o i t w o u l d b e l in k e d t o w h a t
h a p p e n s t o i n te r e s t r a t e s o v e r a p e r i o d o f t i m e .
A D V P H I L L I P M A K O E N A S C : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir w h a t i s a l s o i m p o r t a n t
is t h a t th e s e w e r e lo a n a g r e e m e n ts th a t w e r e o v e r a p e r io d o f t i m e

Page 6 of 182

16 MAY 2019 – DAY 94
s o m e o f t h e m g o i n g t o u p t o fi f te e n y e a r s .
lo a n s t h a t a r e a p p li c a b le to Tr a n s n e t .

S o t h e y a r e lo n g te r ms

T h a t is th e b a s is o f th e

tr a n s a c ti o n .
A D V P H I L L I P M A K O E N A S C : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY :

So what is a swop?

It is

e s s e n ti a l ly w h e r e w e e n t e r i n to a n a r r a n g e m e n t w i th a f in a n c ia l
in s t i tu t io n a n d w e t h e n c o n v e r t t h e fl o a t i n g r a t e t o a s w o p – to a f ix e d
r a te . N o w it is d o n e i n a – i n a d i ffe r e n t w a y i n th e s e n s e t h a t i t d o e s
n o t a ffe c t t h e u n d e r l y i n g lo a n tr a n s a c ti o n .
10

T h a t l o a n tr a n s a c ti o n

r e m a in s fo r Tr a n s n e t’s a c c o u n t b u t w i th t h e i n s t i tu t io n o r w h a t w e th e n
c a l l t h e c o u n te r p a r ty w e w i ll th e n e n g a g e i n a tr a n s a c t io n w h ic h is a
d e r iv a ti v e in s t r u m e n t w h e r e t h e f i n a n c ia l i n s ti t u ti o n w ill e s s e n ti a l ly b u y
t h e f lo a ti n g r a te a n d s e l l u s a f ix e d r a t e . I h o p e I a m e x p l a i n i n g t h a t
c le a r ly. A n d u s in g a n e x a m p l e i f w e h a d a R 1 0 0 0 0 0 lo a n w h i c h w a s a t
9 % o n a n a n n u a l b a s i s t h a t w o u l d m e a n th a t y o u a r e t o p a y R 9 0 0 0
in t e r e s t . T h a t is a f l o a t in g r a te . A n d n e x t y e a r th e r a t e g o e s to 1 0 th e n
it is R 1 0 0 0 0 .

T h e f i n a n c ia l i n s t i tu t io n w o u l d e s s e n t ia ll y s a y o k a y w e

w i ll t a k e t h e R 9 0 0 0 r i s k b u t w e w i ll n o w c h a r g e y o u 1 2 % f ix e d . S o y o u
g o t n o v a r ia b il it y o n t h e r a t e . B u t y o u w i ll n o w h a v e a h i g h e r i n t e r e s t
20

r a te w h ic h m e a n s Tr a n s n e t m u s t p a y t h e f in a n c ia l i n s t i tu t io n R 1 2 0 0 0
t h e f i n a n c ia l in s ti t u t i o n p a y s u s R 9 0 0 0 a t t h e e n d o f t h e d a y i t
in c r e a s e s y o u r i n t e r e s t b i ll b y t h e R 3 0 0 0 .

N o w i t g e t s a l i t tl e m o r e

c o m p le x w h e n i t c o m e s t o tr a n s a c ti o n s t h e s iz e s o f t h a t w e a r e ta lk in g
a b o u t w h i c h i s m u l t ib il li o n r a n d .

I t g o e s i n to t h e c a s h fl o w s e t c e t e r a

b u t e s s e n ti a l ly C h a ir t h a t is w h a t i t i s .

Page 7 of 182

16 MAY 2019 – DAY 94
A D V P H I L L I P M A K O E N A S C : Ye s .
MR MOHAM MED SUL EMAN MAHOM EDY : It is a swop between the two
r a te s .

D e - r is k in g fo r Tr a n s n e t o r a p e r c e p t io n o f d e - r i s k in g fo r

Tr a n s n e t to s a y w e l l y o u n o w h a v e a f i x e d r a te f o r tw e lv e y e a r s –
fi f t e e n y e a r s i n t h is c a s e .
C H A I R P E R S O N : O f c o u r s e j u s t a s i n t h e c a s e o f a n i n d iv id u a l h a v in g a
lo a n w it h a f in a n c i a l i n s ti t u ti o n t h e a d v a n t a g e o f a f ix e d i n t e r e s t r a te i s
t h a t b o th p a r t ie s h a v e c e r t a i n ty a s to w h a t t h e y a r e in fo r a n d t h a t th e
fi n a n c i a l i n s t it u ti o n is k i n d o f p r o te c t e d i n c a s e t h e in t e r e s t r a t e s g o
10

d o w n b u t a ls o t h e i n d iv id u a l is k i n d o f p r o te c te d i n c a s e t h e i n te r e s t
r a te s g o u p . S o t h e y a g r e e e v e r y o n e is c e r t a i n t h e y c a n p l a n – t h e
in d i v i d u a l c a n p l a n h i s o r h e r f in a n c ia l – m a k e fi n a n c i a l p l a n s k n o w in g
w h a t e x a c t ly t h e – h i s o r h e r o b l ig a ti o n s w o u ld b e i f i t i s a fl u c t u a ti o n
in t e r e s t r a t e w h e n th e i n t e r e s t r a t e s g o d o w n a s a b o r r o w e r y o u a r e
v e r y h a p p y. W h e n th e y g o u p y o u a r e n o t h a p p y. S a m e c o n s id e r a ti o n s
a p p ly t o a n e n t i ty s u c h a s Tr a n s n e t w h e n i t e n t e r s i n t o t h e s e
tr a n s a c ti o n s ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
CHAIRPERSON : Hm.

20

MR MOHAMMED SULEMAN MAHOMEDY :

T h o s e a r e e x a c t ly s o m e o f

t h e c o n s id e r a ti o n s .
C H A I R P E R S O N : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : B u t o n e fr o m a Tr a n s – fr o m
a c o m p a n y – f r o m a c o m p a n y p e r s p e c t iv e o n e h a s t o l o o k a t t h e te r m o f
t h e l o a n a s w e l l a n d w h a t t h e e c o n o m i s ts a r e s a y i n g i n t e r m s o f

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16 MAY 2019 – DAY 94
w h e t h e r t h a t i n t e r e s t r a t e w il l a c t u a l ly i n c r e a s e o v e r a p e r i o d o f t i m e .
B e c a u s e i f y o u f ix i t y o u h a v e to l o o k a t w h a t r a t e y o u f ix in g it a t a n d
w h e t h e r t h a t i s m a k i n g b u s in e s s s e n s e .

And the reason that you are

m a n d a t e d t o l o o k a t t h a t fr o m a f id u c i a r y p e r s p e c t iv e i s t o e n s u r e th a t
y o u d o n o t b r in g u n d u e c o s ts e v e n t h o u g h y o u c o r r e c t ly p o in t o u t C h a ir
it r e m o v e s t h e – t h e u n c e r t a in ty a n d g iv e s y o u a fix e d p r ic e n u m b e r.
T h e c h a l l e n g e is t h a t i f a r a te t h a t is q u o t e d t o y o u a t a p o i n t i n t i m e
in t e r e s t r a t e , i f t h a t is d e e m e d to o h ig h i n t h e l o n g te r m t h e n i t c o s ts
y o u a lo t m o r e m o n e y.
10

A n d I t h i n k w h e n w e a p p ly i t t o b i ll io n s i t

tr a n s l a te s i n to b il li o n s o r r a n d s t h a t c a n b e l o s t . S o i t is a c a lc u la t e d
r is k th a t a b u s i n e s s s h o u l d ta k e .

A n d t h e r e i s s i g n i fi c a n t a m o u n t o f

c a l c u l a ti o n s th a t h a v e t o g o i n t o d e t e r m i n i n g w h e th e r t h a t r is k o r
w h e t h e r t h e c o m p a n y h a s th e a p p e t i t e f o r t h a t r is k .
A D V P H I L L I P M A K O E N A S C : Ye s .
C H A I R P E R S O N : S o y o u ju s t w h e th e r i t is a c o m p a n y o r i n d i v i d u a l th e y
m u s t ju s t d o t h e ir h o m e w o r k .
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
CHAIRPERSON :

B e f o r e a g r e e i n g t o a fix e d t e r m – fi x e d i n te r e s t r a te

o r a f lu c t u a ti n g i n t e r e s t r a te o r fl o a t i n g in t e r e s t r a t e .
20

M R M O H A M M E D S U L E M A N M A H O M E D Y : T h a t is tr u e C h a ir.
CHAIRPERSON : Ja.
A D V P H I L L I P M A K O E N A S C : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : R e a li s t ic a l ly s p e a k i n g t h e –
t o a n s w e r a q u e s t i o n in t e r m s o f s o m e o f th e a d v a n ta g e s o r p o s s i b l e
a d v a n t a g e s t h e l o a n r e a lly b e c o m e s a d v a n ta g e o u s t o a n i n s t it u ti o n

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16 MAY 2019 – DAY 94
w h e n th e i n te r e s t r a t e s b e g i n t o i n c r e a s e .
ADV PHILLIP MAKOENA SC: Ja.
MR MOHAMM ED SUL EMAN MAHOM EDY: And if the interest rate stay
v e r y fl a t a n d y o u h a v e t a k e n a r a t e o u t a t a m u c h h ig h e r p r ic e t h e n
a g a in a s t h e C h a ir p o i n t e d o u t y o u w il l b e s i t ti n g th e r e w i t h a l o s s
p o s i ti o n b e c a u s e y o u c o u l d h a v e t a k e n a l o a n a t a m u c h l o w e r i n te r e s t
r a te . A n d I t h e r e is a ls o a n u m b e r o f o t h e r c o n s id e r a ti o n s . O n e o f t h e
k e y t h i n g s is a c t u a ll y t o u n d e r s t a n d th e te r m a s I s a id w h a t i s t h e
f o r w a r d v ie w fr o m t h e e x p e r ts i n th e fi e l d in te r ms o f w h a t w i ll h a p p e n
10

t o t h e i n t e r e s t r a t e ? T h a t r e q u ir e s a n u m b e r o f – it h a s g o t a n u m b e r o f
v a r ia b le s w h e th e r w e t a lk a b o u t t h e i n fl a t io n in t h e c o u n tr y o r w e t a lk
a b o u t k e y p o s i t io n s t h a t a r e h e ld , t h e e le c t io n s , a ll o f th e s e t h i n g s t h e
p o li t ic a l s t a n c e t h a t p e o p l e t a k e a n d a n a l y s is t h a t i s d o n e , a ll o f th a t
h a s a n i m p a c t o n th e p o t e n t ia l o f w h a t c o u ld h a p p e n to a n i n t e r e s t r a t e
w h e t h e r i t w o u l d b e i m p a c t e d p o s i tiv e ly o r n e g a tiv e ly.
A D V P H I L L I P M A K O E N A S C : Ye s . N o w a g a in s t t h a t b a c k g r o u n d a n d
c la r i ty t h a t y o u h a v e n o w fu r n is h e d t o u s m a y w e t h e n p r o c e e d t o
in t e r r o g a t e th e r e le v a n t f a c ts p e r ti n e n t t o th is t o p ic s ta r t i n g f r o m
p a r a g r a p h 5 .6 . 1 ? Ta k e u s t h r o u g h .

20

M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir a s I m e n ti o n e d e a r li e r
o n a ll o f t h e l o a n s t h a t w e h a d u n d e r t a k e n a s Tr a n s n e t w e r e e x e c u te d
o n w h a t is c a l l e d th e fl o a t in g r a t e w h ic h e s s e n ti a l ly m e a n s t h e y w e r e
li n k e d t o a n in d e x . Th e s e w e r e e x e c u te d a t a p o in t i n ti m e . T h e C l u b
L o a n b y t h e w a y f o r w h ic h w e p a i d Tr i lli a n t h e R 9 3 . 5 m i ll io n w a s
b e t w e e n a n u m b e r o f p a r ti e s A B S A , N e d b a n k , O M S a n d F u tu r e G r o w t h

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16 MAY 2019 – DAY 94
a n d t h e B a n k o f C h i n a to t a l li n g R 1 2 b ill i o n h a d t w o d r a w d o w n s .
M e a n i n g th a t t h e R 1 2 b il li o n w a s n o t m a d e a v a il a b l e t o Tr a n s n e t i n o n e
c h e q u e i t w a s l e n t t o Tr a n s n e t in t w o tr a n c h e s . T h e f ir s t tr a n c h e w a s
on the 1 December 2015.
C H A I R P E R S O N : I a m s o r r y I a m i n t e r r u p t in g y o u m a y b e I s h o u l d h a v e
a s k e d t h is y e s te r d a y.

W h y i s i t c a l le d a c l u b l o a n ?

A r e t h e r e m u l ti

p a r t i e s to it ?
MR MOHAMMED SULEMAN MAHOMEDY :

Ye s C h a ir.

I t is s i m p ly a

s y n d i c a t e d lo a n w i th m o r e t h a n o n e p a r t y a n d t h e r e fo r e i t w a s g iv e n
10

t h is t e r m .
C H A I R P E R S O N : S o d i ff e r e n t f i n a n c i a l in s ti t u ti o n s w h o a r e p r e p a r e d to
le n d y o u m o n e y o n m a y b e d i ff e r e n t te r m s , is t h a t r i g h t ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
C H A I R P E R S O N : J a b u t – b u t th e a g r e e m e n t is t h e s a m e ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h e a g r e e m e n t is th e s a m e
b u t it is h e ld in d iv i d u a ll y w i th t h o s e e n t i ti e s .
CHAIRPERSON : With – yes yes
M R M O H A M M E D S U L E M A N M A H O M E D Y : I t d o e s n o t n e c e s s a r i ly m e a n
t h a t th e t e r m s a n d c o n d i ti o n s a r e e x a c t ly t h e s a m e .

20

C H A I R P E R S O N : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h e y w o u l d b e s i m il a r.
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY :

W e w o u l d h a v e g o n e o u t to

t h e m a r k e t a n d s a i d w e a r e l o o k i n g f o r R 1 2 b il li o n a n d o u r te r m is
fi f t e e n y e a r s .

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16 MAY 2019 – DAY 94
CHAIRPERSON : Ja.
MR MOHAMMED SULEMAN MAHOMED Y :

Yo u n e e d t o p r e s e n t a

p r o p o s a l t h a t w i ll b e a s s e s s e d .
C H A I R P E R S O N : J a o k a y.
MR MOHAMMED SULEMAN MAHOMEDY :

So the ZAR Club Loan was

e s s e n ti a l ly a s y n d i c a t io n o f fo u r in s ti t u t i o n s – fiv e in s ti t u t i o n s i n th is
c a s e C h a ir.
C H A I R P E R S O N : O k a y. T h a n k y o u .
ADV PHILLIP MAKOENA SC:
10

Ye s y o u m a y th e n p r o c e e d .

Yo u w e r e

s a y in g – y o u h a d – s ti ll o n p a r a g r a p h 5 . 6 . 2 .
MR MOHAMMED SULEMAN MAHOMEDY :

Ye s s o o n th e 1 D e c e m b e r

2 0 1 5 o f t h e R 1 2 b i ll io n C l u b L o a n t h e r e w a s a r e q u i r e m e n t t h a t R 4 . 5
b i ll io n b e l e n t t o Tr a n s n e t o n t h e 1 D e c e m b e r.

T h e b a la n c e o f R 7 . 5

b i ll io n w a s t o h a v e b e e n p r o v i d e d l a t e r o n . O n t h e 3 D e c e m b e r C h a i r
t h e f o r m e r h e a d o f tr e a s u r y M r R a m o s e b u d i s u b m i ts a m e m o r a n d u m to
M r P i t a t h e t h e n G r o u p C h i e f F i n a n c i a l O ffi c e r r e c o m m e n d in g th a t th e
in t e r e s t r a t e o n t h e C l u b L o a n b e c o n v e r t e d f r o m f l o a t in g to f ix e d .
ADV PHILLIP MAKOENA SC:

Now before you proceed further with

t h a t . M a y I r e f e r y o u t o Fo ld e r n u m b e r 2 3 C h a ir t h a t is o n p a g e 4 5 4 ? It
20

is b e i n g m a r k e d a s M S M 2 3 a n d b e fo r e y o u d e a l w i t h y o u r e v id e n c e a n y
f u r th e r ju s t a s a h i g h l e v e l y o u k n o w h i g h l e v e l i n t e r r o g a ti o n o f t h a t
d o c u m e n t p l e a s e y o u k n o w to ta k e u s t h r o u g h i t a n d th e e s s e n c e a n d
w h y w a s it i m p o r ta n t i n r e l a ti o n t o th e e v i d e n c e t h a t y o u a d d u c i n g n o w ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a i r I t h i n k p a g e 4 5 4 g iv e s
a p e r s p e c ti v e o f th e i n v o l v e m e n t o f c e r t a in e n t it i e s .

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16 MAY 2019 – DAY 94
CHAIRPERSON : I am sorry I was at 517 so…
A D V P H I L L I P M A K O E N A S C : 4 5 4 C h a ir.
CHAIRPERSON : 454?
A D V P H I L L I P M A K O E N A S C : Ye s .
C H A I R P E R S O N : O k a y.
A D V P H I L L I P M A K O E N A S C : T h a t is F o l d e r n u m b e r 2 3 .
CHAIRPERSON :

B u t d i d y o u s a y a n y th i n g M r M o k o e n a a b o u t 3 3 –

it e m ?
ADV PHILLIP MAKOENA SC : No.
10

C H A I R P E R S O N : O h I th o u g h t – I w e n t to d iv i d e r 3 3 .
ADV PHILLIP MAKOENA SC : 23, 23.
C H A I R P E R S O N : O h o k a y a lr ig h t . 4 5 4 is w h e r e I s h o u l d b e .
A D V P H I L L I P M A K O E N A S C : Ye s .
C H A I R P E R S O N : O k a y. L e t m e j u s t g e t t h e r e . O k a y I a m t h e r e . T h a n k
you.
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir it is t h e d o c u m e n t t h a t
is t i tl e d ‘ 1 0 6 4 t i m e li n e s ’ .
C H A I R P E R S O N : Ye s .
MR MOHAM MED SULEMAN MAHOMEDY : We have endeavoured to put

20

t o g e th e r t h e e n ti r e p e r s p e c t iv e o n th e 1 0 6 4 t r a n s a c t io n .

A n d th e

r e a s o n th a t i t b e c o m e s q u i t e i m p o r ta n t is f o r o n e t o u n d e r s ta n d t h e r o l e
o f c e r ta i n e n t it i e s in t h e e n t ir e p r o c e s s .

When we consider the

p r o c u r e m e n t o f 1 0 6 4 i t t e n d s t o g e t a v e r y f o c u s s e d a t t e n t io n a r o u n d
t h e p r o c u r e m e n t p r i n c ip l e s a n d i t – a r o u n d t h e p o te n ti a l is s u e s a r o u n d
R 3 8 t o R 5 4 b il li o n .

A n d i t is g e n e r a ll y li m i te d t o t h a t c o n v e r s a t i o n .

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16 MAY 2019 – DAY 94
H o w e v e r o n e h a s t o l o o k a t t h e e n tir e 1 0 6 4 p r o c e s s c o m m e n c i n g fr o m
J u l y 2 0 1 2 w h e n th e R F P w a s is s u e d a t w h ic h ti m e t h e b u s i n e s s c a s e
was not approved. It was approved subsequent to that but the RFP was
is s u e d s u b j e c t to t h e a p p r o v a l .
A D V P H I L L I P M A K O E N A S C : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : W e t h e n h a v e t h e lo c o m o t iv e
a d v is o r y c o n t r a c t w h i c h w e s p o k e a b o u t w h ic h in i ti a l ly w a s w i t h t h e
M c K in s e y c o n s o r t iu m a n d t h e n p u r p o r t e d t o h a v e b e e n c e d e d t o
R e g i m e n t s . T h a t f e e s tr u c t u r e a s w e e x p l a i n e d y e s t e r d a y C h a ir m o v e d
10

s ig n if ic a n tly f r o m R 3 5 . 2 m i ll io n a n d th e b e n e fi c i a r y o f t h a t w a s la r g e l y
Regiments.
A D V P H I L L I P M A K O E N A S C : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : To t h e tu n e o f I t h in k a b o u t
R 2 6 7 m il li o n . C h a i r i t d i d n o t s to p t h e r e . I t th e n w e n t f u r th e r i n t o t h e
f u n d i n g a n d th e C D B l o a n o f 1 . 5 b il li o n d o ll a r s f o r w h ic h R e g i m e n ts
w e r e p a i d 1 6 6 m i ll i o n s u c c e s s f e e .

T h e n w e m o v e to t h e Z A R C lu b

L o a n f o r w h ic h Tr il li a n w e r e p a i d R 9 3 . 5 m il li o n w h ic h is in c l u d i n g VAT
s o i t w a s R 8 2 m il li o n p l u s VAT.

A n d t h e n w e m o v e i n to th is

c o n v e r s a ti o n o f t h e in t e r e s t r a t e s w o p s . T h e in t e r e s t r a te s w o p s a r e f o r
20

t h e t o t a l o f t h e l o a n i m p li c a t io n s o f t h a t o r t h e l o a n s t h a t w e r e
e s s e n ti a l ly s w o p p e d fr o m f lo a ti n g t o fi x e d t o ta l j u s t o v e r R 2 3 . 3 b i ll io n .
ADV PHILLIP MAKOENA SC: Hm.
M R M O H A M M E D S U L E M A N M A H O M E D Y : A n d R e g i m e n ts a s fa r a s w e
h a v e b e e n a b l e t o a s c e r ta i n w e r e p a i d b y t h e Tr a n s n e t s e c o n d d e f in e d
p e n s i o n fu n d a n a m o u n t j u s t o v e r R 2 2 7 mi ll io n f o r th e e x e c u ti o n o f

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16 MAY 2019 – DAY 94
t h e s e s w o p s . W e w il l e x p la in a l l o f t h is a s w e g o t h r o u g h .
C H A I R P E R S O N : J u s t f o r th e s w o p s ?
MR MOHAMMED SULEMAN MAHOMED Y :

C o r r e c t C h a ir.

There were

t w o s w o p s a n d o n e s w o p w a s d ir e c t ly b e t w e e n Tr a n s n e t a n d th e T S D B F
t h e P e n s io n F u n d a n d t h e o th e r o n e w a s d o n e w i t h N e d b a n k a s th e
c o u n t e r p a r ty. N e d b a n k h a v e c o n f ir m e d s u b s e q u e n t ly th a t t h e y h a v e n o t
p a i d a n y f e e s d ir e c tly t o R e g i m e n ts .
CHAIRPERSON :

W e l l I a m a l a y p e r s o n t o th e s e f i n a n c ia l t h i n g s b u t

y o u h a v e e x p l a i n e d t o m e th a t a n in t e r e s t r a t e s w o p is b a s ic a l ly
10

c o n v e r ti n g fr o m e i t h e r fi x e d r a t e t o a fl o a ti n g r a te o r fr o m a f lo a ti n g
r a te t o a f ix e d r a te . Th a t s e e m s t o s u g g e s t t o m e t h a t th e r e is n o t a l o t
o f w o r k th a t n e e d s t o b e d o n e o b v i o u s ly t h e r e m a y b e a l o t o f
h o m e w o r k t o b e d o n e b y s o m e b o d y w h o m u s t r e c o m m e n d w h e th e r a
swop should happen or not and then the person must decide. But I am
ju s t n o t s u r e – is th e r e a l o t o f w o r k i n v o l v e d to j u s t if y s u c h a h i g h
a m o u n t o f f e e g e n e r a lly s p e a k i n g ?
MR MOHAMMED SULEMAN MAHOMEDY :

C h a ir b e fo r e w e a s k e d t h e

q u e s t io n a b o u t t h e a m o u n t o f w o r k .
CHAIRPERSON : Hm.
20

M R M O H A M M E D S U L E M A N M A H O M E D Y : I t h i n k i t is k e y t o k n o w t h a t
t h e Tr a n s n e t Tr e a s u r y t e a m h a d t h e c a p a b i li ty to d o t h is w o r k .
C H A I R P E R S O N : Ye s . Ye s . Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h e o t h e r t h in g t h a t is a ls o
k e y is th a t t h e R 2 2 7 m i ll io n t h a t w a s p a i d is w h a t w e c a ll a p r e s e n t
value.

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16 MAY 2019 – DAY 94
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY :

O f a ll th e fe e s t h a t w o u ld

h a v e b e e n – w o u l d h a v e a c c r u e d t o R e g i m e n ts o v e r a fi f te e n y e a r
period.
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMED Y :

I t is a l o t m o r e i n w h a t w e

w o u ld c a ll n o m in a l t e r m s b u t i t w a s p a i d o u t o f t h e p e n s i o n fu n d o n d a y
1.
CHAIRPERSON : Hm.
10

MR MOHAMMED SULEMAN MAHOMED Y:

S o t h e p e n s i o n fu n d l o s t

R 2 2 7 m il li o n b u t e s s e n ti a lly i t w a s a l l r e l a ti n g t o th is tr a n s a c t i o n w i t h
Tr a n s n e t.
CHAIRPERSON : Hm.
M R M O H A M M E D S U L E M A N M A H O M E D Y : S o in t h e o n e c a s e C h a ir a s
we understand with Nedbank, Nedbank would have done the work in
t e r m s o f t h e p r ic in g , i n t e r m s o f a ll o f t h e a n a ly s is a n d th e n p r o v i d e d
Tr a n s n e t w i t h t h e c a lc u l a ti o n o f th e i n te r e s t r a t e .

However that was

done through Regiments.
CHAIRPERSON : Hm.
20

M R M O H A M M E D S U L E M A N M A H O M E D Y : A n i n t e r m e d i a r y.
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY :

T h a t w e b e li e v e w a s n o t

n e c e s s a r y.
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMED Y :

Page 16 of 182

B e c a u s e t h e c a p a b il it y

16 MAY 2019 – DAY 94
e x i s te d w i t h i n Tr a n s n e t t o d o th is .
CHAIRPERSON : Hm.
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s t h e R 2 2 7 m i ll i o n is q u i te
s ig n if ic a n t C h a ir.
CHAIRPERSON : Hm.
M R M O H A M M E D S U L E M A N M A H O M E D Y : A c t u a l ly fr o m t h e d o c u m e n ts
t h a t w e h a v e r e v i e w e d t h r o u g h t h e p e n s io n f u n d i t w a s w o r k e d o u t o n
b o t h t h e s w o p s . Th e N e d b a n k s w o p s w h a t w e c a ll t h e N e d b a n k s w o p s
a s w e ll a s t h e p e n s i o n f u n d s w o p s w h e r e w e h a d d o n e a d ir e c t
10

tr a n s a c ti o n .
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMED Y :

S o t h e y e s s e n t ia ll y w e r e I

a m n o t s a y i n g t o o s p e c i fic s w o p s b u t tw o g r o u p s o f s w o p s .
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY :

T h e fi r s t w a s a R 1 2 b ill i o n

lo a n t h e Z A R C lu b L o a n .
CHAIRPERSON : Hm.
M R M O H A M M E D S U L E M A N M A H O M E D Y : W h ic h w a s a t a fl o a ti n g r a te
w h ic h w a s t h e n s w o p p e d to a f ix e d r a t e a n d t h a t w a s e x e c u t e d b y
20

N e d b a n k i n c o n ju n c t io n w i t h R e g i m e n ts .
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY :

W e h a v e a ls o l e a r n t t h a t

N e d b a n k t h e n e s s e n t ia ll y s o ld t h a t s w o p f o r w a r d t o th e p e n s i o n f u n d .
S o u l t i m a te ly fr o m a Tr a n s n e t p e r s p e c ti v e w e h a v e g o t a c o m p lic a t e d
tr a n s a c ti o n b e t w e e n Tr a n s n e t, N e d b a n k a n d t h e P e n s i o n F u n d . Th e n

Page 17 of 182

16 MAY 2019 – DAY 94
t h e r e w a s a s e c o n d g r o u p i n g o f s w a p s C h a ir w h ic h w a s a n a m o u n t o f
a b o u t R 11 . 3 b i lli o n – t h e l o a n s t o t a ll in g 11 . 3 b i ll io n – w h i c h w a s
s w a p p e d d ir e c t ly w it h t h e P e n s io n Fu n d .

B o t h – i f y o u w o u l d lik e t o

c a l l i t t h e c a lc u la t io n o f t h e c o m m i s s i o n f o r R e g i m e n ts – I w o u ld u s e
t h e w o r d “ c o m m is s i o n ” j u s t to e x p l a i n t h e c o n c e p t – w a s c a lc u l a te d a t
2 0 b a s e s p o i n ts w h ic h is 0 .2 p e r c e n t o f a ll o f th e c a s h f lo w s o v e r t h e
1 5 y e a r p e r i o d a n d t h e n p r e s e n t v a l u e d t o t o d a y ’s m o n e y a t t h e t i m e .
ADV PHILLIP MAKOENA SC: Hm.
MR MOHAMMED SULEMAN MAHOMEDY:
10

W h ic h w a s c a l c u la t e d a t

2 2 7 . 8 m il li o n – I t h in k i t w a s – w h ic h w a s p a i d o u t t o R e g i m e n t s fr o m
t h e P e n s i o n F u n d . I t w a s n o t p a i d o u t b y Tr a n s n e t b u t it w a s p a id o u t
fr o m t h e P e n s i o n Fu n d . T h e P e n s i o n F u n d i s c u r r e n t ly in a p r o c e s s o f
li ti g a t i o n w i t h R e g i m e n ts f o r th o s e F u n d s .
CHAIRPERSON :

B u t th e ir f e e – t h a t is n o R e g i m e n ts - w o u ld h a v e

b e e n – h o w m u c h i t w a s w o u ld h a v e b e e n i n p a r t i f n o t s o le ly i n fl u e n c e d
b y t h e k i n d s o f a m o u n ts th a t w e a r e t a lk i n g a b o u t li k e a c o m m i s s i o n .
S o th e b ig g e r t h e a m o u n ts t h a t t h e y a r e d e a li n g w i t h t h e b i g g e r t h e ir
f e e b e c a u s e it is i n th e fo r m o f a c o m m i s s i o n . Is th a t – t h a t r i g h t ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h a t is …
20

CHAIRPERSON :

So it does not depend on how many hours they put

in t o t h e j o b a n d h o w m u c h e ff o r t t h e y p u t i n to t h e jo b ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h a t is c o r r e c t C h a ir.
C H A I R P E R S O N : O k a y, th a n k y o u .
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir I th in k w h a t i s a ls o

q u i te i n t e r e s ti n g i s th e t i m e li n e s f o r w h e n t h e s e s w a p s w e r e th e n

Page 18 of 182

16 MAY 2019 – DAY 94
e x e c u te d . A s I s a id w e e n t e r e d i n t o th e C l u b L o a n to r e c e iv e t h e f ir s t
charge on 1 December 2015.

On 3 December 2015 there was a

m e m o r a n d u m f r o m – a s I s a i d Mr R a m o s e b u d i a n d s u p p o r t e d b y M r P i ta
– t h a t s u g g e s te d w e s h o u l d e n g a g e i n th e s e s w a p s .
CHAIRPERSON :

A n d ju s t r e m in d m e a g a in Mr P i t a w h a t w a s h is

p o s i ti o n a t t h a t ti m e ?
ADV PHILLIP MAKOENA SC:
MR MOHAMMED SULEMAN MAHOMEDY:

H e w a s th e G r o u p C h i e f

Fi n a n c i a l O ff ic e r – A c ti n g G r o u p C h ie f Fi n a n c i a l O ff ic e r – a t t h e ti m e .
10

C H A I R P E R S O N : O k a y, th a n k y o u .
ADV PHILLIP MAKOENA SC:

C h a ir, m a y I r e f e r y o u t o t h e f o l d e r

n u m b e r 2 4 – 2 - 4 – i n o r d e r f o r u s t o b e a b l e to f o l l o w t h e e v i d e n c e o f
Mr Mahomedy?
CHAIRPERSON : Thank you.
ADV PHILLIP MAKOENA SC:

Mr M a h o m e d y m a y y o u p le a s e i d e n ti fy

t h a t d o c u m e n t fo r u s .
MR MOHAMMED SULEMAN MAHOMEDY:

Chairperson

th is

is

a

m e m o r a n d u m fr o m M r P h e t o l o R a m o s e b u d i t o M r G a r r y P i t a – t h e
A c ti n g G r o u p C h i e f F in a n c ia l O ff ic e r o f Tr a n s n e t a t t h e t i m e t i tl e d “ R 1 2
20

B il li o n C lu b L o a n I n t e r e s t R a t e R is k E x p l a n a t io n ” .
A D V P H I L L I P M A K O E N A S C : A n d is th is t h e o n e t h a t y o u a r e r e f e r r i n g
t o i n p a r a g r a p h 5 . 6 .3 o f y o u r s t a t e m e n t ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
A D V P H I L L I P M A K O E N A S C : Ye s . C o u ld y o u p l e a s e j u s t – y o u k n o w –
h i g h l ig h t t h e i m p o r t a n t a s p e c ts fl o w i n g fr o m t h a t d o c u m e n t ?

Page 19 of 182

16 MAY 2019 – DAY 94
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir I t h i n k e s s e n t i a l ly t h i s
d o c u m e n t tr i e s t o e x p l a i n w h y Tr a n s n e t s h o u ld e n g a g e in t h e s w a p
tr a n s a c ti o n . H o w e v e r t h e r e i s a s h o r t c o m in g – s ig n i f ic a n t s h o r tc o m in g
- i n th e t r a n s a c t io n b e c a u s e t h e e x p la n a t i o n g iv e n i n te r m s o f w h a t m a y
h a p p e n t o i n t e r e s t r a te s i n C la u s e 8 o r p a r a g r a p h 8 . It s a y s :
“ T h e l a t e s t ( i n d is ti n c t) p r o j e c t io n o r f o r e c a s t fr o m
B E R i s r e fl e c t e d b e lo w t o g iv e a n i n d i c a t io n o f w h a t
m a y h a p p e n w it h fl o a t i n g in t e r e s t r a t e s o v e r t h e
medium term.”
10

A D V P H I L L I P M A K O E N A S C : Ye s .
MR MOHAMMED SULEMAN MAOMED Y:

N o w v e r y c le a r ly w e w e r e

t a lk in g a b o u t a tr a n s a c ti o n t h a t w a s f o r a p e r i o d o f 1 5 y e a r s . To g iv e a
v ie w o f t w o a n d a h a l f y e a r s d o e s n o t j u s t if y m a k i n g a d e c is i o n o f a 1 5
year movement in interest rates.

T h a t is th e o n e a s p e c t o f th is

p a r t ic u l a r m e m o r a n d u m t h a t w a s c o n c e r n i n g .
ADV PHILLIP MAKOENA SC:

M a y I a l s o r e fe r y o u t o u n d e r t h e

h e a d i n g “ M o ti v a t io n ” a n d in t e r r o g a t e th e i s s u e s t h a t a r e l is t e d t h e r e in
a n d p le a s e c o m m e n t w h e t h e r i n t h e l ig h t o f w h a t y o u h a v e s a i d t o t h e
C h a ir p e r s o n d o t h e y m a k e s e n s e a t a ll ?
20

MR MOHAMMED SULEMAN MAHOMEDY:

S o o n c e a g a i n o n - in

p a r a g r a p h 9 u n d e r “ M o tiv a ti o n ” i t s a y s :
“ As p e r t h e i n te r e s t r a te f o r e c a s t a b o v e t h e s h o r t
t e r m r a t e s a r e e x p e c te d t o i n c r e a s e o v e r t h e
m e d i u m p e r i o d .. .”
I a m n o t s u r e w h a t t h a t m e a n t b e c a u s e it s a i d w e a r e t a l k i n g a b o u t

Page 20 of 182

16 MAY 2019 – DAY 94
s h o r t t e r m i n te r e s t r a t e s a n d th e n s a y m e d iu m p e r io d .
“ …a n d t h is p o s e s a s e r io u s r is k .

H o w e v e r th e

r e a l it y is t h a t w h a t is p r o p o s e d o n th e t a b l e t a lk s
a b o u t a m o v e m e n t fr o m 6 . 5 p e r c e n t to 6 . 8 p e r c e n t .”
I t is a 0 . 3 p e r c e n t m o v e m e n t .

I t d o e s n o t r e f l e c t w h a t is i n t h e

m o t iv a t i o n t h a t w o u ld c r e a te a b u s i n e s s c a s e f o r u s to c o n s i d e r a l o n g
t e r m c o n t r a c t o f 1 5 y e a r s to b e s w a p p e d t o a f ix e d r a t e . C h a ir w h a t is
a ls o q u i t e s i g n i f ic a n t is t h a t t h e r e w e r e a s tr i n g o f e m a il s o n
2 December 2015
10

when

one

w o u ld

assume

that

there

was

a

c o n te m p l a t i o n o f w h e th e r w e s h o u l d m o v e t o a fi x e d o r f l o a t in g r a t e .
ADV PHILLIP MAKOENA SC:

A r e y o u r e fe r r i n g t o t h o s e fr o m p a g e

461?
MR MOHAMM ED SULEMAN MAHOMEDY: 461 and 462.
A D V P H I L L I P M A K O E N A S C : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

But I would start with 462

C h a ir. T h i s is a m e m o r a n d u m th a t w a s a t t a c h e d to t h is d o c u m e n t t h a t
w a s s e n t b y M r D a n i e S m i t h w h o w a s th e D e p u ty Tr e a s u r e r a t th e ti m e
t o Mr G a r r y Pi t a a n d M r P h e t o lo R a m o s e b u d i . O n 2 D e c e m b e r a t 1 0 : 3 9
a m h e w r it e s :
20

“ My h u m b l e o p i n i o n o n t h e in t e r e s t r a t e e x p o s u r e o f
t h e C l u b L o a n .”
M r S m i th h a d s u b m i t te d a d e ta il e d m e m o r a n d u m …
A D V P H I L L I P M A K O E N A S C : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

To

M r P i ta

and

M r R a m o s e b u d i s u g g e s ti n g th a t th e i n t e r e s t r a t e s w a p w a s n o t a g o o d

Page 21 of 182

16 MAY 2019 – DAY 94
id e a f o r Tr a n s n e t .
C H A I R P E R S O N : I n – i n r e a c t io n t o t h e m e m o r a n d u m th a t w e h a v e j u s t
d e a lt w i t h ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : N o C h a ir. T h e m e m o r a n d u m
t h a t w e d e a l t w it h …
C H A I R P E R S O N : In r e s p e c t fr o m w h a t Mr R a m o s e b u d i ?
MR MOHAMM ED SULEMAN MAHOMEDY: Ramosebudi.
CHAIRPERSON : Ramosebudi.
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir t h e m e m o r a n d u m …
10

C H A I R P E R S O N : I a m s o r r y.
MR MOHAMMED SULEMAN MAHOMEDY:

S o r r y m y a p o l o g i e s C h a ir.

T h e m e m o r a n d u m t h a t w e d e a l t w it h w a s d a t e d 3 D e c e m b e r.
A D V P H I L L I P M A K O E N A S C : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : S o i t is a f t e r th is .
A D V P H I L L I P M A K O E N A S C : A f te r.
C H A I R P E R S O N : O k a y.
MR MOHAMMED SULEMAN MAHOMEDY:

Pr io r t o t h is m e m o r a n d u m

b e i n g w r i t t e n M r D a n ie S m i t h …
CHAIRPERSON : Hm.
20

MR MOHAMMED SULEMAN MAHOMEDY:

Wa s

c le a r

in

h is

m e m o r a n d u m t o s a y t h a t h e d o e s n o t b e li e v e t h a t s w a p s a r e a g o o d
id e a f o r Tr a n s n e t .
C H A I R P E R S O N : O h , o k a y, o k a y, o k a y.
M R M O H A M M E D S U L E M A N M A H O M E D Y : M r Pi t a th e n r e s p o n s e …
CHAIRPERSON : Hm.

Page 22 of 182

16 MAY 2019 – DAY 94
MR MOHAMM ED SULEMAN MAHOMEDY: As per page 462.
“ I t is w e l l w r i t t e n a n d I u n d e r s ta n d t h e l o g ic .
P h e to l o a r e y o u ( i n te r v e n e s ) .”
CHAIRPERSN:

I a m s o r r y.

A t 4 6 2 I h a v e t h e m e m o r a n d u m fr o m th e

p e r s o n r e f e r r e d t o a s D a n i e - a n d I t h i n k y o u s a id i t is M r D a n i e S m i t h ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
CHAIRPERSON : And then on top of that or just above that I have got
w h a t a p p e a r s to b e a n e m a i l a d d r e s s e d t o – th e n a m e d o e s n o t a p p e a r
f u ll y b u t i t l o o k s lik e s o m e t h i n g D a n i e .
10

M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
CHAIRPERSON:

H e s a y s i t i s w e ll w r i t t e n a n d I u n d e r s ta n d t h e l o g ic

b u t t h a t a p p e a r s to b e fr o m G a r r y. I s t h a t n o G a r r y Pi t a ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
C H A I R P E R S O N : T h a t is G a r r y P i t a ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
C H A I R P E R S O N : O k a y.
MR MOHAMMED SULEMAN MAHOMEDY:

H e a c t u a ll y a c k n o w l e d g e s

the document.
C H A I R P E R S O N : B u t w h e r e i s t h e o n e to w h ic h th e y a r e r e s p o n d i n g –
20

t o w h i c h h e is r e s p o n d i n g ?
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir t h is is t h e m a il – th e

m a il tr a i l.
C H A I R P E R S O N : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : S o i t is a r e s p o n s e …
C H A I R P E R S O N : Ye s , y e s .

Page 23 of 182

16 MAY 2019 – DAY 94
M R M O H A M M E D S U L E M A N M A H O M E D Y : To th a t m a i l .
C H A I R P E R S O N : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h e m e m o r a n d u m i s a c t u a lly
w i t h m e . I a m n o t s u r e i f i t ( in t e r v e n e s ) .
C H A I R P E R S O N : It is n o t i n - i n t h e b u n d l e ?
MR MOHAMM ED SULEMAN MAHOMEDY: No (intervenes).
ADV PHILLIP MAKOENA

SC:

No

the

p r e v io u s

–

the

previous

m e m o r a n d u m C h a ir i t is n o t .
CHAIRPERSON : Oh, (intervenes).
10

A D V P H I L L I P M A K O E N A S C : Th e p r e v i o u s m e m o r a n d u m a l lu d e d to b y
M r M a h o m e d y is n o t i n th e b u n d l e .
C H A I R P E R S O N : J a , y o u s e e . T h a t is w h y …
M R M O H A M M E D S U L E M A N M A H O M E D Y : B u t th e m e m o r a n d u m …
C H A I R P E R S O N : B e c a u s e I a m tr y i n g t o g e t a s e q u e n c e .
A D V P H I L L I P M A K O E N A S C : Ye s .
C H A I R P E R S O N : B e c a u s e w e – w e s a w M r R a m o s e b u d i ’s m e m o r a n d u m
…
ADV PHILLIP MAKOENA SC : Memorandum.
CHAIRPERSON :

20

W h e r e h e w a s a r g u in g f o r a n in t e r e s t r a te s w a p a n d

t h e n – t h e n y o u r e fe r r e d t o a m e m o r a n d u m a n d t h e n r e a d t o u s e m a i ls
that seem to respond to that memorandum.

So I am looking for that

m e m o r a n d u m f ir s t .
A D V P H I L L I P M A K O E N A S C : Ye s .
C H A I R P E R S O N : S o th a t – s o y o u s a y i t i s n o t h e r e in t h e b u n d l e ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : N o C h a ir.

Page 24 of 182

16 MAY 2019 – DAY 94
CHAIRPERSON : Oh, but it can be found?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir. I t s h o u ld b e .
C H A I R P E R S O N : O h , o k a y.
M R M O H A M M E D S U L E M A N M A H O M E D Y : W e w i ll p r o v i d e t h a t .
C H A I R P E R S O N : O k a y, a lr ig h t b e c a u s e t h e n i t h e l p s t o c o n n e c t …
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s .
C H A I R P E R S O N : B e c a u s e I t h in k fr o m w h a t y o u a r e t e ll in g m e it lo o k s
lik e t h e – t h e a u t h o r o f t h a t m e m o r a n d u m t o o k a v ie w t h a t is c o n tr a r y t o
t h e v i e w e x p r e s s e d b y M r R a m o s e b u d i . A m I r ig h t ?
10

MR MOHAMMED SULEMAN MAHOMEDY:

Ye s C h a ir.

Yo u a r e c o r r e c t

C h a ir.
C H A I R P E R S O N : I n t e r m s o f i n t e r e s t r a t e s s w a p s . S o Mr R a m o s e b u d i
c o m e s w i t h a v i e w th a t is d i ffe r e n t fr o m th a t o n e i n c i r c u ms t a n c e s
w h e r e s o m e b o d y h a s a lr e a d y s a i d th a t i s n o t t h e w a y to g o .

So one

w o u ld th e r e fo r e l ik e t o s e e t h e r e a s o n i n g o f b o t h a n d – a n d o n e
a s s u m e s t h a t Mr R a m o s e b u d i – o n e w o u l d w a n t t o k n o w w h e t h e r
M r R a m o s e b u d i w a s a w a r e o f t h a t o th e r m e m o r a n d u m a n d h o w o n e
c o m p a r e s th e ir r e a s o n i n g a s t o w h o h a d a s o u n d e r r e a s o n i n g f o r t h e
p o s i ti o n th e y w e r e t a k in g . O k a y.
20

M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a i r I th i n k w e w i ll p r o v i d e
that memorandum.
C H A I R P E R S O N : O k a y.
MR MOHAMMED SULEMAN MAHOMEDY:

B u t I t h i n k i t is k e y t h a t th e

– o n 2 D e c e m b e r M r D a n i e S m i t h w a s c l e a r in h is v i e w t h a t th e r e w a s
n o t a n e e d o r t h e r e w a s n o t a c a s e f o r Tr a n s n e t t o e n te r i n t o a s w a p .

Page 25 of 182

16 MAY 2019 – DAY 94
A D V P H I L L I P M A K O E N A S C : A n d t h a t is p e r t h e e m a il o n p a g e 4 6 2 ?
MR MOHAMM ED SULEMAN MAHOMEDY: 462.
A D V P H I L L I P M A K O E N A S C : Ye s a n d t h e n t a k e u s …
C H A I R P E R S O N : A n d – a n d y o u s a i d M r D a n i e S m i t h w a s w h a t p o s i ti o n
a g a in ?
MR MOHAMMED SULEMAN MAHOMEDY:

He

was

the

D e p u ty

Tr e a s u r e r o f Tr a n s n e t a t t h e t i m e r e p o r t in g to M r R a m o s e b u d i .
C H A I R P E R S O N : O h . T h a t is i m p o r t a n t .
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
10

C H A I R P E R S O N : I t i s i m p o r t a n t . S o – s o – b u t h i s e m a il i s i t p r i o r t o
M r R a m o s e b u d i’s o n e i n t e r m s o f d a te s ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : N o C h a ir. I t i s a c t u a l ly …
C H A I R P E R S O N : It is a f t e r ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : H i s e m a il i s f ir s t …
CHAIRPERSON : Ja.
MR MOHAMM ED SULEMAN MAHOMEDY: On 2 December …
CHAIRPERSON : Ja.
M R M O H A M M E D S U L E M A N M A H O M E D Y : A n d ju s t t o g i v e y o u th e f u l l
e m a i l tr a il C h a ir.

20

CHAIRPERSON: Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

Th e e m a il is fr o m M r S m i t h

…
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:
and Mr Pita.

Page 26 of 182

To M r P h e t o l o R a m o s e b u d i

16 MAY 2019 – DAY 94
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

To

say

th a t

he

has

a

d i ff e r e n c e o f o p i n io n . H e d o e s n o t b e l ie v e Tr a n s n e t s h o u l d d o t h i s .
CHAIRPERSON : Ja.
MR MOHAMMED SULEMAN MAHOMEDY:

Mr Ramosebudi

then

responds …
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

B u t a ls o b y t h e w a y o n

2 D e c e m b e r M r R a m o s e b u d i s e n d s t h is e x a c t m a i l …
10

CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

And

document

to

M r Er ic W o o d s a t R e g i m e n ts .
CHAIRPERSON :

O k a y, o k a y.

W e ll p a r t o f w h a t – w h a t I w o u ld b e

lo o k in g fo r is w h e r e - w h e r e s o m e o f t h e p e o p l e i n Tr a n s n e t w e r e
d is a g r e e i n g w i t h M r R a m o s e b u d i – p a r t o f w h a t I w o u l d b e lo o k i n g fo r
a r e t h e ir r e a s o n s b e c a u s e h i s – h i s e m a il w h e r e h e e x p r e s s e s h i s v i e w
o n t h e f a c e o f it a p p e a r s t o b e m o tiv a t e d . H e g i v e s r e a s o n s .
A D V P H I L L I P M A K O E N A S C : Ye s .
CHAIRPERSON : Now one would therefore want to compare reasons for
20

a d i ffe r e n t p o s i ti o n a n d t h e n s e e . T h a n k y o u .
ADV PHILLIP MAKOENA SC:

Ye s C h a ir.

Ye s M r M a h o m e d y ta k e u s

t h r o u g h t h a t e m a il tr a i l.
MR MOHAMMED SULEMAN MAHOMEDY:
…
ADV PHILLIP MAKOENA SC: Ja.

Page 27 of 182

So w e s a i d o n 2 D e c e m b e r

16 MAY 2019 – DAY 94
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h i s m a il fr o m M r S m i t h s a y s
t h a t th e a n n u a l in t e r e s t r a t e c o s t b e t w e e n t h e f lo a ti n g r a t e a n d w h a t i s
c a l l e d t h e m i d m a r k e t r a te w o u l d b e – w o u l d c o s t Tr a n s n e t in t h e r e g io n
o f a p p r o x i m a te ly R 2 0 0 m il li o n a y e a r i n a d d it i o n a l i n t e r e s t a n d i n h i s
v ie w h e d i d n o t a g r e e t h a t Tr a n s n e t s h o u l d a c t u a lly – h e s p e c i f ic a l ly
says:
“ I t is r e c o m m e n d e d t h a t t h e C l u b L o a n n o t b e
s w it c h e d to a f ix e d r a t e e x p o s u r e b y m e a n s o f a n
in t e r e s t r a t e s w a p .”
10

And he goes on to explain that.

However a day later Mr Ramosebudi

t h e n p r e p a r e s th e m e m o r a n d u m t h a t w e j u s t t a lk e d o f w h e r e h e s a y s
t h a t h e b e li e v e s t h is s h o u l d b e e x e c u t e d b y R e g i m e n ts .

H e – th e

p u r p o s e o f t h e m e m o r a n d u m i f I m a y ju s t a d d s o m e – h e s a y s :
“ T h e p u r p o s e o f t h i s m e m o r a n d u m is t o o b t a i n
a p p r o v a l fr o m t h e A c t i n g G r o u p C h i e f Ex e c u ti v e s o r r y – t h e A c ti n g G r o u p C h i e f F i n a n c ia l O ff ic e r –
to:

1 . 1 , h e d g e th e i n te r e s t r a te e x p o s u r e s f r o m a

fl o a ti n g t o f ix e d b a s is fo r a n a m o u n t o f R 1 2 b il li o n . ”
A D V P H I L L I P M A K O E N A S C : C h a ir t h a t is to b e f o u n d o n p a g e 4 5 7 .
20

MR MOHAMM ED SULEMAN MAHOMEDY: 457.
A D V P H I L L I P M A K O E N A S C : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:
in s t r u c t

Regiments

C a p it a l

“ 1 .2 ,
as

per

he
the

says
1 064

lo c o m o t iv e m a n d a t e t o e x e c u te t h e h e d g e s w it h
Tr a n s n e t a p p r o v e d c o u n t e r p a r t ; 3 , t h e e x e c u ti o n

Page 28 of 182

16 MAY 2019 – DAY 94
c o s t h e d g e s b y R e g i m e n ts C a p i t a l w i ll b e a n a ll in c l u s i v e – w i ll b e a ll in c l u s iv e i n th e r a t e o f t h e
in t e r e s t r a t e s w a p . “
S o C h a ir th e r e is a f e w k e y i s s u e s t h a t w e h a v e to p o in t o u t . T h e fir s t
is a t th e ti m e 1 . 2 w a s n o t v a l id .

R e g i m e n ts d i d n o t h a v e a m a n d a t e .

T h e ir m a n d a t e h a d e s s e n t ia l l y b e e n c o n c l u d e d a f e w m o n th s b e fo r e t h a t
w h e n t h e 1 6 6 m i lli o n w a s p a i d .
c o n c l u d e d t h a t m a n d a te .

T h a t p a r t ic u l a r m e m o r a n d u m h a d

S o R e g i m e n t s h a d n o m a n d a te a s f a r a s

Tr a n s n e t is a w a r e .
10

A D V P H I L L I P M A K O E N A S C : A n d p r o c u r e m e n t p r o c e s s t h a t a p p o in t e d
Regiments?
MR MOHAMMED SULEMAN MAHOMEDY:

There was no procurement

p r o c e s s a n d M r P i t a w a s n o t a u t h o r is e d i n t e r ms o f t h e d e l e g a ti o n o f
a u t h o r i ty t o a p p o i n t R e g i m e n ts . T h a t h a d t o h a v e b e e n d o n e t h r o u g h a
p r o p e r p r o c u r e m e n t p r o c e s s e v e n a t t h e ti m e – i f i t w e r e t o b e d o n e
t h r o u g h a c o n fi n e m e n t – b u t i t w o u ld h a v e h a d t o h a v e b e e n a p p r o v e d
b y th e G r o u p C h i e f E x e c u ti v e n o t t h e G r o u p C h i e f Fi n a n c i a l O ff ic e r.
ADV PHILLIP MAKOENA SC : Did it serve …?
CHAIRPERSON :
20

Ar e w e n o t s t ill d e a l in g w i t h th e m a t t e r w h e r e

R e g i m e n t s c a m e o n to t h e s c e n e b y w a y o f – o f a s e s s i o n o r p u r p o r t e d
session or that was in regard to …?
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir - C h a ir t h a t w a s in

r e g a r d t o t h e 1 0 6 4 a d v is o r y.
C H A I R P E R S O N : Ye s , ja .
MR MOHAMMED SULEMAN MAHOMEDY:

Page 29 of 182

B u t w e h a v e to a ls o f o l lo w

16 MAY 2019 – DAY 94
t h e ti m e l in e …
C H A I R P E R S O N : Ye s , y e s .
MR MOHAMMED SULEMAN MAHOMEDY:

Because the last approved

memorandum by the BADC …
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

W h ic h w a s t h e a u t h o r i ty a t

t h e ti m e …
CHAIRPERSON : Hm.
M R M O H A M M E D S U L E M A N M A H O M E D Y : R i g h t ly o r w r o n g ly b u t it w a s
10

t h e a u t h o r i ty w h o c o n c lu d e d t h e 1 0 6 4 tr a n s a c ti o n a d v i s o r y w h e n th e y
s a i d t h a t th e t o t a l p a y m e n t w il l b e 2 6 5 .5 m il li o n . I th i n k th e r e w a s a –
there was a memorandum in July 2015.
ADV PHILLIP MAKOENA SC: Hm.
MR MOHAMMED SULEMAN MAHOMEDY:
3 December 2015.
approval

that

Th is m e m o r a n d u m i s d a t e d

T h e r e w a s n o p r io r a p p r o v a l – th e r e w a s n o p r i o r

Regiments

could

c o n ti n u e

because

there

was

no

a g r e e m e n t e s s e n ti a lly. T h a t a g r e e m e n t h a d t e r m i n a t e d i n J u ly i n te r m s
o f p r o c u r e m e n t p r o c e s s . S o t h e y e ff e c ti v e l y …
CHAIRPERSON : But …
20

MR MOHAMMED SULEMAN MAHOMEDY:

Just kept an agreement

open.
CHAIRPERSON :

J a , b u t w a s t h e r e s o m e b o d y w h o m a d e a d e c is i o n

p u r p o r ti n g t o m a n d a t e th e m t o c o n ti n u e a n d d e e d s o w i th o u t fo ll o w i n g
p r o p e r p r o c u r e m e n t p r o c e d u r e s o r w a s t h e p o s i t io n t h a t t h e y – th e y
k e p t b e i n g a r o u n d a n d p e o p le t h o u g h t t h e y w e r e s t il l m a n d a te d to

Page 30 of 182

16 MAY 2019 – DAY 94
c o n ti n u e o r is t h a t s o m e t h i n g th a t is d i ff ic u lt t o t e ll ?
MR MOHAMMED SULEMAN MAHOMEDY:
b o t h t o b e h o n e s t w it h y o u .

C h a ir I t h i n k i t is a m ix o f

T h e fir s t is o b v i o u s l y M r W o o d s w a s a -

y o u k n o w – w a s – w a s s o m e b o d y w h o w a s q u i te p r e s e n t a t t h e Tr a n s n e t
O ff ic e s .

S o t h a t c o u l d h a v e c r e a te d t h a t p e r c e p ti o n b u t a ls o t h e

m e m o r a n d u m t h a t is i n fr o n t o f u s g iv e s a s e n s e t h a t R e g i m e n ts w e r e
a p p o i n t e d b u t th e r e w a s n o p r o c u r e m e n t e v e n t .

W h a t is a ls o q u i t e

f a s c in a ti n g a b o u t t h is m e m o r a n d u m i s t h a t w h e n w e g o t o t h e
r e c o m m e n d a ti o n o f t h e d o c u m e n t o n p a g e 4 6 0 i t d o e s n o t m e n ti o n
10

a n y th in g a b o u t R e g i m e n ts b e i n g in s t r u c t e d to h a v e a m a n d a t e .
A D V P H I L L I P M A K O E N A S C : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

S o i t – i t s ta r t s o ff in th e

p u r p o s e o f t h e d o c u m e n t b u t t r a ils a w a y i n to th e c o n c l u s io n o f t h e
d o c u m e n t a n d i t d o e s n o t m e n t io n th a t .
ADV PHILLIP MAKOENA SC:

B u t to b e m o r e s p e c i fic – I m e a n –

h a v i n g r e v i e w e d a l l t h e s e d o c u m e n ts p e r t a i n i n g t o t h is tr a n s a c ti o n d i d
you come

across

a n y d o c u m e n t th a t c o u ld

have

a c tu a lly

g iv e n

R e g i m e n t s a n y m a n d a t e a s p e r t h is m e m o r a n d u m ?
MR MOHAMMED SULEMAN MAHOMEDY:
20

C h a ir a s I – a s I m e n ti o n e d

e a r l ie r o n t h e t i m i n g is q u it e c r i ti c a l …
A D V P H I L L I P M A K O E N A S C : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

Because

the

last

m e m o r a n d u m t h a t a p p r o v e d R e g i m e n ts to e x e c u t e o n a n y tr a n s a c ti o n
r e l a ti n g t o 1 0 6 4 w a s s ig n i f ic a n t ly e a r li e r – I th i n k i t w a s J u ly 2 0 1 5 .
T h e r e w a s n o t a n y s u b s e q u e n t p r o c e s s t h a t a p p o i n te d R e g i m e n ts a s a

Page 31 of 182

16 MAY 2019 – DAY 94
m a n d a t e d a d v is o r t o Tr a n s n e t fo r t h i s p a r ti c u l a r tr a n s a c ti o n .
ADV PHILLIP MAKOENA SC:

A n d t h i s p a r t ic u l a r tr a n s a c ti o n d id it

serve on any of the committees that you elaborated upon when you
adduced evidence yes terday?
MR MOHAMM ED SULEMAN MAHOMEDY: Not to my knowledge, no.
ADV PHILLIP MAKOENA SC:

Ye s .

Yo u w e r e s ti ll a t t h e p o i n t o f

h i g h l ig h ti n g t h o s e c o n c e r n s w h ic h y o u a r e r a is in g i n r e l a ti o n t o w h a t i s
s t a te d u n d e r th e h e a d i n g “ P u r p o s e ” .

A n y t h i n g e l s e th a t y o u w is h t o

h i g h l ig h t?
10

M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir …
C H A I R P E R S O N : M a y b e b e fo r e – b e fo r e y o u d o t h a t . Yo u j u s t t o l d u s
t h a t th e l a s t e m a il o r m e m o r a n d u m r e la t in g to t h e m a n d a t e o f …
ADV PHILLIP MAKOENA SC : Regiments.
CHAIRPERSON :

R e g i m e n ts w a s a r o u n d J u l y.

T h is is n o w – w e a r e

d e a li n g w i t h a m e m o t h a t c o m e s u p i n D e c e m b e r.
a b o u t fiv e m o n th s o r s o o r s i x m o n th s .

S o th e r e h a s b e e n

S o d u r i n g th e s e i n t e r v e n i n g

m o n th s fr o m J u l y to D e c e m b e r w o u l d t h e r e h a v e b e e n o th e r a c t iv i ti e s
t h a t R e g i m e n t s w o u l d h a v e b e e n k n o w n t o b e in v o lv e d in w i t h Tr a n s n e t .
S o I a m w o n d e r in g w h e t h e r th e r e h a d b e e n a l u l l o f a b o u t f iv e m o n t h s
20

a n d s u d d e n ly t h e r e is a – a m e m o r a n d u m o r w h e t h e r th e r e h a d b e e n a
lo t o f a c ti v i ti e s b e t w e e n in v o lv i n g Tr a n s n e t a n d R e g i m e n t s m a y b e in
regard to other things.
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir I ju s t w a n t t o c o r r e c t

w h a t I s a i d e a r li e r o n . T h e la s t m e m o r a n d u m w a s i n A p r i l 2 0 1 5 …
C H A I R P E R S O N : Ye s .

Page 32 of 182

16 MAY 2019 – DAY 94
MR MOHAMMED SULEMAN MAHOMEDY:

R e l a ti n g t o t h e tr a n s a c ti o n

a d v is o r n o t J u ly s ir.
C H A I R P E R S O N : Ye s , y e s a n d t h a t g i v e s u s a b o u t e i g h t m o n th s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : E i g h t m o n th s .
C H A I R P E R S O N : In t e r v e n i n g p e r i o d , j a .
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s . R e g i m e n ts w o u ld h a v e
b e e n i n v o lv e d a t t h e t i m e a s I b e s t u n d e r s t a n d i n a n u m b e r o f o th e r
c o n s u l t in g a r r a n g e m e n ts .

F o r e x a m p l e t h e r e is th e g e n e r a l fr e i g h t

b u s i n e s s tr a n s a c ti o n t h a t t h e y w e r e i n v o l v e d i n o r c o n s u l t in g w o r k t h a t
10

t h e y w e r e i n v o lv e d in .

I am not sure in terms of whether they had

c o n ti n u e d w o r k i n t h a t e ig h t m o n t h p e r i o d o n t h e Tr e a s u r y s id e o r …
C H A I R P E R S O N : O k a y.
M R M O H A M M E D S U L E M A N M A H O M E D Y : O r a n y th i n g r e l a ti n g to 1 0 6 4
a d v is o r y. T h a t I a m n o t a w a r e o f C h a ir.
C H A I R P E R S O N : O k a y, th a n k y o u .
ADV PHILLIP MAKOENA SC:

Ye s M r M a h o m e d y I a m s a y i n g t h a t i n

r e l a ti o n …
CHAIRPERSON: I think then you can deal with your question.
ADV PHILLIP MAKOENA SC:
20

To t h e i s s u e s t h a t y o u a r e r a is i n g t h e

h e a d i n g “ P u r p o s e ” is t h e r e a n y is s u e t h a t y o u w a n t e d t o h i g h l i g h t t o t h e
C h a ir ?
MR MOHAMMED SULEMAN MAHOMEDY:

Ye s . C h a ir I t h i n k a ls o o n e

o f t h e k e y is s u e s o n th is m e m o r a n d u m - a s I a ll u d e d to e a r li e r o n i n 1 .3
says:
“ T h e e x e c u t i o n c o s t o f h e d g e s b y R e g i m e n ts C a p i ta l

Page 33 of 182

16 MAY 2019 – DAY 94
w i ll b e a l l i n c l u s iv e in th e r a t e o f t h e i n t e r e s t r a t e
s w a p .”
W h i c h m e a n s th is m e m o r a n d u m t h a t t h e R 1 2 b il li o n Z A R C l u b L o a n
w h ic h w a s n o w g o i n g t o b e h e d g e d o n i n a n i n t e r e s t r a t e s w a p w h a te v e r
t h e i n te r e s t r a te s w a p b y t h e f in a n c i a l i n s ti t u ti o n w o u ld b e w o u l d
in c l u d e t h e - f o r w a n t o f a b e t t e r w o r d C h a ir a s I s a id e a r li e r o n –
in c l u d e w h a t e v e r c o m m i s s io n w a s g o in g t o b e p a i d t o R e g i m e n ts .

So

w e w i ll d e a l w it h th a t a li t tl e l a te r o n a s w e l l a n d t h e r e w a s n o
d is c l o s u r e a s f a r a s w e a r e a w a r e i n t h i s m e m o r a n d u m o f t h e
10

p e r c e n t a g e o r o f t h e r a t e t h a t R e g i m e n ts w a s g o in g t o b e p a i d …
A D V P H I L L I P M A K O E N A S C : Ye s . Yo u c a n …
MR MOHAMMED SULEMAN MAHOMEDY:

An d th is w a s t h e n a p p r o v e d

b y th e g r o u p .
ADV PHILLIP MAKOENA SC : If you go to page 460.
M R M O H A M M E D S U L E M A N M A H O M E D Y : F o u r.
ADV PHILLIP MAKOENA SC : 4-6-0.
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s .
ADV PHILLIP MAKOENA SC : Of the sam e doc ument and take us what
it s a i d u n d e r - u n d e r “ R e c o m m e n d a t io n ” a n d c o m m e n t i n a s f a r a s i t
20

r e l a t e s a ls o to R e g i m e n t s .
MR MOHAMMED SULEMAN MAHOMEDY:

S o in t h e r e c o m m e n d a t i o n

on page 460 under Item 24:
“ I t is r e c o m m e n d e d t h a t t h e A c ti n g G C F O – b e i n g
t h e G r o u p C h i e f Fi n a n c i a l O ff ic e r – a p p r o v e s t h e
h e d g i n g o f t h e in t e r e s t r a t e , th e r is k e x p o s u r e s o n a

Page 34 of 182

16 MAY 2019 – DAY 94
fl o a t f o r f ix e d b a s i s fo r a ll t h e 1 2 b il li o n C l u b L o a n
d r a w d o w n s .”
A n d t h is is e s s e n t ia ll y c o m p il e d b y th e G r o u p Tr e a s u r e r a t th e t i m e a n d
s ig n e d o ff b y M r P i t a w h o is t h e A c t i n g G r o u p C h ie f Fi n a n c i a l O ffi c e r a t
that time.

A g a in a s I p o i n te d o u t e a r l ie r o n it i s n o t i n li n e w i t h t h e

purpose of the document.

Th e p u r p o s e o f t h e d o c u m e n t w a s t o g e t

a p p r o v a l o n t h r e e m a t t e r s w h ic h w a s t h e h e d g i n g o f t h e r a te ,
in s t r u c t i n g R e g i m e n t s C a p i t a l a n d th e fa c t th a t t h e r a t e w o u l d i n c l u d e
t h e R e g i m e n t s C a p i t a l c o m m i s s io n …
10

A D V P H I L L I P M A K O E N A S C : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

A n d w h e n w e g o to t h e

r e c o m m e n d a ti o n it ju s t t a lk s a b o u t a p p r o v in g h e d g i n g o f t h e i n t e r e s t
r a te .

S o i t – i t i s a n a n o m a l y in - i n h o w w e a c t u a l ly p r e p a r e

d o c u m e n ts b u t th a t i s j u s t a n o b s e r v a ti o n i n te r ms o f t h is p a r ti c u l a r
d o c u m e n t C h a ir.
CHAIRPERSON :

U n d e r “ P u r p o s e ” th a t p a r a g r a p h 1 . 2 n a m e ly o n e o f

the purposes of the memorandum was to:
“ O b t a i n a p p r o v a l f r o m A c t in g G r o u p C h i e f F in a n c ia l
O ff ic e r t o i n s tr u c t R e g i m e n ts C a p i t a l a s p e r th e
20

1 0 6 4 lo c o m o t iv e s m a n d a t e t o e x e c u t e t h e h e d g e s
w i t h Tr a n s n e t a p p r o v e d c o u n t e r p a r t s .”
N o w y o u m a d e t h e p o in t y e s t e r d a y a n d I th i n k y o u r e p e a te d i t t h i s
m o r n in g t h a t - a n d I a m n o w p a r a p h r a s i n g – t o t h e e x t e n t t h a t
R e g i m e n t s m a y h a v e h a d a n y m a n d a t e t o d o a n y th i n g w h ic h – a s I
u n d e r s t a n d th e p o s it i o n – w o u ld d e p e n d o n v a li d i ty o f th e s e s s io n f r o m

Page 35 of 182

16 MAY 2019 – DAY 94
M c K in s e y t o t h e e x t e n t t h a t t h e y h a d a n y m a n d a t e fr o m Tr a n s n e t . T h e
m a n d a t e t h e y h a d w a s t h e m a n d a t e t h a t M c Ki n s e y h a d a n d t h a t
m a n d a t e w a s v e r y l i m i te d . I t d i d n o t in c l u d e e x e c u ti o n - t h a t is – th a t
is w h a t I u n d e r s to o d y o u t o h a v e s a id – t o th e e x te n t th a t t h a t m a y b e
r ig h t . W o u l d i t b e c o r r e c t t o s a y p a r a g r a p h 1 .2 u n d e r “ P u r p o s e ” o f t h a t
m e m o r a n d u m f r o m M r R a m o s e b u d i w o u l d s e e k t o g iv e t h e m t h e
mandate

to

get

involved

in

the

e x e c u ti o n ?

Am

I

correct

in

u n d e r s t a n d in g r e a d in g i t t h a t w a y ?
MR MOHAMMED SULEMAN MAHOMEDY:
10

Ye s C h a ir.

Yo u a r e c o r r e c t

in u n d e r s t a n d i n g t h a t w a y. T h i s m a n d a te i s – t h is m a n d a t e o f e x e c u t in g
is f u n d a m e n t a l ly d i ff e r e n t .
C H A I R P E R S O N : Is n e w ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : I t is n e w.
C H A I R P E R S O N : Ye s , y e s ( i n te r v e n e s ) .
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir w h a t is a l s o …
C H A I R P E R S O N : A n d t h a t is w h e r e y o u – t h a t is w h e r e y o u r p o in t a b o u t
f a il u r e to f o l lo w p r o c u r e m e n t p r e s c r i p t s a n d p r o c e d u r e s a r is e s ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
C H A I R P E R S O N : Ye s , o k a y.

20

ADV PHILLIP MAKOENA SC:

Ye s .

N o w m a y I r e fe r y o u t o p a g e 1 9

a n d t a k e u s th r o u g h f r o m y o u r p a r a g r a p h 5 .6 . 4 ?

T h a t is w h e r e w e

in t e r r u p t e d y o u .
C H A I R P E R S O N : T h a t is n o w b a c k t o h is s t a t e m e n t ?
A D V P H I L L I P M A K O E N A S C : H is s t a t e m e n t C h a ir, y e s .
CHAIRPERSON : Ja.

Page 36 of 182

16 MAY 2019 – DAY 94
ADV PHILLIP MAKOENA SC:

N o w th a t y o u h a v e in t e r r o g a t e d th e

relevant annexures.
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir o n c e a g a i n C h a ir t h e

ti m e li n e b e c o m e s q u i t e c r u c ia l i n t h e c o n v e r s a t i o n .

As I said on

1 D e c e m b e r 2 0 1 5 Tr a n s n e t h a s a d r a w d o w n w i th t h e …
C H A I R P E R S O N : I a m – I a m s o r r y. W e m i g h t h a v e l e f t s o m e l o o s e e n d
in r e la t io n t o t h a t m e m o r a n d u m b u t I m a y h a v e m i s s e d th is – w e s h o u ld
fi n a l is e t h a t b y s a y i n g t h a t M r R a m o s e b u d i d i d g e t t h e a p p r o v a l th a t h e
w a s a s k i n g f o r. I s t h a t r i g h t lo o k in g fr o m … ?
10

M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir i t …
C H A I R P E R S O N : L o o k in g a t t h e e n d o f t h e m e m o r a n d u m ( i n te r v e n e s ) .
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir I w o u l d s a y y e s a n d n o
because the …
C H A I R P E R S O N : Ye s .
ADV PHILLIP MAKOENA SC:
MR MOHAMMED SULEMAN MAHOMEDY:

C h i e f F in a n c ia l O ff ic e r w a s

n o t i n a p o s it i o n to a p p r o v e p o i n t s 1 .2 a n d 1 . 3 e s s e n t ia lly b u t h e d id
a p p r o v e th e h e d g i n g t o c o n t i n u e .
C H A I R P E R S O N : Ye s , o k a y.
20

ADV PHILLIP MAKOENA SC : (Intervenes).
C H A I R P E R S O N : S o h e g o t p a r t o f w h a t h e w a n te d ?
MR MOHAMMED SULEMAN MAHOMEDY: He got …
CHAIRPERSON : Part of what he wanted?
MR MOHAMMED SULEMAN MAHOMEDY:
wanted.

Page 37 of 182

He go part of what he

16 MAY 2019 – DAY 94
C H A I R P E R S O N : J a , o k a y t h a n k y o u . A lr i g h t .
M R M O H A M M E D S U L E M A N M A H O M E D Y : A n d l a r g e ly w h a t h e g o t w a s
t h e a p p r o v a l t o a c tu a l ly g o i n t o th e s w a p s a g r e e m e n t .
ADV PHILLIP MAKOENA SC : Swap yes.
MR MOHAMMED SULEMAN MAHOMEDY:
CHAIRPERSON :

And – and did he get paragraph 1.2 of his memo?

T h a t i s t h e a p p r o v a l t o i n s tr u c t R e g i m e n t s to e x e c u te . H e d id n o t g e t
that?
MR MOHAMMED SULEMAN MAHOMEDY:
10

C h a ir a s fa r a s w e a r e

c o n c e r n e d t h e d e l e g a ti o n o f a u th o r it y d i d n o t a ll o w f o r t h e G r o u p C h i e f
Fi n a n c i a l O ff ic e r – M r P it a – t o g iv e t h a t a p p r o v a l b e c a u s e i t w a s
s o m e t h i n g t h a t t h e S u b C o m m i t te e o f t h e B o a r d c o u l d o n ly d o .
CHAIRPERSON :

N o , n o t h a t is – t h a t i s a d i ff e r e n t is s u e .

Yo u a r e

a n s w e r in g t h e q u e s t i o n w h e th e r M r P i ta h a d t h e p o w e r t o g r a n t th e
approval.

M y q u e s t io n is a t a f a c tu a l l e v e l.

R ig h tl y o r w r o n g ly

M r R a m o s e b u d i th o u g h t th a t M r P i t a w a s t h e r i g h t p e r s o n t o g e t
a p p r o v a l fr o m a n d m y q u e s t io n is w h e th e r h e g o t a p p r o v a l fr o m M r P i t a
a s a m a t te r o f fa c t w h e t h e r o r n o t M r P it a h a d a u t h o r i ty to g iv e t h a t
a p p r o v a l is a n o t h e r is s u e .
20

MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir

in

terms

of

t h is

memorandum he got that approval.
C H A I R P E R S O N : O k a y, t h a n k y o u b u t y o u m a k e t h e p o i n t t h a t M r Pi t a
a s fa r a s y o u a r e c o n c e r n e d d i d n o t h a v e t h e a u t h o r i ty to g r a n t s u c h
approval?
M R M O H A M M E D S U L E M A N M A H O M E D Y : C o r r e c t C h a ir.

Page 38 of 182

16 MAY 2019 – DAY 94
C H A I R P E R S O N : O k a y.
ADV PHILLIP MAKOENA SC:

Ye s .

Yo u a r e t a k in g u s th r o u g h t h e

ti m e li n e . Yo u s a i d i t is i m p o r ta n t .
MR MOHAMMED SULEMAN MAHOMEDY:

C h a i r I th i n k i t i s n e c e s s a r y

as I said that the drawdown occurs on 1 December 2015 and then here
is t h e m e m o r a n d u m f r o m M r D a n i e S m i t o n t h e 2 n d o f D e c e m b e r a n d
t h e n t h e m e m o r a n d u m f r o m M r R a m o s e b u d i t h a t w e ’v e j u s t d i s c u s s e d
o n t h e 3 r d o f D e c e m b e r.
ADV PHILLIP MOKOENA SC:
10

Ye s .

MR MOHAMED SULEMAN MAHOMED Y :

To b e c le a r t h is w a s q u it e a

s ig n if ic a n t tr a n s a c ti o n a n d o n e g e t s t h e s e n s e t h a t i t s e e m s t o h a v e
b e e n r u s h e d th r o u g h b e c a u s e t h e tr a n s a c t io n , o r t h e f ir s t p a r t o f th e
tr a n s a c ti o n w a s e x e c u t e d o n t h e 4 t h o f D e c e m b e r. A l l o f th is h a p p e n s
in a

th r e e d a y p e r i o d , w h ic h is i n t e r e s t in g a s a n o b s e r v a ti o n ,

c o n s i d e r in g th e m a g n i tu d e o f t h e v a lu e s t h a t w e a r e r e fe r e n c i n g C h a ir.
S o o n t h e 4 t h o f D e c e m b e r R e g i m e n ts t h e n e x e c u t e a s p e r
5 .1 . 5 i n my s t a t e m e n t t h e y e x e c u t e a n i n t e r e s t r a t e s w a p o n b e h a lf o f
Tr a n s n e t, w i th N e d b a n k . T h i s is a R 4 . 5 b i l li o n d r a w d o w n , t h e e x e c u t io n
o f th e in t e r e s t r a t e s w a p s a r e a t a f ix e d i n t e r e s t r a te o f 11 . 8 3 % . C h a ir
20

if i t m a y p l e a s e th e C o m m i s s io n t h a t w e l o o k a t p a g e 4 5 5 , I t h i n k i t ’s
under Annexure MSM23.
C H A I R P E R S O N : Ye s .
MR MOHAMED SULEMAN MAHOMEDY :

C h a i r t h is s c h e d u le

e n d e a v o u r s to g iv e t h e C o m m i s s io n a p e r s p e c ti v e o n t h e t i m e li n e s b u t
a ls o s o m e d e ta il t h a t g iv e s y o u p e r s p e c t iv e o n t h e lo a n s t h a t w a s

Page 39 of 182

16 MAY 2019 – DAY 94
s w a p p e d a n d t h e d i ff e r e n t ia ls i n t h e in t e r e s t r a t e . A t t h e t i m e w h e n th e
tr a n s a c ti o n w a s e n t e r e d i n t o th e r e w e r e – f o r t h e Z A R C lu b L o a n t h e
r a te s , t h e i n te r e s t r a t e s a t t h e t i m e w e r e a r o u n d 9 . 0 3 , b e t w e e n 9 .0 3 %
a n d 9 . 1 2 % . Th e s e w e r e t h e n fi x e d a t 11 . 8 3 % , a n d t h e 2 . 7 % o n a v e r a g e
o r 2 . 6 % o n a v e r a g e m o v e m e n t is q u i te s i g n i fic a n t w h e n y o u t a k e i n t o
c o n s i d e r a ti o n t h e v a l u e o f R 4 .5 b il li o n .
W e a ls o t h e r e w a s a s e c o n d s w a p w i th N e d b a n k o n th e 1 s t o f
M a r c h 2 0 1 6 , th e s e c o n d d r a w - d o w n o f R 7 .5 b i ll i o n w a s m a d e a n d t h is
d r a w d o w n w a s a l s o s w a p p e d fr o m f lo a ti n g to fi x e d o n th e 7 t h o f M a r c h ,
10

in a s ix d a y p e r io d , w i th N e d b a n k a s th e c o u n t e r p a r t y a n d t h a t
e x e c u ti o n r a te o n th e f ix e d b a s is w a s 1 2 .2 7 % , a n d w h e n w e l o o k a t
t h o s e tr a n s a c ti o n s th e o r i g in a l f lo a ti n g r a te a t t h e ti m e w a s b e t w e e n
9 .5 3 % a n d 9 . 7 2 % b u t t h e y w e r e fix e d a t 1 2 . 2 7 % .
C h a ir I r e f e r e n c e d th e C o m m i s s i o n t o M S M 2 5 .
ADV PHILLIP MOKOENA SC :

I t’s o n p a g e 4 6 4 C h a ir.

CHAIRPERSON : 46?
ADV PHILLIP MOKOENA SC :

4.

CHAIRPERSON : Thank you.
M R M O H A M E D S U L E M A N M A H O M E D Y : C h a ir t h e r e ’s a – i t h a s b e e n
20

b r o u g h t t o m y a t te n ti o n .. .( i n t e r v e n ti o n )
C H A I R P E R S O N : I ’ m s o r r y, a t a c o n v e n i e n t t i m e , M r M o k o e n a y o u c a n
ju s t w a tc h w h e r e th e c o n v e n i e n t ti m e w o u l d b e , I w a n t t o g o b a c k t o Mr
R a m o s e b u d i ’s m e m o r a n d u m a n d a s k y o u a q u e s ti o n , b u t I w a n t y o u t o
fi n i s h w h a t y o u a r e d e a li n g w it h fir s t. 4 6 4 y o u s a i d ?
ADV PHILLIP MOKOENA SC :

Ye s .

Page 40 of 182

16 MAY 2019 – DAY 94
CHAIRPERSON : Thank you.
MR MOHAMED SULEMAN MAHOMEDY :

C h a ir in t h e r e v i e w o f th is

d o c u m e n t a ti o n a n d th e r e v i e w o f t h e tr a n s a c ti o n s i t w a s b r o u g h t to m y
a tt e n ti o n

that

th e

Nedbank

C o m p li a n c e

Department

r e q u ir e d

c o n fir m a t io n fr o m Tr a n s n e t t h a t i t w a s s a tis f ie d w it h t h e p r i c i n g a n d
v a l u e o f t h e tr a n s a c ti o n . I f i t p l e a s e s t h e C o m m i s s i o n I w o u l d r e q u e s t
t o r e a d o u t t h e e m a il o n p a g e 4 6 4 .
C H A I R P E R S O N : Ye s d o t h a t .
MR MOHAMED SULEMAN MAHOMEDY:
10

ADV PHILLIP MOKOENA SC :

C h a ir p e r s o n . .. ( i n te r v e n t io n )

Fir s t ly i d e n t i fy i t , a s to w h o th e r o l e -

p l a y e r s t h a t e m a il , i t w a s d e s p a tc h e d t o w h o b y w h o a n d t h e d a te a n d
take us through the context.
MR MOHAMED SULEMAN MAHOMED Y :

C h a ir i t is d e s p a tc h e d fr o m a

M o s s B r ic k m a n o f N e d b a n k o n W e d n e s d a y t h e 1 6 t h o f M a r c h 2 0 1 6 a t
1 :3 0 p m t o M r P h e t o l o R a m o s e b u d i a t Tr a n s n e t u n d e r t h e s u b je c t
“ fi n a l is a ti o n o f d o c u m e n ta t io n s u r r o u n d i n g th e s w a p tr a n s a c t io n ” . I w i ll
r e a d t h e e n t ir e d o c u m e n t , i t ’s n o t th a t l o n g .
C H A I R P E R S O N : Ye s t h a t ’s f in e .
MR MOHAMED SULEMAN MAHOMEDY :

It says:

“Hi Phetolo,

20

O n c e a g a i n t h a n k y o u fo r t h e o p p o r tu n i t y p r o v i d e t o N e d b a n k
[ I’ m r e a d i n g i t v e r b a t i m C h a i r ] . . .”
C H A I R P E R S O N : J a , t h a t’s f in e .
MR

MOHAMED

SULEMAN

MAHOMEDY :

g r a m m a t ic a l i s s u e s .

Page 41 of 182

W i th

any

p o s s ib le

16 MAY 2019 – DAY 94
C H A I R P E R S O N : Ye s i t m u s t b e p r o v i d e d b u t y o u c a n r e a d i t a s i t is .
MR MOHAMED SULEMAN MAHOMEDY :

Ye s .

“ O n c e a g a i n th a n k y o u f o r t h e o p p o r t u n i ty p r o v i d e t o N e d b a n k
t o p a r t ic i p a te i n y o u r h e a d in g r e q u ir e m e n ts .

As per our

d is c u s s io n i n o r d e r t h a t w e a r e a b l e t o c l o s e th e l o o p o n th e
tr a n s a c ti o n c o m p l e t e d i t w o u ld b e m o s t a p p r e c i a te d i f y o u
c o u l d s h a r e w i th u s t h e s p e c ia l a u th o r i t y g r a n t e d y o u t o g o
a h e a d w it h th e h e d g i n g . W e a r e s ti ll a w a it in g ” . .. ( i n te r v e n ti o n )
C H A I R P E R S O N : I t h i n k i t’s “ i f y o u w o u l d s h a r e w it h u s ” .
10

MR MOHAMED SULEMAN MAHOMEDY :
“ . . .i f y o u w o u l d s h a r e w it h u s th e s p e c i a l a u th o r it y g r a n t e d y o u
t o g o a h e a d w i t h t h e h e d g i n g . W e a r e s ti ll a w a i ti n g th e s i g n e d
c o n fir m a t io n s b u t a r e a w a r e t h a t s o m e p e o p le a r e tr a v e ll i n g .
A d d i t io n a l ly

our

c o m p l ia n c e

is

r e q u e s ti n g

a

l e tt e r

th a t

e s s e n ti a l ly s t a te s th a t Tr a n s n e t h a s l o o k e d a t t h e t r a n s a c t io n
a n d th e r a t e s c o n c lu d e d a n d th a t Tr a n s n e t is s a ti s fi e d w i t h t h e
p r i c i n g a n d v a l u e o f th e tr a n s a c ti o n . F o r e a s e e s s e n t ia ll y th e y
a r e l o o k i n g f o r s o m e t h i n g a l o n g t h e s e l in e s . “ I n t e r m s o f t h e
in t e r e s t r a t e s w a p t r a n s a c t io n s e n te r e d i n to w i t h N e d b a n k o n
20

o r a b o u t 8 M a r c h 2 0 1 6 . I a m a w a r e t h a t t h e s e tr a d e s p r i c e d a
a p u r e mi d - m a r k e t r a t e o f a p p r o x i m a te ly 11 .4 2 % N A C Q . I a m
f u r th e r a w a r e a n d a g r e e th a t t h e s e tr a d e s w e r e e x e c u te d o f a
le v e l o f 1 2 . 3 7 % N A C Q w h i c h r e s u l ts i n a d i ff e r e n c e o f 9 5 B P S ,
m e a n i n g b a s i s p o i n ts , a b o v e o r o v e r m id - ma r k e t v a lu e .

Th e

tr a d e n u m b e r s o f t h e tr a d e s i n q u e s ti o n a r e s e t o u t b e l o w a n d

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16 MAY 2019 – DAY 94
t h e y a r e g i v e n , a n d th e n y o u r a s s i s t a n c e i n t h is m a t te r is m u c h
a p p r e c ia t e d .
Regards
M o s s Br ic k m a n
Head Balance Sheet Management
Tr e a s u r y
Nedbank Corporate and Investment Banking”
C h a ir t h e r e a s o n t h is m a i l is f o r o u r r e v i e w is M r R a m o s e b u d i
s u b s e q u e n t ly c o p i e s a n d p a s te s t h a t p a r t i c u l a r p a r a g r a p h a n d t h i s m a il
10

is s e n t a t 1 : 3 0 p m a n d h e t h e n r e s p o n d s , I t h i n k t h r o u g h h is o ff ic e , a t
5 :2 4 p m t o s a y “ p l e a s e fi n d a t t a c h e d a p p r o v a l f o r th e tr a n s a c ti o n ” .
A fe w p e r t i n e n t p o in ts o u t o f th is i s . . .( in t e r v e n ti o n )
C H A I R P E R S O N : I’ m s o r r y l e t ’s h e a r fir s t w h e r e h is r e s p o n s e is .
A D V P H I L L I P M O K O E N A S C : Ta k e u s t h r o u g h h is r e s p o n s e .
MR MOHAMED SULEMAN MAHOMEDY :

C h a ir t h e n e x t p a g e i s 4 6 5 .

C H A I R P E R S O N : Ye s .
MR MOHAMED SULEMAN MAHOMEDY :

W e w i ll s e e a n o t e fr o m C a r o l

P e r r y w h o w a s th e t h e n a s s is t a n t t o M r R a m o s e b u d i o n t h e 1 6 t h o f
M a r c h 2 0 1 6 a t 5 :2 4 p m s a y s :
20

“Good day Moss,
F o r e a s e o f r e f e r e n c e Mr R a m o s e b u d i h a s r e p h r a s e d t h e
c o n te n t o f h is m a i l in t h e f o r m o f a l e tt e r f o r t h e s u p p o r t in g
d o c u m e n ts .”
A n d t h a t l e tt e r is th e n s e n t th r o u g h t o .. .( i n te r v e n ti o n )
CHAIRPERSON :

I t is s e n t to t h e p e r s o n fr o m N e d b a n k w h o h a d s e n t

Page 43 of 182

16 MAY 2019 – DAY 94
t h e e m a i l th a t y o u r e a d ?
M R M O H A M E D S U L E M A N M A H O M E D Y : Ye s s ir.
C H A I R P E R S O N : S o th is i s s e n t o n t h e s a m e d a y, a fe w h o u r s l a t e r.
MR MOHAMED SULEMAN MAHOMED Y:

Ye s .

C H A I R P E R S O N : Fr o m R a m o s e b u d i ’s o ffic e b y a p e r s o n c a ll e d C a r o l .
MR MOHAMED SULEMAN MAHOMEDY :

Ye s .

C H A I R P E R S O N : Ye s , o k a y, y e s , y o u m a y c o n ti n u e .
M R M O H A M E D S U L E M A N M A H O M E D Y : C h a ir w h a t is in t e r e s ti n g fr o m
o u r o b s e r v a t i o n s o n t h is p a r tic u la r e m a i l is t h a t th e r e q u e s t fo r th e
10

a u t h o r i ty t h a t is m a d e i n th is e m a il o n t h e 1 6 t h o f M a r c h is p o s t th e
tr a n s a c ti o n h a s b e e n e x e c u t e d i n D e c e m b e r 2 0 1 5 a n d o n t h e I t h i n k i t
was the 7th of March 2016.
CHAIRPERSON :

W e l l s h o u l d n ’ t y o u fi r s t t a k e u s to w h a t h e i s

a tt a c h in g b e c a u s e I t h i n k y o u r c o m m e n t s a r e o n t h e c o n t e n t t h e r e o f , o r
t h e d a t e t h e r e o f , is n ’t i t?

B e c a u s e t h e p e r s o n fr o m N e d b a n k , M r

B r ic k m a n w a s a s k i n g b a s ic a lly fo r p r o o f t h a t th e r e w a s th e r i g h t
a u t h o r i ty is n ’ t i t ?
MR MOHAMED SULEMAN MAHOMEDY :
CHAIRPERSON :
20

Ye s C h a ir.

A n d t h e l e t te r f r o m t h e p e r s o n r e f e r r e d t o a s C a r o l

p u r p o r ts t o a t t a c h t h e r e q u ir e d a u th o r i ty a n d y o u h a v e s o m e c o m m e n ts
t o s a y a b o u t t h a t , b u t I t h in k w e m u s t j u s t i d e n ti f y w h e r e t h a t is fir s t .
MR MOHAMED SULEMAN MAHOMEDY :

C h a ir a s I s e e i t ’s n o t i n t h e

d o c u m e n t t h a t i s s u b m it t e d b u t I t h in k fr o m m y p e r s p e c ti v e C h a i r th e
p o i n t t h a t w e ’ r e m a k i n g i s t h a t t h is r e q u e s t c a m e in p o s t th e e x e c u ti o n
o f t h e tr a n s a c t io n s . T h e tr a n s a c ti o n s w e r e e x e c u te d , t h e fi r s t o n e i n

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16 MAY 2019 – DAY 94
D e c e m b e r 2 0 1 5 o n t h e 4 t h a n d t h e s e c o n d o n e w a s o n th e 7 t h o f M a r c h
2016.

Th is r e q u e s t f r o m N e d b a n k is r e q u ir e d o n t h e 1 6 t h o f M a r c h

2016.
C H A I R P E R S O N : O h s o y o u ’r e s a y in g – o r m a y b e t h e y h a v e , t h e y m a y
h a v e , th e r e m a y h a v e b e e n a r e a s o n th a t m a d e t h e m th in k y o u k n o w
w h a t w e s h o u l d h a v e a s k e d f o r t h is b e f o r e b u t t o t h e e x te n t t h a t t h a t
a u t h o r i ty m a y h a v e e x i s t e d a s a t th a t t i m e l e t’s a s k f o r it n o w, b u t
h o p in g th a t w h a t t h e y w o u ld b e g iv e n w o u ld s h o w t h a t i t w a s a u t h o r i t y
t h a t e x is t e d b e fo r e e x e c u ti o n , a n d i f t h a t h a p p e n e d , i f th a t w a s t h e
10

c a s e th e n fr o m t h e ir p o in t o f v ie w th e y m i g h t f e e l t h a t t h e y a r e fi n e , b u t
if t h e a u th o r i ty s e e ms t o h a v e c o m e a f t e r t h e y m a y o r m a y n o t h a v e
b e e n h a p p y w i t h t h a t d e p e n d i n g o n a n u m b e r o f th i n g s , b u t y o u a r e
s a y in g t h a t fr o m y o u r p o i n t o f v i e w t h a t’s t h e is s u e , th a t ’s th e p o i n t y o u
w a n t e d t o m a k e t h a t t h e a u t h o r i ty c o m e s a f te r.
M R M O H A M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
C H A I R P E R S O N : Ye s o k a y.
A D V P H I L L I P M O K O E N A S C : B u t le t ’s g o b a c k t o p a g e 4 6 4 , a n d l e t ’s
e n t e r t a i n f o r a w h il e w h a t h a s b e e n p l a c e d in in v e r t e d c o m m a s b y
N e d b a n k w h e n r e q u e s ti n g th a t a u t h o r i ty in t h o s e te r m s .

20

What was

N e d b a n k a c t u a l ly c o n v e y in g t o M r R a m o s e b u d i , w h a t w a s r e a l ly b e i n g
s o u g h t Mr M a h o m e d y s o t h a t t h e C h a ir s h o u l d u n d e r s t a n d th e e s s e n c e
o f y o u r e v id e n c e i n t h is r e g a r d .
MR MOHAMED SULEMAN MAHOMEDY :

I n e s s e n c e C h a ir I t h i n k

t h e r e ’s t w o t h in g s b e i n g r e q u e s te d in t h i s e m a il , t h e f ir s t i s th a t M r
R a m o s e b u d i to p r o v i d e t h e a u th o r i ty, t h e s p e c i a l a u t h o r i ty th a t h e

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16 MAY 2019 – DAY 94
w o u ld h a v e h a d , t h a t ’s i n t h e u p p e r m o s t p a r a g r a p h s .

The second

. . .( i n te r v e n t io n )
C H A I R P E R S O N : T h i s is f o r t h e s w a p th a t . . .( i n te r v e n t io n )
M R M O H A M E D S U L E M A N M A H O M E D Y : To e x e c u t e t h e s w a p .
C H A I R P E R S O N : To e x e c u t e th e s w a p , ja .
M R M O H A M E D S U L E M A N M A H O M E D Y : W h i c h w a s a lr e a d y e x e c u t e d .
C H A I R P E R S O N : Ye s .
MR MOHAMED SULEMAN MAHOMEDY :

T h e s e c o n d p i e c e is a n

a u t h o r i ty fr o m Tr a n s n e t t o s a y t h a t t h e p r i c in g w a s a c c e p ta b le , n o w t h e
10

r e a s o n w h y th is is i m p o r t a n t is b e c a u s e t h e r e ’s a fa c t t h a t s a y s t h a t –
in t h i s d o c u m e n t t h a t s a y s t h e m i d - m a r k e t, t h e p u r e m i d - m a r k e t r a te
w a s 11 .4 2 % a n d t h e r a t e th a t w a s b i ll e d t o Tr a n s n e t w a s g o i n g t o b e 9 5
b a s is p o i n t s p o i n ts h ig h e r. I n a t r a n s a c t io n o f t h i s n a t u r e i t is o u r v i e w
a n d o u r o p i n i o n t h a t th e 9 5 b a s is p o i n ts w a s o u t s i d e m a r k e t c o n d i ti o n s ,
it w a s t o o h i g h , a n d e s s e n t ia ll y w h a t is h a p p e n i n g h e r e is t h a t t h e r e ’s a
r e q u ir e m e n t o r a r e q u e s t fr o m N e d b a n k o r t h e g e n tl e m a n f r o m N e d b a n k
w h o is a s k in g Tr a n s n e t t o s a y a f te r t h e f a c t , I k e e p s a y i n g th a t C h a ir
b e c a u s e i t ’s q u it e c r i tic a l, a ft e r th e fa c t t o s a y t h a t i t’s a c c e p t a b le t h a t
w e c h a r g e d y o u 1 2 . 3 7 % w h e n t h e m a r k e t, m i d - m a r k e t w a s 11 . 4 2 % .

20

T h i s a ls o h a s to b e t h o u g h t o f in c o n j u n c t io n o f m y p r e v i o u s t e s ti m o n y
o n t h e s w a p a p p r o v a l m e m o w h i c h s a i d t h a t R e g i m e n ts r a t e w il l b e a ll
in c l u s i v e , w h ic h m e a n s th a t s o m e w h e r e i n b e t w e e n th is r a t e w e b e li e v e
R e g i m e n t s c o m m i s s io n w a s a d d e d i n t o t h e r a te a s w e l l w h ic h w o u l d
g iv e o n e a v i e w i n t e r m s o f w h y th e r a te w a s 9 5 b a s i s p o i n ts h i g h e r.
CHAIRPERSON :

Yo u s e e w h e n I r e a d t h e e m a i l f r o m M r M o s s

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16 MAY 2019 – DAY 94
B r ic k m a n to M r R a m o s e b u d i i t s e e ms t o m e t h a t i t ’s a n e m a i l t h a t
c o m e s fr o m a c li e n t o f Tr a n s n e t o r th a t c o m e s fr o m s o m e b o d y w h o fi n d s
s o m e t h i n g s tr a n g e i n w h a t is b e i n g d o n e , a n d ju s t w a n ts to m a k e s u r e
t h a t w h o e v e r s a y s t h is m u s t b e d o n e fr o m Tr a n s n e t , o n e , h a s a u t h o r i t y
t o s a y s o , t w o , k n o w s o r a p p r e c ia t e s t h e i m p li c a t io n s f o r Tr a n s n e t i f
w h a t h e is r e q u e s t in g t o b e d o n e is d o n e , i n o th e r w o r d s i t s e e m s to m e
t o b e s o m e b o d y w h o s a y s I d o n ’ t w a n t Tr a n s n e t to a s k a n y b o d y l a te r o n
t o s a y I w a s p a r ty t o d o i n g th is a n d t h a t m a y b e I fa il e d i n m y
o b l i g a ti o n s in th a t I d id n ’t m a k e s u r e th a t Tr a n s n e t a p p r e c i a t e d w h a t
10

t h e i m p lic a ti o n s o f d o i n g t h is w o u l d b e , t h e r e fo r e I w a n te d t o m a k e s u r e
t h a t i f a n y b o d y a c c u s e d N e d b a n k o r h i m o f n o t h a v in g d o n e h is jo b
p r o p e r ly t h e y w o u l d s a y h e r e is p r o o f t h e y s a id t h e y k n o w a l l t h is , t h e y
a r e a w a r e o f a l l o f t h is , w e c a n g o a h e a d a n d t h e n w e w e n t a h e a d , is
t h a t a j u s ti f ie d i m p r e s s i o n o f th e e m a il fr o m y o u r p o i n t o f v ie w a s
fi n a n c i a l p e r s o n ?
MR MOHAMED SULEMAN MAHOMEDY :

Ye s C h a ir, I t h i n k t h is is a

d o c u m e n t t h a t w a s r e q u e s te d to e n s u r e e x a c t ly w h a t y o u ju s t p u t o u t
b e c a u s e t h a t w a s th e a s p e r t h e m a i l i t s a y s o u r c o m p l i a n c e a n d o n e
w o u ld u n d e r s t a n d t h a t t o b e t h e C o m p l ia n c e D e p a r t m e n t , s o th e
20

q u e s t io n i s w h o a c t u a l ly fo u n d , o r w h a t w a s i t th a t t h e y w e r e lo o k in g
f o r, w h a t d i d th e y fi n d th a t w a s n o t n e c e s s a r i ly i n li n e w i t h w h a t w a s in
t h e s w a p a g r e e m e n ts .
CHAIRPERSON : Okay thank you.
MR MOHAMED SULEMAN MAHOMED Y :

C h a ir it ’s a ls o w o r t h y t o

m e n ti o n a t th is p o i n t a n d w e w il l c o m e b a c k t o t h e c a lc u l a ti o n s o f a l l o f

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16 MAY 2019 – DAY 94
t h e v a l u e s e t c e t e r a , b u t it ’s a l s o n e c e s s a r y t o m e n t io n w e h a v e d e a l t
w i t h w h a t w e c a l l th e N e d b a n k s w a p s , w h ic h w a s t h e Z A R C l u b L o a n
w h ic h w a s in a fl o a t in g r a te in i ti a l ly th a t w a s c o n v e r t e d t o t h e s e t w o
tr a n c h e s o f fix e d .

T h e r e w e r e a l s o o th e r tr a n s a c t i o n s t h a t w e r e th e n

c o n v e r te d i n t o – fr o m fl o a ti n g t o fix e d .
CHAIRPERSON :

B e f o r e w e g o t o o t h e r tr a n s a c t io n s I t h i n k i t i s

c o n v e n i e n t f o r u s to t a lk a b o u t , t o g o b a c k to R a m o s e b u d i .

Now you

remember that I asked you whether Mr Ramosebudi got the approvals
t h a t h e w a s a s k i n g fo r b y w a y o f t h a t e m a il , a n d y o u s a i d p a r tl y y e s
10

p a r t ly n o , a n d I t h i n k y o u s a i d w h a t y o u g o t r e l a t e d to h e d g i n g . I j u s t
w a n t u s t o g o b a c k , i s i t 4 6 . ..
MR MOHAMED SUL EMAN MAHOM EDY : 457.
CHAIRPERSON :

Okay thank you.

Yo u s e e h e w a s a s k i n g , t h a t

m e m o r a n d u m w a s a d d r e s s e d to M r P i t a a n d i n p a r a g r a p h o n e u n d e r t h e
h e a d i n g “ p u r p o s e ” h e s e ts o u t t h r e e i s s u e s i n r e s p e c t o f w h ic h h e w a s
s a y in g h e w a s s e e k i n g a p p r o v a l , o k a y a n d a g a in t h e o n e i s th e h e d g i n g
o f t h e i n te r e s t r a te r i s k e x p o s u r e fr o m a f lo a t f o r f ix e d b a s i s f o r t h e
a m o u n t o f R 1 2 b il li o n , t w o , t o i n s tr u c t R e g i m e n ts C a p i ta l a s p e r t h e
1 0 6 4 l o c o m o t iv e s m a n d a t e to e x e c u t e t h e h e d g e s w it h Tr a n s n e t
20

a p p r o v e d c o u n t e r p a r ts .

Th r e e , t h e e x e c u ti o n c o s t o f h e d g e s b y

R e g i m e n t s C a p i t a l w il l b e a l l in c l u s iv e i n th e r a t e o f t h e in t e r e s t r a t e
swap.
N o w w h e n y o u g o t o th e e n d o f t h e – o r t o th e l a s t p a g e a t
p a g e 4 6 0 i t s a y s c o m p i l e d b y a n d t h e n y o u ’v e g o t h is n a m e a n d h i s
s ig n a tu r e , a n d t h e n b e l o w t h a t i t s a y s a p p r o v e d / n o t a p p r o v e d a n d t h e n

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16 MAY 2019 – DAY 94
b e l o w t h e r e i s a s ig n a tu r e f o r Mr G a r y P it a a n d h is n a m e a n d th e p a r t
t h a t i s c r o s s e d o u t s e e ms t o b e t h e n o t a p p r o v e d p a r t w h ic h s u g g e s ts
t h a t h e w a s a p p r o v in g , h e w a s b e i n g g iv e n a n o p p o r t u n i ty t o s a y h e is
n o t a p p r o v in g o r s a y i n g h e a p p r o v e s , a n d h e s e e m s t o h a v e s a i d I
approve.
N o w t h a t s e e ms to m e t o s u g g e s t th a t h e is a p p r o v in g
e v e r y t h i n g fo r w h ic h a p p r o v a l w a s b e in g s o u g h t fr o m h i m , a n d i f t h a t
in t e r p r e t a ti o n o f t h e m e m o is c o r r e c t t h a t m e a n s h e a p p r o v e d a ll t h e
t h r e e i t e m s t h a t Mr R a m o s e b u d i s e t o u t u n d e r t h e h e a d in g “ p u r p o s e ” .
I t m a y b e t h a t th e r e a s o n w h y y o u a n s w e r e d m y q u e s ti o n t h e

10

w a y y o u d id is b e c a u s e u n d e r r e c o m m e n d a ti o n i n p a r a g r a p h 2 4 m a y b e
t h a t m i g h t n o t h a v e b e e n w i d e e n o u g h i n y o u r v i e w t o c o v e r a ll t h e
t h r e e p u r p o s e s , I’ m n o t s u r e . I s t h a t t h e r e a s o n w h y y o u a n s w e r e d th e
way you answered?
M R M O H A M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
CHAIRPERSON : Ja.
MR MOHAMED SULEMAN MAHOMED Y :

I t h i n k th a t ’s t h e k e y r e a s o n

b e c a u s e w h e n w e a t Tr a n s n e t p r e p a r e a m e m o th e r e q u i r e m e n t is th a t
whatever
20

you

want

must

be

very

e x p l ic i tly

s t a te d

under

the

r e c o m m e n d a ti o n .
C H A I R P E R S O N : Ye s , b u t y o u a c c e p t . . .( i n t e r v e n t io n )
M R M O H A M E D S U L E M A N M A H O M E D Y : I a c c e p t.
CHAIRPERSON :

Th a t t h e r e m a y b e a d i ffe r e n t i n t e r p r e ta t io n th a t

a p p r o v a l f o r a l l t h r e e i te m s w a s g r a n te d .
MR

MOHAMED

SULEMAN

MAHOMEDY :

Page 49 of 182

I

a c t u a ll y

agree

that

16 MAY 2019 – DAY 94
t e c h n ic a l ly a ll , w h a t e v e r w a s r e q u e s te d i n t h e m e m o w a s a p p r o v e d .
C H A I R P E R S O N : Ye s , y e s , o k a y, th a n k y o u .
ADV PHILLIP MOKOENA SC :

Now Mr Mahomedy before you proceed

w i t h t h e o t h e r r e l e v a n t f a c ts i n y o u r – a n d u n d e r t h a t h e a d i n g , m a y I
r e fe r y o u t o p a g e 4 6 5 , C h a i r t h a t is u n d e r f o l d e r n u m b e r 2 5 .
CHAIRPERSON : 25?
A D V P H I L L I P M O K O E N A S C : 2 5 , ju s t t o c o m p le t e th e e v id e n c e o f M r
M a h o m e d y p e r t a i n i n g t o t h e s e q u e n c e o f e m a i ls t h a t p a s s e d b e tw e e n
t h e p a r t ie s a n d I t h in k t h a t o n p a g e 4 6 5 y o u m i g h t h a v e o m i t t e d a n
10

i m p o r t a n t e m a i l i f y o u l o o k r i g h t a t t h e b o tt o m o f t h a t p a g e y o u m a y
w i s h to in d i c a t e to th e C h a i r a s t o w h o w r o te t h a t e m a i l a n d t o w h o m
w a s h e w r i t in g t o , a n d w h a t d i d h e s a y, a n d y o u c a n t ie i t u p w it h w h a t
it c o n v e y e d t o th e C h a ir.
MR MOHAMED SULEMAN MAHOMEDY :

T h a n k y o u A d v o c a t e . I t h in k

. . .( i n te r v e n t io n )
C H A I R P E R S O N : W e a r e o n 4 6 4 , is th a t c o r r e c t ?
ADV PHILLIP MOKOENA SC : 465.
MR MOHAMED SUL EMAN MAHOM EDY : 465.
C H A I R P E R S O N : 4 6 5 , o k a y.
20

ADV PHILLIP MOKOENA SC:

A t t h e b o tt o m , th a t is th e l a s t e m a il

appearing there.
C H A I R P E R S O N : Ye s o k a y.
M R M O H A M E D S U L E M A N M A H O M E D Y : C h a ir p e r s o n th is e m a i l is f r o m
M r R a m o s e b u d i, P h e to l o R a m o s e b u d i o f Tr a n s n e t to M r M o s s B r ic k m a n
b e c a u s e t h e e m a il a d d r e s s e s a r e e x a c t ly t h e s a m e , m o s s b @ n e d b a n k ,

Page 50 of 182

16 MAY 2019 – DAY 94
t h is o n e i s @ n e d b a n k c a p i ta l , o n t h e 1 6 t h o f M a r c h 2 0 1 6 a t 3 : 1 4 p m . T h e
c o n v e r s a ti o n is :
“Hi Moss,
I n te r m s o f t h e i n te r e s t r a t e s w a p tr a n s a c ti o n s e n t e r e d i n t o
with Nedbank on or about 8 March 2016 I am aware that these
tr a d e s p r ic e d a t p u r e m i d - m a r k e t r a t e o f a p p r o x i m a t e l y 11 .4 2 %
NACQ.

I a m f u r t h e r a w a r e a n d a g r e e t h a t th e s e tr a d e s w e r e

e x e c u te d a t a l e v e l o f 1 2 . 3 7 % N A C Q , w h i c h r e s u l ts i n a
d i ff e r e n c e o f 9 5 b a s is p o i n ts o v e r m i d - m a r k e t v a l u e . ”
10

T h i s is M r R a m o s e b u d i t h e n c o n f ir m i n g t o M r Br ic k m a n i t i s a c o p y a n d
p a s t C h a ir o f t h e e x a c t p a r a g r a p h o n p a g e 6 4 i n w h ic h M r B r ic k m a n
w r o t e t o M r R a m o s e b u d i r e q u e s ti n g w h e r e h e s a y s f o r e a s e e s s e n ti a l ly
t h e y a r e l o o k i n g f o r s o m e t h i n g a lo n g th e s e li n e s , s o e x a c t ly w h a t i s i n
in v e r t e d c o m m a s i s c o p i e d a n d p a s t e d b y M r R a m o s e b u d i t o M r
B r ic k m a n a n h o u r a n d a h a l f o r a n h o u r fo r ty f o u r m i n u t e s la t e r.
A D V P H I L L I P M O K O E N A S C : W o u ld t h a t h a v e b e e n . .. ( i n te r v e n t io n )
CHAIRPERSON :

I t m a y b e t h a t c o p y a n d p a s t e is c o r r e c t b u t

e ffe c t iv e l y w h a t h e d o e s , th a t is M r R a m o s e b u d i is to g iv e M r B r i c k m a n ,
M o s s Br ic k m a n , e x a c tly t h e w o r d i n g t h a t h e k n o w s M r B r ic k m a n w il l b e
20

h a p p y w i t h , is t h a t c o r r e c t ?
M R M O H A M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
CHAIRPERSON : Ja, no change of anything.
MR MOHAMED SUL EMAN MAHOM E DY: No change.
C H A I R P E R S O N : J a , o k a y.
ADV PHILLIP MOKOENA SC:

W o u l d t h a t s w a p h a v e b e e n i n th e

Page 51 of 182

16 MAY 2019 – DAY 94
in t e r e s t o f Tr a n s n e t ?
MR MOHAMED SULEMAN MAHOMEDY :

C h a ir I t h i n k th e a d d i t io n a l

c o s t t h a t – b e f o r e I a n s w e r t h a t q u e s ti o n C h a ir I w o u ld li k e t o j u s t
e x p l a i n th a t t h e r e w a s a n o th e r s w a p a s w e ll , a n o th e r i n t e r e s t r a t e
swap.
C H A I R P E R S O N : O k a y, b e f o r e y o u d e a l w i t h a n o th e r s w a p j u s t t o m a k e
s u r e t h a t w e d o n ’ t lo s e tr a c k o f s o m e o f t h e t h i n g s , w e a r e s ti ll g o in g to
lo o k a t th e – a t w h a t e v e r d o c u m e n t M r R a m o s e b u d i m a y h a v e p r o v id e d
p u r p o r ti n g to b e a u th o r it y, is th a t r ig h t?
10

A D V P H I L L I P M O K O E N A S C : Ye s .
CHAIRPERSON : We’ve got such a docum ent?
M R M O H A M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
C H A I R P E R S O N : O k a y, a lr ig h t , o k a y, y o u m a y p r o c e e d .
M R M O H A M E D S U L E M A N M A H O M E D Y : C h a ir a s I e x p l a i n e d e a r li e r o n
t h is w a s a to t a l o f R 1 2 b il li o n in l o a n s , i t w a s e s s e n ti a lly t h e Z A R C l u b
L o a n t h a t w e h a d e n t e r e d in t o o n a f l o a t in g r a te o f r a t e s b e t w e e n 9 .0 3 %
a n d 9 . 2 7 % a t v a r i o u s t i m e s , t h i s e n tir e t r a n s a c ti o n w a s s w a p p e d w i th
N e d b a n k . C h a ir th e r e is a fu r t h e r R 11 . 3 b ill i o n w h ic h w a s e n te r e d i n t o
a s a s e p a r a te . . .( i n te r v e n t io n )

20

C H A I R P E R S O N : O k a y I ’ m s o r r y, I w a n t t o m a k e s u r e I f o l l o w, y o u s a y
t h is e n t ir e t r a n s a c t io n w a s s w a p p e d w i t h N e d b a n k , w e h a v e b e e n u s i n g
s w a p s o f a r i n t h e c o n t e x t o f a n i n t e r e s t s w a p , is th a t w h a t y o u a r e
t a lk in g a b o u t?
M R M O H A M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
C H A I R P E R S O N : O h , o k a y, i t ’s j u s t th a t y o u s a id t h e e n t ir e t r a n s a c t io n

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16 MAY 2019 – DAY 94
w a s s w a p p e d a n d I w a s n ’t s u r e i f i t s ti ll m e a n t t h e s a m e t h i n g a s
s w a p p in g a n in t e r e s t r a t e ?
A D V P H I L L I P M O K O E N A S C : I t ’s s t ill in t e r e s t r a te s .
MR MOHAMED SULEMAN MAHOMEDY :

M y a p o lo g i e s C h a ir, y o u a r e

100% .
C H A I R P E R S O N : J a , o k a y.
M R M O H A M E D S U L E M A N M A H O M E D Y : C h a ir p e r s o n t h e R 1 2 m i ll i o n in
lo a n s , th e i n t e r e s t r a t e s w a p w a s w i th N e d b a n k .

T h e r e w e r e c e r ta in

o th e r tr a n s a c ti o n s a s I p r o v id e d a n a n a ly s is e a r l ie r th is m o r n in g a g a i n
10

w h ic h i n v o lv e d E D C , Ex i m o f C a n a d a w i th I n v e s t e c , L ip f in , O m s fi n a n d
S t a n d a r d B a n k , w h e r e w e h a d e n t e r e d i n to t h e s e lo a n tr a n s a c ti o n s
b e t w e e n 2 0 1 4 a n d 2 0 1 5 , th e s e h a d e x i s t e d , t h e s e w e r e t r a n s a c t io n s
t h a t w e r e a lr e a d y i n p r o g r e s s . T h e s e w e r e th e n i n v o lv e d in a n in t e r e s t
r a te s w a p w i t h t h e Tr a n s n e t S e c o n d D e fi n e d P e n s i o n F u n d , w h i c h i s
c a l l e d f o r s h o r t t h e T S D P F.
R e g i m e n t s a s t h e i n t e r m e d i a r y.

Also by the way Chair executed with
T h o s e r a t e s w e r e c o n v e r te d b e t w e e n

t h e o r ig i n a l fl o a t in g r a t e s w e r e b e tw e e n 8 . 8 % a n d 9 . 9 % a n d th e y w e r e
c o n v e r te d a t b e t w e e n 11 .1 5 % a n d 1 2 . 0 7 % , a n d th o s e w e r e d o n e i n
March 2016 and April 2016.
20

C h a ir t h e k e y is s u e w i t h th e p e n s i o n fu n d s w a p s o r t h e i n te r e s t
r a te s w a p s t h a t w e r e d o n e w i t h th e p e n s i o n f u n d w a s t h a t a t t h e t i m e ,
w h ic h is p r i o r t o t h e p e n s io n f u n d i n t e r m s o f Tr a n s n e t p o l ic y d i d n o t
q u a li fy a s w h a t w e c a ll a n a p p r o v e d c o u n t e r p a r ty i n t e r m s o f w h e t h e r
w e c o u l d a c t u a lly b e d o i n g th is k in d o f tr a n s a c t io n w i t h t h e m .
T h e r e w a s a s u b s e q u e n t m a il th a t – a m e m o r a n d u m a g a in t h a t

Page 53 of 182

16 MAY 2019 – DAY 94
was signed by two or three people that said that it would be approved –
it w o u l d b e c o m e a n a p p r o v e d c o u n t e r p a r t y.

S a y in g t h a t C h a ir I t h i n k

o n e o f t h e k e y t h i n g s is t h a t t h e c a l c u l a ti o n a t t h e ti m e o f t h e
c o m m i s s io n a g a i n I u s e t h e w o r d c o m m i s s i o n l o o s e l y a n d t h a t w a s t h e n
p a i d o u t , c a l c u l a t e d a n d p a i d o u t b y th e p e n s i o n fu n d .
lo a n s t o ta ll y R 11 . 3 b i ll io n .

That was for

S o t h e i n te r e s t r a t e s w o p s f o r Tr a n s n e t

e ffe c t e d t w o d i ff e r e n t l o a n ty p e s t o t a lly R 2 3 .3 b il li o n . C h a ir t h e r e a s o n
t h a t b e c o m e s v e r y k e y is w h e n y o u h a v e t o d o t h e c a l c u la t io n s o f t h e
in c r e m e n t a l in t e r e s t .
10

A D V P H I L L I P M A K O E N A S C : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY :

I t i s q u it e s i g n i fic a n t .

But

ju s t b e f o r e w e g o in t o t h e c a lc u l a t io n s o f th e i n te r e s t a s it r e l a t e s to
m a n d a t e s C h a ir i t is a l s o q u i t e i m p o r t a n t t o n o t e th a t Tr a n s n e t b e in g a
p l a y e r o f s i g n i fic a n t n a tu r e in t h e fi n a n c i a l s e r v i c e s s e c t o r in t e r m s o f
lo a n s a n d f a c il i ti e s t h a t w e g e n e r a t e a n d c o m m e r c ia l p a p e r t h a t w e p u t
in t o t h e m a r k e t w e o r d i n a r i ly d o s e n d o u t to th e l o c a l a n d g l o b a l
b a n k i n g s e c t o r w h a t w e c a ll th e m a n d a t e f o r t r a d e s . A n d th is i s d o n e
a n n u a ll y. S o i n 2 0 1 4 a n d 2 0 1 5 a s p e r m y A n n e x u r e M S M 2 6 o n p a g e s
4 7 2 t o 4 7 6 C h a ir t h e s e a r e e x a m p l e s o f m a n d a t e le t t e r s t h a t w o u l d
20

h a v e g o n e th r o u g h t o v a r i o u s fi n a n c i a l i n s t it u ti o n s w h i c h c o n f ir m w h o
a r e t h e e m p l o y e e s th a t a r e m a n d a te d to a c t f o r Tr a n s n e t i n c e r ta i n
s p e c i f ic tr a n s a c ti o n s .
C H A I R P E R S O N : L e t u s p ic k th e o n e o n p a g e 4 7 2 a n d ju s t r e a d fo r u s
w h a t d o e s i t s a y i n o r d e r fo r u s to u n d e r s t a n d w h a t y o u a r e t e s ti f y i n g
on?

Page 54 of 182

16 MAY 2019 – DAY 94
M R M O H A M M E D S U L E M A N M A H O M E D Y : I t is a m a n d a te fo r d o m e s tic
m a r k e t tr a d e r s .
“ T h e e m p l o y e e s o f Tr a n s n e t S O C L i m it e d in d i c a t e d
b e l o w a r e h e r e b y a u t h o r is e d i n t h e n o r m a l c o u r s e o f
t h e ir e m p lo y m e n t t o e n te r i n t o c a p i t a l a n d m o n e y
market

tr a n s a c ti o n s

p a r t ic ip a t e

and

Johannesburg

deal
Stock

and

more

s p e c i fi c a ll y

in

bonds

li s t e d

Ex c h a n g e ,

on

to
the

repurchase

a g r e e m e n ts , m o n e y m a r k e t in s tr u m e n ts a n d in t e r e s t
10

r a te d e r i v a t iv e s o n b e h a l f o f Tr a n s n e t S O C L i m it e d .
W i th in t h e li m i ts s e t o u t i n th e d e l e g a t io n o f a u t h o r i ty
fr a m e w o r k a n d o r t h e f in a n c ia l r is k m a n a g e m e n t
fr a m e w o r k a s a p p r o v e d b y t h e Tr a n s n e t Ex e c u tiv e
C o m m i t t e e o r b o a r d o f d ir e c t o r s . I t p r o d u c e s … ”
O r i t g o e s o n t o n a m e t h e p e o p l e , p r o v id e s t h e ir Id e n ti ty n u m b e r a n d
t h e s i g n a t u r e o f t h e r e l e v a n t in d i v i d u a l . A n d t h e n i t s a y s :
“Thus

done

and

signed

at

Johannesburg

in

a c c o r d a n c e w i t h t h e Tr a n s n e t d e l e g a ti o n o f a u t h o r i ty
fr a m e w o r k .”
20

I t is s ig n e d b y t h e G r o u p Tr e a s u r e r a t t h e t i m e a n d t h e n c o u n t e r s i g n e d
b y th e G r o u p C h i e f F in a n c ia l O ffic e r a t t h a t t i m e . I n 2 0 1 4 a n d in 2 0 1 5
it w a s s i g n e d b y th e th e n C F O ’s o r th e t h e n C F O b o t h o f t h e m b y M r
A n o j S i n g h . T h e 2 0 1 5 d o c u m e n t o n 4 7 3 is s ig n e d b y Mr R a m o s e b u d i o n
the 12 May 2015.
CHAIRPERSON:

I s e e I a m tr y i n g t o s e e t h e d a te o f t h e d o c u m e n t

Page 55 of 182

16 MAY 2019 – DAY 94
it s e l f a t 4 7 2 a n d I d o n o t s e e a n y d a t e o th e r t h a n t h e d a te o n w h ic h M r
A n o j S in g h s i g n e d it . I h a d e x p e c te d t h a t w h e r e i t s a y s ‘ th u s d o n e ’ th a t
w o u ld g iv e a d a t e . S o a r e y o u – w h e n y o u s a y i t is a 2 0 1 4 d o c u m e n t
s i m p l y b e c a u s e M r A n o j Si n g h ’s s i g n a t u r e in d i c a t e s t h a t h e s i g n e d i t o n
t h e d a t e g iv e n t h e r e w h i c h is o n t h e – i n 2 0 1 5 / 1 4 ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
C H A I R P E R S O N : O k a y.
ADV PHILLIP MAKOENA SC :

Now Mr Mahomedy I do not understand

t h a t if t h e r e a r e th o s e m a n d a t e s t h a t a r e s e n t t o l o o k t o f i n a n c ia l
10

in s t i tu t io n a n d i n t e r n a t io n a l in s t i tu t io n s h o w w o u l d o n e f i n d R e g i m e n ts
tr a d i n g o n b e h a l f o f Tr a n s n e t i n t h o s e m e d i a t r a n s a c t io n s t h a t w e h a v e
a c t u a ll y c a n v a s s e d ?
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir t h a t c a n o n ly b e t h e

c a s e i f s p e c i fic d e l e g a ti o n o r m a n d a te w a s p r o v i d e d t o R e g i m e n ts to
e x e c u te a p a r ti c u l a r t r a n s a c t io n . L a te r o n i n m y t e s t i m o n y I t a l k a b o u t
t h e c o n c e r n s a s it r e la t e s t o Tr a n s n e t p r a c t ic e a n d Tr a n s n e t p r o c e s s e s
a n d Tr a n s n e t fr a m e w o r k s a s it r e la t e s to a ll o f t h e s w o p tr a n s a c ti o n s . I
t h i n k w e – s a v e to s a y t h a t o u r f in a n c i a l r is k m a n a g e m e n t fr a m e w o r k s
a n d d e l e g a t io n s e t c e t e r a d o n o t a ll o w f o r t h ir d p a r ti e s t o b e e x e c u ti n g
20

o n Tr a n s n e t’s b e h a l f . U n l e s s t h e r e w a s a s p e c i f ic d e l e g a t io n g iv e n o r a
s p e c i f ic m a n d a t e t h a t w a s g i v e n to R e g i m e n ts .
A D V P H I L L I P M A K O E N A S C : Ye s .
CHAIRPERSON :

B u t i f Tr a n s n e t h a d a p r a c t ic e o f s e n d in g o u t th e s e

m a n d a t e s th a t w o u l d m e a n th a t a n y b o d y w i th i n t h e r e l e v a n t m a r k e t,
a n y b o d y o f s i g n i f ic a n c e w o u l d b e a w a r e t h a t t h e r e w o u ld b e s p e c i f ic

Page 56 of 182

16 MAY 2019 – DAY 94
p e o p l e th a t Tr a n s n e t w o u l d h a v e m a n d a t e d t o d o c e r t a i n th i n g s a n d
t h e r e f o r e th e y w o u l d b e fo r e e n g a g in g w i t h a n y b o d y o n e w o u ld e x p e c t
them to double check whether that person is somebody who is
m a n d a t e d b y Tr a n s n e t t o d o t h a t . O b v i o u s l y i f t h a t p e r s o n ’s n a m e d o e s
n o t a p p e a r i n t h e m a n d a t e s u c h a s t h is b u t h e o r s h e i s a b l e t o p r o d u c e
a s p e c i a l m a n d a te o r a u t h o r is a ti o n th e n a n d t h a t a u t h o r is a ti o n i s s e e n
a s l e g i t i m a te b y t h e t h ir d p a r t y t h e n t h e y c o u ld c o n ti n u e b u t t h e
q u e s t io n w o u l d – o n e w o u ld e x p e c t th e t h ir d p a r ti e s to w a n t t o c h e c k
w h e t h e r th e y a r e d e a l i n g w i th s o m e b o d y w h o s e n a m e a p p e a r s in a
10

d o c u m e n t s u c h a s th is .
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir t h a t is a c c u r a t e .
CHAIRPERSON : Hm.
MR MOHAMM ED SULEMAN MAHOMEDY: And I think more so.
CHAIRPERSON : Hm.
MR

MOHAMMED

SULEMAN

MAHOMEDY :

In

the

case

of

the

s ig n if ic a n c e o f th is v a lu e a n d th is tr a n s a c t i o n .
CHAIRPERSON : Hm, hm.
MR MOHAMMED SULEMAN MAHOMED Y :

So I think I agree with you

C h a ir.
20

CHAIRPERSON : Thank you.
ADV PHILLIP MAKOENA SC :

Ye s .

May I – May I take you back to

p a g e 2 0 o f y o u r s t a t e m e n t a n d s i m p l y t o c la r i fy o n e o r t w o is s u e s
arising from there?

Yo u h a v e t e s ti fi e d a b o u t a n u m b e r o f in t e r e s t

s w o p s a n d o th e r s y o u a r e r e fe r e n c in g in t h o s e r e le v a n t p a r a g r a p h s ,
p a r a g r a p h 5 . 6 . 5 a n d 5 . 6 .6

and you

a ls o

Page 57 of 182

mentioned the

others.

16 MAY 2019 – DAY 94
Fi n a n c i a lly w h a t d o e s i t m e a n to Tr a n s n e t w h e n t h e s e s w o p s a r e
e x e c u te d fr o m t i m e t o t i m e ? H a v e y o u e v e r c o m p u t e d a s to h o w m u c h
d i d Tr a n s n e t l o s e ?
MR MOHAMM ED SULEMAN MAHOM EDY: Chair yes we have done the
c o m p u ta t io n . I w o u l d li k e t o j u s t e x p l a i n th e c o m p u t a ti o n .
A D V P H I L L I P M A K O E N A S C : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY :

I f i t – i f I a m a ll o w e d t o .

T h e f ir s t t h i n g is t h a t w h e n y o u d o a n i n t e r e s t r a te s w o p y o u a r e
e s s e n ti a l ly l o o k in g a t t h e fu t u r e o f in t e r e s t r a te s a s c o m p a r e d t o w h e r e
10

y o u a r e . A s I e x p l a i n e d e a r l ie r o n . W h ic h m e a n s t h a t i f t h e a g r e e m e n t
w a s s ig n e d a t I a m u s i n g a n a r b i tr a r y n u m b e r o f 9 .5 % f lo a ti n g a t a p o i n t
in ti m e a n d w e t h e n e n g a g e a t 1 2 % a s l o n g a s th a t r a t e s t a y s a t 9 . 5 y o u
w i ll h a v e a 3 . 5 % d e f ic it a n d y o u w il l b e a l w a y s p a y in g 2 . 5 % mo r e . B u t
o n e h a s t o o b v io u s ly a l w a y s m a t c h th is b e c a u s e t h e c u r v e s th e in t e r e s t
r a te s d o c h a n g e . Yo u r fix e d w il l b e e x a c t ly t h a t i t is fix e d a n d a s t h e
f o r w a r d v i e w g e ts ta k e n o n a n in t e r e s t r a t e a n d y o u h a v e in t e r e s t r a te
in c r e a s e s i n th e m a r k e t e t c e t e r a th e d i ff e r e n t ia l w i ll b e l o w e r i f t h e
in t e r e s t r a te g o e s l o w e r th a n th e 9 .5 t h a t y o u o r i g i n a l ly w e n t a t th e n i t
w i ll b e g r e a t e r.

20

S o y e s i n t e r m s o f 5 .6 . 11 i n m y s t a t e m e n t w e

e n d e a v o u r t o e x p la i n …
A D V P H I L L I P M A K O E N A S C : I t is o n p a g e 2 1 C h a ir.
MR MOHAMMED SULEMAN MAHOMEDY : Page 21
A D V P H I L L I P M A K O E N A S C : Ye s .
MR MOHAMMED SULEMAN MAHOMED Y :

T h e d e c is io n t o s w o p f r o m

fl o a ti n g in t e r e s t r a t e s to fix e d i n te r e s t r a te h a s r e s u l t e d in th e fo ll o w i n g

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16 MAY 2019 – DAY 94
a d d it i o n a l in t e r e s t r a t e c o s t to Tr a n s n e t a n d t h is w a s a s o f t h e 2 5
February 2019.

A n d C h a ir t h e c o n t e x t t o t h a t i s th a t t h i s is t h e

d i ff e r e n t ia l b e t w e e n th e i n t e r e s t r a t e o v e r t h e la s t t h r e e o d d y e a r s w h e n
t h is w a s s i g n e d i n 2 0 1 5 D e c e m b e r to t o d a y t o th e 2 5 F e b r u a r y 2 0 1 9
ju s t o v e r t h r e e y e a r s . F o r th e N e d b a n k tr a n s a c ti o n s Tr a n s n e t h a s p a i d
a d d it i o n a l

i n te r e s t

of

R 7 8 5 .3

m i ll i o n .

For

the

Pension

Fu n d

tr a n s a c ti o n s Tr a n s n e t h a s p a i d a n a d d i t io n a l i n te r e s t o r p a id a d d i t i o n a l
in t e r e s t o f R 6 9 6 .6 m i ll io n .
ADV PHILLIP MAKOENA SC :
10

And this is on swops nothing more but

swops?
MR MOHAMMED SULEMAN MAHOMEDY :

Th is is ju s t o n t h e s w o p s .

T h i s is w h a t w e c a l l r e a lis e d l o s e s m e a n in g w e h a v e p a i d p h y s ic a l ly
r e a l is e d t h e s e p a r tic u la r l o s s e s . W e a ls o d o a c a l c u la t io n o f w h a t w e
c a l l t h e u n r e a lis e d lo s s m e a n i n g w h a t w e e s t i m a te w i ll b e t h e l o s s o f
in t e r e s t t o th e e n d o f t h e tr a n s a c ti o n .
C H A I R P E R S O N : D o e s t h is r e p r e s e n t a l o s s th a t Tr a n s n e t s a y s i t w o u l d
n o t o f i t p r o b a b ly w o u ld n o t h a v e i n c u r r e d h a d th e s w o p n o t h a p p e n e d ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir. I f t h e s w o p w a s
n o t e x e c u te d .
20

CHAIRPERSON : Hm.
M R M O H A M M E D S U L E M A N M A H O M E D Y : Th e n w e w o u l d n o t h a v e h a d
t h is p a r tic u la r c o s t , a d d it i o n a l c o s t.
CHAIRPERSON :

Ye s .

D o – h a v e y o u – I a s s u m e th a t i n o r d e r to

a n s w e r t h a t y o u w o u l d – in o r d e r t o b e a b l e to a n s w e r t h a t q u e s ti o n y o u
w o u ld h a v e b e e n – y o u w o u l d h a v e w o r k e d o u t e x a c t ly w h a t Tr a n s n e t

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16 MAY 2019 – DAY 94
w o u ld h a v e p a i d i f t h e r e h a d b e e n n o s w o p i n in t e r e s t r a te s a n d t h e –
a n d b e c a u s e y o u h a v e d o n e t h a t h o m e w o r k y o u a r e a b le t o s a y t h i s
lo s s w o u l d h a v e b e e n a v o i d e d ?
MR MOHAMMED SULEMAN MAHOMED Y :

Ye s C h a ir t h is is t h a t

homework that has been done.
CHAIRPERSON : YEs.
M R M O H A M M E D S U L E M A N M A H O M E D Y : To a c tu a lly lo o k a t
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMED Y:
10

W h a t d i d t r a n s p i r e o n th e

fl o a ti n g r a t e .
C H A I R P E R S O N : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : A n d a g a i n C h a ir I t h i n k i t is
a c r y s t a l b a l l th a t n o t e v e r y b o d y o w n s b u t i t is t a k in g a v ie w o n t h e
lo n g t e r m i n t e r e s t r a te s .
C H A I R P E R S O N : J a , ja .
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h e c o n tr a r y p o s i t io n t o th is
is o n e w o u l d s a y w e l l y o u k n o w i t w a s f ix in g t h e r a t e , i t w a s a ll o f t h e s e
g o o d th in g s t h a t t h e a d v a n t a g e s b e in g t h a t a s y o u p o i n t e d o u t e a r li e r
o n i t g iv e s y o u a – i t ta k e s a w a y t h e a v a i l a b il i ty e tc e t e r a . T h a t is in i ts

20

place.
CHAIRPERSON : Hm ja.
M R M O H A M M E D S U L E M A N M A H O M E D Y : H o w e v e r t h e k e y q u e s t i o n is
s h o u l d Tr a n s n e t h a v e g o n e in t o th e s w o p s a t a l l? A n d a s I m e n ti o n e d
t h e D e p u ty Tr e a s u r e r a t th e ti m e d i d n o t a g r e e w it h th e s w o p s .

The

c o n s e q u e n c e o f e n te r i n g i n t o t h e s w o p a g r e e m e n t i s a s I p o i n te d o u t i n

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16 MAY 2019 – DAY 94
t e r m s o f t h e r e a lis e d l o s s e s o f R 7 8 5 m il li o n w it h th e N e d b a n k
tr a n s a c ti o n a n d R 6 9 6 . 6 mi ll i o n w i t h th e Tr a n s n e t S e c o n d D e fi n e d
P e n s io n F u n d tr a n s a c t i o n .
C H A I R P E R S O N : T h a t i s a lt o g e t h e r a b o u t R 1 b i ll i o n w h a t ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : J u s t o v e r R 1 . 4 b il li o n C h a ir.
J u s t a b o u t – s o r r y my a p o lo g ie s . J u s t a b o u t R 1 .4 b i ll io n .
C H A I R P E R S O N : A b o u t R 1 .4 b i ll io n .
M R M O H A M M E D S U L E M A N M A H O M E D Y : A n d th a t i s t h e d i ffe r e n ti a l i n
t h e in t e r e s t r a t e b e t w e e n w h a t w a s f lo a ti n g , w h a t w e w o u l d h a v e p a i d .
10

CHAIRPERSON : Ja.
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ve r s u s w h a t w e a r e c u r r e n tl y
paying.
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY :

A n d t h a t is o n ly t o t h e 2 5

February 2019.
C H A I R P E R S O N : Ye s . A n d a s w e g o o n …
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h e s e c o n tr a c ts …
C H A I R P E R S O N : A n d a s w e g o o n y o u w i ll b e c a r r y i n g m o r e l o s s e s ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Th e s e c o n tr a c ts t e r m i n a t e i n
20

2 0 3 0 C h a ir.
C H A I R P E R S O N : Ye s o k a y, o k a y.
ADV PHILLIP MAKOENA SC:

I s e e t h a t C h a ir y o u a r e n o w v e n t u r i n g

in t o m a th e m a ti c a l c o m p u ta t io n .
C H A I R P E R S O N : Ye s .
ADV PHILLIP MAKO ENA SC : Despite what happened between us when

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16 MAY 2019 – DAY 94
M r Vo l m in k t e s t i fi e d .
CHAIRPERSON :

Ye s .

L e t u s t a k e t h e – l e t u s t a k e th e s h o r t

a d j o u r n m e n t a n d w e w i ll r e s u m e a t h a l f p a s t e l e v e n .
A D V P H I L L I P M A K O E N A S C : Ye s .
CHAIRPERSON : We adjourn.
I N Q U I RY A D J O U R N S
I N Q U I RY R E S U M E S
C H A I R P E R S O N : M r M a h o m e d y my w a tc h mi g h t b e a h e a d o f y o u r – o f
y o u r w a t c h . I t s a y s 2 9 m i n u te s to 1 2 n o w b u t I d id s a y i n t h e m o r n i n g
10

t h a t I w a s r e s p o n s i b le e a r li e r fo r a b o u t f iv e m i n u te s d e l a y i n o u r
s t a r ti n g a n d a ls o y e s t e r d a y a f e w m i n u t e s .

S o – b u t I d id s a y w e tr y

and improve.
M R M O H A M M E D S U L E M A N M A H O M E D Y : M y a p o l o g i e s C h a ir.
C H A I R P E R S O N : Ye s .
MR MOHAMM ED SULEMAN MAHOMEDY: I was …
C H A I R P E R S O N : Ye s . N o t h a t is fi n e . T h a n k y o u .
ADV PHILLIP MAKOENA

SC:

Mr Mahomedy

just

before

a d j o u r n m e n t y o u w e r e s ti ll d e a li n g w it h p a r a g r a p h 5 . 6 .11 .

the

tea

If you can

s u m m a r i s e w h a t y o u a r e c o n v e y i n g to t h e C h a ir p le a s e ?
20

MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir a s I s a i d th a t th e

fi g u r e s t h a t w e p r o v i d e d th e 7 8 5 m i l li o n a n d t h e 6 9 6 m i ll i o n i n w h a t w e
d e e m a s r e a l is e d l o s s e s . M e a n i n g t h a t b a s e d o n t h e i n fo r m a ti o n u p t o
2 5 F e b r u a r y th a t g a p b e t w e e n th e fl o a t i n g r a t e a n d t h e f ix e d r a t e h a s
not closed.

I t h a s n o t n a r r o w e d f o r u s to g a i n b e n e f i t fr o m t h is

tr a n s a c ti o n .

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16 MAY 2019 – DAY 94
A D V P H I L L I P M A K O E N A S C : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : I n a d d i ti o n …
C H A I R P E R S O N : ( In t e r v e n e s ) .
MR MOHAMMED SULEMAN MAHOMEDY:

W e a ls o d o a c a l c u l a t i o n o f

w h a t w e w o u l d c a ll t h e u n r e a lis e d p o r t i o n o f th e lo s s lo o k i n g f o r w a r d to
t h e e n d o f t h e c o n tr a c ts a n d t h e c a lc u l a ti o n s th a t w e h a v e p e r fo r m e d t o
d a t e s a y th a t th e r e w o u l d b e a n a d d i ti o n a l - b a s e d o n th e fo r w a r d
c u r v e s o f t h e i n tr a s ta t e a s w e l l. S o i t is n o t b a s e d o n t o d a y ’s r a t e . I t
is b a s e d o n th e fu t u r e p e r s p e c t iv e a s w e l l. W e h a v e a n u n r e a lis e d l o s s
10

o f a p p r o x i m a t e l y a f u r t h e r R 1 .8 b il li o n o n t h e s e t w o tr a n s a c ti o n s w h ic h
e s s e n ti a l ly m e a n s t h a t i f th i n g s s t a y a s t h e y a r e a n d t h e f o r w a r d c u r v e s
s t a y a s th e y a r e th e n Tr a n s n e t w il l b e – w h a t w e w o u l d c a l l – o u t o f t h e
m o n e y b y a n e s ti m a t e d R 3 .2 b i ll i o n o v e r th e 1 5 y e a r s .
CHAIRPERSON :

O f c o u r s e w h a t i s m o s t i m p o r ta n t t o c o n s i d e r w h e n

o n e l o o k s a t s u c h a – a b ig a m o u n t o f fi n a n c i a l l o s s t o Tr a n s n e t t h a t
a r o s e fr o m t h e d e c is i o n to s w a p fr o m a f l o a t in g in t e r e s t r a t e to a fi x e d
in t e r e s t r a te is t o w h a t e x t e n t th a t d e c i s i o n c o u l d b e s a i d t o h a v e b e e n
a s a r e s u l t o f n e g li g e n c e – m a y b e g r o s s n e g li g e n c e – o r i n c o m p e te n c e
o r a c r i m in a l a g e n d a . I n o th e r w o r d s it is i m p o r t a n t a s o n e l o o k s a t a l l
20

o f t h i s to b e a b l e t o s a y t o t h e e x t e n t t h a t m a k i n g t h e d e c is io n t o s w a p
fr o m a fl o a t in g i n te r e s t to a fix e d in t e r e s t w h ic h h a s n o w p r o d u c e d t h is
lo s s – f u tu r e l o s s f o r – f o r Tr a n s n e t.

Wa s t h is s i m p ly b e c a u s e

s o m e b o d y m a y h a v e m e a n t w h il e b u t ju s t g o t th in g s te r r i b l y w r o n g o r is
t h is a s i t u a t io n w h e r e o n e c a n s a y lo o k i n g a t t h e i n f o r m a t io n th a t w a s
a v a i la b le to t h e p e r s o n a n d l o o k i n g a t t h a t p e r s o n ’s e x p e r i e n c e a n d

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16 MAY 2019 – DAY 94
q u a li fi c a t io n s a n d c o m p e t e n c e i n t h e – t h is k in d o f a r e a t h a t d e c is i o n
c o u l d s i m p l y n o t h a v e b e e n m a d e b y s o m e b o d y w h o m e a n t w e ll f o r –
w a s t r y i n g t o l o o k a f t e r th e i n te r e s t o f Tr a n s n e t a s t h e y s h o u ld . S o –
s o – a n d it m a y w e l l b e th a t s i t t in g th e r e y o u y o u r s e lf m i g h t n o t b e a b l e
t o g o a s f a r a s a c e r ta in p o in t b u t y o u c a n o n l y g o u p t o a c e r t a in p o i n t
b u t i t i s i m p o r t a n t th a t I k n o w h o w f a r y o u c a n g o i n te r m s o f s a y i n g
w h e n I c r i ti c is e t h is d e c is io n I c r i ti c is e i t b e c a u s e I t h i n k t h e p e r s o n
w h o m a d e it w a s s o m e b o d y w h o h a d a n o t h e r a g e n d a o r y o u s a y I
c a n n o t g o th a t f a r b u t I t h i n k it w a s j u s t g r o s s ly w r o n g o r g r o s s ly
10

n e g li g e n t f o r a n y b o d y w i t h t h a t k in d o f e x p e r i e n c e w it h th o s e k in d o f
q u a li fi c a t io n s a n d in t h a t p o s i ti o n t o m a k e t h i s d e c is io n m a y b e i n t h e
li g h t o f w h a t o th e r p e o p l e w e r e s a y i n g o n t h e s a m e is s u e .
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir I t h i n k o n e h a s t o l o o k
a t i t v e r y c i r c u ms p e c tl y a n d w e h a v e r e v i e w e d a n u m b e r o f d o c u m e n ts
in t h i s r e g a r d a n d th e o v e r a l l m a n a g e m e n t o f t h e Tr e a s u r y fu n c t io n . It
is w o r t h y t o n o te i n t h i s p a r t ic u l a r tr a n s a c t io n th a t th e r e w e r e n o
Tr a n s n e t Tr e a s u r y O ffic i a l s in v o lv e d i n th e e x e c u t io n i n t h e c a lc u l a ti o n s
in t h e a s s e s s m e n t o f t h e s w a p s w h i c h i n it s e l f te lls a s t o r y o f in m y
h u m b l e o p i n i o n s o m e b o d y n o t w il li n g t o t a k e a r is k t h a t p e o p l e w il l

20

a c t u a ll y d o t h e c a lc u l a ti o n s a n d s a y n o .

T h a t i s t h e f ir s t p o in t .

Th e

s e c o n d p o i n t C h a ir i n r e v i e w in g t h e d o c u m e n t a ti o n o n e d o e s n o t g e t t h e
s e n s e t h a t w e a c t u a ll y c o n s i d e r e d a 1 5 y e a r p o s i t io n o n w h a t m a y o r
m a y n o t h a v e h a p p e n e d to t h e i n t e r e s t r a t e s f o r u s t o m a k e a n i n f o r m e d
d e c is i o n . A s p e r t h e m e m o r a n d u m t h a t w e d is c u s s e d C h a ir i t is c l e a r.
It says:

Page 64 of 182

16 MAY 2019 – DAY 94
“ We h a v e r e v i e w e d t h e s h o r t t e r m i n t e r e s t r a t e o n
t h e m e d i u m p e r io d .”
T h i s w a s a 1 5 y e a r t r a n s a c t io n w h ic h w o u l d h a v e r e q u ir e d a t b e s t fo r u s
t o ta k e a lo n g e r v ie w t h a n t w o a n d a h a lf y e a r s . T h e m e m o r a n d u m f r o m
M r S m i th i s a ls o v e r y c l e a r.

It says that he does not as the Deputy

Tr e a s u r e r w i t h s o m e b o d y w h o h a d a t th e t i m e – I t h in k - m o r e t h a n 3 0
years’ experience or about 30 years’ experience.

I t w o u ld n o t b e

o p p o r t u n e f o r s o m e b o d y t o ig n o r e th a t fo r t h e E x e c u tiv e s t h a t w e r e in
p l a c e . Yo u w o u l d h a v e h a d to h a v e c o n s id e r e d t h is . C h a ir o n e o t h e r
10

k e y p i e c e o f in f o r m a t io n i s t h a t Tr a n s n e t h a d n o t e x e c u te d a n i n t e r e s t
r a te s w a p fo r m a n y y e a r s w h ic h t h e n b e g s t h e q u e s ti o n w h y t h i s o n e –
w h y s u d d e n ly a n d o n e h a s t o d r a w t h e i n fe r e n c e th a t i t w a s d o n e to
b e n e fi t a n e n t i ty i n t h e l ik e o f R e g i m e n ts s p e c i fi c a ll y w i t h t h e
s ig n if ic a n t a m o u n t o f m o n e y t h a t t h e n f l o w e d t o R e g i m e n t s a r o u n d t h is
ti m e a n d t h a t is a s f a r a s I w o u l d g o i n te r ms o f m y a s s e s s m e n t b a s e d
o n t h e r e v ie w s t h a t w e h a v e u n d e r t a k e n . T h e is s u e s o f n e g li g e n c e o r
g r o s s – d e r e l ic t io n o f d u ty e tc e te r a w o u l d b e o n e f o r I g u e s s a n o t h e r
d a y b u t p r e s e n t e d w i th in f o r m a t io n o f t h is n a t u r e a t t h e t i m e a n d I
g u e s s o n e w il l a ls o s a y w e l l s o m e o f i t is i n h i n d s i g h t b u t f o r a b u s i n e s s

20

t h e s iz e o f Tr a n s n e t o n e is a lw a y s e x p e c t e d t o ta k e d e c is i o n s in t h e
in t e r e s t o f th e b u s i n e s s . T h e e n ti ty is a s ig n i f ic a n t p la y e r i n t h e S o u t h
A fr ic a n s p a c e b u t a l s o n o t j u s t i n i ts e l f b u t a ls o i n t h e s p a c e o f p u b l ic
funding.

S o i t w o u l d b e s o m e t h i n g t h a t y o u w o u l d h a v e e x p e c te d fo r

t h e E x e c u tiv e s t o h a v e o b t a i n e d m u l ti p le o p i n i o n s o n t h i s n o t t o h a v e
e x e c u te d b a s e d o n – r ig h t n o w i t is b a s e d o n o n e in d iv i d u a l t h a t w r i te s

Page 65 of 182

16 MAY 2019 – DAY 94
memorandums

to s a y

t h a t t h is i s w h a t I th i n k s h o u l d

happen.

M a g n i t u d e s o f t h e tr a n s a c ti o n s o f R 2 3 b i ll i o n s h o u l d h a v e b e e n
c o n s i d e r e d a l o t m o r e d il ig e n tly b y th e E x e c u tiv e s a t t h e t i m e – i n m y
v ie w C h a ir.
C H A I R P E R S O N : W e ll y o u – y o u s a y s o m e t h i n g t h a t is q u i t e s i g n i f ic a n t .
Yo u s a y n e g l i g e n c e a n d g r o s s n e g li g e n c e m i g h t b e f o r a n o t h e r d a y b u t
w h a t y o u d o s a y is i n y o u r v i e w w h e n y o u lo o k a t th e f a c t s a n d w h e n
y o u l o o k a t h o w t h i s c a m e a b o u t t h e s u r r o u n d i n g c i r c u ms t a n c e s y o u –
y o u in f e r th a t t h e p e r s o n w h o m a d e th is d e c is io n m a d e i t f o r th e b e n e f i t
10

o f R e g i m e n ts . I s t h a t c o r r e c t?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
CHAIRPERSON :

To a s s i s t – to a s s is t o r b e n e fi t R e g i m e n ts . I n o t h e r

words that would mean that that person did not seek to protect
Tr a n s n e t’s in t e r e s ts a t t h a t s t a g e a n d t h a t p e r s o n ’s – w h a t y o u a r e
s a y in g w o u ld s u g g e s t th a t th a t p e r s o n s o u g h t to b e n e fi t R e g i m e n ts
e v e n t o th e d e t r i m e n t o f Tr a n s n e t . S o I j u s t w a n t t o – t o m a k e s u r e th a t
I u n d e r s t a n d y o u w h a t y o u a r e s a y i n g w h e t h e r I u n d e r s ta n d y o u
c o r r e c t ly.
MR MOHAMMED SULEMAN MAHOMEDY:
20

C h a ir t h a t i s a – th a t is

c o r r e c t fr o m m y p e r s p e c t iv e .
C H A I R P E R S O N : Ye s . O k a y, t h a n k y o u .
A D V P H I L L I P M A K O E N A S C : Ye s . N o w i f w e c a n m o v e o n fo r y o u t o
s u m m a r i s e fo r u s t h e c o n t e n ts o f p a r a g r a p h s 5 .6 . 1 2 t o 5 . 6 . 1 4 o f y o u r
s t a te m e n t .
MR MOHAMMED SULEMAN MAHOMEDY:

C h a i r I th i n k i t i s n e c e s s a r y

Page 66 of 182

16 MAY 2019 – DAY 94
t o s a y t h a t – y o u k n o w – fo r w h a t w e c o u l d c a ll a n u n w i n d o f t h is
tr a n s a c ti o n f o r u s to a c t u a ll y g e t t o a p o s it io n w h e r e t h e s e l o s s e s …
C H A I R P E R S O N : I a m t e r r i b ly s o r r y M r M a h o m e d y a n d Mr M o k o e n a . I
ju s t w a n t to g o b a c k t o t h e q u e s t io n I a s k e d y o u j u s t a m i n u te a g o . Yo u
d i d n o t w a n t t o e x p r e s s a n y o p i n io n o n t h e is s u e s o f n e g li g e n c e o r
g r o s s n e g li g e n c e a n d t h a t – th a t is w h y y o u s a i d m a y b e t h a t is f o r
a n o t h e r d a y.
c o m m e n t o n it .

I j u s t w a n t t o m e n t io n t h i s to y o u a n d th e n y o u c a n
I f a p e r s o n w h o w a s m a k in g th e d e c is i o n th a t th e r e

s h o u l d b e a n i n t e r e s t r a t e s w a p w a s d o i n g s o i n o r d e r to a d v a n ta g e o r
10

e n s u r e b e n e fi t s to R e g i m e n ts a s o p p o s e d t o l o o k i n g a f t e r t h e i n t e r e s t
o f Tr a n s n e t . Th a t w o u l d e x c l u d e n e g li g e n c e b e c a u s e t h a t p e r s o n w o u l d
h a v e a n i n te n ti o n – w o u l d b e i n t e n d in g t o b e n e fi t R e g i m e n t s a s
o p p o s e d to Tr a n s n e t .

S o i n o t h e r w o r d s i t i s a – i t is a m u c h m o r e

s e r io u s c o n c l u s i o n to m a k e a g a i n s t th e m – a g a i n s t t h a t p e r s o n th a n t o
s a y m a y b e i t w a s n e g l ig e n c e o r c o m p e t e n c e .

That you understa nd?

Yo u h a v e n o p r o b l e m w i t h t h a t?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s t h a t is c o r r e c t C h a ir.
C H A I R P E R S O N : Ye s , o k a y t h a n k y o u .
M R M O H A M M E D S U L E M A N M A H O M E D Y : B u t j u s t to a ls o – s o r r y – t o
20

a d d t o t h i s I th i n k i t i s a ls o i m p o r ta n t – t h e o n e p o i n t t h a t is i m p o r t a n t
o r t w o o f t h e m C h a ir is th a t t h e s h o r t p e r io d o f t i m e b e tw e e n th e t i m e
w e e x e c u t e d t h e l o a n a n d e x e c u t e d t h e s w a p o n e h a s to q u e s ti o n w h y
d i d w e n o t th in k a b o u t e n te r i n g i n to a fi x e d l o a n – fix e d i n t e r e s t l o a n
u p fr o n t .
C H A I R P E R S O N : Ye s .

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16 MAY 2019 – DAY 94
MR MOHAMMED SULEMAN MAHOMEDY:

A s r e q u ir e d b y t h e d i c t a t e s

o f o u r fi n a n c i a l r is k m a n a g e m e n t fr a m e w o r k …
C H A I R P E R S O N : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : W i th in Tr a n s n e t .
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

It is n o t a d e c i s i o n t h a t y o u

should be making …
CHAIRPERSON : Hm.
M R M O H A M M E D S U L E M A N M A H O M E D Y : I n b e tw e e n a tr a n s a c t i o n …
10

C H A I R P E R S O N : Ye s , y e s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : O r in t e r m i t te n tl y.
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

I t s h o u l d a ls o f o r m p a r t o f

y o u r s tr a te g y.
C H A I R P E R S O N : Ye s fr o m t h e b e g i n n i n g ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Fr o m t h e b e g i n n in g …
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

Yo u s h o u l d h a v e a f u n d i n g

s tr a t e g y t h a t s a y s X a m o u n t w i ll b e f lo a ti n g . X a m o u n t w i ll b e f ix e d a n d
20

y o u w il l a d h e r e t o t h a t.
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

Now had we gone into that

tr a n s a c ti o n u p f r o n t w i th a p e r s p e c t iv e o f e n te r i n g in t o a f ix e d r a t e …
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

Page 68 of 182

Fo r t h a t p e r i o d o f ti m e w e

16 MAY 2019 – DAY 94
w o u ld h a v e a v e r y d i ff ic u l t d is c u s s io n to d a y.
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

The rates may have been

d i ff e r e n t . I d o n o t s a y i t w o u ld h a v e b e e n d i ff e r e n t . I t c o u l d h a v e b e e n
d i ff e r e n t .
C H A I R P E R S O N : Ye s , ja .
MR MOHAMMED SULEMAN MAHOMEDY:

B u t i t q u e s t i o n s t h e e n ti r e

p r o c e s s i n t e r m s o f w h y t h is w a s m a d e a n d a s I a l s o p r e s e n t e d C h a ir i t
w a s a ll d o n e …
10

CHAIRPERSON : Hm.
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h e d e c is i o n to c h a n g e f r o m
fi x e d to f lo a ti n g w a s d o n e i n a 2 4 /4 8 h o u r p e r i o d .
C H A I R P E R S O N : T h is w a s i n – th is w a s i n M a r c h 2 0 1 6 . Is th a t r ig h t ?
When the swap …?
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir t h e fir s t tr a n c h e w a s

in D e c e m b e r 2 0 1 5 .
C H A I R P E R S O N : D e c e m b e r, y e s .
MR MOHAMM ED SULEMAN MAHOMEDY: On 4 December 2015.
CHAIRPERSON :
20

Ye s a n d t h e – t h e e a r l i e r – t h e ti m e w h e n i t w o u l d

h a v e – t h e t h i n g w o u ld h a v e b e e n c o n s i d e r e d a s a lo n g t e r m v ie w w a s
h o w m a n y m o n th s e a r li e r th a n t h a t?
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir w e h a d a n u m b e r o f

d is c u s s io n s t h a t g o b a c k t o S e p t e m b e r / O c t o b e r 2 0 1 5 …
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

Page 69 of 182

W h e n th e l o a n s w e r e b e i n g

16 MAY 2019 – DAY 94
c o n c e p t u a l is e d a t t h e t i m e .
CHAIRPERSON :

Ye s .

S o – s o t h e – th e p o i n t y o u a r e m a k i n g – t h e

la t e s t p o in t y o u a r e m a k in g is th is t h a t w h e n – w h e n y o u w e r e
c o n s i d e r in g th e w h o le is s u e p a r t o f w h a t y o u w o u l d h a v e c o n s i d e r e d is
w h e t h e r t h e in t e r e s t r a t e r e g i m e th a t s h o u l d b e a p p l ic a b l e is a f ix e d
r a te - in t e r e s t r a t e r e g i m e o r a fl o a t i n g i n te r e s t r a t e r e g i m e a n d in
c o n s i d e r in g t h a t y o u w o u ld h a v e l o o k e d a m o n g o th e r th in g s a t th e l o n g
t e r m n a tu r e o f t h e tr a n s a c t i o n – 1 5 y e a r s a n d y o u w o u l d h a v e l o o k e d
a ls o a t t h e a m o u n t s i n v o l v e d a n d t h e n y o u w o u ld h a v e t a k e n a
10

d e li b e r a t e d e c is i o n t o g o o n e – o n e w a y o r a n o t h e r a n d i n t h i s c a s e y o u
t o o k t h e d e c i s i o n t o g o t h e r o u te o f a fl o a t in g i n te r e s t r a t e .

So the

p o i n t y o u a r e m a k in g is th a t tw o / t h r e e – t w o / t h r e e m o n t h s t h e r e a f te r a
d e c is i o n i s ta k i n g e a r ly D e c e m b e r b y o n e p e r s o n m a y b e t w o p e r s o n s .
O n e r e c o m m e n d – a s k i n g fo r a p p r o v a l a n o th e r o n e g r a n t in g th e
a p p r o v a l to c h a n g e t h a t a n d y o u m a k e t h e p o i n t. Yo u s a y b u t i f t h r e e
m o n th s o r s o e a r l ie r l o o k i n g a t a lo n g te r m v ie w a d e c is i o n w a s t a k e n t o
s a y t h e fl o a ti n g i n t e r e s t r o u t e – r a t e r o u te is t h e c o r r e c t o n e . I t s h o u l d
h a v e b e e n q u i t e d i ffic u lt t o c h a n g e i t w i t h i n s u c h a s h o r t ti m e . T h a t i s
w h a t y o u a r e s a y in g ?
20

M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s .
CHAIRPERSON : There should have been something very special.
MR MOHAMMED SULEMAN MAHOMEDY:

Ye s C h a ir. I t h i n k y o u r l a s t

p o i n t e v e r y t h i n g th a t y o u s a i d i s 1 0 0 p e r c e n t c o r r e c t b u t y o u r la s t p o in t
n e e d s a li t t le m o r e e x p l a n a t io n .
C H A I R P E R S O N : Ye s , y e s , y e s .

Page 70 of 182

16 MAY 2019 – DAY 94
MR MOHAMMED SULEMAN MAHOMEDY:

The

q u e s ti o n

is

what

changed.
CHAIRPERSON : What changed?
M R M O H A M M E D S U L E M A N M A H O M E D Y : F o r Tr a n s n e t.
C H A I R P E R S O N : W h a t w a s s o s p e c i a l to c h a n g e t h a t e a r l ie r d e c is i o n ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : C o r r e c t.
CHAIRPERSON :

And when you look at that memorandum from

M r R a m o s e b u d i a d d r e s s e d t o Mr P i ta a s k i n g f o r t h e a p p r o v a ls y o u s a y
y o u d o n o t f in d a n y t h i n g s p e c i a l i n
10

– in t h e c o n te n ts o f t h a t

m e m o r a n d u m t h a t w o u l d j u s t if y t h e c h a n g e ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir r ig h t u p t o 1 D e c e m b e r
…
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

W e a r e s ti ll i n t h e p r o c e s s

w i t h t h e f u n d i n g in s ti t u t i o n s t o p r o v i d e u s t h e m o n e y.
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

They

provide

it

on

1 December …
CHAIRPERSON: Hm.
20

MR MOHAMMED SULEMAN MAHOMEDY:

And

we

changed

t h is

s tr a t e g y o n 4 D e c e m b e r.
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:
or 3 December …
CHAIRPERSON : Hm.

Page 71 of 182

L it e r a l ly w i th in – o r t h e 2 n d

16 MAY 2019 – DAY 94
M R M O H A M M E D S U L E M A N M A H O M E D Y : W i th in a fe w d a y s .
CHAIRPERSON: Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

S o a s y o u v e r y s u c c in c tly

p o i n t o u t C h a ir fo u r o r fi v e m o n t h s b e f o r e t h a t …
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

W h y w a s t h e s tr a te g y n o t

reconsidered?
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:
10

W h y w a s t h e s tr a t e g y to g o

in t o f l o a t in g ? W h y d id it – w h a t o c c u r r e d ?
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

O r w h a t in f o r m a ti o n w a s

a v a i la b le t o w h o m th a t w o u l d a c t u a lly …
C H A I R P E R S O N : J a t h a t h a d n o t b e e n a v a il a b l e b e fo r e ?
MR MOHAMMED SULEMAN MAHOMEDY:

C o r r e c t b u t th a t is a v e r y

i m p o r t a n t q u e s ti o n y o u a s k e d C h a ir.
CHAIRPERSON :

H m a n d – a n d t h e p e r s o n s o r p e o p l e f r o m Tr a n s n e t

w h o h a d b e e n i n v o lv e d i n t h e e a r li e r d e c is io n to s a y l e t u s g o t h e
fl o a ti n g i n te r e s t r a t e r o u te w o u l d t h a t h a v e b e e n a n u m b e r o f d i ffe r e n t
20

p e o p l e w h o c a m e to t h a t d e c i s i o n ?
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir th a t tr a n s a c ti o n w a s

t h e C l u b L o a n . T h e r e w o u l d h a v e - I a s s u m e – th e r e w o u l d h a v e b e e n
in d i v i d u a ls …
CHAIRPERSON : Ja.
MR MOHAMMED SULEMAN MAHOMEDY:

Page 72 of 182

That

may

h ave

been

16 MAY 2019 – DAY 94
in v o lv e d in t h a t .
C H A I R P E R S O N : Ye s , y e s , y e s b u t – b u t t h e c h a n g e w a s m a d e b y … ?
MR MOHAMMED SULEMAN MAHOMEDY:

An

in d iv i d u a l

or

two

in d i v i d u a ls .
C H A I R P E R S O N : A n i n d iv i d u a l w i t h t h e a p p r o v a l o f a n o t h e r i n d iv id u a l /
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
C H A I R P E R S O N : Ye s , o k a y.
ADV PHILLIP MAKOENA SC:

B u t c o u p le d w i t h t h a t Mr M a h o m e d y

t h e r e w a s a c o m p r e h e n s iv e a d v ic e b y th e D e p u ty Tr e a s u r e r.
10

M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s .
ADV PHILLIP MAKOENA SC:

Who said that you cannot go on this

in t e r e s t s w a p i n th a t m a n n e r a n d t h a t a d v i c e w a s n e v e r ta k e n ?
MR MOHAMMED SULEMAN MAHOMEDY:

Th a t a d v ic e w a s n o t ta k e n

n o , a g r e e b u t I t h i n k C h a ir a s w e g o fu r t h e r w e w il l g iv e m o r e c o l o u r t o
w h a t p r o c e s s e s w i th i n Tr a n s n e t s h o u l d h a v e b e e n a p p li e d t h a t in o u r
v ie w w e r e n o t a p p li e d a s a r e s u l t o f b r i n g i n g in a n in t e r m e d ia r y li k e
Regiments.
ADV PHILLIP MAKOENA SC:

Yo u w e r e a t th e v e r g e w h e r e y o u w e r e

n o w s u m m a r i s i n g f o r u s th e c o n t e n ts o f p a r a g r a p h s 5 .6 . 1 2 t o 5 . 6 .1 4 .
20

MR MOHAMMED SULEMAN MAHOMEDY:

C h a i r a s w e s a id t h e r e i s

d i ff e r e n t c a s h f lo w s o v e r t h i s – t h e s e p a r ti c u l a r tr a n s a c t i o n s . H o w e v e r
if t h e i n te r e s t r a t e s w e r e t o m o v e in t h e w r o n g d ir e c ti o n a n d o n e
a s s u m e s t h a t Tr a n s n e t c a n r e c o v e r f r o m t h is p o s it i o n it w o u l d h a v e to
b e v e r y s i g n i f ic a n t b e c a u s e w e fir s t h a v e t o r e c o v e r t h e 1 .4 b il li o n t h a t
w e a r e o u t o f t h e m o n e y a lr e a d y a n d y o u w o u ld h a v e h a d to l o o k a t t h a t

Page 73 of 182

16 MAY 2019 – DAY 94
b e n e fi t a c c r u in g a l o t s o o n e r a n d w e d o n o t in t e r m s o f t h e c u r r e n t
tr e n d s a n d t h e c u r r e n t f o r w a r d p r o je c ti o n s t h a t i s n o t w h e r e w e t h i n k
t h is tr a n s a c ti o n w i ll c o n c lu d e i n a n y p r o f it t o Tr a n s n e t .

I must also

h a s te n t o p o i n t o u t t h a t a s I s a i d th e b e n e fic i a r y o f th e T S D P F
tr a n s a c ti o n is th e Tr a n s n e t S e c o n d D e f i n e d P e n s i o n F u n d .

We have

a ls o le a r n t th a t - a s I s a i d e a r li e r o n – t h a t t h e N e d b a n k s w a p – i n te r e s t
r a te s w a p w a s t h e n e ff e c ti v e ly – i f I c a n u s e t h e w o r d – f o r w a r d s o l d t o
t h e P e n s i o n F u n d a s w e ll . F o r t h e s e tr a n s a c ti o n s w e u n d e r s ta n d t h e 2 0
b a s e s p o in t f e e w a s i n c l u d e d i n th e r a t e s a s a f e e .
10

p a y a b le b y N e d b a n k .

W e s a y it is

I th i n k i t h a s b e e n c o n f ir m e d b y N e d b a n k t h a t

t h e y h a v e n o t p a id t h e f e e d ir e c tly.

H o w e v e r w e a r e lo o k i n g a t t h e

c a l c u l a ti o n t h a t h a s b e e n p r o v id e d b y R e g i m e n ts . A s I a ls o s a i d e a r l i e r
o n C h a i r fr o m t h e d o c u m e n ts t h a t w e r e v ie w e d R e g i m e n t s w e r e p a i d
R 2 2 7 m i ll io n b y t h e P e n s io n F u n d . N o w i t is a m a t t e r o f d e b a t e a s t o
w h e t h e r th e y w e r e p a i d t h e a m o u n t o r w h e th e r t h e y h a d e x tr a c te d t h e
amount …
A D V P H I L L I P M A K O E N A S C : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : A n d t h a t is s o m e t h i n g th a t is
u n d e r d e b a t e i n t h e c o u r ts .
20

CHAIRPERSON:

I s t h a t a b o u t w h e t h e r t h e y h e l p e d t h e m s e lv e s t o t h e

a m o u n t o r w h e th e r t h e y w e r e p a id b y – b y t h e P e n s i o n F u n d ? I s t h a t
w h a t – w h a t y o u a r e t a lk i n g a b o u t ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
C H A I R P E R S O N : O k a y.
ADV PHILLIP MAKOENA

SC:

Now

in

Page 74 of 182

r e la t io n

to

those

swap

16 MAY 2019 – DAY 94
tr a n s a c ti o n s y o u i d e n t if i e d c e r t a in ir r e g u l a r it i e s a n d y o u r a is e d s o m e o f
the concerns.

C a n y o u t a k e u s t h r o u g h t h o s e c o n c e r n s th a t y o u a r e

raising?
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir I t h i n k a s I m e n ti o n e d
e a r l ie r o n Tr a n s n e t h a d n o t e n t e r e d in t o a n y m a j o r in t e r e s t r a t e s w a p s
in t h e r e c e n t p a s t a n d th e d e c is i o n t o e n t e r i n t o a l o a n a g r e e m e n t o r
t h e d e c i s i o n t o e n t e r i n to a l o a n a g r e e m e n t w i th a fl o a t in g o r fix e d r a t e
s h o u l d h a v e t a k e n p l a c e a t i n c e p ti o n o f t h a t lo a n i d e a l ly. W h ils t th e r e
m a y b e c ir c u m s ta n c e s a n d th e s e a r e n o r m a l m a r k e t c o n d i ti o n s t h e
10

o u t lo o k o n t h e i n t e r e s t r a te d o e s n o t c h a n g e o n a d a i ly b a s is o r a
w e e k ly b a s i s .

I t is s o m e t i m e s – u n le s s y o u h a v e q u i t e a s i g n i fi c a n t

e v e n t th a t w i ll c r e a t e a s w i n g in th e m a r k e t c o n d i ti o n s . W e d id n o t s e e
t h a t i n th e th r e e d a y s o r in t h e t h r e e m o n th s b e fo r e t h a t .

I r e i t e r a te

a n d r e e m p h a s is e th e p o in t t h a t t h e Tr a n s n e t Tr e a s u r y Te a m h a d a n d
s t il l h a s t h e e x p e r t is e t o h a n d l e t h e s e t r a n s a c t io n s w h a t w e te r m v a n i ll a
tr a n s a c ti o n s . Th e s e a r e s to c k s ta n d a r d tr a n s a c ti o n s o r s to c k s t a n d a r d
swaps.

T h a t th e Tr a n s n e t d e a l in g r o o m w o u ld h a v e t h e e x p e r t is e t o

a s s e s s a n d e x e c u t e . I f u r th e r g o o n – o n p a g e 2 2 u n d e r 5 .6 . 1 5 .2 – t o
e x p l a i n w h a t t h e n o r m a l p r o c e s s s h o u ld h a v e b e e n w i t h i n Tr a n s n e t if
20

t h e s e s w a p s w e r e e x e c u t e d b y t h e Tr a n s n e t Tr e a s u r y Te a m .

In all

p r o b a b i li ty t h e y w o u l d h a v e l o o k e d a t th e tr a n s a c ti o n a n d t h e n d e c i d e d
h o w m a n y p a r ti e s s h o u l d h a v e p a r tic i p a t e d in t h e tr a n s a c ti o n u p fr o n t .
T h a t w o u l d d e p e n d o n w h a t is c a ll e d th e c o u n t e r p a r ty a p p e ti t e .

The

d e a li n g r o o m w i ll t h e n o b ta i n p r ic i n g f r o m c o u n te r p a r ti e s a n d d o a
m a tc h a n d u n d e r s t a n d a n d a s s e s s w h ic h e n ti ty p r o v i d e d t h e r i g h t p r i c e .

Page 75 of 182

16 MAY 2019 – DAY 94
N o w h o w is t h e r i g h t p r i c e d e te r mi n e d ?

T h e p r ic in g o b t a in e d u n d e r

5 .6 . 1 5 . 5 o n p a g e 2 2 C h a ir – p r i c i n g o b t a i n e d is a l w a y s b e n c h m a r k e d –
benchmarked

i n te r n a l ly

by

th e

d e a l in g

team

and

th e y

u t il is e

in d e p e n d e n t p r ic in g m o d e ls o f e n t it i e s l i k e R e u t e r s a n d B l o o m b e r g .
P o s t th e e v e n t – s o r r y C h a ir – n o n e o f t h e s e p r o c e s s e s w e r e fo ll o w e d
in t e r n a ll y a t Tr a n s n e t.

T h e d e a li n g r o o m w a s n o t i n v o l v e d .

They

e s s e n ti a l ly w e r e g iv e n t h e t r a n s a c t io n a f t e r th e c o n c lu s i o n t o s a y y o u
w i ll r e c o r d t h is p a r t ic u l a r tr a n s a c ti o n .

W h e n t h e y w e r e g iv e n t h is

p a r t ic u l a r …
10

C H A I R P E R S O N : A n d y o u h a v e n o t c o m e a c r o s s a n y d o c u m e n t in y o u r
r e v ie w o f t h e s e tr a n s a c ti o n w h ic h r e f l e c ts a n y e x p l a n a t io n b y t h e
p e o p l e c o n c e r n e d a s t o w h y th e s e p r o c e s s e s th a t w o u l d n o r m a lly h a v e
b e e n e x p e c t e d t o b e f o l lo w e d w e r e n o t f o l l o w e d ?
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir w e h a v e n o t c o m e

across any of that.
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

I n f a c t t o th e c o n tr a r y w e

h a v e d is c u s s e d th is w i th Tr a n s n e t Tr e a s u r y O ffi c i a l s a n d t h e d e a li n g
room …
20

CHAIRPERSON : Hm.
M R M O H A M M E D S U L E M A N M A H O M E D Y : I n d iv i d u a ls . Th e y r a is e d th is
as a concern.
CHAIRPERSON: Hm.
MR MOHAMMED SULEMAN MAHOMEDY:
w e w il l w o r k a r o u n d y o u .

T h e y w e r e t o l d th i n g s li k e

W e w il l w o r k a b o v e y o u .

Page 76 of 182

W e w il l w o r k

16 MAY 2019 – DAY 94
t h r o u g h y o u . T h o s e w e r e t h e k i n d s o f s t a t e m e n t s th a t w e r e m a d e w h e n
p e o p l e r a i s e d o b j e c t io n s t o s o m e o f t h e s e ty p e o f t r a n s a c ti o n s t o s a y
w h y i t i s t h a t w e a r e n o t b e i n g c o n s id e r e d …
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

F o r p r o v i d i n g o u r e x p e r t is e .

S o t o t h e c o n tr a r y i t w a s a c t u a ll y - in m y h u m b l e o p i n i o n – a n in t e n t t o
h a v e R e g i m e n ts e x e c u t e th e s e tr a n s a c ti o n s .
C H A I R P E R S O N : W e l l i f – i f th a t tr u e th a t s e e m s t o s a y d o n o t b o t h u s .
Yo u d o n o t m a t t e r.
10

M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir …
CHAIRPERSON :

I s - is th a t a fa ir i n te r p r e t a ti o n o f w h a t y o u

u n d e r s t a n d w a s t o ld t o t h e m ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a i r t o w a r d s t h e l a tt e r p a r t
o f y e s t e r d a y I m e n t io n e d t h a t t h e C h a ir m a n o f th e B o a r d h a d m a d e a
s t a te m e n t a t o n e o f t h e B o a r d m e e t i n g s s u g g e s ti n g th a t R e g i m e n t s h a d
g a i n e d a c c e s s t o o u r d e a li n g r o o m .
CHAIRPERSON : Hm.
ADV PHILLIP MAKOENA SC:
MR MOHAMMED SULEMAN MAHOMEDY:
20

An d w h e n I a d d r e s s e d t h a t

t o t h e o ff ic ia ls i n t h e d e a l i n g r o o m t h e y s a i d R e g i m e n ts n e v e r g a in e d
a c c e s s t o th e d e a li n g r o o m .
CHAIRPERSON : Hm.
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h e d e a li n g r o o m j u s t m o v e d
t o R e g i m e n ts .
CHAIRPERSON : Hm.

Page 77 of 182

16 MAY 2019 – DAY 94
MR MOHAMMED SULEMAN MAHOMEDY:

So

they

executed

the

tr a n s a c ti o n s o n Tr a n s n e t ’s b e h a l f a n d t h e d e a li n g r o o m t h e i n d iv id u a ls
were not engaged or …
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

C o n s u l te d i n a n y s h a p e o r

form.
C H A I R P E R S O N : A n d M r R a m o s e b u d i a n d M r Pi t a w o u l d h a v e b e e n p a r t
o f w h a t is c o n s i d e r e d t o b e th e d e a l i n g r o o m ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : N o C h a ir.
10

C H A I R P E R S O N : In – i n te r m s o f n o r m a l p r o c e s s e s a t Tr a n s n e t?
M R M O H A M M E D S U L E M A N M A H O M E D Y : N o C h a ir.
C H A I R P E R S O N : T h a t w o u ld – th e y w o u ld n o t b e p a r t o f th a t ?
MR MOHAMM ED SULEMAN MAHOMEDY: No they would not be part of
t h a t p r o c e s s . T h e r e is a m u c h f o c u s e d t e a m .
C H A I R P E R S O N : Ye s , y e s .
MR MOHAMMED SULEMAN MAHOMEDY:

Who works on – on these

ty p e o f tr a n s a c t i o n s .
C H A I R P E R S O N : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : I t is t h e d e a li n g r o o m …
20

C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

A n d t h e y w o u ld r e p o r t to

M r R a m o s e b u d i a s t h e d e p a r t m e n t a l s u p e r v is o r o r s u p e r io r …
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

A n d M r R a m o s e b u d i w o u ld

b e t h e d ir e c t r e p o r t o f M r P i ta a t t h e t i m e a n d M r P it a w o u l d n o t - a s

Page 78 of 182

16 MAY 2019 – DAY 94
t h e C F O – n o t n e c e s s a r il y h a v e a d i r e c t li n e w i th t h e Tr e a s u r y Te a m .
C H A I R P E R S O N : B u t i f – i f th e p e o p le i n t h e d e a l in g r o o m r e p o r t e d t o
M r R a m o s e b u d i th e n t h a t m e a n s M r R a m o s e b u d i w a s in c h a r g e o f t h e
d e a li n g r o o m o r w a s i n c h a r g e o f t h e p e o p l e i n t h e d e a l in g r o o m ?
MR MOHAMMED SULEMAN MAHOMEDY:

Ye s C h a ir h e w a s in c h a r g e

o f t h e p e o p le y e s .
CHAIRPERSON :

Ye s .

S o h e – h e m ig h t n o t o r d in a r il y h a v e b e e n

e x p e c te d t o b e p a r t o f a c e r ta i n t e a m m a y b e b u t h e w a s in c h a r g e o f
them …
10

M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
C H A I R P E R S O N : A n d t h e r e f o r e i f h e w a s i n c h a r g e o f t h e m I ta k e i t h e
w a s i n c h a r g e o f t h e d e a li n g r o o m .
MR MOHAMED SULEMAN MAHOMEDY :

Ye s , n o I a g r e e w it h y o u o n

t h a t C h a ir.
C H A I R P E R S O N : Ye s .
MR MOHAMED SULEMAN MAHOMED Y :

But you, yes, so it would

h a v e r e p o r te d to h i m . . .( i n t e r v e n ti o n )
C H A I R P E R S O N : J a , I w a s tr y i n g t o u n d e r s t a n d t h e c o n c e p t o f s a y i n g
t h e d e a l in g r o o m w e n t t o R e g i m e n ts , s o i f – b e c a u s e i f y o u s a y M r
20

R a m o s e b u d i w a s n o t p a r t o f th e d e a li n g r o o m t h e n I’ m w o n d e r in g h o w
d i d t h e d e a l in g r o o m g o t o R e g i m e n ts , b u t i f M r R a m o s e b u d i w a s i n
c h a r g e o f t h e p e o p le i n t h e d e a li n g r o o m t h e n m a y b e I u n d e r s t a n d w h a t
they meant.
MR MOHAMED SULEMAN MAHOMEDY :
. . .( i n te r v e n t io n )

Page 79 of 182

O k a y, n o y o u ’r e r i g h t

16 MAY 2019 – DAY 94
ADV PHILLIP MOKOENA SC :

T h e q u e s ti o n m i g h t b e w h ic h d e a li n g

r o o m , th e o n e a t M c K i n s e y o r t h e o n e a t Tr a n s n e t .
CHAIRPERSON :

N o , n o , th e – w h a t h e w a s s a y i n g w a s t h a t h e w a s

t o l d , w h a t M r M a h o m e d y w a s s a y in g w a s t h a t h e w a s to l d b y t h e p e o p le
in t h e d e a l in g r o o m t h a t t h e d e a l in g r o o m h a d g o n e t o R e g i m e n ts a n d I
c a n o n ly – in t h e c o n te x t o f h is e v id e n c e I c a n o n ly u n d e r s ta n d th a t t o
m e a n th a t s o m e b o d y o t h e r t h a n t h e t e a m t h a t n o r m a ll y fo r ms t h e
d e a li n g r o o m b u t s o m e b o d y e ls e c o n n e c t e d w i th t h e d e a li n g r o o m w e n t
t o R e g i m e n ts , o k a y a lr i g h t. S o m y u n d e r s t a n d in g i s c o r r e c t?
10

MR MOHAMED SULEMAN MAHOMEDY :
CHAIRPERSON :

C o r r e c t C h a ir.

O k a y th a n k y o u .

MR MOHAMED SULEMAN MAHOMEDY :

Chair I think 5.6.1.16 on

p a g e 2 2 w e s a y, “ p o s t t h e e v e n t o f t h e i n t e r e s t r a te s w o p p e d
tr a n s a c ti o n s in q u e s ti o n th e d e a l in g t e a m t h e n o b t a i n e d e x t e r n a l
in d i c a t iv e p r i c i n g fr o m o t h e r m a r k e t p a r t i c ip a n ts w h i c h s u g g e s t e d th a t
t h e m a r g in o n t h e s e c o n d ( in d i s ti n c t) o f t h e N e d b a n k s w o p tr a n s a c ti o n s ,
w h ic h w a s o n t h e 7 t h o f M a r c h 2 0 1 6 w e r e i n t h e r e g io n o f b e tw e e n 3 2
a n d 5 4 b a s is p o in t s h ig h e r a s c o m p a r e d t o q u o t e s r e c e i v e d . A t t h e e n d
o f th e tr a n s a c ti o n t h e d e a l in g r o o m w a s t h e n g i v e n t h e d o c u m e n ts t o
20

r e c o r d , s o m e o f t h o s e d e a l e r s d e c id e d to g o a n d c h e c k o n t h i s p r ic i n g
a n d t h e y f o u n d th a t t h e N e d b a n k p r i c i n g w a s b e t w e e n 3 2 a n d 5 4 b a s i s
p o i n t s h ig h e r th a n c o m p a r e d to q u o t e s r e c e i v e d .

Th is i s p r o b a b ly

d u e . . .( i n t e r v e n t io n ) .
CHARPERSON:

S o i n o t h e r w o r d s d o e s t h is m e a n t h a t s o m e b o d y i n

t h e d e a li n g r o o m o f Tr a n s n e t w e n t o u ts i d e to t e s t t h e q u o t e th a t w a s

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16 MAY 2019 – DAY 94
b e i n g a p p r o v e d b y t h o s e a b o v e t h e d e a l i n g r o o m t e a m a n d e s ta b l is h e d
t h a t t h o s e a b o v e th e m h a d a c t u a l ly r e c e i v e d d i ff e r e n t q u o te s s o m e o f
w h ic h w e r e 3 2 a n d 5 4 b a s is p o i n t s l o w e r t h a n th e o n e s th a t w e r e b e in g
approved.

I n o t h e r w o r d s o n e w o u l d h a v e e x p e c t e d th a t t h e y w o u l d

h a v e g o n e f o r a lo w e r o n e , i s t h a t r ig h t b u t t h e y ’ d g o n e f o r h ig h e r
ones?
MR MOHAMED SULEMAN MAHOMEDY :
CHAIRPERSON :

T h a t ’s c o r r e c t C h a ir.

O k a y w h i c h m u s t h a v e b e e n q u i t e s u r p r is i n g I w o u l d

g u e s s t o th e d e a li n g t e a m ?
10

MR MOHAMED SULEMAN MAHOMEDY :
CHAIRPERSON :

C o r r e c t.

O k a y.

MR MOHAMED SULEMAN MAHOMEDY :

Because they then said that

t h is is p r o b a b ly d u e t o t h e f a c t b o th t h e s w o p s w i t h N e d b a n k a n d t h e
p e n s i o n f u n d w a s s e c u r e d i n a n o n - c o m p e t i tiv e e n v ir o n m e n t a n d i n
a d d it i o n b o th o f th e s e s w o p s h a d t o i n c lu d e t h e fe e o f 2 0 b a s i s p o in ts
p a y a b le t o R e g i m e n ts .
CHAIRPERSON :

A n d t h a t p a y m e n t to R e g i m e n ts y o u w o u l d s a y w h e n

y o u – w h e n w e h e a r a b o u t i t w e m u s t r e m e m b e r th a t th e f e e s fo r
R e g i m e n t s , o r t h e c o m m is s i o n h a d a lr e a d y b e e n p r o v i d e d f o r e l s e w h e r e
20

e a r l ie r is th a t r i g h t?
MR MOHAMED SULEMAN MAHOMEDY :
CHAIRPERSON :

Ye s , t h a t ’s r i g h t .

O k a y.

MR MOHAMED SULEMAN MAHOMEDY :

C h a ir t h e p r e m i u m o r w h a t

w e c a l l t h e p r e m i u m o f 5 4 b a s is p o in t s o n t h is q u a n tu m o f d e b t o v e r 1 5
years represents an

approximate

a d d i t io n a l c o s t t o Tr a n s n e t o f

Page 81 of 182

16 MAY 2019 – DAY 94
2 4 6 m i lli o n r a n d o n a n e t p r e s e n t v a l u e a t th e ti m e o f t h e t r a d e a n d a
p r e m iu m o f 3 2 b a s is p o i n ts o v e r 1 5 y e a r s a p p r o x i m a te s 1 4 6 m i ll io n r a n d
o f a d d i ti o n a l c o s t to Tr a n s n e t o v e r t h e p e r i o d o n a n e t p r e s e n t v a lu e .
ADV PHILLIP MOKOENA SC :

A n d y o u c o n c lu d e o n t h a t to p i c w i t h

p a r a g r a p h 5 .6 . 1 6 c a n y o u p le a s e s u m m a r i s e i t fo r u s ?
MR MOHAMED SULEMAN MAHOMEDY :

C h a ir in th e l o c a l a d v is o r y –

a n d m y a p o lo g ie s t o t a k e u s a ll t h e w a y b a c k b u t i n th e l o c a l
tr a n s a c ti o n a d v is o r y c o n tr a c t w h i c h i n i t ia l ly w a s a c o n f i n e m e n t , a n d I
m a y h a v e s t a t e d y e s t e r d a y, it w a s a n o p e n t e n d e r b u t i t w a s a c t u a ll y a
10

c o n fi n e m e n t t h a t w e n t t h r o u g h a p r o c e s s a n d M c K i n s e y o r th e M c K in s e y
c o n s o r ti u m w a s s e l e c t e d a t t h a t p o i n t in t i m e .

The McKinsey

c o n s o r ti u m h a d p r o v id e d a s u b m is s i o n t o Tr a n s n e t a n d i t i n c l u d e d
N e d b a n k a s o n e o f t h e c o n s o r t iu m p a r t n e r s . W e a l s o d is c u s s e d t h e n ,
t h a t N e d b a n k – a n d I d r a w in f e r e n c e b y th e v a r i o u s c o m m u n ic a ti o n s
b e t w e e n Tr a n s n e t a n d M c Ki n s e y in f o r m i n g M c K i n s e y o f th e c o n f lic t o f
in t e r e s t th a t w a s i d e n t i fi e d o r p e r c e iv e d a t th e ti m e w h e r e N e d b a n k
r e q u e s t e d t o b e e x c u s e d fr o m t h e c o n s o r ti u m a s a r e s u l t o f th e m
c o n s i d e r in g t h e n e e d t o g e t i n to fu n d i n g tr a n s a c ti o n s l a te r o n i n t h e
tr a n s a c ti o n .
20

What

my

point

here

is

th a t ,

Nedbank

had,

e s s e n t ia ll y

s u b m i tt e d a b i d t o g e t h e r w i t h M c K in s e y a n d th e n l a t e r o n N e d b a n k w a s
r e p l a c e d w i t h R e g i m e n ts a s t h e p a r ty.

T h a t p e r c e iv e d c o n fl ic t w h i c h

e x i s te d w h e n N e d b a n k w it h d r e w w a s n o d i ff e r e n t , i n m y v i e w, t o t h e
c o n fli c t th a t e x is te d w h e n R e g i m e n ts b e g a n e x e c u t in g tr a n s a c ti o n s o n
Tr a n s n e t’s b e h a l f a s i t r e la t e d to t h e 1 0 6 4 f u n d i n g a n d I g o f u r t h e r to

Page 82 of 182

16 MAY 2019 – DAY 94
e x p l a i n t h is .

I n m y v ie w, i n 2 0 1 5 , R e g i m e n t s h a d l a r g e ly b e c o m e t h e

le a d c o n s o r t i u m p a r t n e r w i t h t h e e x i t o f M c K in s e y a t t h e ti m e .

Th e y

n o w p r o v i d e a d v ic e t h r o u g h th e ir a d v i s o r y s e r v ic e , th e y p r o v i d e
a d v is o r y s e r v i c e o n t h e f u n d in g p r o g r a m m e .

T h e y t h e n e x e c u te t h e

s w o p s f o r N e d b a n k a n d t h e T S D B F t h e in t e r e s t r a t e s s w o p s f o r
Tr a n s n e t a n d t h e c o u n te r p a r ty b e i n g N e d b a n k a n d t h e Tr a n s n e t S e c o n d
D e f in e d P e n s i o n F u n d a s t h e c o u n t e r p a r t i e s . R e g i m e n ts r e c e i v e s
s ig n if ic a n t p a y m e n t f r o m t h e T S D B F f o r t h is tr a n s a c ti o n .

Regiments

a ls o g e t s p a id f o r t h e a r r a n g i n g o f t h e C h i n a D e v e lo p m e n t B a n k l o a n
10

w h i c h w e s p o k e a b o u t e a r l ie r o f 1 6 6 m il li o n .
O n e o th e r fa c t, C h a ir, i s t h a t R e g i m e n t s a d i ff e r e n t c o m p a n y
n a m e w i th i n th e R e g i m e n t s s t a b le is a ls o t h e a s s e t m a n a g e r o r o n e o f
t h e a s s e t m a n a g e r ’s o f t h i s Tr a n s n e t S e c o n d D e fi n e d P e n s i o n F u n d .
S o t h e y a c te d a s a d v is o r to Tr a n s n e t , t h e y th e n a c t a s t h e e x e c u t o r o f
t h e tr a n s a c t i o n w i th N e d b a n k a n d Tr a n s n e t, o n th e o t h e r s i d e th e y ’r e
a c ti n g a s th e a s s e t m a n a g e r f o r t h e p e n s i o n f u n d a n d fo r m e C h a ir, in
m y o p in io n R e g i m e n t s w e r e c o n f lic t e d i n t h e ir f u n c ti o n s o n m a n y l e v e ls .
ADV PHILLIP MOKOENA SC :

A n d h a v i n g p a i d in a l l t h o s e d i ff e r e n t

roles.
20

MR MOHAMED SULEMAN MAHOMEDY :

I n t h e ir d i ff e r e n t r o le s th e y

w e r e b e i n g p a i d b y d i ff e r e n t e n t it i e s . S o m e o f th e m d ir e c t ly a n d o t h e r s
in - d ir e c tly w i t h th e i n c lu s i o n o f th e 2 0 b a s i s p o i n ts i n th e r a t e a n d I
t h i n k , t h a t f o r u s , lo o k in g a t th a t E x e c u t i v e s a c r o s s a l l o f t h e e n t it i e s
s h o u l d h a v e i d e n t if i e d t h is a s a n i m m e d i a te r e d f la g a n d a ls o C h a i r I
m u s t a l s o s t a te t h a t Tr a n s n e t is c o n d u c t i n g a d e t a il e d r e v i e w o f th is

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16 MAY 2019 – DAY 94
tr a n s a c t i o n w i t h t h e p e n s io n f u n d , t h e i m p l ic a t io n s t h e r e o f a n d a ls o t h e
e n t ir e p r o c e s s a r o u n d w h ic h s o m e o f t h e s e w e r e m a n a g e d a t th e t i m e
a n d s u b s e q u e n tl y w e h a v e a ls o i n t h e r e c e n t d a y s r e a d a b o u t a v e r y
s ig n if ic a n t t r a n s a c t io n t h a t w a s d o n e o n t h e 9 t h o f D e c e m b e r 2 0 1 5 , t h e
d a t e o n w h i c h a s p e c i f ic Fi n a n c e M in is t e r w a s r e m o v e d a n d a n o t h e r
a p p o i n t e d w h i c h , i n s o m e e s s e n c e f r o m t h e i n f o r m a t io n t h a t w e
c u r r e n tly h a v e i m p a c t s th e Tr a n s n e t S e c o n d D e fi n e d P e n s i o n F u n d a s
w e ll .

S o t h e t o t a l f lo w o f th is C h a ir, is s ti l l a m a t t e r t h a t is u n d e r

r e v ie w fr o m Tr a n s n e t ’s p e r s p e c t iv e .
10

ADV PHILLIP MOKOENA SC :

C a n w e n o w m o v e o n t o d e a l w i th t h e

1 0 6 4 l o c o m o t iv e d e f e r r a l o p ti o n s s t a r ti n g fr o m p a r a g r a p h 5 .7 o f y o u r
s t a te m e n t a n d f ir s t ly g i v e u s a b a c k g r o u n d f a c ts p e r t a i n i n g to t h a t
deferral.
MR MOHAMED SULEMAN MAHOMEDY :

During the latter part of 2015

t h e s i g n in g o f t h e 1 0 6 4 c o n tr a c t – n o w t h e c o n s e q u e n c e s o f th is w e r e
b e i n g f e l t i n th e b u s i n e s s i n th e s e n s e t h a t w e h a d p a id , a s I s ta t e d a t
t h a t t i m e , s i g n i fic a n t u p fr o n t d e p o s i t s w i t h n o t m a n y lo c o m o t iv e s b y t h is
ti m e b e i n g r e c e iv e d .

T h is w a s c a u s i n g a l o t o f c h a ll e n g e s in t h e

li q u i d i ty p o s i t io n a t Tr a n s n e t a n d M r P i ta , t h e th e n G r o u p C h i e f
20

Fi n a n c i a l O ff ic e r a t th e ti m e c o n t a c t e d m y o ff ic e a n d a s k e d t h a t w e
a s s is t i n u n d e r s t a n d in g t h e c o n s e q u e n c e s a n d i m p l ic a t i o n s i f Tr a n s n e t
w e r e t o d e fe r t h e d e l iv e r y s c h e d u l e w i th t h e c u r r e n t O E M ’s .

It was a

r e q u e s t t h a t o b v i o u s l y, w h e n w e l o o k e d a t i t , m e a n t t h a t w e w o u l d b e
g o i n g b a c k to t h e s ix - y e a r d e l iv e r y s c h e d u le t h a t w a s o r i g i n a l ly
e n v is i o n e d i n t h e b u s i n e s s c a s e l a r g e l y.

Page 84 of 182

H o w e v e r w e w e r e a ls o

16 MAY 2019 – DAY 94
in f o r m e d , a t t h e ti m e , b y t h e G r o u p C F O t h a t t h e R e g i m e n ts t e a m w e r e
w o r k i n g a n d r e v i e w i n g w h a t th e c o s ts m a y b e i f w e e x t e n d e d th e s e
c o n tr a c ts

f u r th e r.

In

a d d i ti o n

the

Regiments

te a m

were

a ls o

c o n s i d e r in g a n u m b e r o f d i ff e r e n t o p ti o n s g iv i n g d u e c o n s id e r a ti o n t o
t h e ( i n d i s t i n c t) o f v o l u m e a t th e t i m e , t h e y w e r e lo o k i n g a t w h e t h e r
t h e r e w e r e o p p o r t u n i t ie s t o le a s e s o m e o f t h e s e lo c o m o t iv e s to o t h e r
p a r t s o f th e C o n ti n e n t , c r e a ti n g s p e c ia l p u r p o s e v e h ic l e s f o r s a l e o f
e x c e s s lo c o m o t iv e s e t c e t e r a , t h e s e w e r e j u s t s o m e o f t h e d i ff e r e n t
o p t io n s t h a t a p p a r e n t ly th e R e g i m e n ts t e a m w e r e l o o k i n g a t , a s I w a s
10

in f o r m e d b y t h e C F O .
O n t h e 2 6 t h o f F e b r u a r y 2 0 1 6 o n e o f t h e e m p lo y e e s a t
R e g i m e n t s s u b m i t t e d e s t i m a t e d c a lc u la t io n s t o m y o ffic e t o s a y t h a t th e
p o s s i b le , m a x i m u m d e f e r r a l c o s t f o r a n o th e r t w o y e a r s w o u ld b e a
f u r th e r 1 3 b il li o n r a n d .
5 4 b il li o n r a n d .

C h a ir t h i s w o u l d h a v e b e e n o n t o p o f t h e

M y t e a m a n d I w e r e n o t a w a r e o f w h ic h c o n tr a c t u a l

m a n d a t e t h is t e a m a t R e g i m e n t s w a s w o r k i n g o n , h o w e v e r, a t t h e t i m e I
c o m m i s s io n e d t h e M c k in s e y te a m t o r e v i e w t h e R e g i m e n t s p r o p o s a l s
a n d c o n s id e r a l l o f t h e d i ff e r e n t n u is a n c e s o f a n y p o t e n t ia l d e f e r r a l o f
t h e d e l iv e r y p r o g r a m m e .
20

T h e M c K i n s e y t e a m w e r e c o n tr a c t e d u n d e r

w h a t w a s t h e n c a ll e d S WAT 2 a t n o a d d i t io n a l c o s t i t w a s w i t h i n t h e
c o n tr a c t t h a t w a s e s ta b lis h e d .
C h a ir t h e r e is a s u b m is s io n i n t h e d o c u m e n t t h a t t a lk s t o t h e
p r o c e s s t h a t w e fo ll o w e d a n d a l l o f t h e d i ff e r e n t o p t io n s th a t w e r e
c o n s i d e r e d , h o w e v e r , t o p u t a s h o r te n e d v e r s i o n o n t h e t a b l e , w e h a d
c o n s i d e r e d a ll o f t h e c u r r e n t – a t t h e ti m e , t h e c u r r e n t p r o g r e s s t h a t

Page 85 of 182

16 MAY 2019 – DAY 94
w a s b e i n g m a d e o r l a c k o f i t w i t h t h e o r i g i n a l e q u ip m e n t m a n u f a c tu r e r s
a n d t h e r e w e r e s ig n i f ic a n t c h a ll e n g e s t h a t e a c h o n e o f t h e m w a s fa c i n g .
S o m e o f th e m t o d a te , h a v e n o t y e t b e e n r e s o lv e d . W e h a d p r o v id e d , t o
t h e G r o u p C h i e f Fi n a n c i a l O ff ic e r i n w r i t in g th a t th e r e w a s a b s o l u t e ly n o
n e e d f o r u s t o e n g a g e w it h o r i g i n a l e q u ip m e n t m a n u f a c t u r e r s to in c u r
a d d it i o n a l c o s t g iv i n g c o n s i d e r a ti o n t o t h e p r o d u c ti o n c h a l le n g e s t h a t a
f e w o f t h e m w e r e f a c in g a n d i n s o m e c a s e s s o m e o f t h e O E M ’s h a d n o t
e v e n c o m m e n c e d p r o d u c ti o n i n S o u th A f r ic a . S o b a s e d o n th a t w e h a d ,
I w o u ld s a y, c o n c l u d e d a n d in f o r m e d t h e G r o u p C h i e f F in a n c i a l O ffi c e r
10

that nothing should happen.

T h e r e a s o n w e p u t th is o n t h e t a b le is

b e c a u s e t h e r e w a s a s u b mi s s io n fr o m R e g i m e n t s th a t s u p p o s e d a
1 3 b il li o n r a n d i n c r e m e n t i n t h e c o s t o f t h e lo c o m o t iv e s w h i c h w e a r e
g r a t e f u l w a s n o t i m p le m e n t e d a t a n y p o i n t t h a t i s t h e r e a s o n fo r t h i s .
ADV PHILLIP MOKOENA SC :

D i d y o u q u e s t io n a t t h is s ta g e a s to

how Regiments was appointed?
MR MOHAMED SULEMAN MAHOMEDY :

Ye s w e d i d , w e t o d a te h a v e

n o t r e c e iv e a n y r e s p o n s e a t t h a t ti m e w e w e r e n o t a w a r e o f w h ic h
c o n tr a c t t h e y w e r e w o r k i n g o n .
ADV PHILLIP MOKOENA SC :
20

Ye s , n o w c a n y o u p r o c e e d ( i n d is ti n c t)

S WAT c o n tr a c ts w i t h M c Ki n s e y a n d R e g i m e n ts ?
MR MOHAMED SULEMAN MAHOMED Y :

C h a ir a s I m a d e a n e ffo r t

y e s t e r d a y to e x p la in t h e c o n c e p t o f S WAT, t h is w a s ju s t t h e p r o j e c t th a t
w a s c r e a te d t o a s s is t Tr a n s n e t a t t h e t i m e i n m a k in g s u r e t h a t th e
c a p i t a l p o r t f o l io w a s s o m e t h in g t h a t w a s a c h ie v a b le a n d t h a t i t w a s
w i t h i n t h e c o n s tr a in ts o f t h e v a r io u s f u n c t io n s w i t h i n Tr a n s n e t w h e t h e r

Page 86 of 182

16 MAY 2019 – DAY 94
it w a s a n e x e c u t a b l e p o r t fo li o , c o n s i d e r i n g t h a t it w a s q u i t e a
s ig n if ic a n t p o r t fo li o a t t h e ti m e .

A t p o in ts t h e p o r t fo li o w a s o v e r

3 4 0 b i ll io n a n d i t w a s s o m e th in g t h a t w e n e e d e d t o m a n a g e . I t h i n k t h e
r a ti o n a le fo r S WAT 1 , e s s e n t ia lly w a s a l s o – I t h i n k a ls o i t ’s i m p o r t a n t t o
p o i n t o u t th a t S WAT 1 w a s e n v i s a g e d i n 2 0 1 2 , t h e r e w a s a n o p e n te n d e r
p r o c e s s , t h e r e w a s a w h o le l o t o f w o r k t h a t w a s d o n e i n 2 0 1 2 , I w a s n o t
present

in

2012

in

t h is

p a r t ic u l a r

fu n c ti o n ,

I

o n ly

joined

t h is

d e p a r t m e n t, a s I s a i d , a r o u n d F e b r u a r y 2 0 1 3 w h e n t h e – i t w a s in t h e
fi n a l s t a g e s o f c o n t r a c t i n g w i t h Mc K i n s e y.
10

I t h i n k t h e k e y i s s u e w a s t h a t th e t e a m – t h e r e w a s n ’ t a v e r y
s ig n if ic a n t te a m i n Tr a n s n e t a t t h a t p o i n t a n d t h e r e w e r e n ’ t v e r y s tr ic t
a n d f o r m a li s e d p r o c e s s e s a r o u n d t h e c a p i t a l p r o je c ts a n d c a p i ta l
p r o g r a m m e s o f Tr a n s n e t . T h e k e y o b je c ti v e s fo r M c K i n s e y a t t h e t i m e ,
f o r S WAT 1 w e r e th a t th e y h a d t o fo r m u l a t e a c a p i t a l s t r a t e g y, t h e y h a d
t o d e fi n e th e c a p it a l p o r t f o l io o f Tr a n s n e t , a s I s a id , lo o k a t w h e t h e r
t h e r e w e r e o p p o r t u n i ti e s to o p ti m i s e th is p o r t fo li o , it w a s 3 4 0 b i ll io n b u t
w e h a d t o lo o k a t i t in t e r m s o f a ff o r d a b i li t y a t Tr a n s n e t , c a s h
a v a i la b ili t y a n d a ll o f t h e fi n a n c i a l r a ti o s a n d a l s o lo o k a t w h e th e r t h i s
p o r t f o l i o w a s d o a b l e a n d w h e n I s a y d o a b le m e a n in g , c o u ld i t b e

20

e x e c u te d w it h in t h e t h e n s tr a t e g y o f Tr a n s n e t c a l l e d M D S , t h e M a r k e t
D e m a n d S t r a t e g y. W e a t t a c h e d i n t h e d o c u m e n ts s o m e o f t h e b e n e fi t s
a t t h e ti m e t h a t w e r e a c h i e v e d w h i c h w e r e s i g n e d o ff b y t h e th e n G r o u p
C F O a s w e l l a s t h e G r o u p C h i e f E x e c u tiv e .
ADV PHILLIP MOKOENA SC :

M a y I ( i n d is ti n c t ) to p a g e 4 9 9 , it i s

f o l d e r n u m b e r 2 9 C h a ir.

Page 87 of 182

16 MAY 2019 – DAY 94
CHAIRPERSON :

Thank you.

MR ADV PHILLIP MOKOENA SC :

A r e y o u t h e r e Mr M a h o m e d y ?

M R M O H A M E D S U L E M A N M A H O M E D Y : Ye s .
ADV PHILLIP MOKOENA SC :

C o u l d y o u p l e a s e i d e n t if y th a t

document?
MR MOHAMED SULEMAN MAHOMEDY :

C h a ir i t’s a m e m o r a n d u m

t h a t ’s a d d r e s s e d fr o m Mr A n o j S i n g h t o t h e t h e n G r o u p C h i e f F in a n c ia l
O ff ic e r, t o M r B r i a n M o l e f e , th e th e n G r o u p E x e c u t iv e o f Tr a n s n e t .
ADV PHILLIP MOKOENA SC :
10

Is i t th e o n e t h a t y o u ’r e r e f e r e n c i n g i n

y o u r te s t i m o n y ?
MR MOHAMED SULEMA N MAHOMEDY:

Ye s C h a ir, t h e p u r p o s e o f

t h is s u b m i s s i o n is t o n o ti fy t h e G r o u p C h i e f E x e c u t iv e o f t h e c a p i t a l
p o r t f o l i o s a v i n g s a n d b e n e f it s o f t h e M c Ki n s e y le d c o n s o r ti u m e n g a g e d
in t h e c a p i t a l o p t i m is a ti o n S W AT i n i t ia t iv e .
ADV PHILLIP MOKOENA SC :

A n d y o u ’r e a l s o in v o lv e d i n th is

tr a n s a c ti o n ?
MR MOHAMED SULEMAN MAHOMEDY :

Ye s I w a s i n v o l v e d i n t h e

m a n a g e m e n t o f t h i s c o n tr a c t a n d t h e M c K i n s e y a n d R e g i m e n t s t e a m s
e s s e n ti a l ly r e p o r t e d i n t o m y o ff ic e f o r t h e e x e c u t i o n o f S WAT 1 a n d t h e
20

n e x t p r o g r a m m e w h ic h w a s c a ll e d S WAT 2 .
CHAIRPERSON :

A n d S WAT w a s th a t a n d a c r o n y m f o r a n y t h i n g ?

MR MOHAMED SULEMAN MAHOMEDY :
CHAIRPERSON :

N o C h a ir.

I t w a s j u s t a c o m b i n a t io n o f l e t te r s ?

MR MOHAMED SULEMAN MAHOMED Y :

I ’l l h a v e t o a s k s o m e b o d y

w h o w a s t h e r e a t t h e ti m e C h a ir, t h is w a s s o m e t h i n g th a t w a s d e fi n e d i n

Page 88 of 182

16 MAY 2019 – DAY 94
2 0 1 2 b u t i t h a s , f r o m w h a t I ’v e c h e c k e d it h a s n o s p e c i f ic – t h e
a b b r e v ia t io n i s n o t a r e p r e s e n t a ti v e o f a n y s p e c i f ic n a t u r e .
CHAIRPERSON :

O k a y th a n k y o u .

ADV PHILLIP MOKOENA SC :

And if you may turn now to page 506,

C h a ir t h a t is M S M 1 3 , i t s h o u ld b e t h e f o ld e r n u m b e r 1 3 .
CHAIRPERSON :

Thank you.

ADV PHILLIP MOKOENA SC :

A n d a l s o f o r c o m p le t e n e s s j u s t t a k e u s

– i d e n ti f y t h e d o c u m e n t a n d t a k e u s th r o u g h t h e c o n t e n ts th e r e o f in
s u m m a r y.
10

MR MOHAMED SULEMAN MAHOMEDY:

C h a ir I t h in k t h is r e l a t e s to

w h a t w e c a ll – i t ’s a d o c u m e n t f r o m m y s e l f t o t h e Mc K i n s e y le d
c o n s o r ti u m a t t h e ti m e s p e c i f y i n g v e r y d e ta il e d w h a t th e b il li n g a n d
in v o ic e p r o c e s s e s s h o u l d e n t a i l s p e c i f ic a l l y i n te r m s o f w h o s h o u l d b e
is s u i n g t h e i n v o i c e , w h o s h o u l d r e v i e w t h e i n v o i c e , w h e r e i t g e t s t h e
p r o o f o f p a y m e n t e t c e t e r a , q u it e c l e a r ly s t a te d t o b o t h t h e M c K i n s e y
t e a m s a s w e l l a s th e R e g i m e n t s te a m s th a t w e r e in t h e o r g a n i s a t io n a t
t h e ti m e .

T h i s b e c o m e s m o r e r e l e v a n t a s w e g o f u r th e r d o w n t h e

document

C h a ir,

there

is

reason

for

th is

but

i t’s

a c t u a l ly

just

h i g h l ig h ti n g e x a c t ly w h a t p r o c e s s w a s i m p l e m e n te d a t t h a t t i m e , w h o
20

w o u ld b e t h e r e s p o n s ib le m a n a g e r, w h a t w o u ld t h e y p r e p a r e t h e r e
w o u ld b e a d e t a i l e d b e n e f i ts m e m o , w e w o u l d h a v e a n u n d e r s t a n d i n g o f
h o w f a r t h e y a r e i n a p a r t ic u l a r p i e c e o f t h e c o n tr a c t e t c e t e r a , a ll th a t
w a s r e l a y e d th r o u g h t h is p a r tic u l a r m e m o , m a k i n g s u r e th a t t h e r e w a s
a n a p p r o p r i a t e p r o c e s s f o r th e a p p r o v a l o f in v o ic e s f o r t h i s p a r ti c u l a r
project.

Page 89 of 182

16 MAY 2019 – DAY 94
ADV PHILLIP MOKOENA SC :
o th e r

c o n tr a c ts

involving

Ye s , c a n y o u t h e n t a k e u s t h r o u g h t h e

M c K in s e y

and

Regiments

as

per

your

p a r a g r a p h 5 .9 ?
MR MOHAMED SULEMAN MAHOMED Y :

C h a ir I th in k t h e r e w e r e a

n u m b e r o f o t h e r p r o je c ts . .. ( i n te r v e n ti o n ) .
ADV PHILLIP MOKOENA SC:

A n d th e r e a s o n w h y a r e y o u

h i g h l ig h ti n g t h e m in t h is s t a t e m e n t ?
MR MOHAMED SULEMAN MAHOMEDY :

I t h i n k i t’s k e y t o – f o r m e t o

p r o v i d e fu ll tr a n s p a r e n c y o f m y r o l e w i t h te a m s fr o m M c K i n s e y,
10

R e g i m e n t s o v e r th e p e r i o d o f m y t e n u r e a t Tr a n s n e t .

There were a

n u m b e r o f p r o j e c ts th a t R e g i m e n ts a n d M c K i n s e y w e r e i n v o lv e d in , a s I
p u t o u t t h e S WAT 1 a n d S W AT 2 t h e s e a r e t w o s e p a r a t e c o n t r a c t s , tw o
s e p a r a t e p r o j e c t s , t h e n t h e r e w a s t h e M a n g a n e s e S u p p o r t c o n tr a c t a n d
I w il l t o u c h o n th a t j u s t n o w a n d th e N N P P p r o j e c t w h ic h w a s t h e n e w
m u l ti - p u r p o s e p i p e li n e . T h e s e w e r e s i g n i f ic a n tl y l a r g e c a p i t a l p r o j e c ts
t h a t w e r e u n d e r e x e c u t i o n o r g e tt i n g c l o s e t o e x e c u ti o n a n d m y r o l e a s
t h e G e n e r a l M a n a g e r a t t h e ti m e o f G r o u p C a p i t a l I n t e g r a t io n a n d
Assurance was to look at some of these projects and whether we were
r e a d y f o r th e e x e c u t i o n o f t h e s e p r o j e c t s a n d t h e N N P P w a s t o a d d r e s s
20

s o m e o f t h e c h a ll e n g e s .

A t t h e ti m e t h e N N P P p r o j e c t w a s te r m e d a

p r o j e c t i n d is tr e s s , t h e r e w a s s i g n i fi c a n t c h a ll e n g e s t o t h a t p r o j e c t
d e p e n d s w h o y o u s p e a k to t h e c o s t s h a d e s c a l a t e d e x p o n e n t i a l ly f r o m
t h e o r i g i n a ll y e n v is a g e d b u s in e s s c a s e a t t h e t i m e w h i c h w a s w r i t te n
m a n y y e a r s b e f o r e t h a t . T h e r e w a s a r i s k o f s e c u r i ty o f s u p p ly to th e
in la n d o f o u r c o u n t r y, t h e p r o j e c t w a s e x p e r i e n c in g d e la y s t h a t w e r e

Page 90 of 182

16 MAY 2019 – DAY 94
g o i n g o n , n o t f o r m o n th s b u t t h e y w e r e n o w g o i n g o n f o r y e a r s a n d
M c k in s e y

was

brought in

at

th a t t i m e

to

assist,

to g e th e r

with

R e g i m e n t s , t o a s s i s t t o tr y t o b r i n g th is p r o j e c t b a c k o n l i n e . I t w a s a t
t h a t t i m e , i n 2 0 1 4 b e fo r e t h e l o c o m o t iv e c o n tr a c ts , i t w a s a b o u t th e
b i g g e s t s in g le i n v e s t m e n t Tr a n s n e t w a s g o i n g t o b e in v o lv e d in w h ic h
w a s r a n g in g b e tw e e n 2 5 a n d 3 0 b ill i o n r a n d , s o t h a t’s th e c o n t e x t o f th a t
p a r t ic u l a r o n e .
T h e M a n g a n e s e p r o j e c t w a s a ls o , a t th a t t i m e , e n v i s a g e d to
c o s t Tr a n s n e t a n y t h i n g i n t h e r e g i o n o f b e t w e e n 1 5 a n d 2 6 b il li o n r a n d ,
10

t h e M c K i n s e y c o n s o r ti u m w e r e b r o u g h t i n to a s s is t w i t h p r e p a r a ti o n t o
m a k e s u r e th a t th e p r o j e c t w a s v i a b le , it w a s r e a d y f o r e x e c u t i o n .
ADV PHILLIP MOKOENA SC :

And how were they appointed, the

M c k in s e y c o n s o r t iu m ?
MR MOHAMED SULEMAN MAHOMEDY :

A s fa r a s I’ m a w a r e t h e s e

c o n tr a c ts w e r e a ls o t h r o u g h c o n fi n e m e n t . N o w in m y p a r ti c u l a r r o le i n
t h e s e i t w o u ld h a v e b e e n , in o n e c a s e , t o i n te g r a te t h e d i ff e r e n t e n ti t ie s
t h a t w o u l d h a v e b e e n i n v o lv e d i n t h e – i n th e s e p a r ti c u la r p r o j e c ts t o
a s s is t M c K in s e y i n c o o r d in a ti n g a ll o f th e s t a k e h o ld e r s a n d t h e r e a s o n
b e i n g t h a t i f w e lo o k a t M a n g a n e s e f o r e x a m p l e , it s p r e a d a c r o s s a
20

n u m b e r o f o p e r a t i n g d i v is i o n s w i th in Tr a n s n e t i n c l u d i n g Tr a n s n e t
Fr e i g h t R a il , t h e P o r ts A u th o r i ty a s w e l l a s t h e P o r t Te r m in a l O p e r a t o r.
S o to a s s is t i n m a k i n g s u r e t h a t th e r e w a s a n i n te g r a t e d s o l u ti o n t h a t
w a s p u t o n t h e t a b le I w o u ld h a v e p la y e d q u i te a r o l e i n i n t e g r a ti n g t h e
k e y s t a k e h o l d e r s o f t h e v a r io u s d i v i s i o n s .
We

would

a ls o

have

been

involved

Page 91 of 182

in

looking

at

the

16 MAY 2019 – DAY 94
g o v e r n a n c e p r o c e s s e s a n d m a k i n g s u r e , fr o m a c a p i ta l p e r s p e c tiv e n o t
a p r o c u r e m e n t p e r s p e c t iv e , th a t t h e s e p r o j e c ts w e r e m o v in g in t h e r i g h t
d ir e c t io n a n d u l t i m a t e ly o n e o f t h e k e y a c c o u n ta b i li t ie s w a s t o a l w a y s
lo o k a t m a k in g s u r e t h e p r o j e c t c o u l d b e d e li v e r e d a t t h e r i g h t v a l u e
w i t h th e v a lu e e n g i n e e r in g a n d t h a t ’s l a r g e ly t h e r o l e th a t w e w o u l d
h a v e p l a y e d i n a n u m b e r o f o th e r tr a n s a c ti o n s t h a t i n v o lv e d Mc K i n s e y
and Regiments.
ADV PHILLIP MOKOENA SC:

We are now going to spend much more

ti m e o n t h e n e x t t o p ic w h e r e y o u a r e d e a li n g n o w w i t h t h e r e le v a n t
10

is s u e s p e r t a i n i n g t o Tr il li a n fr o m p a g e 2 7 p a r a g r a p h 5 . 1 0 c a n y o u tr a c e
t h o s e e v e n ts fr o m 2 5 t h F e b r u a r y 2 0 1 6 , y o u m a y p r o c e e d t o o u t li n e
t h o s e f a c ts fo r u s .
MR MOHAMED SULEMAN MAHOMEDY :

C h a ir p e r s o n , I t h in k i t ’s a ls o ,

h e r e , r e l e v a n t t o g i v e s o m e c o n te x t a s I s p o k e a b o u t th e S WAT 2
c o n tr a c t, t h a t w a s b e t w e e n Tr a n s n e t a n d t h e h e a d s o f a g r e e m e n t w a s
w i t h M c K in s e y a n d a t t h e t i m e w e w e r e in f o r m e d t h a t t h e s u p p l ie r
d e v e l o p m e n t p a r tn e r w a s R e g i m e n ts .

On the 25 th of February 2016,

C h a ir, if I m a y r e f e r e n c e t h e C o m m is s i o n t o t h e i n d e x M S M 3 1 p a g e 5 11 .
ADV PHILLIP MOKOENA SC :
20

I t’s f o ld e r 3 1 C h a ir.

MR MOHAMED SULEMAN MAHOMED Y :

F o ld e r 3 1 , u n d e r th e p a g e

n u m b e r 5 11 , I r e c e iv e d a n e m a il f r o m a n e m p lo y e e o f R e g i m e n t s o n t h e
2 5 t h o f F e b r u a r y 2 0 1 6 a t a p p r o x i m a t e l y 2 2 h 4 5 p m a n d I w ill r e a d t h i s
m a il i t s a y s – i t ’s fr o m a n e m p l o y e e a t R e g i m e n ts M s F a h i m a B a d a t o n
t h e 2 5 t h o f F e b r u a r y a s I s a i d t o u n d is c lo s e d r e c ip i e n ts , I w a s o n e o f
t h o s e r e c ip i e n ts a n d i t s a y s ,

Page 92 of 182

16 MAY 2019 – DAY 94
“ G o o d e v e n in g I tr u s t th a t y o u a r e w e l l . T h is e m a i l is t o in f o r m
y o u th a t my e m a il a d d r e s s w il l b e c h a n g i n g e ff e c t iv e 1 s t M a r c h
2 0 1 6 t o F a h i m a . B a d a t @ t c p . c o .z a . a s a c o n s e q u e n c e o f th e
p a r t n e r s h i p r e - c o n fi g u r a t i o n t h e R e g i m e n t s A d v is o r y B u s i n e s s
U n i t w il l f o r m p a r t o f a n e w g r o u p o f c o m p a n i e s Tr i ll ia n C a p i ta l
Partners.

W e r e m a i n c o m m i t t e d t o e x c e p ti o n a l c li e n t s e r v ic e

d u r i n g t h e tr a n s i t io n . P l e a s e u s e m y n e w e m a i l a d d r e s s g o in g
forward, kind regards”.
C h a ir o n th e 2 5 t h o f . . .( in t e r v e n ti o n ) .
10

C H A I R P E R S O N : W e ll i t s a y s t o u n d is c l o s e d r e c ip ie n ts th a t’s w h a t t h e
author would have written?
MR MOHAMED SULEMAN MAHOMEDY :

No Chair they would have

b l in d - c a r b o n e d i t t o a w h o le l o t o f p e o p l e s o i t w o u ld n ’t a c tu a l ly r e f le c t
w h o i t ’s a c t u a ll y s e n t to b u t i t w a s s e n t t o m e , a m o n g s t o th e r s .
CHAIRPERSON :

Ye s s o t h e p a r t t h a t s a y s u n d is c l o s e d r e c ip ie n ts

w o u ld h a v e b e e n p u t b y w h o m ?
M R M O H A M E D S U L E M A N M A H O M E D Y : T h a t ’s b e c a u s e t h e r e w a s n ’ t a
s p e c i f ic i n d iv id u a l t h a t w a s – i t w a s s e n t t o fr o m a n e m a il p e r s p e c t iv e
C h a ir f r o m t h e s y s te m s o t h i s is ju s t a s y s t e m . . .( i n t e r v e n t i o n ) .
20

CHAIRPERSON :

O h s o t h i s is w h a t t h e s y s t e m s a y s w h e n y o u d o n ’ t

. . .( i n te r v e n t io n ) .
MR MOHAMED SULEMAN MAHOMEDY:
CHAIRPERSON :

W h e n y o u b li n d - c a r b o n .

O h o k a y s o b u t w h a t e v e r t h e a u th o r w o u l d h a v e

d o n e h e o r s h e – i t’s a s h e i s th a t r ig h t – s h e d i d n ’ t w a n t t h e r e c i p i e n ts
t o b e k n o w n , is t h a t r ig h t ?

Page 93 of 182

16 MAY 2019 – DAY 94
MR MOHAMED SULEMAN MAHOMEDY :

T h a t ’s c o r r e c t C h a ir s o I ’ m

n o t s u r e w h o it w a s w r i t te n t o , a l l I’ m a w a r e o f t h a t I w a s o n e o f t h e
people.
CHAIRPERSON :

O k a y th a n k y o u a n d y o u k n e w th e a u t h o r ?

MR MOHAMED SULEMAN MAHOMEDY :
CHAIRPERSON :

Ye s C h a ir.

B e f o r e th a t ?

MR MOHAMED SULEMAN MAHO MEDY:

T h i s w a s a n i n d iv i d u a l w h o

w o r k e d a t t h e – a t R e g i m e n ts .
CHAIRPERSON :
10

Ye s o k a y.

MR MOHAMED SULEMAN MAHOMEDY :

A n d h a d a ls o w o r k e d o n t h e

S WAT 1 a n d S WAT 2 p r o j e c ts .
CHAIRPERSON :

O k a y, a lr i g h t t h a n k y o u .

MR MOHAMED SULEMAN MAHOMEDY :

C h a ir w i th in te n m i n u te s o f

r e c e i v i n g t h a t e m a i l I th e n f o r w a r d e d t h a t e m a i l t o c e r ta i n k e y p a r tn e r s
a n d p r i n c ip a l s a t M c K i n s e y.

N a m e ly M r Pr a k a s h P a r b h o o , M r D a v i d

Fi n e a n d Mr K a n n a n L a k m e e h a r a n . . .( in t e r v e n t io n ) .
CHAIRPERSON : Before you proceed you say tha t this was the author
o f t h i s e m a il w a s s o m e b o d y a t R e g i m e n ts ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
20

C H A I R P E R S O N : W h o w a s i n v o lv e d i n w o r k r e la t in g to S w a t 2 ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
C H A I R P E R S O N : H o w – w h a t w a s h e r p o s i ti o n ? I j u s t w a n t to s e e h o w
h i g h s h e w a s i n t h e R e g i m e n ts h i e r a r c h y ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir I w o u ld n o t a c tu a lly b e
a b l e t o c o n f ir m t h a t b u t s h e w a s o n e o f th e s e n i o r s .

Page 94 of 182

16 MAY 2019 – DAY 94
CHAIRPERSON : One of the senior people.
MR MOHAMM ED SULEMAN MAHOMEDY : That was on the project yes.
C H A I R P E R S O N : J a o k a y a lr i g h t . Yo u m a y p r o c e e d .
ADV PHILLIP MOKOENA SC SC:

B u t a t t h is s t a g e M r M a h o m e d y d i d

y o u e n c o u n t e r Tr i ll ia n b e f o r e ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : N o C h a ir.
A D V P H I L L I P M O K O E N A S C : T h is w i ll b e t h e fi r s t t i m e ?
MR MOHAMMED SULEMAN MAHOMED Y :

We had not encountered

Tr i ll ia n . W e h e a r d t h a t t h e r e w e r e – a t t h is p o i n t w e h e a r d t h e r e w e r e
10

r u m b li n g s o f s o m e d is c o m f o r t w i t h i n t h e R e g i m e n ts s p a c e . W e d id n o t
k n o w a b o u t Tr i ll ia n .
A D V P H I L L I P M O K O E N A S C : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : A n d th e r e fo r e I th i n k th e fi r s t
t h i n g o r t h e f ir s t a c ti o n fr o m m y s i d e w a s t o s e n d it t o th e h e a d s o f
a g r e e m e n t p a r t n e r b e i n g M c K i n s e y.

And as I said I addressed – I

li te r a ll y j u s t s e n t t h is m a il o n d ir e c tly t o t h e m t o t h e v a r i o u s – M r P a b o
w a s o n e o f th e k e y p r i n c ip le s i n S w a t 2 . D o c t o r Fi n e w a s o n e o f t h e
p a r t n e r s a n d Mr L a k m e e h a r a n w a s a ls o o n e o f t h e p r i n c ip le s a t t h e ti m e
o n t h e S w a t 2 c o n tr a c t .
20

A D V P H I L L I P M O K O E N A S C : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : W e s e n t i t fo r i n fo r m a ti o n t o
them.
A D V P H I L L I P M O K O E N A S C : Yo u w e r e j u s t a b o u t to te ll u s a s to w h a t
y o u d id a f te r r e c e iv in g th is e m a i l?
MR MOHAMMED SULEMAN MAHOMEDY :

Page 95 of 182

C h a ir s u b s e q u e n t to t h a t I

16 MAY 2019 – DAY 94
f o r w a r d e d t h e e m a il t o M r G a r r y P i t a a n d M r E d w a r d T h o m a s a m o n g s t
o th e r s b u t t h e s e w e r e th e t w o k e y in d i v i d u a ls . M r P i t a b e i n g t h e G r o u p
C h i e f F in a n c ia l O ff ic e r a n d M r E d w a r d Th o m a s b e i n g t h e G r o u p S u p p ly
C h a in O ff ic e r, t h e h e a d o f p r o c u r e m e n t r e q u e s t in g t h e ir g u i d a n c e a s in
m y v i e w a t t h e ti m e I s a i d n o p r o c u r e m e n t r e l a ti o n s h i p e x is t e d w it h t h i s
n e w e n ti ty c a l le d Tr il li a n .

A g a i n a s I s t a te d t o t h e m t h e S w a t 2

e n g a g e m e n t a t t h e t i m e w a s s i g n e d w i th M c Ki n s e y a n d R e g i m e n t s a s …
C H A I R P E R S O N : I a m s o r r y a r e y o u r e a d i n g fr o m a n e m a i l y o u s e n t t o
them?
10

M R M O H A M M E D S U L E M A N M A H O M E D Y : N o C h a ir I a m r e a d in g fr o m
m y s ta t e m e n t .
C H A I R P E R S O N : O h fr o m y o u r s t a te m e n t o k a y.
MR MOHAMM ED SULEMAN MAHOMEDY : On page 27.
C H A I R P E R S O N : O k a y th a n k y o u .
M R M O H A M M E D S U L E M A N M A H O M E D Y : P a r a g r a p h 5 . 1 0 .2 .
ADV PHILLIP MOKOENA SC : .2
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:
March

20

after

procurement

sending
issue

th is

mail

because

C h a ir a s I s a id o n t h e 1

r e q u e s t in g

Tr il li a n

were

guidance
not

around

m e n ti o n e d

in

the
any

c o r r e s p o n d e n c e a s fa r a s I w a s a w a r e o f a r o u n d t h e M c K i n s e y c o n tr a c t .
A n d I fo ll o w e d u p a n d e s c a l a te d t h e m a t t e r b e c a u s e I d i d n o t r e c e iv e
a n y r e s p o n s e . I f o l lo w e d u p a n d e s c a la t e d t h e m a t t e r f u r th e r to Mr P it a
a t a t e a m m e e t in g w h e r e I w a s i n fo r m e d t h a t M c Ki n s e y w a s in th e
p r o c e s s o f r e p l a c i n g R e g i m e n t s w i th Tr i ll ia n .

Page 96 of 182

Th is w a s t h e f e e d b a c k

16 MAY 2019 – DAY 94
t h a t w a s p r o v i d e d to m e .
C H A I R P E R S O N : S o – b u t – s o M c K i n s e y w a s n o t c o m p l e t e l y g o n e fr o m
the picture?
MR MOHAMMED SULEMAN MAHOMED Y :

N o C h a ir a n d t h e – in

F e b r u a r y 2 0 1 6 t h e y s til l h a d th e S w a t 2 c o n tr a c t w h i c h w a s c o n t in u in g .
CHAIRPERSON : Ja.
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h e y w e r e s ti ll t h e r e .
C H A I R P E R S O N : O k a y.
MR MOHAMMED SULEMAN MAHOMEDY :
10

B u t t h e n t h is p r o b l e m w i t h

Regiments came about.
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMED Y :

Th e n w e r e c e iv e a n o te t o

s a y t h a t Tr il li a n i s c o m in g in t o t h e p ic tu r e . W e f o l lo w t h i s u p . W e g e t
t o l d t h a t t h e r e is a p r o c e s s b e tw e e n M c K in s e y a n d Tr il li a n t o r e p la c e
Regiments.
CHAIRPERSON : Hm.
MR MOHAM MED SUL EMAN MAHO MEDY : However I cannot remember
e x a c tl y b u t t h e r e w a s a l e t te r t h a t w a s c i r c u la t e d to m y o ffi c e b y t h e
M c K in s e y p a r tn e r s h i p a t t h e ti m e w h i c h w a s d a t e d t h e 2 3 F e b r u a r y
20

2 0 1 6 w h ic h I a n n e x a s F o l d e r 3 2 o n p a g e 5 1 3 .
C H A I R P E R S O N : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir t h is le t t e r is s i g n e d b y
t w o d ir e c t o r s o f Mc K i n s e y a n d a d d r e s s e d t o M r G a r r y P i t a . A n d in th is
d o c u m e n t t h e y m a k e c l e a r t h a t w e h a v e b e e n i n fo r m e d – s o r r y C h a ir I
a m r e a d in g o n p a g e 5 1 4 .

Page 97 of 182

16 MAY 2019 – DAY 94
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMED Y :

To w a r d s t h e m i d d l e o f th is

p a r t ic u l a r p a g e .
“ We h a v e b e e n i n f o r m e d th a t R e g i m e n t s C a p i t a ls
management

a d v is o r y

business

is

tr a n s i ti o n i n g

o w n e r s h i p t o Tr il li a n C a p i t a l P a r tn e r s .

T h e y w i ll b e

s u b j e c t t o t h e o w n e r s h i p c o m p o s i t io n m a n a g e m e n t
a n d s t a ff c o m p o s i ti o n a n d c a p a b il it y c r i te r ia a b o v e .
W e a r e n o t a b l e t o c o m m e n c e a r e l a ti o n s h i p w i t h
10

Tr i ll ia n o r a n y o t h e r p a r t n e r o r s u b - c o n tr a c t o r u n ti l
these criteria have been met and approved by our
global risk and legal teams.”
W h a t i s c le a r is th a t o n t h e 2 3 F e b r u a r y 2 0 1 4 – 2 0 1 6 M c Ki n s e y h a d
a lr e a d y g iv e n c l e a r i n d ic a ti o n t o th e t h e n C F O M r G a r r y P i ta t h a t th e y
h a d m a d e n o d e c is io n o n e n g a g i n g w i t h Tr i lli a n .
A D V P H I L L I P M O K O E N A S C : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY :

Ye t o n th e 1 M a r c h 2 0 1 6

w h e n I e s c a la t e d th e m a t t e r I w a s t o l d t h a t t h e r e w a s a d is c u s s i o n
between McKinsey and – in the – they were in the proc ess of replacing
20

R e g i m e n t s w i t h Tr il li a n . C h a i r f u r th e r to t h a t o n th e 1 0 M a y 2 0 1 6 u n d e r
F o l d e r 3 3 p a g e 5 1 7 t h e r e w a s a s p e c i a l a c q u is i ti o n s a n d d is p o s a ls
c o m m i t t e e m e e t in g w h ic h w a s h e l d .
CHAIRPERSON : That is now a committee of the board?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
C H A I R P E R S O N : J a o k a y.

Page 98 of 182

16 MAY 2019 – DAY 94
MR MOHAMMED SULEMAN MAHOMEDY : This committee approved the
s e s s i o n o f c e r ta i n c o n tr a c ts fr o m R e g i m e n t s t o Tr il li a n .
A D V P H I L L I P M O K O E N A S C : C a n y o u r e a d f o r u s p a r a g r a p h 5 .2 ?
MR MOHAMM ED SULEMAN MAHOM EDY: It says:
“ F ir s tl y t h is is t h e s p e c ia l a c q u is it i o n s a n d d is p o s a l s
committee

m e e t in g

h e ld

on

the

10

May

2016

r e s o l u ti o n n u m b e r 5 . 2 – m y a p o l o g i e s s o r r y i te m
n u m b e r 5 . 2 s e s s i o n b e t w e e n R e g i m e n ts a n d Tr il li a n .
R e s o lv e d t h a t t h e c o m m i t t e e a p p r o v e d .
10

T h e s e s s i o n o f th e c o n tr a c t f r o m R e g i m e n ts L i m i t e d
PTY

Limited

to

Tr i ll ia n

C a p it a l

P a r tn e r s

being

s a ti s f i e d t h a t t h e B B B E s t a tu s is n o t a ff e c t e d .
in c r e a s e

in

scope

for

the

d e t a il e d

The

c a p it a l

o p t i m is a ti o n s e r v ic e s a n d th e i n c r e a s e i n c o n tr a c t
v a l u e fr o m R 3 7 5 m ill i o n t o R 4 6 3 . 3 m il li o n a n d t h e
c o n tr a c t e x t e n s i o n o n t h e 3 0 S e p t e m b e r 2 0 1 6 to t h e
3 1 M a r c h 2 0 1 8 s u b j e c t to z e r o b u d g e t i m p lic a ti o n s
f o r t h e c o m p a n y.”
ADV PHILLIP MOKOENA SC:
20

N o w b e fo r e y o u c o m m e n t o n t h e

c o n te n ts o f th a t a p p r o v a l a s p e r r e s o l u ti o n t h a t y o u h a v e ju s t r e a d n o w
w h e n t h i s a c q u is it i o n d is p o s a l c o m m i t t e e a p p r o v e d o r p u r p o r t e d t o
a p p r o v e th e s e s s io n d o y o u k n o w w h e t h e r t h e y w e r e f u r n is h e d w i t h a n y
s e s s i o n a r y a g r e e m e n t b e t w e e n t h e p a r ti e s ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : As f a r a s w e h a v e r e v ie w e d
a l l o f t h e d o c u m e n t s C h a ir w e h a v e n o t c o m e a c r o s s a fo r m a l s e s s i o n

Page 99 of 182

16 MAY 2019 – DAY 94
agreement.
A D V P H I L L I P M O K O E N A S C : A n d th is b o d y w a s it a w a r e t h a t Tr il li a n
h a d n o t s u b m i t te d a n y te n d e r t o Tr a n s n e t i n o r d e r f o r i t t o p r o v i d e
t h e s e s e r v ic e s ?
MR MOHAMMED SULEMAN MAH OMED Y:

I n te r m s o f w h a t w a s

s u b m i tt e d t o t h i s b o d y f o r a p p r o v a l w a s a g a i n – o n c e a g a i n a
m e m o r a n d u m t h a t w a s p r e s e n t e d t o t h e b o a r d a c q u i s i ti o n d is p o s a ls
c o m m i t t e e w h i c h I h a v e u n d e r F o l d e r 3 4 b u t th a t w a s a l l .
C H A I R P E R S O N : I s i t Fo ld e r 3 4 ?
10

M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
CHAIRPERSON : Hm. Does it – I am going there. Does it purport to
t e ll t h e c o m m i t t e e w h a t t h e te r m s a n d c o n d i ti o n s o f t h e s e s s i o n w e r e
going to be?
MR MOHAMMED SULEMAN MAHOMEDY :

C h a ir a s fa r a s I h a v e

r e v ie w e d th is d o c u m e n t i t d o e s n o t g o i n t o a d e t a il e d d i s c u s s i o n o n t h e
t e r m s o f t h e s e s s io n b u t r a t h e r f o c u s s e s o n a l e tt e r I t h i n k t h a t i s – w e l l
t h a t w a s a n n e x e d to t h is d o c u m e n t a t t h e ti m e .

I t is n o t a n n e x e d t o

t h is p a r tic u la r m e m o r a n d u m . O n p a g e 5 2 1 .
C H A I R P E R S O N : Ye s .
20

MR

MOHAMMED

bottom

and

SULEMAN
it

MAHOMEDY:

ju s t

states

The
that:

“On the 13 April 2016 Mr Eric Wood sent a letter to
Tr a n s n e t A n n e x u r e B in d i c a t in g th a t h e is c e d i n g h is
r ig h ts r e c e iv e d fr o m R e g i m e n ts t o Tr i ll i a n C a p i t a l
P a r t n e r s e ff e c t iv e 1 M a r c h 2 0 1 6 . Tr i ll ia n – Tr a n s n e t

Page 100 of 182

16 MAY 2019 – DAY 94
t h e n in i ti a te d i ts v e n d o r p r o c e s s a n d t h e r e is n o
r e a s o n w h y Tr i ll ia n c a n n o t b e a v e n d o r t o Tr a n s n e t. ”
A D V P H I L L I P M O K O E N A S C : A n d t h a t w a s a l l?
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h a t is w h a t is b e i n g – w h a t
is s ta t e d h e r e .
A D V P H I L L I P M O K O E N A S C : A n d a t th a t s t a g e M r M a h o m e d y d o y o u
k n o w w h e t h e r a n y d u e d il i g e n c e w a s c o n d u c te d i n r e l a ti o n t o Tr il li a n
w h o is n o w g o in g t o a c q u ir e t h e s e r v ic e s t h a t w e r e in i ti a l ly p e r f o r m e d
b y M c K in s e y ?
10

M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir o n p a g e 5 2 1 . 1 , 5 2 1 . 1
t h e v e r y n e x t p a g e t h e r e is a n a tt e m p t t o e x p la in th a t w h e r e t h e y s a y
t h a t th e E M E a ff id a v i t p r o v id e d f o r t h e l e v e l 2 B B B E c e r t i fi c a t io n
in d i c a t e d t h a t th e y a r e 6 0 % b l a c k o w n e d . T h e s h a r e h o l d i n g o f Tr il li a n
H o l d i n g s P t y L i m i t e d 6 0 % w h o l ly o w n e d b y Mr S a l i m Es s a . [ In d is ti n c t ]
P t y L i m i t e d P ty L i m i te d 2 5 % w h o lly o w n e d b y M r Er ic W o o d .
Benjamin Roy 1.8% .

Daniel

J a n J o h a n n e s F o u r ie 1 . 2 % .

Another company

w h ic h i s I t h i n k p r o n o u n c e d A r i u m N o m in e e s 1 2 % .

A h o l d i n g v e h ic le

w h o s e s h a r e s w i ll b e tr a n s f e r r e d t o s t a ff a t a l a t e r s t a g e .

And the

d ir e c t o r s o f t h is c o m p a n y w e r e E r ic A n t h o n y W o o d , Te b o g o L e b a ll o ,
20

J e ffr e y Ir v i n e A f r i a t a t th e ti m e .

A n d h e ju s t g o e s o n to e x p la i n th a t

Tr i ll ia n o r th e c o m p a n y i t s s h a r e h o ld e r s a r e n o u g h t o n th e Tr a n s n e t l is t
o f e x c l u d e d te n d e r e r s .
A D V P H I L L I P M O K O E N A S C : Ye s . S o Tr i lli a n w a s g o i n g t o t a k e t h o s e
s e r v ic e s fr o m R e g i m e n ts b y m e r e l y t h a t l e t t e r a n d t h e m e m o r a n d u m
that

you

have

i n d ic a te d

to

the

Chair

Page 101 of 182

and

nothing

more.

No

16 MAY 2019 – DAY 94
p r o c u r e m e n t , n o c o m m i t te e h a v i n g r e v i e w e d a n y o f t h e

relevant

d o c u m e n ts .
M R M O H A M M E D S U L E M A N M A H O M E D Y : Th a t is c o r r e c t . B u t I w o u ld
lik e to a d d .
A D V P H I L L I P M O K O E N A S C : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : I n te r m s o f p o i n t n u m b e r 1 7
o n t h i s m e m o r a n d u m ju s t m i d - w a y th r o u g h t h a t o r i t s a y s :
“There

is

a

r e q u ir e m e n t

fo r

the

scope

of

the

c o n tr a c t. ”
10

T h e s e c o n d s e n t e n c e C h a ir p e r s o n .
“ T h e r e i s a r e q u ir e m e n t f o r t h e s c o p e o f t h e c o n tr a c t
t o b e i n c r e a s e d t o in c l u d e t h e f u l l a m b i t o f t h e
capital

o p t i m is a ti o n

programme

and

to

i n c lu d e

in c r e a s e th e v a l u e o f t h e c o n tr a c t b y t h e u n s p e n t … ”
CHAIRPERSON :

I a m s o r r y y o u h a v e lo s t m e , w h e r e a r e y o u r e a d i n g

fr o m ?
MR MOHAMMED SULEMAN MAHOMEDY :

C h a ir I a m s ti ll o n p a g e

521.1.
C H A I R P E R S O N : O k a y.
20

M R M O H A M M E D S U L E M A N M A H O M E D Y : I t is p o i n t n u m b e r 1 7 .
C H A I R P E R S O N : O k a y a lr ig h t t h a n k y o u .
M R M O H A M M E D S U L E M A N M A H O M E D Y : M y a p o l o g i e s C h a ir.
“ T h e r e i s a r e q u ir e m e n t f o r t h e s c o p e o f t h e c o n tr a c t
t o b e i n c r e a s e d t o in c l u d e t h e f u l l a m b i t o f t h e
c a p i t a l o p t i m is a t i o n p r o g r a m m e a n d t o i n c r e a s e t h e

Page 102 of 182

16 MAY 2019 – DAY 94
v a l u e o f th e c o n tr a c t b y t h e u n s p e n t p o r ti o n o f t h e
previous

c a p i ta l

m il li o n .

That

o p t i m is a ti o n
c o n tr a c t

is

c o n tr a c t
th e

of

previous

R88.3
c a p i ta l

o p t i m is a ti o n c o n tr a c t is w h a t w e c a ll S w a t 2 .”
I w il l g iv e s o m e c o n t e x t to t h a t n o w C h a ir.
“ An d

to

increase

the

c o n tr a c t

date

from

30

S e p te m b e r t o t h e 3 1 M a r c h .”
S o e s s e n ti a l ly t h e r e w e r e tw o p a r tic u l a r s e s s io n s .

The one was what

w a s c o m m o n ly c a l l e d th e G e n e r a l Fr e i g h t O p t i m is a ti o n P r o g r a m m e
10

w h ic h w a s h e a d s o f a g r e e m e n t w a s w i t h R e g i m e n ts . A s p e r p o i n t 1 7 i t
t a lk s a b o u t t h e c a p i t a l o p t i m is a ti o n c o n tr a c t . A n d t h e y t a lk a b o u t t h e
u n s p e n t p o r ti o n o f R 8 8 m i ll io n . T h is c o n t r a c t h e a d s o f a g r e e m e n t w a s
w i t h M c K in s e y. A s f a r a s I a m a w a r e t h e r e h a s b e e n n o i n d ic a ti o n fr o m
M c K in s e y w r i t t e n o r o t h e r w is e i n a fo r m o f a n a g r e e m e n t o r a l e t t e r t h a t
c e d e d t h is c o n tr a c t t o Tr i ll i a n . S o th e r e w e r e t w o p a r ts o f t h i s t h a t w e
h a v e t o k e e p in m i n d . I t w a s n o t j u s t o n e s e s s i o n . I t w a s e s s e n t i a ll y i n
m y h u m b l e o p i n io n t w o s e s s i o n s .

O n e w a s t h e G e n e r a l F r e ig h t

C o n tr a c t w h ic h R e g i m e n ts w e r e t h e h e a d s o f a g r e e m e n t w i th a n d th a t i s
a p u r p o r te d s e s s i o n t h a t t h e y ta lk a b o u t .
20

B u t th e s e c o n d o n e is t h e

C a p it a l O p ti m i s a t io n C o n tr a c t w h i c h a t t h e ti m e w a s t h e h e a d s o f
a g r e e m e n t w a s w i t h M c K in s e y. I n a d d i ti o n a s f a r a s m y m e m o r y s e r v e s
t h a t c o n tr a c t te r m i n a te d i n A p r il 2 0 1 6 w h ic h m a k e s it s tr a n g e t h a t in
M a y 2 0 1 6 w e s e e th e c o n t r a c t t h a t is e s s e n ti a l ly te r mi n a te d . It – fr o m
CHAIRPERSON : Purported to be ceded?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s .

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16 MAY 2019 – DAY 94
CHAIRPERSON : Hm.
M R M O H A M M E D S U L E M A N M A H O M E D Y : I t is p u r p o r t e d to b e c e d e d .
Fi r s tl y t h e r e is n o i n d i c a t io n fr o m M c K in s e y t h a t t h e y c e d e d t h i s
c o n tr a c t t o a n y b o d y b e c a u s e t h e c o n t r a c t t e r m i n a t e d i f m y m e m o r y
s e r v e s m e c o r r e c tly I th i n k i t w a s t h e 8 A p r il 2 0 1 6 .
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY :

A m o n t h l a t e r th e r e is a

d o c u m e n t t h a t p u r p o r ts t o c e d e th a t p a r t o f th e c o n t r a c t t o Tr i ll ia n .
CHAIRPERSON : Hm.
10

ADV PHILLIP MOKOENA SC :

Ye s .

B u t t h e r e w a s a ls o th is i n c r e a s e

s c o p e o f c a p i ta l o p t i m is a t i o n o f R 8 8 . 3 m il li o n w a s t h a t s u b j e c te d t o a n y
f o r m a l t e n d e r o r p r o c u r e m e n t w i th i n Tr a n s n e t ?
MR MOHAMMED SULEMAN MAHOMEDY : No as far as I am concerned
t h e r e w a s n o t e v e n a r e q u e s t f o r t h a t s e r v ic e b e c a u s e a t t h a t t i m e t h is
p a r t ic u l a r a c tiv i ty r e s t e d w i t h i n t h e c o n fi n e s o f m y d e p a r t m e n t .

We

w e r e n o t e v e n a w a r e t h a t th e r e w a s th is r e q u i r e m e n t o r s u b m is s i o n t h a t
w a s b e i n g m a d e o n o u r b e h a l f . B u t a s I s a i d t h e r e w a s a c o n tr a c t t h a t
p r e v i o u s ly e x is t e d w h ic h t e r m i n a t e d in A p r il 2 0 1 6 th a t t a l k s t o t h is li t tl e
p i e c e t h a t i s c a l l e d ‘ in c r e a s e s c o p e fo r c a p i ta l o p ti m is a ti o n ’ b u t t h e r e
20

was no pro curement event, no.
ADV PHILLIP MOKOENA SC :

N o w I p o s e t h i s q u e s ti o n t o y o u a t t h e

ti m e w h e n w e a r e s til l o n p a g e 5 1 7 d e a li n g w it h w h a t w a s a p p r o v e d i n
p a r a g r a p h 5 .2 a n d I w is h to in v i t e y o u r c o m m e n t o n t h a t p a r a g r a p h ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : W e ll C h a ir I t h i n k a g a i n y o u
k n o w f o r m e i t i s a p u r p o r t e d s e s s i o n . T h e d o c u m e n ts t h a t w e r e

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16 MAY 2019 – DAY 94
s u b m i tt e d d i d n o t c a r r y a s e s s i o n a g r e e m e n t . T h e r e w e r e w o u l d b e a
n u m b e r o f q u e s ti o n s t h a t o n e c o u l d a s k a r o u n d t h e d u e d i li g e n c e o f
Tr i ll ia n a t t h a t p o i n t i n ti m e .

B u t a g a i n a ls o w h e th e r i t w a s e v e n

appropriate that we could have as management and the management
w h o s u b m i t t e d t h is s u b m is s io n m a d e th e c la i m s t h a t w e r e d i d a r o u n d
t h e v a lu e , t h e s e s s i o n a s w e ll a s t h e in c r e a s e d s c o p e o f R 8 3 m i ll io n .
C H A I R P E R S O N : T h is s e s s i o n r e f e r r e d t o i n It e m 5 . 2 a t p a g e 1 5 7 t h a t
is a r e s o l u t i o n o f t h e a c q u is i ti o n o r s p e c i a l a c q u is i ti o n s a n d d i s p o s a l s
c o m m i t t e e o f th e b o a r d d o e s n o t t h e w o r d i n g – d o e s n o t r e f e r t o a n
10

a p p r o v a l i n p r i n c ip l e o r a p p r o v a l o f a s e s s io n in p r i n c i p le w h i c h is
d i ff e r e n t fr o m a p p r o v i n g t h e a c t u a l
MR MOHAMM ED SULEMAN MAHOMEDY : Session.
CHAIRPERSON :

S e s s i o n a n d t o t h e e x t e n t t h a t th a t is a c o r r e c t

r e a d in g o f t h a t r e s o l u ti o n t h e n o n e w o u l d s a y h o w c o u l d t h e c o m m i t t e e
a p p r o v e a s e s s i o n w it h o u t s e e in g t h e a c t u a l s e s s i o n w h e r e t h e t e r ms
a n d c o n d i t io n s w o u l d b e s e t o u t . A n d y o u h a v e s a i d t h a t y o u – t h r o u g h
y o u r p r o c e s s o f r e v i e w i n g a ll t h e s e tr a n s a c ti o n s a n d l o o k i n g a t a ll k i n d s
o f d o c u m e n t s y o u h a v e b e e n u n a b le t o c o m e a c r o s s t h e a c t u a l
agreement, the actual session.
20

M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir th a t i s c o r r e c t . A n d t o
y o u r p r e v i o u s p o i n t C h a ir I a g r e e w h o l e h e a r te d l y b e c a u s e a s th e
e x e c u tiv e s a n d n o n - e x e c u ti v e d ir e c t o r s o f t h e b u s in e s s t h e k e y is s u e i s
o n e h a s t o u n d e r s ta n d t h e t e r m s a n d c o n d it i o n s o f th a t s e s s i o n t o
e n s u r e t h a t t h e s e s s i o n w a s n o t g o i n g t o p u t Tr a n s n e t t h r o u g h a n y
undue risk. That would have been expected of the – of that committee

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16 MAY 2019 – DAY 94
a s w e ll a s th e e x e c u tiv e s w h o m a d e t h is – t h e s u b m is s i o n .
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY :

H o w e v e r t h e r e is a s i n g l e

le t t e r a s f a r a s I a m a w a r e t h a t s a y s : M r W o o d i s p r o p o s i n g t h a t t h is
b e c e d e d . Th e p r o b le m w i th th a t i s t h a t h e is a m e m b e r o f R e g i m e n ts
a t t h e ti m e a n d h e is a m e m b e r o f Tr il li a n la t e r o n a s w e ll s o a g a in o n e
c o u l d q u e s ti o n th is fr o m a – m a n y d i ff e r e n t c o n f li c t a n g l e s a s w e l l .
C H A I R P E R S O N : B e c a u s e t h e i m p o r ta n c e o f a n i n p r i n c i p le d e c i s i o n is
w h e r e t h e b o a r d o r t h e c o m m i t t e e m i g h t b e s a y in g in p r i n c i p le w e
10

a p p r o v e n e g o t ia t io n s f o r a s e s s i o n b u t i n t h e e n d w e m u s t s e e t h e
s e s s i o n a n d t h e n s e e w h e t h e r w e i n t h e li g h t o f t h e t e r m s a n d
c o n d i ti o n s w e a p p r o v e .
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s .
CHAIRPERSON :

B u t y o u c a n n o t – i t is d i ff ic u l t t o s e e h o w y o u c a n

a p p r o v e a n a g r e e m e n t w i t h o u t s e e in g t h e t e r m s a n d c o n d it i o n s o f th e
agreement.
M R M O H A M M E D S U L E M A N M A H O M E D Y : I a g r e e C h a ir.
C H A I R P E R S O N : Ye s . O k a y.
ADV PHILLIP MOKOENA SC :
20

B u t c o u l d t h is b e th e s e r v ic e s t h a t o n e

c o u l d s i m p l e c e d e w i t h o u t h a v i n g to r e a l ly i n v i te t e n d e r s a n d e n s u r e
t h a t th e r e i s a n o p e n , f a ir, tr a n s p a r e n t, c o m p e ti t iv e p r o c u r e m e n t
s y s te m ?
MR MOHAMMED SULEMAN MAHOMED Y :

N o th a t is c l e a r ly n o t

a p p a r e n t i n th e p r o c e s s th a t w a s f o l lo w e d h e r e .

It was merely a

tr a n s fe r o f a c o n tr a c t f r o m o n e e n ti ty t o a n o t h e r w it h n o p r o c u r e m e n t

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16 MAY 2019 – DAY 94
e v e n t . I f th a t e n ti ty w a s n o t g o i n g t o a c tu a l ly e x e c u t e t h e t r a n s a c t io n s
y o u w o u l d h a v e h a d t o h a v e g o n e b a c k a n d a s k e d w h y b e c a u s e th e r e
w a s a c o n tr a c t i n p la c e fo r t h a t e n t it y t o d e l iv e r i n t h is R e g i m e n t s
w h a t e v e r t h e d e liv e r a b l e s w e r e e x p e c te d .

S o i t d o e s n o t fr o m a

p r o c u r e m e n t p e r s p e c ti v e i t d o e s n o t n e c e s s a r ily m a k e s e n s e t h a t w e
w o u ld h a v e j u s t c e d e d o v e r a c o n tr a c t w i th o u t u n d e r s t a n d i n g th e
s e s s i o n a g r e e m e n t , w i th o u t u n d e r s t a n d i n g t h e r is k s to Tr a n s n e t.
W i th o u t a s s e s s i n g w h e t h e r t h e r e w a s a n e e d t o a c t u a ll y g o o u t o n a
n e w p r o c u r e m e n t e v e n t i n s te a d o f j u s t – s o th is w a s e s s e n t i a l ly fo r
10

w a n t o f a b e t t e r p h r a s e C h a ir a n d w o u ld li k e n o t – th is is n o t p a r t o f a
p r o c u r e m e n t p r i n c ip l e in Tr a n s n e t b u t i t b e c a m e a c o n fi d e n t ia l c o n f in e d
session.

T h a t is r e a ll y w h a t h a p p e n e d h e r e b e c a u s e t h i s e n ti ty c a m e

out of nowhere.
CHAIRPERSON :

W e ll a q u e s ti o n w h i c h I a s k e d M r Vo l m i n k l a s t w e e k

w h e n h e g a v e h i s e v i d e n c e w a s w h e t h e r a s e s s i o n is c o m p a t ib le w i t h
t h e w h o l e i d e a o f te n d e r s o r p r o c u r e m e n t b e c a u s e th e i d e a o f
p r o c u r e m e n t o f a t e n d e r is t h a t :
1 . T h e b o d y is s u i n g t h e t e n d e r Tr a n s n e t i n t h is c a s e w a n ts t o g e t
t h e b e s t s e r v i c e f o r a s r e a s o n a b ly p r i c e d a s p o s s i b l e f o r t h e
20

c h e a p e s t p r ic e th e y c a n g e t o u t o f th e m a r k e t . S o m e t i m e s th e y
m a y b e c e r t a i n fa c t o r s t h a t a r e t a k e n in t o a c c o u n t b u t b a s ic a l ly
t h a t i s w h e r e y o u s t a r t fr o m y o u k n o w.

If two companies are

g o i n g to g i v e y o u a s e r v ic e t h a t is e q u a l a n d o n e o ff e r s y o u a
c h e a p e r p r i c e t h a n t h e o th e r y o u g o f o r th e o n e w i th t h e c h e a p e r
price. Excuse me. There may be factors where you may led you

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16 MAY 2019 – DAY 94
t o [i n d is t in c t ] t a m p e r w i t h t h a t b u t t h a t is t h e s ta r t i n g p o i n t . A n d
n o w b u t th e n t h e o t h e r f a c to r i s th a t y o u h a v e a n o b li g a t io n t o
e n s u r e t h a t w h o y o u g i v e b u s i n e s s t o i s d e a l t w i t h tr a n s p a r e n tly
t o a v o i d c o r r u p t io n . A n d o n e o f t h e f a c t o r s y o u h a v e t o t a k e in t o
a c c o u n t is c a n t h e y d e liv e r ?
2 . Yo u w a n t t o s e e a l o t o f th i n g s a b o u t th e i r c r e d i b i li t y a n d s o o n
a n d s o o n a n d y o u w i ll in v i t e d i ffe r e n t p e o p l e to t e n d e r. A n d i f –
a n d n o b o d y w h o m e e ts t h e r e q u ir e m e n ts i s e x c l u d e d a s l o n g a s
y o u m e e t th e r e q u ir e m e n ts y o u m a y p u t i n y o u r b i d .
10

So if now

having gone through that process you are going – and you have
c h o s e n a p a r ti c u la r s e r v ic e p r o v i d e r a n d t h e n b e f o r e t h e y c a n
fi n i s h t h e j o b th e y s a y i n g w e ll w e w il l g iv e th is jo b t o s o m e b o d y
e ls e a n d fr o m n o w o n i t is s o a n d s o t h a t w i ll d o th is j o b . I t d o e s
n o t s e e m t h a t i t is c o m p a t ib l e w i t h t h e w h o l e i d e a o f a t e n d e r. I t
s e e m s t h a t a s e r v ic e p r o v i d e r w h i c h f o r o n e o r o t h e r r e a s o n
r e a l is e s t h a t th e y c a n n o l o n g e r p e r f o r m i n a c c o r d a n c e w i t h t h e
c o n tr a c t s h o u ld b e – s h o u l d c o m e b a c k a n d s a y w e h a v e
d i ff ic u l ti e s w e c a n n o t p e r fo r m a n d t h e n y o u a s th e b u s in e s s m u s t
t h e n d e c i d e h o w th a t s h o u ld b e d e a l t w i t h a n d it m a y w e ll b e th a t

20

y o u s h o u ld p u t o u t a t e n d e r fo r s o m e b o d y w h o c a n fi n is h t h a t jo b .
S o I d o n o t k n o w w h e th e r y o u a r e a b le t o s a y a n y t h i n g o n t h is
b u t th e m o r e I th in k a b o u t i t t h e m o r e it s e e m s to m e t h a t t h e
w h o le id e a o f a s e s s i o n is in c o m p a t ib l e w i t h th e w h o le id e a o f
t e n d e r s a n d o p e n a n d tr a n s p a r e n t p r o c e s s e s t h a t a r e r e q u i r e d b y
S e c t io n 2 1 7 o f T h e C o n s t it u ti o n a n d o u r p r o c u r e m e n t le g is l a ti o n .

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16 MAY 2019 – DAY 94
MR MOHAMMED SULEMAN MAHOMEDY :

C h a ir i f I m a y c o m m e n t o n

that?
CHAIRPERSON :

A n d I a p p r e c ia t e t h a t m a y b e s o m e o f t h is m i g h t b e

la w.
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s .
CHAIRPERSON : And you might not be able to express a view bu t I just
g iv e y o u a c h a n c e t o c o m m e n t i f y o u w a n t t o .
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir e a r l ie r i n m y t e s ti m o n y
w e t a l k o f th e M c K in s e y c o n s o r t iu m o n 1 0 6 4 a d v is o r y.
10

CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMED Y :

And we mention that

b e c a u s e t h e r e w a s a c h a n g e i n th e c o n s o r ti u m c o m p o s i ti o n th a t
p r o c e s s w a s d e e m e d ir r e g u l a r. I t w o u l d h o l d th e s a m e p r i n c ip l e i n my
v ie w i n t e r ms o f t h e c o n s o r ti u m i n t h i s c a s e h e r e w a s R e g i m e n ts a n d
M c K in s e y b e c a m e Tr il li a n w it h M c K in s e y b e i n g e x c l u d e d . A n d y o u b r i n g
in t h i s c a s e e v e n f u r th e r y o u r e m o v e R e g i m e n ts a s t h e e n t i ty, th e
ju r is ti c e n ti ty t h a t th e c o n t r a c t w a s e n t e r e d i n t o w i t h a n d r e p l a c e th e m
w i t h a n e n ti ty t h a t i s c o m p le t e l y d i ff e r e n t.

To A d v o c a t e M o k o e n a ’s

p o i n t a s w e ll I t h i n k it is i m p o r t a n t t h a t w h e n w e ta l k a b o u t t h e d u e
20

d i li g e n c e d i d w e d o a d u e d il ig e n c e o n t h e c a p a c i t y a n d c a p a b il i ty o f
t h is e n t i ty t o e x e c u t e e x a c t ly w h a t w a s o r i g i n a l ly e n v is a g e d i n t h e
c o n tr a c ts . A n d t h a t q u e s t io n r e m a i n s u n a n s w e r e d o r i s a b s e n t in te r ms
o f t h e m e m o r a n d u m . A n d I t h in k C h a ir t o o p i n e o n w h a t y o u h a v e j u s t
p u t o u t I t h in k th a t i t is n o t c o m p a t ib l e t o h a v e s e s s io n s a s y o u w o u l d
b r i n g i n – y o u c o u l d b r i n g i n s ig n if ic a n t u n d u e r is k t o – i n t o a

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16 MAY 2019 – DAY 94
p r o c u r e m e n t e v e n t t h a t w a s e s s e n t ia ll y d e - r i s k e d a t t h e t i m e o f t h e
e v e n t . T h e r e c o u l d b e a w h o l e h o s t o f o t h e r m a t te r s t h a t w e w il l h a v e
t o l o o k a t b u t I t h i n k t h i s p a r t ic u l a r s e s s io n is fl a w e d f u n d a m e n ta lly
b e c a u s e t h e c o n s o r t iu m t h a t h a d p u t in t h e b i d w a s M c K i n s e y a n d – o r
a t t h e ti m e R e g i m e n ts a n d M c K i n s e y a n d th a t w a s fu n d a m e n t a l ly
c h a n g e d fir s t ly b y

r e m o v in g M c K i n s e y a n d t h e n r e p l a c i n g t h e m w i t h

Tr i ll ia n . S o I t h i n k th a t I s u p p o r t s o m e o f y o u r v ie w s C h a ir.
A D V P H I L L I P M O K O E N A S C : Ye s . M a y I r e f e r y o u to p a g e 2 8 , 2 8 o f
your statement.
10

M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s .
ADV PHILLIP MOKOENA SC :

W i t h p a r ti c u l a r r e fe r e n c e t o p a r a g r a p h

5 .1 0 .5 . 3 w h e r e y o u s t a te th a t w h e r e i t w a s s ta t e d b y t h e A D C t h a t t h e r e
w a s a n in c r e a s e i n c o n tr a c t v a lu e o f G F B c o n tr a c t fr o m 3 7 5 m i lli o n to
4 6 3 . 3 m i ll i o n . D o y o u k n o w w h ic h c o n tr a c t a r e t h e y r e f e r r i n g t o h e r e ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s t h e r e is a – th e r e w a s a
c o n tr a c t c a ll e d G e n e r a l Fr e i g h t O p t i m is a t i o n .
A D V P H I L L I P M O K O E N A S C : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : W h ic h I b e li e v e th e h e a d s o f
a g r e e m e n t w a s b e t w e e n Tr a n s n e t a n d R e g i m e n ts w i th M c K i n s e y a s a
20

p a r t n e r o r a s u p p ly d e v e l o p m e n t p a r t n e r to th a t – t o R e g i m e n ts .
ADV PHILLIP MOKO ENA SC : But they were now going to be performed
by
M R M O H A M M E D S U L E M A N M A H O M E D Y : Tr i ll ia n .
A D V P H I L L I P M O K O E N A S C : Tr il li a n ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s .

Page 110 of 182

16 MAY 2019 – DAY 94
ADV PHILLIP MAKOENA SC:

And when that scope of that magnitude

w a s b e e n e n v i s a g e d a ls o t h a t c o m p o n e n t d id n o t g o to a n y p r o c u r e m e n t
o f a n y te n d e r p r o c e s s e s ?
MR MOHAMMED SULEMAN MAHOMEDY:

As far as I am aware the

in it i a l c o n tr a c t t o R e g i m e n ts w a s a ls o a c o n fi n e m e n t .
A D V P H I L L I P M A K O E N A S C : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

So

it

went

through

a

c o n fi n e m e n t p r o c e s s b u t t h i s in c r e a s e i n s c o p e d i d n o t g o t h r o u g h a n y
p r o c u r e m e n t a c ti v i ti e s .
10

A D V P H I L L I P M A K O E N A S C : Ye s . C h a ir w o u ld th is b e a n a p p r o p r i a t e
ti m e t o a d jo u r n fo r lu n c h ?
CHAIRPERSON :

Ye s , l e t u s ta k e th e l u n c h a d j o u r n m e n t a n d w e w i ll

resume at two. We adjourn.
REGISTRAR: All rise.
I N Q U I RY A D J O U R N S
I N Q U I RY R E S U M E S
C H A I R P E R S O N : A r e y o u r e a d y Mr M o k o e n a ?
ADV PHILLIP MOKOENA SC :

C h a ir w e a r e r e a d y.

CHAIRPERSON : Thank you, proceed.
20

ADV PHILLIP MOKOENA SC :

C h a ir b e f o r e w e p r o c e e d w i t h th e

r e m a in in g p a r a g r a p h s u n d e r t h a t h e a d in g th a t w e w e r e d e a li n g w i th
b e f o r e t h e l u n c h a d j o u r n m e n t w e m a n a g e d t o tr a c e s o m e o f t h e
d o c u m e n ts w h ic h t h e C h a ir r e q u e s t e d u s t o lo c a t e , w e b e g l e a v e t o
h a n d i n t h e m e m o r a n d u m d a t e d t h e 2 n d D e c e m b e r 2 0 1 5 a n d a ls o t h e
le t t e r d a t e d th e 1 6 t h o f M a r c h 2 0 1 6 . W e w i ll t h e n t r y t o l o c a t e – C h a ir

Page 111 of 182

16 MAY 2019 – DAY 94
w e p r o p o s e s u b je c t t o y o u r d ir e c ti o n s t h a t th e m e m o r a n d u m d a t e d t h e
2 n d D e c e m b e r 2 0 1 5 b e i n s e r t e d i m m e d i a t e ly a f t e r t h e d o c u m e n t s i n
f o l d e r n u m b e r 2 4 , b e c a u s e it m a k e s s e n s e , th a t ’s w h e r e th e y f e e d in in
terms of chronology and the evidence of Mr Mahomedy and subject to
y o u r d ir e c ti o n s to m a r k th e m a s p a g e 4 6 2 . 1 t o p a g e 4 6 2 .3 .
CHAIRPERSON:

O h t h is m e m o r a n d u m t h a t h a s j u s t b e e n h a n d e d u p is

n o t M r R a m o s e b u d i ’s m e m o r a n d u m t h a t w e d is c u s s e d e a r l ie r ?
ADV PHILLIP MOKOENA SC :

I t ’s n o t C h a ir w e w il l l e a d t h e w i tn e s s

t h r o u g h th is m e m o r a n d u m t h e n y o u ’l l f o l lo w t h e s e n s e is t h e o n e w h i c h
10

w a s a d v is i n g a g a i n s t t h e s w a p a n d i t w a s o n ly r e f e r e n c e d i n a n e m a i l
b u t w e d i d n o t h a v e t h e m e m o r a n d u m i ts e l f .

S o i f C h a ir c o u l d g o to

folder number 24.
CHAIRPERSON :

Ye s th a t ’s w h e r e I a m .

ADV PHILLIP MOKOENA SC :
CHAIRPERSON :

Ye s .

W h a t I ’ m l o o k in g a t is w h e n y o u s a i d i t ’s a

m e m o r a n d u m d a t e d 2 D e c e m b e r I t h o u g h t it w o u l d b e t h e m e m o r a n d u m
t h a t M r M a h o m e d y t o ld m e a b o u t w h ic h h a d p r e c e d e d M r R a m o s e b u d i ’s
m e m o w h ic h w a s ta k i n g a p o s i ti o n i n r e la t i o n t o i n t e r e s t r a t e s w a p s t h a t
was
20

d ir e c t ly

a g a in s t

th e

p o s i ti o n

taken

by

Mr

R a m o s e b u d i . . .( i n t e r v e n t i o n ) .
ADV PHILLIP MOKOENA SC :

T h i s is t h e m e m o r a n d u ms C h a ir i f y o u

lo o k a t t h e s e q u e n c e . . .( i n t e r v e n t i o n ) .
MR

MOHAMED

SULEMAN

MAHOMED Y :

( In d i s ti n c t)

fr o m

Mr

Ramosebudi.
ADV PHILLIP MOKOENA SC :

N o C h a i r i f y o u g o t o t h e la s t p a g e ,

Page 112 of 182

16 MAY 2019 – DAY 94
page 463 – 462.3.
CHAIRPERSON : What page?
ADV PHILLIP MOKOENA SC :

4 6 1 – o h t h e d o c u m e n t t h a t w e ’v e ju s t

h a n d e d t o y o u C h a ir, o f t h e d o c u m e n t t h a t w e ’v e j u s t h a n d e d to t h e
C h a ir.
CHAIRPERSON :

Ja.

ADV PHILLIP MOKOENA SC:

A n d t h e n g o t o t h e la s t p a g e o f t h a t

document.
CHAIRPERSON :
10

Ye s .

ADV PHILLIP MOKOENA SC :

M r M a h o m e d y w i ll e x p la in t o y o u t h a t

t h is w a s i n fa c t a d o c u m e n t b y Mr D e n is S m i t , t h e G r o u p Tr e a s u r e r.
CHAIRPERSON :

Ye s .

ADV PHILLIP MOKOENA SC :

A n d h e ’ ll e x p l a i n t o y o u a s t o w h y y o u

fi n d t h e n a m e o f M r G a r y P i t a a n d M r R a m o s e b u d i b u t h e ’l l d o t h a t
t h r o u g h h is e v i d e n c e , y o u ’ ll fo ll o w i t .
MR MOHAMED SULEMAN MAHOMEDY :
ADV PHILLIP MOKOENA SC :

O h o k a y a lr i g h t .

Ye s s o

th is i s t h e o n e

th a t

p r e c e d e s . . .( i n t e r v e n t i o n ) .
CHAIRPERSON :
20

O h o k a y s o w h e r e s h o u l d w e s lo t t h is o n e in ?

ADV PHILLIP MOKOENA SC :

T h is o n e s h o u l d g o i m m e d i a te ly a ft e r

page 460.
CHAIRPERSON :

S h o u ld n ’t i t c o m e b e fo r e p a g e 4 5 7 i n t e r m s o f t h e

d a t e s i n c o m e s b e f o r e a n d i n t e r m s o f t h e lo g i c o f t h e s t o r y i t s e e m s t o
b e lo n g b e f o r e ?
ADV PHILLIP MOKOENA SC :

C h a ir w e c a n th e n a m e n d t h e p a g e t o

Page 113 of 182

16 MAY 2019 – DAY 94
become 457.1 instead.
CHAIRPERSON :

What should we mark it page?

ADV PHILLIP MOKOENA SC :

P a g e 4 5 7 . 1 a n d th e n w e ’ ll n u m b e r th e

f o ll o w i n g p a g e s a s 4 5 7 . 2 a n d 4 5 7 . 3 i n o r d e r t o f o ll o w t h a t c h r o n o lo g y
a n d th e s e q u e n c e .
CHAIRPERSON :

W e ’l l m a r k it M S M – o r s h o u ld w e m a k e a r e fe r e n c e

t o M S M o r n o t?
ADV PHILLIP MOKOENA SC :
CHAIRPERSON :
10

Ye s .

M S M 4 5 7 .1 , t h e o n ly t h i n g is t h a t i n th e a ff i d a v i t d o e s

h e r e f e r to s u c h a m e m o ?
ADV PHILLIP MOKOENA SC :
CHAIRPERSON :

N o C h a ir h e d o e s n ’ t r e fe r t o i t .

O k a y w e ’ ll s lo t it in w i t h t h e u n d e r s ta n d i n g t h a t it ’s

n o t a m e m o r e f e r r e d t o i n h is a ff id a v i t b u t i t s h o u ld h a v e b e e n r e f e r r e d
t o a n d i t b e l o n g s i m m e d i a te ly b e f o r e t h e o n e t h a t i s a t p a g e M S M 4 5 7
b u t y o u h a v e s a i d th a t w e m u s t p u t . 2 fo r t h e o th e r o n e .
ADV PHILLIP MOKOENA SC :

F o r th e n e x t p a g e .

C H A I R P E R S O N : Ye s f o r th e n e x t. . .( in t e r v e n t io n ) .
ADV PHILLIP MOKOENA SC :

Ye s a n d t h e o t h e r p a g e s h o u l d b e . 3 s o

t h a t w e a r e a b l e t o f o l l o w in t e r m s o f r e fe r e n c e .
20

CHAIRPERSON :

O k a y n o w l e t ’s – t h e n e w m e m o t h e fi r s t p a g e o n

t h e n e w m e m o is M S M 4 5 7 . 1 .
ADV PHILLIP MOKOENA SC :

Ye s .

CHAIRPERSON : Must I then say 2, 3 for the next one?
ADV PHILLIP MOKOENA SC :
CHAIRPERSON :

Ye s .

O k a y.

Page 114 of 182

16 MAY 2019 – DAY 94
ADV PHILLIP MOKOENA SC :
CHAIRPERSON :

457.2 and 457.3, the last page.

Is – h a s t h e w i t n e s s e s o n e a lr e a d y b e e n ta k e n c a r e

o f?
ADV PHILLIP MOKOENA SC :
CHAIRPERSON :

Ye s .

O k a y a n d th e n t h e o n e t h a t w a s – t h a t i s 4 5 7

r e m a in s a s 4 5 7 o r d o w e d o a n y t h i n g t o i t ?
ADV PHILLIP MOKOENA SC :

Th a t w il l g o t o f o l d e r n o w – i f y o u g o t o

f o l d e r n u m b e r 2 5 C h a ir.
CHAIRPERSON :
10

Ja.

ADV PHILLIP MOKOENA SC :

Yo u ’l l s e e t h a t’s w h e r e o n p a g e 4 6 4 M r

M a h o m e d y is r e f e r e n c i n g a n u m b e r o f e m a i ls a n d t h e y g o u p u n t il t h e
la s t e m a i l w h i c h i s o n p a g e 4 7 0 t h e r e fo r e w e a r e p r o p o s i n g t h a t t h is
o n e d o c u m e n t , i t s h o u ld b e p a g e 4 7 0 . 1 .
CHAIRPERSON :

A r e y o u t a lk i n g a b o u t t h e le t t e r n o w ?

ADV PHILLIP MOKOENA SC :

T h e l e tt e r C h a ir, y e s .

CHAIRPERSON : Oh I’m not there yet.
ADV PHILLIP MOKOENA SC :
CHAIRPERSON :

O h y o u ’r e s t il l o n t h e m e m o ?

I’ m s t il l o n t h e m e m o w e h a v e m a r k e d t h e n e w

m e m o M S M 4 5 7 .1 u p t o 3 .
20

ADV PHILLIP MOKOENA SC :
CHAIRPERSON :

Ye s .

A n d I th in k w e h a v e a g r e e d t h a t i t s h o u l d c o m e

i m m e d i a t e ly b e f o r e M S M 4 5 7 .
ADV PHILLIP MOKOENA SC :
CHAIRPERSON :

D e f in i te ly.

S o m y q u e s ti o n w a s w h e t h e r w e s h o u l d le a v e

M S M 4 5 7 a s i t is i n t e r m s o f th e n u m b e r i n g o f th e p a g e o r w h e t h e r w e

Page 115 of 182

16 MAY 2019 – DAY 94
should put any new thing.
ADV PHILLIP MOKOENA SC :

N o C h a ir.. . ( in t e r v e n ti o n ) .

C H A I R P E R S O N : Yo u w a n t u s t o l e a v e i t l i k e th a t ?
ADV PHILLIP MOKOENA SC :
CHAIRPERSON :

Ye s .

O k a y t h i s w i ll h a v e t o b e p u n c h e d t h e n in d u e c o u r s e

o k a y th e n y o u s a y w e – in r e g a r d t o t h e l e t t e r. . .( in t e r v e n ti o n ) .
ADV PHILLIP MOKOENA SC :

T h e l e t t e r s h o u l d g o i m m e d i a t e ly a f t e r

p a g e M S M 4 7 0 w h i c h i s t h e la s t e m a i l i n t h e s e q u e n c e o f th o s e
correspondence.
10

CHAIRPERSON :

A n d y o u s u g g e s t t h a t it s h o u ld b e M S M w h a t?

ADV PHILLIP MOKOENA SC :

4 7 0 .1 s o t h a t it d o e s n ’ t ta m p e r w it h a n y

o th e r n u m b e r s .
CHAIRPERSON :

O k a y, a l r i g h t t h a n k y o u , y e s .

ADV PHILLIP MOKOENA SC :

Ye s C h a ir, h a v i n g d o n e t h a t t h e n w e

c a n p r o c e e d to p l a c e t h e m p r o p e r l y b y m e a n s o f e v i d e n c e o f M r
M a h o m e d y.

M r M a h o m e d y e a r l ie r o n , w it h r e f e r e n c e t o f o ld e r n u m b e r

2 4 . . .( in t e r v e n ti o n ) .
CHAIRPERSON :

M a y b e j u s t b e f o r e y o u p r o c e e d b e c a u s e th e r e is a

c o n te x t t o t h e n e w m e m o o r a r e y o u g o i n g t o g o b a c k t o i t a t s o m e
20

s t a g e w i t h th e w i tn e s s ?
ADV PHILLIP MOKOENA SC :

Ye s th a t ’s w h a t I’ m . . .( in t e r v e n ti o n ) .

C H A I R P E R S O N : O h o k a y I w a n t e d t o – ja t h a t ’s fi n e t h e n .
A D V P H I L L I P M O K O E N A S C : W i th r e f e r e n c e d t o fo l d e r 2 4 w h ic h i s
p a g e M S M 4 5 7 y o u i n d ic a te d th a t t h e r e w a s a m e m o – t h is w a s th e
m e m o b y M r R a m o s e b u d i w h ic h w a s d e s p a t c h e d t o M r G a r y P i ta , d o

Page 116 of 182

16 MAY 2019 – DAY 94
y o u r e c a ll ?
MR MOHAMED SULEMAN MAHOMEDY :
ADV PHILLIP MOKOENA SC :

Ye s .

And

y o u a l s o r e fe r r e d t o a

m e m o r a n d u m p r e c e d in g t h is o n e w h e r e i n t h e r e w a s a c l e a r a d v ic e n o t
t o m a k e a – a n i n te r e s t r a t e s w a p d o y o u r e c a l l t h a t?
MR MOHAMED SULEMAN MAHOMEDY :
ADV PHILLIP MOKOENA SC :

Ye s .

U n f o r t u n a te ly t h a t d o c u m e n t w a s n o t

p a r t o f t h e p a p e r s a n d y o u h a v e n o w s i n c e l o c a te d t h a t d o c u m e n t , a m I
correct?
10

MR MOHAMED SULEMAN MAHOMEDY :
ADV PHILLIP MOKOENA SC :

Ye s .

Now may I refer you to MSM457.1 and

p l e a s e i d e n ti fy t h a t d o c u m e n t .
MR MOHAMED SULEMAN MAHOMEDY :

C h a ir i t’s a m e m o r a n d u m

w h ic h is u n s i g n e d b u t a tt a c h e d w h ic h w a s A n n e x e d to a n e m a i l fr o m Mr
D a n ie S m i t t o M r R a m o s e b u d i a n d M r P i t a w h ic h is t it l e d , “ 1 2 b i ll io n
r a n d c l u b l o a n i n t e r e s t r a te , r is k e x p l a n a ti o n ” a n d d a t e d th e 2 n d o f
December 2015.
ADV PHILLIP MOKOENA SC :

Ye s b u t w h e n y o u l o o k o n t h e f a c t o f

t h a t d o c u m e n t i t s a y s t o G a r y P i ta a c ti n g G r o u p C h ie f F i n a n c i a l O ff ic e r
20

t h e n i t s a y s fr o m P h e to l o R a m o s e b u d i G r o u p Tr e a s u r e r.

Can you

e x p l a i n h o w d o y o u c o m e t o th e c o n c l u s i o n t h a t i t w a s in f a c t f r o m M r
D a n ie S m i t ?
MR MOHAMED SULEMAN MAHOMEDY :

C h a ir a s I t e s ti f ie d e a r li e r

t h e e m a il t h a t w a s s e n t o n th e 2 n d o f D e c e m b e r 2 0 1 5 a t 1 0 h 3 0 a m f r o m
M r D a n i e S m i t w h ic h is e v i d e n c e p a c k 4 6 2 w h e r e h e s t a te s , m y h u m b le

Page 117 of 182

16 MAY 2019 – DAY 94
o p i n i o n o n th e i n te r e s t r a te e x p o s u r e o f t h e c lu b l o a n a n d a s y o u w i ll
n o t e th e r e , th e r e w a s a d o c u m e n t a t t a c h e d t o t h a t e m a i l , th is is th e
d o c u m e n t t h a t w a s a t t a c h e d t o t h a t e m a il .

S o i t w a s e s s e n t ia lly

p r e p a r e d a s i s s t a t e d o n t h e d o c u m e n t o n p a g e 4 5 7 . 3 t h a t it w a s
c o m p il e d b y D a n i e S m i t a n d i t w a s s u p p o s e d t o h a v e b e e n t h e n
r e c o m m e n d e d b y Mr R a m o s e b u d i fo r s u b m is s i o n t o – f o r a p p r o v a l b y
t h e th e n a c t i n g G r o u p C h i e f F in a n c ia l O f fi c e r a n d w e a r e n o w a w a r e
t h a t , th a t d o c u m e n t d i d n o t g e t a p p r o v e d .
CHAIRPERSON :
10

I th in k y o u s a i d M r D a n i e S m i t r e p o r t e d t o Mr

Ramosebudi, is that right?
MR MOHAMED SULEMAN MAHOMEDY :
CHAIRPERSON :

Ye s C h a ir.

S o M r D a n i e S m i t w o u l d h a v e p r e p a r e d a – t h is

d o c u m e n t o n th e b a s is th a t i t w o u l d b e – it w o u ld g o , u l ti m a t e l y t o M r
G a r y P i t a b u t a f te r Mr R a m o s e b u d i h a d s i g n e d i t – h a d s i g n e d i t t o s a y
h e w a s r e c o m m e n d i n g w h a t w a s s a i d i n th e m e m o .
MR MOHAMED SULEMAN MAHOMEDY :

Ye s C h a ir, th a t w o u l d h a v e

b e e n t h e fl o w o r d i n a r i ly.
CHAIRPERSON :

Ye s s o th e in t e n t i o n w a s t h a t i n e ffe c t M r D a n i e S m i t

a n d M r R a m o s e b u d i w o u l d b e m a k in g a r e c o m m e n d a ti o n t o Mr G a r y
20

P i ta a n d t h a t th e r e c o m m e n d a ti o n w o u ld b e b a s e d a n d s u p p o r t e d b y t h e
c o n te n ts o f t h e m e m o .
MR MOHAMED SULEMAN MAHOMEDY :
CHAIRPERSON :

T h a t is c o r r e c t .

B u t i f Mr R a m o s e b u d i d i d n o t a g r e e w i th i t t h e n h e

c o u l d a m e n d i t o r c h a n g e i t o r w h a t e v e r b u t M r D a n i e S m i t p r e p a r e d it
o n t h e b a s is t h a t h e a n d M r R a m o s e b u d i w o u ld a g r e e b u t a s i t t u r n e d

Page 118 of 182

16 MAY 2019 – DAY 94
out Mr Ramosebudi does not appear to have agreed.
MR MOHAMED SULEMA N MAHOMEDY:
CHAIRPERSON :

T h a t is c o r r e c t C h a ir.

O k a y, a lr i g h t .

ADV PHILLIP MOKOENA SC:

Now may I refer you to page 457.2 of

t h a t m e m o r a n d u m t h a t w e ’v e j u s t i n tr o d u c e d i n to e v i d e n c e a n d ta k e u s
w h a t Mr D a n i e S m i t s a y s u n d e r th e h e a d i n g , c o n c l u s i o n ?
MR MOHAMED SULEMAN MAHOMEDY :

C h a ir u n d e r t h e c o n c l u s i o n

p o i n t n u m b e r 1 4 o f t h i s m e m o r a n d u m it s t a t e s ,
“ it is r e c o m m e n d e d t h a t t h e c l u b l o a n n o t b e s w i tc h e d t o a
10

fi x e d r a te e x p o s u r e b y m e a n s o f a n i n t e r e s t r a te s w a p d u e to
t h e f o ll o w i n g :

i f t h e r e w a s a d e fi n it e n e e d t o f ix t h e r a t e

d u r i n g t h e f i n a lis a ti o n o f t h e c l u b l o a n , t h e lo a n s h o u ld h a v e
b e e n d e a l t a s f ix e d a s a n y s w a p w il l c r e a t e a n a m o u n t o f
v o l a ti li t y i n th e i n c o m e s t a t e m e n t d u e t o f a ir v a l u e m o v e m e n ts
w h ic h

could

a c c o u n t in g .

be

m i n i m is e d

by

th e

a p p l ic a t i o n

of

hedge

In t e r e s t r a t e s w a p s w il l u s e m a s s i v e c r e d it li n e s

fr o m b a n k s w h i c h is n o t t h a t f r e e l y a v a i l a b l e o v e r a 1 5 y e a r
t e n u r e a n d th e s e l i n e s a r e r e q u ir e d t o h e d g e f o r e i g n e x c h a n g e
r e l a t e d e x p o s u r e s d u e t o t h e M D S r e q u i r e m e n ts . S w a p s w i ll
20

c o m e a t a c o s t w h ic h n e e d t o b e d e t e r m i n e d i n th e m a r k e t .
L i q u i d i ty fo r th e 1 2 b i ll io n w ill h a v e to b e t e s t e d i n t h e m a r k e t .
T h e r e is c u r r e n t ly a g a p o f a r o u n d 2 0 0 b a s i s p o i n t s b e t w e e n
t h e c o s t o f a f lo a ti n g r a t e a n d t h e i n d ic a tiv e c o s t t o fix a n d
b a s e d o n th e fo r e c a s t s fr o m B E R a n d t h e a d d i t io n a l p r e s s u r e
t h e c o s t o f s w a p p i n g t o fi x e d w il l c r e a t e , o n th e c a s h in t e r e s t

Page 119 of 182

16 MAY 2019 – DAY 94
c o v e r r a t io o f th e G r o u p . I t is n o t r e c o m m e n d e d t o s w a p t h e
c lu b l o a n fr o m f lo a t in g to fi x e d ” .
ADV PHILLIP MOKOENA SC :

So this was the advice conveyed by Mr

D a n ie S m i t t o Mr R a m o s e b u d i ?
M R M O H A M E D S U L E M A N M A H O M E D Y : Ye s .
ADV PHILLIP MOKOENA SC :

A n d d e s p i t e t h is a d v i c e y o u ’v e a lr e a d y

t e s ti fi e d th a t w e k n o w t h a t t h e s w a p w e r e e x e c u te d .
MR MOHAMED SULEMAN MAHOMEDY :
ADV PHILLIP MOKOENA SC :
10

CHAIRPERSON :

T h a t is c o r r e c t .

Ye s n o w. . . ( in t e r v e n ti o n ) .

T h i s m e m o g iv e s r e a s o n s o f m o t iv a ti o n w h y i t w a s

n o t a g o o d i d e a i n t h e v i e w o f Mr D a n i e S m i t t o s w a p i n t e r e s t r a te s
r e g i m e fr o m f lo a ti n g i n t e r e s t r a t e r e g i m e t o a f i x e d i n t e r e s t r a t e r e g i m e
a n d – b u t w e k n o w t h a t a b o u t t w o d a y s l a te r – is it t w o d a y s l a t e r M r
R a m o s e b u d i p r e p a r e d a d o c u m e n t t h a t w a s s a y i n g th a t th e r e s h o u l d b e
a s w a p . N o w h a v e y o u h a d t h e c h a n c e t o lo o k a t t h e r e a s o n s g i v e n b y
b o t h th e s e m e m o f o r th e d i ff e r e n t p o s i t io n s t h e y t a k e a n d a r e y o u a b l e
t o s a y w h e t h e r o r n o t th e o n e t h a t M r R a m o s e b u d i s e n t t o M r P it a
w h e t h e r i t d o e s r e f le c t th a t h e h a d a n a n s w e r f o r t h e a r g u m e n ts in th e
o th e r m e m o . I n o t h e r w o r d s d o e s h is m e m o t e l l u s t h a t h e d i d c o n s i d e r
20

t h e v a r i o u s a r g u m e n ts a g a i n s t a s w a p a n d h e h a d a n a n s w e r fo r t h o s e
a r g u m e n ts a n d t h a t ’s w h y h e w e n t a h e a d a n d d i d n ’ t a g r e e w i th Mr
D a n ie S m i t ’s p o s i t io n ?
ADV PHILLIP MOKOENA SC :

C h a ir w e h a v e h a d a c h a n c e t o lo o k a t

t h e t w o , th e p e c u l i a r t h i n g i s th a t i f y o u l o o k a t t h e t w o m e m o ’s t h e t w o
m e m o r a n d u m s u n d e r d is c u s s i o n p o i n ts 4 t o 8 is e s s e n ti a lly, la r g e l y a

Page 120 of 182

16 MAY 2019 – DAY 94
c o p y a n d p a s t e f r o m o n e m e m o t o t h e o th e r w h ic h a c t u a ll y d o e s n ’ t
make sense because the one memorandum is saying you shouldn’t be
a c t u a ll y e x e c u ti n g t h i s a n d t h e o th e r – t h e m e m o r a n d u m o n t h e 3 r d o f
D e c e m b e r s a y s y o u s h o u ld b u t t h e r e a r e s o m e s li g h t n u is a n c e s t h a t
h a v e b e e n a m e n d e d , s o t h a t’s t h e fir s t t h i n g b u t th e s e c o n d t h i n g is
t h a t . . .( i n te r v e n t io n ) .
CHAIRPERSON :

I’ m s o r r y j u s t to g e t th a t , d i d y o u s a y fr o m w h a t , 2 t o

8?
ADV PHILLIP MOKOENA SC :
10

C h a ir p o i n ts 4 , i f y o u lo o k a t b o th

m e m o r a n d u m p o in t 4 . . .( i n t e r v e n ti o n ) .
CHAIRPERSON :

On each one?

MR MOHAMED SULEMAN MAHOMEDY :

P o i n t 8 o r 1 0 o n 4 5 7 . 1 i t ’s

p o i n t 4 t o 1 0 h a s l a r g e ly b e e n c o p i e d a n d p a s t e d i n to m e m o r a n d u m
n u m b e r 4 5 7 fr o m p o i n t 4 t o 8 w i t h s o m e m i n o r t w e a k s .
CHAIRPERSON :

Ye s a n d t h a t ’s th e d i s c u s s io n p a r t .

MR MOHAMED SULEMAN MAHOMEDY :
CHAIRPERSON :

Ye s .

O k a y a n d I s e e t h a t o n t h e p u r p o s e M r D a n ie S m i t ’s

o n e h a s g o t o n e p u r p o s e , M r R a m o s e b u d i’s o n e h a s g o t h r e e p u r p o s e s ,
is t h a t r i g h t ?
20

MR

MOHAMED

SULEMAN

MAHOMED Y :

Ye s

C h a ir

th a t ’s

th e

d i ff e r e n c e .
CHAIRPERSON :

Ye s a n d t h e n y o u c a n g o o n .

MR MOHAMED SULEMAN MAHOMEDY :

C h a ir t h e n i f w e l o o k a t t h e

k e y is s u e s t h a t h a v e b e e n r a i s e d b y M r S m i t , th e fi r s t o n e is , i f t h e r e
w a s a d e f i n i t e n e e d t o f ix i t s h o u l d h a v e b e e n a t t h e f in a lis a ti o n o f t h e

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16 MAY 2019 – DAY 94
c lu b l o a n , t h a t m a t t e r i s n o t r e s p o n d e d to i n a n y w a y.
CHAIRPERSON :

I s n o t d e a l t w i th ja .

MR MOHAMED SULEMAN MAHOMEDY :

N o C h a i r, t h e in t e r e s t r a t e

s w a p s w i ll u s e m a s s iv e c r e d i t li n e s fr o m b a n k s w h ic h is n o t th a t fr e e ly
a v a i la b le , t h a t a g a in , w h e n w e lo o k a t t h e m e m o r a n d u m u n d e r th e
m o t iv a t i o n , i t ’s n o t m e n ti o n e d a t a ll i n te r m s o f h o w t h a t w a s g o i n g t o
b e m i ti g a te d , i t ’s a s i g n i f i c a n t r i s k . S w a p s w i ll c o m e a t a c o s t , t h a t is
s o m e w h a t a d d r e s s e d in t h e d is c u s s i o n w h ic h w a s a c o p y f r o m t h e
p r e v i o u s d o c u m e n t . . .( i n te r v e n t io n ) .
10

CHAIRPERSON :

But then if – but then if it is part of the discussion

t h a t w a s i n M r D a n i e S m i t ’s m e m o t h e n i t c a n ’ t p o s s i b ly s u p p o r t
c o n tr a d ic to r y c o n c l u s io n .
MR MOHAMED SULEMAN MAHOMEDY :

C h a ir t h e o n ly t h i n g t h e y d i d

w a s , th e y u s e d t h a t a r g u m e n t a n d t h e n a d d e d a l in e t h a t s a y s , t h i s
e l i m in a t e s

the

interest

u n c e r t a i n ty

for

c o m m i t m e n ts f o r t h e d u r a t i o n o f t h e l o a n .

the

loan

and

f ix e d

th e

S o t o c o n v e r t t h e n e g a t iv e

t h e y c r e a t e d – t h e y h a v e n ’ t a d d r e s s e d t h e f a c t t h a t t h is b r i n g s m o r e
t h a n 2 0 0 m i ll io n r a n d o f a d d i ti o n a l c o s t t o t h e i n c o m e s t a te m e n t t h a t ’s
s t il l n o t a d d r e s s e d . T h e li q u i d i t y is s u e o f 1 2 b i ll i o n r a n d h a s n o t b e e n
20

a d d r e s s e d a n d th e i m p a c t o f th e ( in d i s ti n c t ) fr o m B E R t h a t h a s n o t b e e n
a d d r e s s e d s o n o w h e r e i n th e d o c u m e n t h a s i t a c tu a lly a d d r e s s e d t h e
r is k s t h a t Mr S m i t a c t u a l ly r a is e d i n t h e m e m o o r t h e e m a i l o f 2 n d o f
December 2015.
CHAIRPERSON :

O k a y th a n k y o u .

ADV PHILLIP MOKOENA SC :

Yo u , e a r li e r o n a ls o to o k t h e C h a ir

Page 122 of 182

16 MAY 2019 – DAY 94
t h r o u g h fo ld e r 2 5 a n d t e s t i fi e d o n a n u m b e r o f e m a i ls t h a t h a s p a s s e d
h a n d a n d y o u e v e n u s e d t h e w o r d s th a t t h e r e w a s c u t a n d p a s te i n w h a t
w a s w r it t e n in th e e m a il fr o m N e d b a n k w h i c h w a s s u b s e q u e n t ly – w h i c h
s u b s e q u e n t ly

found

i ts

way

in t o

the

le t t e r

of

Tr a n s n e t

by

Mr

R a m o s e b u d i , d o y o u r e c a l l t h a t e v id e n c e ?
MR MOHAMED SULEMAN MAHOMEDY :
ADV PHILLIP MOKOENA SC :

Ye s C h a ir.

N o w i f y o u g o t o M S M 4 7 0 . 1 a n d p le a s e

id e n t i fy t h a t d o c u m e n t a n d w h i le d o i n g t h a t a l s o c o n te x tu a l is e i t in
r e l a ti o n to t h e e v i d e n c e th a t y o u ’v e d e d u c e d b e fo r e t h is C o m m i s s i o n
10

e a r l ie r o n t o d a y.
MR MOHAMED SULEMAN MAHOMEDY :

C h a i r w e p r o v i d e d e v id e n c e

e a r l ie r o n i n te r ms o f p a g e 4 6 5 w h ic h s a y s t h a t Ms C a r o l P i ll a y w h o
w a s t h e a s s i s ta n t t o M r R a m o s e b u d i o n t h e 1 6 t h o f M a r c h 2 0 1 6 s e n t a n
e m a i l w i th a n a t t a c h m e n t t o Mr M o s s B r i c k m a n o f N e d b a n k s a y i n g t h a t
M r R a m o s e b u d i h a s r e p h r a s e d t h e c o n te n t o f h i s e m a i l i n t h e fo r m o f a
le t t e r fo r t h e s u p p o r ti n g d o c u m e n ts a n d t h e C h a ir p e r s o n a s k e d f o r t h a t
s p e c i f ic l e t t e r. C h a ir w e ’v e b e e n a b l e t o t r a c e t h a t l e t t e r a n d p r o v i d e i t
a c c o r d i n g l y w h e r e i n 4 7 0 . 1 i s a d o c u m e n t t h a t ’s i n fr o n t o f u s w h i c h i s
o n a Tr a n s n e t l e t te r h e a d s ig n e d o ff b y Mr P h e th o lo R a m o s e b u d i o n t h e
20

1 6 t h o f M a r c h 2 0 1 6 a s t h e G r o u p Tr e a s u r e r a d d r e s s in g t h a t le t t e r t o M r
M o s s B r i c k m a n a n d e s s e n t ia ll y t h e fir s t p a r a g r a p h o f t h a t le t t e r is a
c o p y a n d p a s t e o f t h e e m a il Mr Br ic k m a n h a d s e n t r e q u e s ti n g t h i s
p a r t ic u l a r p a r a g r a p h t o b e i n c l u d e d a n d t h e r e i s a s e c o n d p a r a g r a p h
w h ic h s a y s ,
“ f u r th e r m o r e a c o p y o f th e a p p r o v a l o f t h e tr a n s a c ti o n w a s s e n t

Page 123 of 182

16 MAY 2019 – DAY 94
to you on the 16th of March,

please note the second

s u b s e q u e n t tr a n s a c ti o n f o r t h e C P I l o a n n o v a ti o n a s p e r th e
G C a p p r o v a l d e t a i li n g n o fe e s f o r R e g i m e n ts a s t h e 1 0 6 4
lo c o m o t iv e s a g r e e m e n t” .
T h a t is th e tw o d o c u m e n ts t h a t w e r e r e q u e s t e d C h a ir.
ADV PHILLIP MOKOENA SC :

Ye s n o w h a v i n g d e a lt w i th t h o s e i s s u e s

t h a t w e r e s t il l p e n d in g m a y w e t h e n p r o c e e d w i t h y o u r e v id e n c e a n d
m a y I r e fe r y o u t o p a g e 2 8 o f y o u r s t a te m e n t w i t h p a r t ic u l a r r e f e r e n c e
to paragraph 5.10.7 and take us through the summary of the payments
10

w h ic h w e r e m a d e t o Tr i ll ia n .
MR MOHAMED SULEMAN MAHOMEDY :

C h a ir, t h e p a y m e n t s th a t w e

r e fl e c t i n t h e 5 . 1 0 .7 , a n u m b e r o f t h e m a n d w e w il l i d e n ti fy th e m w e r e
d o n e i n l in e w i t h th e p u r p o r t e d s e s s i o n t h a t w e d is c u s s e d b e f o r e l u n c h
in s o m e l e v e l o f d e t a il . Th a t w a s th e – e s s e n ti a lly th e c o n t r a c t u n d e r
w h ic h t h e s e p a y m e n t s w e r e m a d e .

There was a

payment that was

m a r k e d Tr a n s n e t P r o p e r ty fo r 4 1 . 0 4 m il li o n , a p a y m e n t – w e l l t h e r e w e r e
three

in v o ic e s

that

were

marked

General

Fr e i g h t

Business

for

2 3 . 9 4 m il li o n , t h e r e w e r e tw o i n v o ic e s th a t h a d t h e r e f e r e n c e S WAT a n d
a n o t h e r o n e t h e r e f e r e n c e G C I A b e i n g G r o u p C a p i t a l In t e g r a t i o n a n d
20

Assurance

fo r

3 8 . 7 m i ll io n ,

th ere

was

an

invoice

fo r

Tr a n s n e t

E n g i n e e r i n g f o r 11 . 4 m il li o n a n d a s w e m e n ti o n e d e a r li e r o n t h a t f o r t h e
Z A R C lu b L o a n t h e r e w a s a p a y m e n t o f 9 3 o d d m i ll i o n w h i c h i n c lu d e d
VAT.

W e d i d s t a t e th a t u n d e r 5 . 1 0 . 7 .5 t h a t t h e r e w a s n o e v i d e n c e a s

f a r a s w e h a v e r e v i e w e d a n d r e q u e s t e d th a t a n y w o r k w a s d o n e f o r t h e
p r o v i s i o n o f th e s e r v ic e u n d e r t h e a r r a n g i n g o f t h e Z A R C l u b L o a n fo r

Page 124 of 182

16 MAY 2019 – DAY 94
9 3 m i ll io n o r 9 3 . 5 m il li o n .
ADV PHILLIP MOKOENA SC :

Ye s .

MR MOHAMED SULEMAN MAHOMEDY :

C h a i r i t is a l s o n e c e s s a r y t o

n o t e t h a t u n d e r 5 . 1 0 . 7 . 3 f o r t h e S W AT a n d G C I A i n v o ic e s t o t a l li n g
3 8 . 7 m il li o n r a n d th is a m o u n t w a s r e fu n d e d to Tr a n s n e t i n D e c e m b e r
2 0 1 6 a s w e b e li e v e n o w o r k w a s e x e c u t e d b y Tr il li a n e v e n t h o u g h t h e
p a y m e n t w a s m a d e i n J u ly 2 0 1 6 .

I w ill d e a l w i t h t h a t i n a l i t tl e m o r e

d e t a i l a s w e l o o k a t t h e n e x t p a r t o f t h e s ta t e m e n t C h a ir.
CHAIRPERSON :
10

B u t I d o w a n t t o k n o w, j u s t w h a t t h e – w h e t h e r in

r e fu n d i n g t h is a m o u n t Tr il li a n c o n s id e r s t h a t n o w o r k h a d b e e n d o n e o r
w h e t h e r t h e y g a v e a n o t h e r r e a s o n f o r r e f u n d i n g it ?
MR MOHAMED SULEMAN MAHOMEDY:

C h a ir a n u m b e r o f t h e s e

in v o ic e s h a d m a d e t h e ir w a y i n t o t h e p u b l ic d o m a i n b e fo r e t h i s t i m e ,
b e f o r e t h e D e c e m b e r p e r io d a s I ’ m a w a r e R e g i m e n t s h a d t a k e n
e x c e p ti o n t o s o m e o f t h e s e p a y m e n ts , c la i m i n g t h a t th e y h a d e x e c u te d
t h e w o r k a n d w h y w a s Tr il li a n t h e b e n e f ic i a r y o f th e p a y m e n t , th a t w a s
o n e o f t h e k e y d i s p u t e s t h a t o c c u r r e d a t t h e t i m e . T h e o t h e r k e y p ie c e
o f e v i d e n c e i s t h a t t h e s e t w o i n v o ic e s p a r t ic u l a r l y r e l a t e d to my a r e a o f
c o n tr o l a t t h e t i m e . A s I m e n ti o n e d e a r l i e r o n , t h e S W AT c o n tr a c t a s
20

w e ll a s G r o u p C a p i t a l In t e g r a t i o n , t h e s e w e r e m y a r e a s i n Tr a n s n e t a t
t h a t p o i n t in t i m e . W e g o t t o h e a r o f th e s e i n v o ic e s a n d t h e c o s t s w e r e
w a n ti n g to b e a ll o c a t e d t o m y d e p a r t m e n t , w e r e s is t e d a n d a s k e d t h e m
w h a t w o r k , w h e r e w a s th e e v id e n c e o f a n y w o r k .

As I p o i n t e d o u t

e a r l ie r o n , w h e n – in M a r c h 2 0 1 6 w e h a d w a n t e d t o u n d e r s ta n d t h e
p r o c u r e m e n t e v e n t w i t h Tr i ll ia n a n d a t t i m e w e h a d a s k e d a l l o f th e

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16 MAY 2019 – DAY 94
p e o p l e w h o r e p r e s e n t e d Tr il li a n th a t w e r e p r e v i o u s ly w it h R e g i m e n ts to
le a v e th e b u i ld in g o r le a v e o u r s id e o f t h e b u il d i n g a s w e d i d n ’ t h a v e
a n y p r o c u r e m e n t e v e n t w i th t h e m .

S o w h e n t h e s e i n v o ic e s s u r f a c e s

s o m e t i m e i n J u l y I t h in k i t w a s o r l a te J u n e 2 0 1 6 i t w a s q u it e s u r p r is i n g
t o s a y th e le a s t b e c a u s e w e w e r e c e r t a i n t h a t Tr i l li a n h a d n o t e x e c u t e d
a n y w o r k a t t h e G r o u p – in t h e G r o u p C a p i t a l I n te g r a ti o n a n d A s s u r a n c e
function.

I w i ll la t e r o n , a ls o p r o v i d e t e s ti m o n y t o t h e p r o c e s s e s t h a t

w e r e i m p l e m e n te d a t Tr a n s n e t t o i n v e s ti g a t e t h e l e a k s o f in f o r m a t io n .
T h i s a m o n g s t o th e r s a n d t h e r e a s o n I s a y t h a t w a s b e c a u s e w e
10

h a d m a d e v e r y c le a r t o t h o s e p a r ti c u l a r in v e s t i g a t o r s t h a t th e s e
in v o ic e s w e r e i n v a li d b e c a u s e Tr il li a n h a d n o t d o n e a n y w o r k i n t h e
G r o u p C a p i t a l In t e g r a t i o n s p a c e n e i th e r h a d th e y d o n e a n y w o r k
r e fe r e n c in g t h e S w a t 2 c o n tr a c t . I n f a c t t h e y h a d d o n e n o w w o r k in o u r
d e p a r t m e n t. S o i t w a s a – I w o u l d s a y a – a c o m b i n a t i o n o f fa c t o r s t h a t
w o u ld p r o b a b l y h a v e l e d t h e m t o r e f u n d t h i s p a r tic u la r a m o u n t .
C H A I R P E R S O N : Ye s b u t I w a n t is t h e ir v e r s i o n a s f a r a s y o u k n o w it i f
y o u d o k n o w it ? T h e y h a d r e c e iv e d p a y m e n t a l a r g e p a y m e n t a n d y o u
w e r e n o w d e m a n d i n g t h e m o n e y to b e p a i d b a c k . D i d th e y j u s t p a y b a c k
without saying anything?

20

D id t h e y s a y w e b e l ie v e w e a r e e n ti tl e d t o

t h is a m o u n t b u t f o r r e a s o n s a , b , c , d w e a r e g iv i n g i t b a c k t o y o u ? O r
d i d th e y n o t s a y a n y t h i n g t h e y j u s t tr a n s f e r r e d t h e m o n e y b a c k th a t i s
what I want to know?
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir I a m n o t …
C H A I R P E R S O N : W h e t h e r is i t – t h e y …
MR MOHAMMED SULEMAN MAHOMEDY :

I a m n o t i n t h e k n o w. T h i s

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16 MAY 2019 – DAY 94
p a r t ic u l a r tr a n s a c ti o n w a s a s is e v i d e n c e d b y t h e d o c u m e n ta t io n
m a n a g e d b y l a r g e ly M r E d w a r d T h o m a s w h o w a s t h e G r o u p S u p p ly
C h a in O ff ic e r a t t h e ti m e a n d M r G a r r y P i t a .
C H A I R P E R S O N : Ye s , y e s .
MR MOHAMMED SULEMAN MAHOMED Y :

O u t s i d e o f t h a t v e r y fe w

p e o p l e s e e m e d t o h a v e a n u n d e r s t a n d i n g o f w h a t a c tu a lly tr a n s p ir e d
C h a ir.
CHAIRPERSON :

Ye s . A n d y o u a r e n o t a w a r e o f a n y c o r r e s p o n d e n c e

t h a t m a y h a v e a c c o m p a n ie d th e r e fu n d f r o m t h e m ?
10

MR MOHAM MED SULEMAN MAHOMED Y : I am not – I am not aware of
a n y th in g C h a ir.
C H A I R P E R S O N : O k a y.
A D V P H I L L I P M O K O E N A S C : C a n I p o s e t h e C h a ir ’s q u e s ti o n s s li g h tly
d i ff e r e n t ? I f i n d e e d Tr i ll ia n h a d p e r f o r m e d a n d e x e c u t e d w o r k o r r e n d e r
t h e s e r v i c e s fo r t h e a m o u n t w h ic h th e y h a v e b e e n p a i d f o r w o u l d th e r e
b e a n y r e a s o n fo r t h e m t o p a y b a c k th a t m o n e y ?
MR MOHAMMED SULEMAN MAHOMEDY :

N o th e r e w o u l d n o t b e a n y

r e a s o n if t h e w o r k w a s e x e c u t e d .
A D V P H I L L I P M O K O E N A S C : Ye s .
20

M R M O H A M M E D S U L E M A N M A H O M E D Y : S o i t – a ls o C h a ir o n e o f t h e
in v o ic e s is r e f le c t e d a s w o r k d o n e o n t h e 1 F e b r u a r y t o th e 1 A p r il a t
w h ic h p o i n t th e r e w a s n o c o n tr a c t, s e s s i o n o r o t h e r w is e b e c a u s e th e
s e s s i o n o n l y e x i s te d o n t h e 1 0 F e b – 1 0 M a y 2 0 1 6 . S o h o w c o u l d t h e y
h a v e a c tu a lly e x e c u t e d w o r k a s Tr il li a n i n F e b r u a r y, M a r c h a n d A p r il
2016?

It g o e s a g a i n s t a ll l o g ic e v e n t h o u g h i t w a s p r o b l e m a t ic in t h e

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16 MAY 2019 – DAY 94
s e s s i o n i n t h e f ir s t p la c e .

But even though it does not make sense

b e c a u s e th e s e p a y m e n ts w e r e – o r t h e i n v o ic e s w e r e r e fl e c ti n g w o r k
d o n e p r i o r to a n y c o m m i t m e n t Tr a n s n e t h a d w i th Tr ill i a n .
A D V P H I L L I P M O K O E N A S C : Yo u c o n c lu d e o n th is t o p i c b y i d e n ti f y i n g
s o m e o f t h e d e v ia t io n s f r o m t h e Tr a n s n e t p r a c ti c e .

Could you please

t a k e u s t h r o u g h t h e m fl o w i n g f r o m p a r a g r a p h 5 .1 0 . 8 .1 ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir e a r li e r o n I b r o u g h t t o
t h e a t t e n ti o n t h e – o f t h e c o m m i s s i o n t h e p a y m e n t p r o c e s s t h a t h a d
b e e n i m p le m e n t e d b y o u r t e a m w h ic h r e q u ir e d th a t th e m a n a g e r
10

r e s p o n s i b l e w il l s i g n o ff . Th e r e w o u l d b e a n e x p l a n a ti o n o f t h e f e e s ,
w h a t t h e y w e r e – w h a t w o r k w a s a c tu a ll y e x e c u t e d e t c e t e r a .

C h a ir

u n d e r M S M 3 5 o n e w i ll n o t e th a t t h e in v o i c e s w e r e a l l l i te r a lly o n e
li n e r s . W o r k d o n e , f e e s f o r w o r k d o n e , f e e s f o r p r o fe s s io n a l f e e s , w o r k
d o n e , p r o f e s s io n a l f e e s , w o r k d o n e to c l o s e [ i n d is ti n c t ] .
A D V P H I L L I P M O K O E N A S C : I t i s f in e .
C H A I R P E R S O N : J a w h a t p a g e is – a r e t h o s e i n v o ic e s ?
MR MOHAMM ED SULEMAN MAHOMEDY : 525.
A D V P H I L L I P M O K O E N A S C : F o ld e r 3 5 C h a ir.
MR MOHAMMED SULEMAN MAHOMEDY :
20

a p o lo g i e s .

S o f o ld e r 3 5 C h a ir m y

A ll o f t h o s e in v o ic e s f r o m p a g e 5 2 4 t h r o u g h t o 5 2 9 th e y

h a v e g o t t h e s i g n a t u r e o f t w o k e y e x e c u t iv e s . A n d t h e r e a s o n w e r a is e
t h is is b e c a u s e i t w o u l d o r d i n a r i ly b e e x p e c t e d th a t a b u s i n e s s p r o c e s s
o w n e r s i g n s o ff th e i n v o ic e t o s a y th a t h e h a s r e c e i v e d t h e g o o d s o r
s e r v ic e .

Th a t is Tr a n s n e t p r a c ti c e a n d t h e p a y m e n t s p r o c e s s t h a t w e

a tt a c h i n M S M 3 6 .

B u t h e r e w e h a d t h e C h i e f Pr o c u r e m e n t O ff ic e r

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16 MAY 2019 – DAY 94
e s s e n ti a l ly s ig n in g o n t h e i n v o ic e to g e t h e r w it h t h e G r o u p C h i e f
Fi n a n c i a l O ff ic e r M r Pi t a . S o t h o s e s i g n a t u r e s i d e n ti f ie d a s M r E d w a r d
T h o m a s a n d M r G a r r y P i ta .

A s I s a i d i t i s n o t a p p r o p r ia t e f o r th e

p e r s o n n o t r e c e iv i n g t h e s e r v ic e i f th e s e r v ic e w a s p r o v i d e d t h e r e w o u l d
h a v e b e e n a p r o c e s s o w n e r in Tr a n s n e t w h o w o u l d s i g n o ff to s a y h e
a c c e p ts t h e s e r v i c e , th e q u a l i ty o f t h e s e r v ic e a n d t h e p r o d u c t th a t w a s
d e li v e r e d .
C H A I R P E R S O N : W e ll I s ti ll h a v e n o t f o u n d w h e r e t h o s e in v o ic e s a r e .
Yo u s a i d
10

A D V P H I L L I P M O K O E N A S C : F o ld e r 3 5 .
C H A I R P E R S O N : D iv i d e r 2 5 .
ADV PHILLIP MOKOENA SC : 35
MR MOHAMM ED SULEMAN MAHOMEDY : 35
CHAIRPERSON : 85?
ADV PHILLIP MOKOENA SC : 35.
CHAIRPERSON :

I t l o o k s l ik e to d a y a s t h e d a y p r o g r e s s e s t h e

e q u ip m e n t i s m a k i n g s u r e t h a t I c a n n o t h e a r y o u .
A D V P H I L L I P M O K O E N A S C : I t is 3 5 C h a i r a n d y o u w i ll s e e w h a t t h e –
w h a t M r M a h o m e d y is t a l k i n g a b o u t w i t h la c k o f in f o r m a t io n o r a n y
20

p e c u li a r i ty p e r t a in i n g t o w h y t h o s e i n v o ic e s s h o u l d b e p a i d .

And he

w a s a l s o g iv i n g te s t i m o n y o n w h o s i g n e d t h e t w o – w h o s ig n e d th o s e
in v o ic e s a n d c o n tr a r y to w h a t is t h e p r a c t ic e o f Tr a n s n e t a s c o n t a i n e d
in o n e o f t h e d o c u m e n ts i n Fo l d e r n u m b e r 3 6 .
C H A I R P E R S O N : I t l o o k s lik e t h e – th e s i g n a t u r e s t h a t a p p e a r o n e a c h
o f t h e i n v o ic e s a r e s i g n a t u r e s o f t h e s a m e p e o p l e , is t h a t c o r r e c t ?

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16 MAY 2019 – DAY 94
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h a t is c o r r e c t C h a ir.
C H A I R P E R S O N : A n d y o u w e r e m a k i n g a c e r ta i n p o i n t a b o u t t h e p e o p le
s ig n in g , w h a t w a s t h e p o i n t y o u m a d e ?
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir t h e s i g n a tu r e o f t h e

r ig h t i s M r E d w a r d T h o m a s w h o w a s th e G r o u p S u p p ly C h a in O ff ic e r.
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMED Y :

In normal processes within

a n o r g a n is a ti o n t h e p r o c u r e m e n t i n d iv id u a l o r th e p r o c u r e m e n t h e a d
s h o u l d n o t b e s ig n i n g i n v o i c e s .
10

C H A I R P E R S O N : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : B e c a u s e t h a t is t h e p r o c e s s
p o s t h is a c c o u n t a b il i ty.
CHAIRPERSON :

B e c a u s e h i s o r h e r s is t o c h e c k th a t th e p r o c e s s i s

correct?
M R M O H A M M E D S U L E M A N M A H O M E D Y : C o r r e c t C h a ir.
CHAIRPERSON : Not – not so much the product.
MR MOHAMMED SULEMAN MAHOMEDY :

T h a t is c o r r e c t C h a ir.

The

p r o d u c t o r t h e s e r v ic e d e l iv e r e d w o u l d b e a t t e s t e d t o b y a p r o c e s s
o w n e r.
20

C H A I R P E R S O N : Ye s . Ye s .
MR

MOHAMMED

SULEMAN

MAHOMED Y :

And on

a ll o f th e s e

d o c u m e n ts t h e r e is a l a c k o f a p r o c e s s o w n e r s ’ s i g n a t u r e .
C H A I R P E R S O N : Ye s , y e s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : A n d th a t i s k e y i n t e r m s o f
tr y i n g t o u n d e r s ta n d w h y t h e s e p a y m e n ts w e r e m a d e i n t h e fir s t p l a c e .

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16 MAY 2019 – DAY 94
C H A I R P E R S O N : A n d – a n d a r e y o u a b l e t o s a y in te r m s o f y o u r o w n
e x p e r i e n c e a t Tr a n s n e t th a t g e n e r a ll y t h e p e r s o n w h o w o u ld s i g n a n
in v o ic e w o u l d n o t b e a p r o c u r e m e n t p e r s o n ?
MR MOHAMMED SULEMAN MAHOMEDY :

Tw o p r in c i p l e s C h a ir. T h e

one is that it would not be a procurement person.
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

And the second would be

that a process owner
C H A I R P E R S O N : Ye s .
10

MR MOHAMMED SULEMAN MAHOMEDY :

W h o e v e r th a t m a y b e w ill

s ig n f o r t h e r e c e i p t o f th a t s e r v ic e .
C H A I R P E R S O N : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : A n d d e liv e r a b l e .
C H A I R P E R S O N : A n d w h a t – w h a t ty p e o f p e r s o n w o u l d b e a p r o c e s s
o w n e r i f y o u a r e a b l e t o c la r i fy th a t ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir i f y o u lo o k a t th e …
CHAIRPERSON :

W o u l d i t b e lik e t h e h e a d o f t h e d e p a r t m e n t w h o s e

n e e d s o r w h ic h n e e d e d t h e s e r v ic e o r t h e p r o d u c t .
M R M O H A M M E D S U L E M A N M A H O M E D Y : Th a t i s o n e h u n d r e d p e r c e n t
20

c o r r e c t C h a ir.
C H A I R P E R S O N : O k a y.
MR MOHAMMED SULEMAN MAHOMEDY :

And when you look at the

in v o ic e f o r e x a m p l e o n p a g e 4 7 9 .
CHAIRPERSON : YEs.
MR MOHAMMED SULEMAN MAHOMEDY :

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T h e in v o ic e s a y s Tr a n s n e t

16 MAY 2019 – DAY 94
g e n e r a l fr e ig h t b r e a k th r o u g h . O n e w o u l d h a v e e x p e c t e d th a t s o m e b o d y
fr o m t h a t d iv is io n
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMED Y :

T h a t m a n a g e d t h is f o r

g e n e r a l fr e i g h t b e i t th e Tr a n s n e t F r e ig h t R a il C h ie f Ex e c u t iv e o r th e
C h i e f O p e r a ti o n s O ffic e r
C H A I R P E R S O N : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h e y w o u l d h a v e s i g n e d th is
t o s a y t h a t t h i s i n v o i c e is v a l id , p e o p l e d e li v e r e d t h e s e r v i c e .
10

C H A I R P E R S O N : Ye s .
MR MOHAM MED SULEMAN MAHOMED Y : If we look at another one it
s a y s S w a t 2 t h a t w o u l d h a v e e x p e c t – b e e n e x p e c te d to h a v e m y
s ig n a tu r e b e c a u s e it w a s o n p a g e 5 2 7 my a p o lo g i e s 5 2 4 a n d 5 2 7 .
C H A I R P E R S O N : I a m s o r r y y o u a r e to o fa s t fo r m e . W h e r e d o e s it s a y
S w a t 2 t h e fi r s t o n e w h i c h is …
M R M O H A M M E D S U L E M A N M A H O M E D Y : 5 2 7 C h a ir.
A D V P H I L L I P M O K O E N A S C : P a g e 5 2 7 C h a ir.
C H A I R P E R S O N : O h I w a s l o o k i n g a t t h e o n e a t 5 2 4 O k a y. 5 2 7 w a i t –
where about in the

20

MR MOHAMM ED SULEMAN MAHOMEDY : It says…
C H A I R P E R S O N : W h e r e a b o u t in t h e in v o i c e d o e s it s a y S w a t 2 ?
MR MOHAMMED SULEMAN MAHOMEDY :

C h a ir i t s a y s w o r k d o n e ,

professional fees, work done
CHAIRPERSON :

O h t h e r e is S w a t 2 n o w I s e e i t . I t i s h a s g o t t w o

p r o j e c ts .

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16 MAY 2019 – DAY 94
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s . Ye s C h a ir.
C H A I R P E R S O N : Ye s s o y o u w o u l d h a v e b e e n th e p r o c e s s o w n e r ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : C o r r e c t.
C H A I R P E R S O N : S o y o u – i t s h o u l d h a v e c o m e to y o u f o r y o u to s i g n ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
C H A I R P E R S O N : I f y o u w e r e h a p p y w i th t h a t t h e w o r k h a d b e e n d o n e ?
MR MOHAMMED SULEMAN MAHOMEDY :

I n th e fir s t p la c e if Tr il li a n

p i tc h e d C h a ir.
C H A I R P E R S O N : Ye s o k a y. S o b u t y o u r s i g n a t u r e is n o t t h e r e .
10

M R M O H A M M E D S U L E M A N M A H O M E D Y : C o r r e c t.
C H A I R P E R S O N : A n d i t w a s n e v e r b r o u g h t to y o u a t t h e t i m e ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : N o S ir.
C H A I R P E R S O N : A n d th e o t h e r s ig n a t u r e i s it M r P i ta ’s s i g n a t u r e ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h a t is r i g h t C h a ir.
C H A I R P E R S O N : A n d h e w a s – h e w a s i n t r e a s u r y ? H e w a s in …
M R M O H A M M E D S U L E M A N M A H O M E D Y : N o C h a ir h e w a s t h e G r o u p
C h i e f F in a n c ia l O ffi c e r.
C H A I R P E R S O N : Ye s G r o u p C h i e f Fi n a n c i a l O ff ic e r.
M R M O H A M M E D S U L E M A N M A H O M E D Y : O f Tr a n s n e t .

20

CHAIRPERSON :

W o u ld a p e r s o n i n t h a t p o s i ti o n n o r m a lly s i g n

in v o ic e s ?
MR MOHAMMED SULEMAN MAHOMEDY :

H e w o u l d o r d i n a r ily s i g n

a ft e r t h e p r o c e s s o w n e r s i g n s .
C H A I R P E R S O N : Ye s .
MR MOHAMM ED SULEMAN MAHO MEDY: If it was beyond the process

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16 MAY 2019 – DAY 94
o w n e r s ’ d e l e g a ti o n .
C H A I R P E R S O N : O k a y, o k a y.
MR MOHAMMED SULEMAN MAHOMEDY :

S o if i t w a s a b o v e – i n t h is

c a s e h e w o u ld h a v e s i g n e d p o s t …
CHAIRPERSON : After you had signed?
M R M O H A M M E D S U L E M A N M A H O M E D Y : A f t e r I w o u l d h a v e s ig n e d .
C H A I R P E R S O N : J a . D o t h e y a ll r e l a t e t o y o u r d e p a r t m e n t o r o n ly th e
o n e y o u m e n t io n e d r e la t e d t o y o u r d e p a r t m e n t ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir t h e r e i s t w o t h a t r e la t e
10

t o m y d e p a r t m e n t.
C H A I R P E R S O N : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : Th e r e is – p a g e n u m b e r 5 2 9
a s w e ll .
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY :

T h e s e tw o r e l a t e t o m y

d e p a r t m e n t a n d t h e o t h e r s r e l a te t o a v a r ie ty o f f u n c ti o n s a t Tr a n s n e t .
C H A I R P E R S O N : Ye s . B u t y o u a r e a b l e t o s a y i n r e g a r d t o t h e o th e r s
a s w e l l t h e p r o c e s s o w n e r, th e p e r s o n w h o w a s s u p p o s e d t o h a v e
s ig n e d h a d n o t s ig n e d .
20

So the process owners’ signature has to be

t h e r e e v e n i f i n a d d i ti o n to i t t h e r e m u s t b e t h e C h i e f F i n a n c i a l O ff ic e r ’s
one?
MR MOHAMMED SULEMAN MAHOMEDY :

A n d th e p r o c e s s o w n e r ’s

s ig n a tu r e s h o u l d b e b e f o r e t h e C h i e f Fi n a n c ia l O ffi c e r s i g n s .
C H A I R P E R S O N : Ye s , y e s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : S o i f t h e r e is o n e t h a t s h o w s

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16 MAY 2019 – DAY 94
it a f te r t h e n t h is w a s a u t h o r is e d f o r p a y m e n t e s s e n ti a lly b e f o r e .
C H A I R P E R S O N : Ye s .
MR

MOHAMMED

SULEMAN

MAHOMEDY:

The

process

owner

c o n fir m e d i t .
CHAIRPERSON :

S o y o u s a y t h a t th e s e in v o ic e s a r e d e f e c t iv e , r a i s e

q u e s t io n m a r k s to s a y t h e l e a s t ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
CHAIRPERSON : Ja.
MR MOHAMMED SULEMAN MAHOMEDY :
10

In a d d it i o n t o t h e f a c t t h a t

t h e s e in v o ic e s s o m e s a y s e r v ic e s w e r e r e n d e r e d i n M a r c h 2 0 1 6 .
C H A I R P E R S O N : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : A p r i l 2 0 1 6 w h e n Tr i ll i a n h a d
n o c o n tr a c t a t Tr a n s n e t .
C H A I R P E R S O N : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h e s e s s i o n o n ly t o o k p l a c e
o n t h e 1 0 M a y.
C H A I R P E R S O N : Ye s , y e s .
MR MOHAMM ED SULEMAN MAHOMEDY : 2016.
C H A I R P E R S O N : Ye s . O k a y t h a n k y o u .

20

ADV PHILLIP MOKOENA SC :

M r M a h o m e d y t h e r e i s a ls o a p o li c y

d o c u m e n t g o v e r n in g th e i n te r n a l c o n tr o ls w i t h t h e p r o c e s s i n g o f
p a y m e n t a n d i f I m a y r e f e r y o u t o Fo l d e r n u m b e r 3 6 C h a ir, 3 6 a n d …
C H A I R P E R S O N : F o ld e r n u m b e r ?
ADV PHILLIP MOKOENA SC : 36, 36.
CHAIRPERSON : Thank you.

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16 MAY 2019 – DAY 94
ADV PHILLIP MOKOENA SC :

And then maybe respond to the

q u e s t io n s o f C h a ir i n r e la t io n to th a t d o c u m e n t a s w e ll a n d w h y d o y o u
b e li e v e th a t i n th is i n s t a n c e i t w a s n e v e r a d h e r e d t o ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir I t h i n k u n d e r p a g e 5 3 2
o n e l i n e a m o n g s t t h e e n tir e p r o c e s s s a y s :
“ T h e c o s t c e n tr e m a n a g e r is r e s p o n s i b l e f o r a ll
a p p r o p r i a t e d o c u m e n ta t io n s u p p o r t in g t h e i n v o ic e
s u c h a s a g r e e m e n t s , o r d e r fo r m s , te n d e r d o c u m e n ts ,
q u o t e s , a ll g o o d s r e c e i v e d .”
10

S o i t is la r g e l y t h e c o s t c e n t r e o w n e r o r t h e m a n a g e r r e c e iv i n g t h a t
s p e c i f ic s e r v ic e .

A n d i n t h i s c a s e a s I m e n ti o n e d t h a t d i d n o t f o l l o w

that due process.
CHAIRPERSON :

W h e r e is t h e s e n t e n c e t h a t y o u j u s t r e a d a b o u t a ll

c o s t c e n tr e m a n a g e r o r s o m e t h i n g ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir p a g e 5 3 2 .
C H A I R P E R S O N : Ye s I a m t h e r e .
MR MOHAMMED SULEMAN MAHOMEDY :

T h e s e c ti o n 1 . 2 s u p p o r ti n g

d o c u m e n t a ti o n .
C H A I R P E R S O N : Ye s .
20

MR MOHAMMED SULEMAN MAHOMEDY:

I t g o e s th r o u g h a n d th e n

s o m e w h e r e in t h e m i d d l e o f th a t .
CHAIRPERSON : Oh.
M R M O H A M M E D S U L E M A N M A H O M E D Y : I th in k t h e t h ir d b u l le t .
C H A I R P E R S O N : T h e th ir d b u ll e t p o i n t?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.

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16 MAY 2019 – DAY 94
C H A I R P E R S O N : S o w o u l d t h e c o s t c e n tr e m a n a g e r b e t h e s a m e a s th e
p e r s o n y o u r e f e r r e d to a s th e p r o c e s s o w n e r ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h a t w o u ld o r d i n a r i ly …
C H A I R P E R S O N : O r t h e y d i ff e r e n t p e o p l e ?
MR MOHAMMED SULEMAN MAHOMED Y :

I t w o u l d o r d i n a r i ly b e th e

same person .
CHAIRPERSON : Ja.
MR MOHAMMED SULEMAN MAHOMED Y :

I f th e c o s t s a r e b e in g

a l lo c a t e d t o m y c o s t c e n tr e .
10

C H A I R P E R S O N : Ye s b u t it c a n b e s o m e b o d y d i ff e r e n t ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : I t c o u ld b e .
C H A I R P E R S O N : O k a y.
M R M O H A M M E D S U L E M A N M A H O M E D Y : A n d a l s o C h a ir u n d e r 1 . 3 t h e
la s t b u ll e t o n t h e p a g e
CHAIRPERSON : Hm.
MR MOHAMM ED SULEMAN MAHOMEDY : It says:
“ T h e g o o d s r e c e ip t i s d o n e b y th e r e q u is i ti o n e r a n d
a l l r e l e v a n t s u p p o r ti n g d o c u m e n t s m u s t b e s e n t –
m u s t b e s u b m i t t e d t o t h e c o r p o r a t e a c c o u n t in g –

20

c o r p o r a t e c e n tr e a c c o u n ti n g i n l in e w i t h th e d a t e
e tc e t e r a .”
T h a t is a ls o s a y i n g t h a t t h e p e r s o n w h o r e q u e s ts t h e s e r v ic e m u s t
c o n fir m h e r e c e iv e d th e s e r v ic e .
CHAIRPERSON :

Hm.

S o – s o i n m a n y r e s p e c ts i n t e r m s o f t h e

e v i d e n c e g iv e n b y y o u r s e l f a s w e l l a s b y M r Vo l m in k a n d t h e

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16 MAY 2019 – DAY 94
C h a ir p e r s o n o f t h e b o a r d s o f a r it a p p e a r s th a t th e – u n le s s w e fi n d o r
w e a r e f u r n is h e d w i t h p r o p e r e x p l a n a t io n s b y t h e p e o p l e w h o w e r e
in v o lv e d i n s o m e o f t h e s e t h in g s i t a p p e a r s t h a t t h e r e w a s ju s t b la t a n t
d is r e g a r d o f p r o c e d u r e s a n d p r o c e s s e s w h i c h a r e p u t i n p la c e t o t r y a n d
m i n i m is e c h a n c e s f o r a b u s e , f o r c o r r u p ti o n a n d o f m i n i m i s i n g l o s s e s ,
p o t e n t i a l l o s s e s t o Tr a n s n e t .

S o u n l e s s o n e fi n d s – u n l e s s th e r e i s

s o m e b o d y w h o c o m e s u p a n d g i v e s a s o u n d e x p la n a ti o n w h y t h e s e
p r o c e d u r e s a n d p r o c e s s e s w e r e d is r e g a r d e d it a p p e a r s th a t i t w a s ju s t
a b la t a n t d is r e g a r d o f p r o c e s s e s .
10

M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir i n s u p p o r t o f y o u r v i e w
I th in k a n u m b e r o f t h e s e p r o c e s s e s t h a t w e r e fe r e n c e a r e s ta n d a r d
p r o c e s s e s i n Tr a n s n e t .
d i ff ic u l t to f o l lo w.

None of t hem are complex, none of them are

W e h a v e b e e n d o i n g t h is i n a p a r tic u l a r w a y fo r a

lo n g p e r i o d o f ti m e .
CHAIRPERSON :

O f c o u r s e i t is – i t is p o s s ib le t h a t s o m e o f t h e

p e r s o n s o r a l l th e p e r s o n s w h o m a y b e i m p l ic a t e d in d is r e g a r d in g t h e s e
p r o c e s s e s m a y c o m e f o r w a r d a n d g iv e p o s s ib l e e x p l a n a t io n s f o r w h y
t h e d is r e g a r d o f t h o s e p r o c e s s e s a n d p r o c e d u r e s w a s j u s ti f ie d a n d s o
on.
20

S o w e w i ll w a i t a n d s e e b u t w e – i n t h e a b s e n c e o f t h a t i t d o e s

a p p e a r th a t s o m e o f t h e a c ts o f d is r e g a r d w e r e – m a y h a v e b e e n q u i te
b l a ta n t . H m y e s .
A D V P H I L L I P M O K O E N A S C : Yo u c o n c l u d e o n th a t t o p ic o n p a r a g r a p h
5 .1 0 .8 . 2 a n d 5 . 1 0 . 8 .3 c a n y o u s i m p ly s u m m a r is e f o r th e C h a ir s o m e o f
t h e p o i n t s w h ic h I a m s u r e y o u h a v e a lr e a d y h i g h l ig h t e d ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : J a I t h i n k k e y t o t h is is th e

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16 MAY 2019 – DAY 94
p r o c e s s e s w e r e n o t f o ll o w e d fo r t h e p a y m e n t o f Tr il li a n i n v o i c e s . T h e
s e c o n d p o in t is th a t i n a n u m b e r o f c a s e s th e s e r v i c e s t h a t w e r e
s u p p o s e d l y v e n d e d w e r e b e f o r e Tr il li a n h a d a n y v a l id p r o c u r e m e n t
event.

I t w a s b e f o r e t h e 1 0 M a y e v e n i f w e q u e s ti o n t h e s e s s i o n b u t

b e f o r e th e 1 0 M a y 2 0 1 6 i t is c l e a r f r o m t h e i n v o i c e s s o m e o f t h e m d a t e
b a c k t o 1 9 F e b r u a r y 2 0 1 6 . S o t h e e n tir e – a l l o f t h e p a y m e n t s to Tr il li a n
a r e a t b e s t q u e s t i o n a b l e C h a ir. A n d w e d i d r e c e i v e a r e f u n d f o r R 3 8 . 6
m il li o n a n d t h a t is n o t n o r m a l in a n y o f t h i s k in d o f s i t u a t io n .
A D V P H I L L I P M O K O E N A S C : Ye s .
10

C H A I R P E R S O N : W e l l I s e e t h a t y o u m e n ti o n e d in y o u r s t a te m e n t t h a t
y o u r e c e iv e d a r e fu n d o f R 3 8 . 7 m i ll i o n fr o m Tr il li a n a n d y o u s a y th e r e
w a s n o w o r k t h a t h a d b e e n d o n e b y Tr ill i a n i n t h a t r e g a r d – i n r e g a r d t o
t h a t a m o u n t . B u t y o u a ls o s a y t h a t th e r e w a s n o w o r k d o n e i n r e g a r d t o
t h e i n v o ic e o r t h e p a y m e n t o f R 9 3 m i lli o n b u t t h a t o n e h a s n o t b e e n
r e fu n d e d , i s t h a t c o r r e c t?
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h a t is c o r r e c t C h a ir.
C H A I R P E R S O N : Ye s a n d y o u a r e n o t a w a r e w h e th e r t h a t n o w o r k w a s
d o n e is b e i n g d is p u t e d o r n o t ?
MR

20

MOHAMMED

SULEMAN

MAHOMEDY:

No

C h a ir

we

have

c o m m e n c e d a p r o c e s s t h r o u g h o u r a t to r n e y s t o …
C H A I R P E R S O N : To r e c o v e r.
MR MOHAMMED SULEMAN MAHOMEDY :

C iv i l a c t i o n a g a i n s t th e

c o m p a n y.
C H A I R P E R S O N : O k a y.
A D V P H I L L I P M O K O E N A S C : Ye s w e c a n n o w p r o c e e d t o d e a l w i t h th e

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16 MAY 2019 – DAY 94
f a c ts p e r t in e n t t o N k o n k i I n c o r p o r a t io n . Yo u s t a r t e d d e a li n g t h e n – w i t h
t h e m f r o m p a r a g r a p h 5 . 11 o n p a g e 2 9 . B u t b e fo r e y o u d o t h a t p l e a s e
g iv e u s th e b a c k g r o u n d y o u k n o w r e le v a n t t o N k o n k i?
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir it i s n e c e s s a r y t o n o te
t h a t N k o n k i w e r e a s e r v i c e p r o v i d e r to Tr a n s n e t fo r c e r t a i n in t e r n a l
a u d it f u n c ti o n s t h a t w e r e o u ts o u r c e d .

In 2 0 1 3 Tr a n s n e t w e n t th r o u g h

a n o p e n t e n d e r p r o c e s s t o a p p o i n t a fir m o r fir m s t o a s s is t w i t h t h e
in t e r n a l a u d i t f u n c ti o n w h ic h w a s o u ts o u r c e d . A t t h e ti m e t h r e e b i d d e r s
w e r e a p p o i n t e d a s t h e p r e f e r r e d b i d d e r o f a c o n s o r t iu m f o r th e i n te r n a l
10

a u d it f u n c t i o n . Th e y i n c l u d e d K P M G , N k o n k i a n d S e k e l a X a b is o . T h e
N k o n k i c o n tr a c t a t t h a t t i m e w a s a w a r d e d f o r a f iv e y e a r p e r i o d
c o m m e n c i n g o n th e 1 A u g u s t 2 0 1 3 to e n d o n t h e 3 1 J u l y 2 0 1 8 .

That

in it i a l c o n t r a c t w a s f o r a v a l u e o f R 5 0 0 m i lli o n f o r t h e fi v e y e a r p e r io d .
I n a r o u n d M a r c h 2 0 1 8 t h e r e w e r e a n u m b e r o f a n n o u n c e m e n ts m a d e b y
v a r io u s a u t h o r i ti e s i n th e a c c o u n ti n g , a u d i ti n g p r o f e s s i o n i n c l u d in g t h e
a u d it o r g e n e r a l a t th e t i m e a s k i n g f o r s t a t e o r g a n s t o c o n s i d e r
t e r m in a ti o n o f c o n tr a c t s w it h N k o n k i a s a r e s u l t o f a n u m b e r p r e s s
a r ti c l e s t h a t a p p e a r e d w i t h r e – r e l a ti n g t o th e ir a s s o c ia t io n w it h t h e
Guptas.
20

Tr a n s n e t fo ll o w e d s u i t a n d t e r mi n a t e d t h e i n te r n a l a u d i t

c o n tr a c t p r io r t o th e 3 1 J u l y 2 0 1 8 .

W e h a v e r e v ie w e d s o m e o f t h e

c o n tr a c ts th a t N k o n k i h a d a n d w e n o t e th e fo ll o w i n g . I t a r o u n d J a n u a r y
2 0 1 7 Tr a n s n e t r e c e iv e d u n s o lic i te d b i d s . C h a ir I a m o n p a g e 2 9 o f m y
s t a te m e n t u n d e r 5 . 11 . 2 . I n J a n u a r y 2 0 1 7 Tr a n s n e t r e c e iv e d u n s o l ic i t e d
b i d s fr o m N k o n k i a s w e ll a s o n e t h a t w a s u n d e r N k o n k i a n d O l iv e r
W y m a n fo r a v a r ie t y o f s e r v ic e s in c l u d i n g w h a t w a s c a ll e d s u p p ly c h a i n

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16 MAY 2019 – DAY 94
e ffic i e n c i e s , c o a l a n d ir o n o r e li n e v o lu m e a n d ta r i ff o p t i m is a t i o n .
A D V P H I L L I P M O K O E N A S C : M a y I r e fe r y o u t o p a g e 4 5 2 . C h a ir t h a t
is Fo l d e r n u m b e r
MR MOHAMMED SULEMAN MAHOMEDY : 5, 54
A D V P H I L L I P M O K O E N A S C : F o ld e r n u m b e r 3 7 . 3 7
CHAIRPERSON : 37?
A D V P H I L L I P M O K O E N A S C : Ye s .
C H A I R P E R S O N : O k a y.
MR MOHAMM ED SULEMAN MAHOMEDY : 542 ja.
10

ADV PHILLIP MOKOENA SC :

Ye s .

A n d i f y o u c o u l d p le a s e id e n ti fy

t h a t d o c u m e n t fo r u s ?
MR MOHAMMED SULEMAN MAHOMEDY :

C h a ir th is a d o c u m e n t th a t

N k o n k i h a d s u b m i tt e d . T h is i s o n e o f th e d o c u m e n t s .
A D V P H I L L I P M O K O E N A S C : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY :

C h a ir a t th a t t i m e i n e a r ly

2 0 1 7 a s I s a i d N k o n k i h a d – a lr e a d y w a s p r o v id i n g th e i n t e r n a l a u d i t
s e r v ic e a n d th e y h a d a n e x i s t i n g c o n tr a c t f o r t h a t .

In a memorandum

d a t e d F e b r u a r y 2 0 1 7 w h ic h w a s a d d r e s s e d t o t h e a s s e ts

– my

a p o lo g i e s , t h e a c q u is it i o n s a n d d i s p o s a ls c o m m i t t e e t h e A D C Tr a n s n e t
20

e x e c u tiv e s p r o p o s e d t h a t Tr a n s n e t u til is e th e e x is t in g in t e r n a l a u d i t
c o n tr a c ts fo r t h e s e u n s o lic i te d p r o p o s a ls . A n d i n t h e Tr a n s n e t c o n tr a c t
it a ll o w s f o r s o m e t h i n g c a ll e d n o n - a u d it w o r k . U n d e r th e F o ld e r 3 8 w e
h a v e i n c l u d e d t h e s p e c i fi c r e q u e s ts t h a t w e n t t h r o u g h t o t h e Tr a n s n e t
A c q u is i t io n s a n d D i s p o s a ls C o m m i t t e e .
ADV PHILLIP MOKOENA SC : Page 571.

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16 MAY 2019 – DAY 94
MR MOHAMM ED SULEMAN MAHOMEDY : Page 571.
A D V P H I L L I P M O K O E N A S C : Ye s .
MR MOHAMMED SULEMAN MAHOMED Y :

C h a ir t h is d o c u m e n t w a s

s u b m i tt e d t o t h e A c q u is i t io n s a n d D is p o s a l s C o m m i t t e e a s t h e l a s t p a g e
– I t h i n k i t i s p a g e 5 7 5 s u g g e s ts o n t h e 7 F e b r u a r y 2 0 1 7 . C h a ir w h a t is
a ls o n o te w o r th y fr o m o u r p e r s p e c t iv e is I d o n o t t h i n k is t o c l e a r b u t th e
A c q u is i t io n s

and

D is p o s a ls

Committee

approved

th is

p a r tic u la r

s u b m is s io n a n d t h e v a l u e th a t w a s m a r k e d in t h e s u b m is s i o n s a y s th a t
it s h o u l d n o t e x c e e d R 5 0 0 m il li o n i n c o n s u lt in g f e e s . N o w t h e f iv e y e a r
10

c o n tr a c t f o r in t e r n a l a u d i t s e r v ic e s w a s fo r R 5 0 0 m il li o n . H o w e v e r t h is
p a r t ic u l a r e x t e n s i o n in v a l u e o r i n c r e a s e in v a l u e w a s n o t t o e x c e e d
R 5 0 0 m i ll i o n . Th is i s a b r e a c h o f t h e N a ti o n a l Tr e a s u r y n o t e s t h a t h a v e
b e e n i n p l a c e s in c e s o m e o f t h e m 2 0 1 6 a n d o t h e r s fr o m 2 0 0 8 . O n t w o
fr o n t s C h a ir. Th e s u g g e s t e d e x t e n s i o n s u n d e r m y s t a te m e n t p a g e 3 0 .
CHAIRPERSON :
somewhere.

I am sorry I may have – you may have lost me

Th e m e m o r a n d u m a t p a g e 5 7 1 i t i s a d d r e s s e d t o th e

Tr a n s n e t A c q u i s i t io n a n d D i s p o s a ls C o m m i t te e w h ic h is a c o m m i t t e e o f
the board.

I t is s i g n e d a t t h e e n d a t 5 7 5 b y G a r r y P i t a , G r o u p C h ie f

Fi n a n c i a l O ff ic e r a n d P h i w e I d o n o t k n o w w h e t h e r i t is S h i n g a o r
20

S e li n g a C h i e f L e g a l C o u n s e l a n d h e o r s h e r e c o m m e n d s a n d S i y a b o n g a
G a m a s i g n e d i t – Mr S i y a b o n g a G a m a s ig n e d i t a s C h ie f E x e c u tiv e – a s
G r o u p C h i e f E x e c u t iv e .

T h e y a l l r e c o m m e n d w h a t i t is in t h e

m e m o r a n d u m . H a v e y o u r e fe r r e d to a n y r e s p o n s e f r o m o r d e c is io n b y
t h a t c o m m i t t e e a n d d i d I m is s w h e r e th a t i s ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir o n p a g e 5 7 6 .

Page 142 of 182

16 MAY 2019 – DAY 94
C H A I R P E R S O N : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : I t h i n k t h is is u n fo r t u n a t e ly a
v e r y d i ff ic u l t p a g e to r e a d .
CHAIRPERSON :

Or maybe before we do that what did you say was

s o u g h t t o b e a c h i e v e d w i t h th a t m e m o r a n d u m ?

The purpose which is

o b v i o u s l y s ta t e d i n p a r a g r a p h 1 t h e r e , 5 7 1 .
A D V P H I L L I P M O K O E N A S C : M a y b e r e a d i t M r M a h o m e d y. R e a d t h e
p u r p o s e , th e c o n t e n ts o f t h e p u r p o s e i n t o t h e r e c o r d .
MR MOHAMMED SULEMAN MAHOMEDY :
10

C h a i r th is m e m o r a n d u m a s

y o u c o r r e c t ly p o i n t o u t i s fr o m t h e G r o u p C h i e f E x e c u tiv e t o t h e
Tr a n s n e t A c q u is it i o n s a n d D is p o s a ls C o m m i t te e .

T h e p u r p o s e o f t h is

m e m o r a n d u m is f o r t h e A c q u is it i o n s a n d D i s p o s a ls C o m m i t t e e t o
r e c o m m e n d th a t t h e b o a r d a p p r o v e t h e a p p o in t m e n t o f c o n s u l t a n t s f o r
t h e c o s t s a v in g s a n d e ffic i e n c y p r o p o s a l f o r t h e I S C M w h ic h is S u p p ly
C h a in M a n a g e m e n t fr o m N k n o n i w h ic h w a s a p p r o v e d a s a p e r m i t te d
n o n - a u d i t s e r v ic e b y t h e a u d i t c o m m i t te e .
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY :

T h e ir o n o r e a n d c o a l

r e v e n u e e n h a n c e m e n t p r o g r a m m e p r o p o s a ls f o r Tr a n s n e t C o m m e r c ia l
20

fr o m N k o n k i I n c o r p o r a t e d w h ic h w a s a p p r o v e d a s a p e r m i t t e d n o n - a u d i t
s e r v ic e b y t h e a u d i t c o m m i t t e e .

A n d t h e n d e l e g a t e a u t h o r it y to t h e

G r o u p C h i e f E x e c u t iv e t o s i g n a l l d o c u m e n ta t io n i n c l u d i n g t h e c o n tr a c t
d o c u m e n t a ti o n .
A D V P H I L L I P M O K O E N A S C : Ye s . N o w w h a t t h e C h a ir w a n ts t o k n o w
is w h e t h e r w h a t w a s s o u g h t i n th a t m e m o r a n d u m w a s i t u l ti m a t e l y

Page 143 of 182

16 MAY 2019 – DAY 94
granted or approved?
M R M O H A M M E D S U L E M A N M A H O M E D Y : A n d b e f o r e th e – b e f o r e t h a t
ju s t c o n fir m a t i o n t h a t t h e c o s t a n d s a v i n g s a n d e ffi c i e n c y p r o p o s a l f o r
I S C M w h ic h th e y s a y i s fr o m N k n o k i I n c o r p o r a t e d r e f e r s t o t h e
document to which you referred a few minutes ago.
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
C H A I R P E R S O N : T h a t – s o i n o t h e r w o r d s t h e y r e c e iv e d th is d o c u m e n t
fr o m N k o n k i a n d th e n t h e y w e r e n o w – t h e y w e r e i n a g r e e m e n t w it h i t .
T h e y w e r e p r o p o s i n g to [i n d i s t i n c t ] t h e Ac q u is i ti o n s a n d D is p o s a ls
10

C o m m i t t e e to s a y p le a s e a p p r o v e t h a t w e d o t h i s ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : T h a t is c o r r e c t C h a ir.
CHAIRPERSON :

O k a y a l r i g h t th e n y o u c a n p r o c e e d .

Then the

committee makes a decision?
MR

MOHAMMED

SULEMAN

MAHOMED Y :

Ye s

C h a ir

under

the

document numbered 576.
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY :

T h is is e s s e n ti a l ly t h e

m i n u t e s o f t h e A c q u is it i o n s a n d D is p o s a l s C o m m i t te e m e e ti n g n u m b e r
7 6 – I th in k 7 1 6 / 1 7 F Y h e l d o n th e 1 3 Fe b r u a r y 2 0 1 7 a t 1 0 : 0 5 a t
20

boardroom 4901.
ADV PHILLIP MOKOENA : Do you have a better copy of that document
Mr Mahomedy?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s .
ADV PHILLIP MOKOENA:

Ye s .

W il l y o u p l e a s e a ls o m a r k - m a r k a s

o n e o f th o s e d o c u m e n t s th a t w e h a v e t o e x c h a n g e f r o m t h e fi l e s

Page 144 of 182

16 MAY 2019 – DAY 94
b e c a u s e t h e r e a r e q u i t e a n u m b e r o f t h e m w h ic h a r e n o t q u i t e l e g i b l e .
W e w i ll t h r o u g h y o u r b e n e fi t j u s t t o l is t e n y o u a n d t r y to f o ll o w w h a t y o u
w i ll b e r e a d i n g in t h i s d o c u m e n t. I t is d i ff i c u l t t o r e a d .
MR MOHAMMED SULEMAN MAHOMEDY:
c o n s ti t u ti o n

of

the

M r S ta n le y S h a n e ,

m e e ti n g .
Mr G a m a ,

The

C h a i r t h e d o c u m e n t is t h e

m embers

Ms L C Mabaso

T h e s e a r e t h e m e m b e r s o f t h e C o m m it t e e .
Mr Shane.

who
and

were

present:

Mr Z A Nagdee.

T h e C h a ir m a n w a s

In a t te n d a n c e w e r e a n u m b e r o f Tr a n s n e t Ex e c u ti v e s a n d

t h e r e t h e n w e h a d p a r t ia l a t t e n d a n c e . U n d e r – o n th e r ig h t h a n d s id e –
10

I th in k i t is 5 .6 . 4 a m e m b e r e n q u ir e d w h e t h e r t h e s e r v ic e s c o u l d b e
c a p p e d w i t h i n t h e C o m m i t t e e ’s a u th o r i ty n a m e l y 5 0 0 m il li o n a n d s o u g h t
c la r i ty o n th e c o n tr a c t u a l te r m s fo r t h e s a i d s e r v ic e s .

Management

c o n fir m e d th a t th e a c c u m u l a ti v e d e l e g a t e d a u th o r i ty o f t h e C o m m i t te e
f o r a p p o i n t m e n t o f c o n s u l ta n ts i s 5 0 0 m il l io n a n d th a t th e c o s ts c o u ld
t h e r e f o r e b e c a p p e d w i th i n t h e a p p r o v a l li m i t o f t h e C o m m i t t e e . I t w a s
f u r th e r a g r e e d th a t t h e B o a r d o f D ir e c to r s w o u ld b e i n fo r m e d o f t h e
d e c is i o n th r o u g h th e s ta n d a r d p r a c t ic e o f t a b l in g t h e C o m m i t t e e ’s
R e s o l u t i o n R e g is t e r a t t h e n e x t C o m m i t t e e m e e t i n g . E s s e n t ia ll y t h is –
t h is s u b m i s s io n w a s a p p r o v e d b y a B o a r d C o m m i t t e e w it h t h e d e l e g a t e d
20

a u t h o r i ty C h a ir.
CHAIRPERSON : Hm.
MR MOHAMM ED SULEMAN MAHOMEDY: It concerned …
C H A I R P E R S O N : A n d – a n d d i d t h e – d i d t h e C o m m i t t e e g iv e – a p p r o v e
e v e r y t h i n g t h a t w a s a s k e d f o r b y th e p a r ti c u la r Ex e c u ti v e s w h o w e r e
…?

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16 MAY 2019 – DAY 94
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
C H A I R P E R S O N : Ye s , o k a y a lr i g h t . T h a n k y o u .
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir i n my o p i n i o n I t h i n k

Tr a n s n e t’s a c c e p t a n c e o f N k o n k i ’s u n s o lic it e d b i d d i d n o t c o m p ly w i th
N a t io n a l Tr e a s u r y p r a c tic e 0 1 / 2 0 0 8 - 2 0 0 9 a s th e …
C H A I R P E R S O N : B u t b e f o r e y o u s a y t h a t c a n y o u j u s t s u m m a r is e w h a t
t h e s u b s ta n c e i s t h a t th e ir p r o p o s a l w a s a b o u t. W h a t – w h a t d i d t h e y
w a n t to d o a n d w h y w e r e t h e y m a k i n g a n u n s o l ic i t e d b id ?
MR MOHAMMED SULEMAN MAHOMEDY:
10

C h a ir t h e y a s k e d f o r t h r e e

things …
CHAIRPERSON : Ja.
MR MOHAMMED SULEMAN MAHOMEDY:
things.

O r t h e y s p o k e to t h r e e

T h e f ir s t w a s p r o c u r e m e n t o p ti m is a t io n .

O p t i m is a ti o n o f o u r

processes …
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

Bringing

in

savings

on

p r o c u r e m e n t c o n tr a c t s a n d a s s i s t i n g Tr a n s n e t t o b e tt e r i ts i n c o m e
s t a te m e n t a n d b a l a n c e s h e e t p o s i ti o n . T h e s e c o n d p a g e w a s to l o o k a t
t h e c o a l l in e o p ti m i s a t io n a n d e n h a n c e m e n t .
20

W h a t o p p o r t u n i t ie s

e x i s te d f o r v o l u m e g r o w t h a n d a n y ta r i ff s p o s s ib il i ty w i t h c u s t o m e r s ?
T h e t h ir d w a s t h e i r o n o r e l in e to a c t u a ll y e n g a g e a g a i n w i t h c u s t o m e r s
…
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

To l o o k a t w h a t o p p o r tu n i t y

m a y h a v e e x is t e d …

Page 146 of 182

16 MAY 2019 – DAY 94
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

F o r ir o n o r e v o l u m e g r o w th

a n d i f t h e r e w a s a p o t e n ti a l f o r u s t o l o o k a t t h e t a r i ffs …
CHAIRPERSON : Hm.
M R M O H A M M E D S U L E M A N M A H O M E D Y : O r t h e c u s t o m e r.
C H A I R P E R S O N : H m , o k a y.
MR MOHAMM ED SULEMAN MAHOMEDY: So those were the three key
is s u e s .
C H A I R P E R S O N : Ye s a n d t h e y w e r e a p p r o v e d ?
10

M R M O H A M M E D S U L E M A N M A H O M E D Y : C o r r e c t.
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

T h e in t e r e s ti n g th in g a b o u t

t h a t is t h a t fr o m th e c o n tr a c ts t h a t w e h a v e n o t s e e n a r o u n d o r h a v e – I
h a v e n o t d is c u s s e d a r o u n d R e g i m e n ts a n d Mc K i n s e y – t h e y w e r e g i v e n
s i m il a r c o n tr a c ts b e f o r e t h a t o n c o a l e n h a n c e m e n t .

M c K in s e y w a s

g iv e n a c o n f i n e m e n t o n th a t - I th i n k i t w a s i n 2 0 1 4 - I a m n o t s u r e a n d
R e g i m e n t s – M c K in s e y w e r e g iv e n a c o n tr a c t f o r th e i r o n o r e t a r i ff
r e v ie w a s w e l l.

S o i t s e e m e d to b e a d u p l ic a ti o n i n v e r y q u i c k

s u c c e s s i o n , b u t t h a t is t h e c o n te x t t o w h ic h …
20

A D V P H I L L I P M O K O E N A : B u t d e s p i t e i t b e i n g a d u p l ic a ti o n – I m e a n –
t h e s e s e r v ic e s a r e t h o s e w h ic h w o u l d o r d i n a r i ly h a v e t o g o o u t o n o p e n
t e n d e r. A m I c o r r e c t ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a i r b e c a u s e t h e r e a r e
– th e r e a r e s e r v i c e p r o v i d e r s w h o c a n p r o v i d e th is s e r v i c e o u ts i d e o f
Nkonki.

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16 MAY 2019 – DAY 94
A D V P H I L L I P M O K O E N A : Ye s .
C H A I R P E R S O N : W h a t is t h e p o l ic y o r a t t h e t i m e w h a t w a s Tr a n s n e t ’s
p o li c y o n u n s o lic i te d b i d s ?

Wa s t h e r e a p o lic y th a t w o u l d s a y

s o m e t h i n g l ik e i f Tr a n s n e t r e c e iv e s a n u n s o li c i t e d b i d t h is is w h a t
s h o u l d f o l l o w o r w a s t h e r e – w a s t h e r e n o t h i n g s p e c i fi c ?
MR MOHAMMED SULEMAN MAHOMEDY:

Chair in terms of National

Tr e a s u r y Pr a c t ic e N o t e 11 / 2 0 0 8 – 2 0 0 9 w h ic h Tr a n s n e t s u b s c r i b e d t o
t h e c r i te r i a f o r c o n s id e r a ti o n o f a n u n s o lic i t e d p r o p o s a l is v e r y c le a r. I t
says:
10

“ I n s ti t u ti o n s
u n s o li c i t e d

are

not

proposal

o b li g e d
but

may

to

c o n s id e r

c o n s id e r

such

an
a

p r o p o s a l o n ly i f i t m e e t s t h e f o ll o w i n g r e q u ir e m e n t –
o n ly i f i t m e e ts .

A , a c o m p r e h e n s iv e a n d r e le v a n t

p r o j e c t f e a s ib il i ty s tu d y h a s e s t a b li s h e d a c le a r
business case.

B , t h e p r o d u c t o r s e r v i c e i n v o lv e s

a n in n o v a tiv e d e s i g n .
in v o lv e s

an

C , t h e p r o d u c t o r s e r v ic e

i n n o v a t iv e

approach

to

project

development and management or D, the product or
s e r v ic e p r e s e n ts a n e w a n d c o s t e ff e c t iv e m e t h o d o f
20

s e r v ic e d e liv e r y. ”
T h o s e a r e th e s p e c if ic s o f t h e N a t i o n a l Tr e a s u r y N o te o n u n s o lic i te d
b i d s . A m o n g s t o th e r t h i n g s t h e r e is a – i t t a lk s a b o u t a lo t o f d e t a i l i n
t e r m s o f w h a t s h o u l d b e p r o v id e d e tc e t e r a .
CHAIRPERSON :

B u t w h e n it s a y s a n u n s o l ic i te d – a n u n s o l ic it e d b i d

m a y b e c o n s i d e r e d u n d e r t h e c ir c u m s ta n c e s w h ic h y o u h a v e s e t o u t –

Page 148 of 182

16 MAY 2019 – DAY 94
w h ic h it s e ts o u t .

W h a t is y o u r u n d e r s t a n d in g o f w h a t t h a t m e a n s ?

D o e s i t m e a n i f y o u c o n s i d e r th a t th is is s o m e t h i n g y o u n e e d a s a n S O E
y o u c a n th e n t a k e i t a n d c o n c lu d e t h e c o n tr a c t w i t h t h e p e r s o n w h o
s e n d s t h e u n s o lic i te d b i d o r d o e s i t m e a n th a t i f y o u b e li e v e t h a t y o u
n e e d t h is k in d o f s e r v ic e o r p r o d u c t y o u s h o u l d t h e n f o l lo w th e te n d e r
p r o c e s s e s o r i n o t h e r w o r d s t h o s e e x c e p t io n s t h a t it s e e ms to s e t o u t
a r e t h e y t o s a y if a n y o n e o f th e s e is p r e s e n t y o u c a n c o n c l u d e a
c o n tr a c t w i th o u t g o in g t h r o u g h p r o c u r e m e n t o r te n d e r – o p e n t e n d e r –
o r d o e s it m e a n i f y o u n e e d i t y o u m u s t s ti ll g o t h r o u g h t h e te n d e r
10

process or procurement processes?
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a i r t h e f ir s t p r i n c ip le h e r e
w i ll b e t o a s s e s s w h e th e r t h e u n s o l ic it e d b i d p r o v i d e d a s o lu t io n th a t
w a s n o t o r d in a r il y a v a il a b l e i n t h e m a r k e t .
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

In t h i s p a r t ic u l a r i n s t a n c e I

d o n o t b e l ie v e t h a t t o b e th e c a s e – in m y v ie w.
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

I t w a s fo r o p t i m is a ti o n o f a

process.
20

CHAIRPERSON: Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

There are a number

of

in s t i tu t e s o u t th e r e a n d i n s ti t u ti o n s o u t t h e r e t h a t w o u l d b e a b l e t o h a v e
helped us …
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

If we had put out a proper

Page 149 of 182

16 MAY 2019 – DAY 94
o p e n t e n d e r.
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

Th is w a s a g a i n n o t j u s t a

c o n fi n e m e n t . T h is w a s p ig g y b a c k i n g o ff a c o n tr a c t t h a t w a s a lr e a d y i n
e x i s te n c e …
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

A n d g o i n g i n th r o u g h a

t e c h n ic a l i ty o f s a y in g i t i s o t h e r s e r v i c e s b u t s o s ig n if ic a n tly t h a t w e
w e r e p o s s ib ly g o i n g t o d o u b le t h e v a l u e o f t h a t c o n t r a c t …
10

CHAIRPERSON : Hm.
M R M O H A M M E D S U L E M A N M A H O M E D Y : W i th o u t a n y p r o c e s s .
CHAIRPERSON :

Hm.

S o i s – is y o u r a n s w e r th a t h a v i n g N a t io n a l

Tr e a s u r y – to w h i c h y o u h a v e r e f e r r e d …
M R M O H A M M E D S U L E M A N M A H O M E D Y : Wa s n o te d .
CHAIRPERSON :

W o u l d p e r m i t o r w o u l d n o t p e r m i t Tr a n s n e t t o

c o n c l u d e a c o n tr a c t w h ic h i t c o n s id e r s it n e e d s - f o r a s e r v ic e th a t i t
c o n s i d e r s i t n e e d s fr o m a s e r v ic e p r o v i d e r w h o p r o v i d e s a n u n s o l ic it e d
b i d o r w o u l d t h e p o s i ti o n o n y o u r u n d e r s t a n d i n g b e t h a t i f th e S O E s u c h
a s Tr a n s n e t – a n S O E s u c h a s Tr a n s n e t b e l ie v e s t h a t i t n e e d s t h i s k i n d
20

o f s e r v i c e t h e n i t w o u l d g e n e r a ll y s p e a k i n g h a v e t o p u t i t o u t t o t e n d e r
u n l e s s t h e - i t is a s i t u a t i o n w h i c h u n d e r t h e p r o c u r e m e n t p r e s c r ip t s i t
w i ll b e p e r m i tt e d to n o t g o t h r o u g h a n o p e n te n d e r ?
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir in t e r m s o f th e p o l ic y

fr o m N a t io n a l Tr e a s u r y i t g o e s f u r t h e r t o s a y a f t e r a l e n g t h y d is c u s s i o n :
“ I f t h e a c c o u n t in g o ffi c e r o r a c c o u n ti n g a u th o r i ty

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16 MAY 2019 – DAY 94
d e c i d e s t o c o n s i d e r t h e u n s o li c i t e d b i d h e o r s h e
m u s t s e n d a r e g is t e r e d le t t e r … ”
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:
r e fe r r e d

to

in

paragraph

“…to the address

2.2a

c o n f ir m i n g

the

d e c is i o n . . .”
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

“ … t o c o n s i d e r th e

u n s o li c i t e d p r o p o s a l .”
10

C H A I R P E R S O N : O k a y, o k a y.
MR MOHAMMED SULEMAN MAHOMEDY:

I t w a s n o t a d e c is io n t h a t

w a s fo r Tr a n s n e t a s fa r a s I u n d e r s ta n d i t . I t h a d t o h a v e g o n e t h r o u g h
a p r o c e s s o f r e v ie w.
CHAIRPERSON :

Huh-uh.

S o w h e r e i t s a y s - r e fe r s t o c o n s i d e r i t

s e e m s to m a y b e th is w h a t o n e w i ll s a y m i g h t b e d i ffe r e n t fr o m t h e
u n d e r s t a n d in g - I m a y h a v e h e a r d e a r l ie r o n . I t s e e ms t o – to m a k e a
d is t in c ti o n t h a t y o u – y o u – i f y o u a r e – i f y o u a r e g o in g t o c o n s i d e r i t .
I m e a n s y o u a r e g o i n g t o c o n s i d e r i t w i t h o u t a n o p e n t e n d e r.
M R M O H A M M E D S U L E M A N M A H O M E D Y : N o C h a ir.
20

CHAIRPERSON :

T h e r e a r e c e r ta in c ir c u m s ta n c e s w h ic h m u s t b e

p r e s e n t b e f o r e y o u c a n d o t h a t b u t i f y o u a r e n o t p r e p a r e d to c o n s i d e r
it t h a t m ig h t m e a n y o u w a n t t o p u t t h e w h o l e t h i n g o u t t o t e n d e r a n d
t h e y m ig h t h a v e to b i d l ik e e v e r y b o d y e ls e a n d i t w o u l d b e c o n s id e r e d
la t e r if t h e y a r e s u c c e s s f u l o r s o m e b o d y e ls e ’s o n e m a y b e c o n s i d e r e d
la t e r ?

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16 MAY 2019 – DAY 94
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir i n te r m s o f – a g a in –

in t e r m s o f th is d o c u m e n t fr o m N a t io n a l Tr e a s u r y i t i s c l e a r. I t s a y s :
“ I f th e u n s o lic i te d … ”
F u r th e r d o w n th e d o c u m e n t .
“ I f th e u n s o li c i t e d p r o p o s a l i s c o n c l u d e d t h e n th e
in s t i tu t io n m u s t p r e p a r e a n d is s u e b i d d o c u m e n t s
…”
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

“…the process to

b e f o l lo w e d w h e n p r o c u r i n g a s e r v ic e p r o v i d e r.”

10

It goes on to say:
“ Pr e p a r a ti o n

of

an

RFQ

or

a

Request

for

Q u a li f ic a ti o n to t e s t t h e m a r k e t f o r t h e e x i s t e n c e o f
o th e r p r i v a t e e n ti t ie s c a p a b l e o f p r o d u c t o r s e r v ic e .
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

“ Pr e p a r a t io n o f a

d r a f t c o n tr a c t e tc e t e r a . ”
So …
C H A I R P E R S O N : O k a y.
20

MR MOHAMMED SULEMAN MAHOMEDY:

It is n o t - i t is n o t g iv in g a

b l a n k e t a u th o r it y.
C H A I R P E R S O N : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : Yo u s a y c o n s i d e r i t .
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

Ye s y o u c o n s i d e r e d it t h e n

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16 MAY 2019 – DAY 94
g iv e t h e w o r k o u t .
C H A I R P E R S O N : O k a y.
M R M O H A M M E D S U L E M A N M A H O M E D Y : I t f o ll o w s s o m e p r o c e s s .
C H A I R P E R S O N : O k a y.
A D V P H I L L I P M O K O E N A : A n d a ll o f t h o s e is s u e s w e r e n o t a d h e r e d t o
b y – w h e n – w h e n th is – t h i s b i d w a s – y o u k n o w - a p p r o v e d o r a c c e p te d
b y Tr a n s n e t?
MR MOHAMM ED SULEMAN MAHOMEDY: Not to our knowledge.
A D V P H I L L I P M O K O E N A : Ye s .
10

MR MOHAMMED SULEMAN MAHOMEDY: No.
A D V P H I L L I P M O K O E N A : B u t t h e o th e r c o m p e l li n g r e a s o n s w h i c h y o u
w a n t e d to b r i n g to t h e a t te n ti o n o f t h e C h a ir f o r i n s t a n c e a t t h e ti m e
w h e n t h is u n s o lic i te d b i d w a s s u b m i tt e d N k o n k i h a d a n a lr e a d y e x i s ti n g
c o n tr a c t o f 5 0 0 m il li o n . S o t h is o n e w a s i n a d d i t io n t o t h a t o n e ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : I t w a s o n t o p o f th a t y e s .
ADV PHILLIP MOKOENA:

S o m e a n in g t h a t i t – i t to o k th e v a l u e n o t e

t o 1 b i lli o n – t o o n e …
M R M O H A M M E D S U L E M A N M A H O M E D Y : To 1 b ill i o n . H a d w e …
ADV PHILLIP MOKOENA: Had …
20

MR MOHAMMED SULEMAN MAHOMEDY:

Had

we

allowed

it

to

c o n ti n u e .
ADV PHILLIP MOKOENA:
p a r a g r a p h 5 . 11 . 3 .2 .

Ye s a n d n o w y o u c o n c l u d e o n t h e l a s t s u b

Yo u c a n t a k e th e C h a ir t h r o u g h th a t la s t

paragraph.
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir b e f o r e t h a t I a l s o w a n t

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16 MAY 2019 – DAY 94
t o p r o v id e c la r i ty t h a t w e d i d n o t s p e n d t h i s m o n e y.
A D V P H I L L I P M O K O E N A : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

I n a r o u n d t h e ti m e t h a t th is

w a s i d e n t if i e d b y o u r s e lv e s i n J u n e / J u ly 2 0 1 8 a l l o f t h i s – b y n a m e a n d
a l l o f t h e is s u e s w e r e a ls o b e in g r a i s e d t h r o u g h th e m e d i a .

Tr a n s n e t

h a d p a i d R 2 6 . 1 m il li o n f o r t h e s e r e la t e d s e r v ic e s w i t h a f u r th e r R 6 0
m il li o n t h a t is – t h a t w a s o u ts t a n d in g a n d r e m a in s o u ts t a n d in g a s w e
d is p u te t h i s a m o u n t.
A D V P H I L L I P M O K O E N A : Ye s .
10

MR MOHAMMED SULEMAN MAHOMEDY:

M y a p o lo g i e s f o r t h a t .

I

t h i n k u n d e r 5 .11 .3 2 w h a t w e a r e s a y i n g i s t h e 1 0 0 p e r c e n t i n c r e a s e in
t h e v a lu e o f N k o n k i’s c o n tr a c t is a ls o a c o n tr a v e n ti o n o f Tr e a s u r y
P r a c t ic e N o t e 3 / 2 0 1 6 a n d 2 0 1 7 d a te d 1 9 A p r il 2 0 1 6 t h a t l i m it s t h e
v a r ia t io n o f c o n t r a c t s a n d t h is is a d e v ia t io n .

A v a r ia t io n o f t h e

c o n tr a c t t o a m a x i m u m o f 1 5 p e r c e n t o r 1 5 m il li o n . W h e n w e g o a n d d o
t h e c a lc u la t io n s b a s e d o n w h a t w a s i n c l u d e d i n t h is m e m o r a n d u m a n d
t h e a p p r o v a l o f b e i n g u n d e r 5 0 0 m i ll i o n – t h e u n d e r 5 0 0 m i ll io n i s n o t
n e c e s s a r i ly a d e fi n i ti v e s u m b u t i f y o u d o th e c a lc u l a ti o n s b a s e d t h is
h a d to h a v e b e e n s u b m i t te d to N a t io n a l Tr e a s u r y f o r t h e ir r e v ie w a n d
20

t h e ir i n p u t .

I t h a d n o t g o n e t o N a t i o n a l Tr e a s u r y.

It to o k th e

A c q u is i t io n s a n d D i s p o s a ls C o m m i t t e e a p p r o v a l a s b e i n g fi n a l .
A D V P H I L L I P M O K O E N A : Ye s .
MR MOHAMM ED SULEMAN MAHOMEDY: That was not the case.
ADV PHILLIP MOKOENA:

Ye s .

N o w w e c a n p r o c e e d to d e a l w i t h

T- S y s te m s fr o m p a r a g r a p h 5 .1 2 .

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16 MAY 2019 – DAY 94
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir t h e r e i s a n u m b e r o f

is s u e s a r o u n d T- S y s t e ms t h a t h a v e b e e n m a d e p u b l ic . H o w e v e r i n m y
t e s ti m o n y I d o n o t – I d o n o t d e a l w i th t h e d e t a i ls a r o u n d th a t s a v e t o
s a y t h a t i n my r o l e a s t h e G e n e r a l M a n a g e r o f F in a n c e a t Tr a n s n e t
G r o u p C a p i t a l b e t w e e n S e p t e m b e r 2 0 1 6 a n d 1 5 M a y 2 0 1 8 w e i d e n ti f ie d
t h a t th e d iv is i o n w a s p a y i n g fo r a p p r o x i m a te ly 2 2 0 0 c o m p u te r s w h e n
t h e d i v i s i o n o n l y e m p l o y e d a b o u t 1 1 0 0 p e o p l e . I t is a p r o c e s s t h a t w e
u n d e r t o o k t o i d e n t i fy, tr a c k t h e s e c o m p u te r s .
c o m p u te r s w e r e o r d e r e d i n J u l y 2 0 1 5 .
10

Tr a n s n e t.

We found that 450

T h a t w e r e n e v e r u ti lis e d b y

I t s e e m s to h a v e g o n e m is s i n g .

W e c o u l d n o t fi n d t h e s e

c o m p u te r s . Th e y d i d n o t …
C H A I R P E R S O N : H a d th e y b e e n d e liv e r e d ?
MR MOHAMMED SULEMAN MAHOMEDY:

T h e y h a d b e e n d e li v e r e d to

Tr a n s n e t O ffi c e s a n d t h e n h a d b e e n m o v e d t o u n k n o w n l o c a ti o n s .
c a m e i n to th e b u s i n e s s .

It

T h e y w e r e n o t e v e n p r e lo a d e d w i th th e

Tr a n s n e t s o f t w a r e b e c a u s e t h e Tr a n s n e t s o f t w a r e h a s g o t tr a c k in g
s o f tw a r e w h ic h is l o a d e d o n . W e c o u l d n o t t r a c k t h e s e c o m p u t e r s . T h e
r e a s o n w e p u t t h is o n t h e t a b le is t h a t a ll t h e s e c o m p u te r s w e r e l e a s e d
t h r o u g h T- S y s t e ms – t h r o u g h t h e T- S y s t e m s c o n t r a c t w h ic h w a s s u b
20

c o n tr a c te d to e n t i ti e s l ik e Ze s t il o r a n d l a te r t o I n n o Ve n t R e n t a l a n d
Asset

Management

S o l u ti o n s .

B o th

Z e s ti l o r

and

In n o Ve n t

had

o w n e r s h i p li n k e d t o M r S a li m E s s a a n a s s o c ia t e o f t h e G u p t a s a t t h e
ti m e a n d a m a j o r s h a r e h o ld e r o f Tr il li a n C a p i t a l P a r t n e r s a s w e ll .
A D V P H I L L I P M O K O E N A : Ye s .
CHAIRPERSON :

S o h o w m a n y c o m p u te r s a ll to g e th e r w e r e d e l iv e r e d

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16 MAY 2019 – DAY 94
a n d w e r e p a i d f o r – d e l iv e r e d b u t h a d d is a p p e a r e d ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : W e b e l ie v e i t w a s m o r e th a n
1 0 0 0 C h a ir.
CHAIRPERSON : Hm.
MR MOHAMM ED SULEMAN MAHOMEDY: In one division.
CHAIRPERSON :

I mean how much would that have been in terms of

w h a t th a t d iv is i o n l o s t ?
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir i t r a n in t o a f e w

m il li o n R a n d a y e a r b e c a u s e th e s e c o m p u t e r s w e r e a ll le a s e d . S o y o u
10

w e r e p a y i n g fo r c o m p u t e r s t h a t d i d n o t e x is t a n d y o u w o u l d c o n t in u e
p a y i n g fo r th e m u n ti l y o u r e a c h e d a s e t tl e m e n t w i t h th e e n ti ty t o s e t tl e
t h e s e c o m p u t e r s b e c a u s e t h e r e w e r e l e a s e s t h a t ju s t c o n t in u e d i n t o
( in t e r v e n e s ) .
CHAIRPERSON :

Th e l e a s e s w o u l d h a v e b e e n f o r h o w lo n g ?

Would

t h e y h a v e b e e n a ll m o r e o r le s s fo r t h e s a m e d u r a ti o n o r y o u d o n o –
you would not know?
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir t h e y w o u ld h a v e –

o r d i n a r i ly th r e e to f o u r y e a r li f e …
CHAIRPERSON : Hm.
20

MR MOHAMMED SULEMAN MAHOMEDY:

Th e

lease

but

it

o n ly

c a n c e l le d w h e n y o u h a d r e tu r n e d t h e c o m p u te r p h y s ic a l ly …
C H A I R P E R S O N : Ye s .
M R M O H A M M E D S U L E M A N M A H O M E D Y : A n d t h e n i t w o u l d te r m i n a te .
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

S o in s o m e c a s e s th e 4 5 0

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16 MAY 2019 – DAY 94
w e r e c o m p u t e r s t h a t w e i d e n ti f ie d i n J u l y 2 0 1 5 b u t t h e r e w e r e o t h e r
o l d e r c o m p u t e r s t h a t w e r e n e v e r r e t u r n e d th a t h a d g o n e m is s i n g t h a t
w e r e b e in g p a i d f o r u n ti l a b o u t t h e m id d le – I th i n k – t h e m i d d l e o r
t o w a r d s t h e la t t e r o f 2 0 1 7 w h e n w e f i n a ll y s e t tl e d t h e m a tt e r a n d p a i d
t h e d i ff e r e n c e a n d w e s to p p e d t h e p a y m e n t fr o m r e c u r r in g .
CHAIRPERSON :

H a s – h a s t h a t is s u e b e e n d e t e r m i n e d b y a n

in v e s t i g a t io n a s t o w h e t h e r i t is – t h is m ig h t ju s t b e ju s t s h e e r t h e f t
w h ic h m i g h t n o t b e c o n n e c t e d w i t h a n y t h i n g o r Tr a n s n e t u p to n o w h a s
n o t d e t e r m i n e d e x a c tl y w h a t h a p p e n e d ?
10

MR MOHAMMED SULEMAN MAHOMEDY:
determine

e x a c t ly

what

tr a n s p ir e d

C h a i r w e w e r e u n a b l e to

because

we

had

the

–

the

c o n fir m a t io n o f t h e d e l iv e r y a n d t h e n i t j u s t g o t c o l d .
CHAIRPERSON :

B u t th e r e w o u l d h a v e b e e n p e o p l e u n d e r w h o s e

c u s t o d y e a c h – e a c h c o m p u t e r w a s b r o u g h t. I f t h e y – w h e n th e y w e r e
d e li v e r e d i f t h e y w e r e s u p p o s e d t o b e h o u s e d in o n e p la c e th e r e w o u l d
h a v e s o m e b o d y w h o w o u l d h a v e b e e n r e s p o n s i b l e t o m a k e s u r e th a t
t h e y w e r e s a f e l y k e p t th e r e a n d i f t h e y w e r e d e l iv e r e d t o – th e y w e r e
g iv e n t o e m p l o y e e s t h e y w o u l d b e – t h e y s h o u l d h a v e b e e n r e c o r d s o f
w h ic h c o m p u t e r w a s g i v e n t o w h ic h e m p lo y e e a n d t h a t e m p l o y e e w o u ld
20

h a v e h a d to c o n fir m w h e th e r th e c o m p u te r e v e r r e a c h e d h i m o r h e r a n d
w h a t h a p p e n e d to t h e c o m p u te r o r w a s t h e r e n o p a p e r w o r k o r n o p a p e r
– p a p e r tr a il ?
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir

there

was

an

in v e s t i g a t io n d o n e . A n u m b e r o f e m p lo y e e s o r a f e w e m p l o y e e s w e r e
suspended.

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16 MAY 2019 – DAY 94
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

S u b s e q u e n t ly

some

r e s ig n e d .
CHAIRPERSON : Hm.
MR MOHAMMED SULEMAN MAHOMEDY:

We

a ls o

had

i d e n t if i e d

in d i v i d u a ls w h o w e r e in v o lv e d i n t h e f t o f c o m p u t e r s . W e a r e n o t a b le t o
e s t a b li s h w h e th e r i t w a s e n t ir e l y a l l o f t h e s e c o m p u te r s o r s o m e o f
t h e s e w e r e d e f in i te ly r e l a t e d t o t h a t c a s e . T h e i n d i v i d u a ls – i n d i v i d u a l
w a s f o u n d g u il t y a n d w a s – w a s s e n te n c e d a c c o r d i n g ly a t t h e ti m e .
10

CHAIRPERSON :

Ye s t h a t i s s o m e t h i n g .

As I mean 1 000 – more or

le s s 1 0 0 0 – c o m p u t e r s g e t d e liv e r e d a n d t h e y j u s t d is a p p e a r e d a n d
n o b o d y a t Tr a n s n e t k n o w s e x a c t ly w h a t h a p p e n e d .
M R M O H A M M E D S U L E M A N M A H O M E D Y : I t is …
C H A I R P E R S O N : It is v e r y s t r a n g e .
M R M O H A M M E D S U L E M A N M A H O M E D Y : A c h a l le n g e .
CHAIRPERSON : Ja.
ADV PHILLIP MOKOENA: We …
C H A I R P E R S O N : W e ll it – i t m u s t t a l k t o – i t m u s t t a l k t o c e r t a in w e a k
s y s te m s
20

w it h in

Tr a n s n e t .

I

mean

that

is

not

one

c o m p u te r

d is a p p e a r in g . I t is – i t is …
ADV PHILLIP MOKOENA : 1 000.
C H A I R P E R S O N : I t is a l o t o f c o m p u t e r s . H o w c a n th e y ju s t d is a p p e a r
and nobody knows who took them, when they took them and where did
– w h e r e d id t h e y g o .

I t m u s t ta lk t o w e a k s y s te m s w i th i n – w i t h i n

Tr a n s n e t.

Page 158 of 182

16 MAY 2019 – DAY 94
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir I th i n k t h a t i s a - th a t
is a k e y t h in g w e lo o k e d a t w a s a s t o w h e th e r t h i s w a s a n i n t e n t io n a l
w e a k e n i n g o f t h e s y s t e m , w h e t h e r it w a s s o m e t h i n g th a t h a p p e n e d a n d
I t h i n k th e j u r y i s s t il l o u t b u t th e r e w a s d e fi n i t e ly s o m e i n v o l v e m e n t o f
d i ff e r e n t in d iv i d u a ls t o w e a k e n t h e s y s t e m s o t h a t t h i n g s l ik e t h is w o u ld
b e – g o – w o u l d g o u n d e te c t e d fo r p e r i o d s o f t i m e .
C H A I R P E R S O N : I m e a n b e c a u s e e v e n t h o s e w h o w e a k e n th e s y s te m i t
should be possible to determine them.

It should be possible to

d e t e r m i n e w h o d id – w h o w a s r e s p o n s ib l e f o r t h a t a n d b e c a u s e
10

c e r t a i n l y w i th t h a t k i n d o f t h i n g t h a t s h o u ld b e o f s u c h g r e a t c o n c e r n
t h a t i m m e d i a t e ly Tr a n s n e t s h o u l d b e - i m m e d i a t e ly Tr a n s n e t d i s c o v e r s
t h is k i n d o f t h i n g .

T h e y s h o u ld b e w a n t i n g t o s e e w h a t d o w e p u t i n

p l a c e to m a k e s u r e t h a t t o m o r r o w – w e d o n o t w a k e u p o n e m o r n i n g a n d
fi n d t h a t Tr a n s n e t h a s – d o e s n o t h a v e a s i n g l e c o m p u t e r t h r o u g h o u t
t h e c o u n t r y.
MR MOHAMMED SULEMAN MAHOMEDY:

C h a i r I th i n k a t th a t ti m e –

t h is g o e s b a c k t o 2 0 1 6 – t h e r e w a s a c o n s i d e r a b le c h a n g e i n t h e
m a n a g e m e n t o f th a t d iv is io n .
CHAIRPERSON : Hm.
20

MR MOHAMMED SULEMAN MAHOMEDY:

There were a number of

E x e c u t iv e s w h o w e r e m o v e d , a n u m b e r w h o w e r e s u s p e n d e d a n d a n
e n t ir e n e w m a n a g e m e n t te a m w a s ta k e n in t o t h a t d i v is i o n .
w h e n t h i s w a s d is c o v e r e d .

Th a t is

It would have gone undetected had there

n o t b e e n a s i g n i fi c a n t c h a n g e …
CHAIRPERSON : Hm.

Page 159 of 182

16 MAY 2019 – DAY 94
M R M O H A M M E D S U L E M A N M A H O M E D Y : R e s h u ff le in m a n a g e m e n t .
CHAIRPERSON :

I s – i s t h e r e a r e p o r t s it t in g s o m e w h e r e w h ic h w a s

c o m p il e d b y w h o e v e r w a s a s k e d to i n v e s t i g a t e t h e c ir c u m s t a n c e s u n d e r
w h ic h th o s e c o m p u t e r s w e r e – w e r e o r d i s a p p e a r e d a n d s o o n ? Is - is
there a report somewhere?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir t h e r e s h o u l d b e a
report somewhere.
C H A I R P E R S O N : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:
10

W e w i ll tr y t o l o c a te th a t

r e p o r t b e c a u s e t h is m a t te r w a s r e p o r te d t o th e F o r e n s ic Te a m t o l o o k
a t.
C H A I R P E R S O N : It is – i t is h o r r i f y i n g .
A D V P H I L L I P M O K O E N A : Ye s .
C H A I R P E R S O N : It is h o r r i fy in g a n d i t is t a x p a y e r s ’ m o n e y.
A D V P H I L L I P M O K O E N A : It is C h a ir.
C H A I R P E R S O N : Ye s t h a n k y o u .
ADV PHILLIP MOKOENA:

T h e n e x t t o p i c t h a t y o u a r e d e a l in g w i t h

M r M a h o m e d y is t h e N e o t e l m a t t e r fr o m 5 . 1 3 . M r Vo l m i n k d id t e s t i fy o n
t h is is s u e a t l e n g th . Yo u c a n g i v e – y o u k n o w – t h e s u m m a r y a n d th e
20

h i g h l ig h ts o f w h a t y o u w a n t t o c o n v e y t o t h e C h a ir a s c o r r o b o r a t in g
o b v i o u s l y w h a t M r Vo l m i n k h a s t e s t if i e d o n .
M R M O H A M M E D S U L E M A N M A H O M E D Y : C h a ir I t h i n k u n d e r t h e fo ld e r
4 1 c o m m e n c i n g o n p a g e 5 9 5 th is w a s w h a t w e b e l ie v e d t o b e a n
o r i g in a l m e m o r a n d u m t h a t is d a t e d 3 0 O c t o b e r 2 0 1 3 u n d e r b a n n e r 4 1
page 595.

T h is i s a m e m o r a n d u m a t t h e ti m e fr o m M r G a r r y P it a w h o

Page 160 of 182

16 MAY 2019 – DAY 94
w a s t h e G r o u p S u p p ly C h a in O ff ic e r, M s H a n s ik a M o t w a n i w h o w a s th e
C h i e f I n f o r m a t io n O ff ic e r, m y s e l f a t t h a t ti m e a c ti n g a s t h e C h i e f
Fi n a n c i a l O ffic e r i n Mr S i n g h ’s a b s e n c e t o M s S h a r l a P ill a y w h o w a s t h e
A c ti n g G r o u p C h ie f E x e c u t iv e i n Mr M o l e f e ’s a b s e n c e .

A s I s a i d i t is

d a t e d 3 0 O c t o b e r 2 0 1 3 u n d e r t h e ti tl e :
“RFP

Number

GSM13040722

for

Pr o v is io n

of

Network Services Request for Approval to Approve
t h e P r o c e s s , Aw a r d C o n tr a c t a n d Is s u e a L e t t e r o f
I n t e n t I n v i t in g N e o te l t o F u r t h e r I n v e s t N e g o t ia t io n s
10

a s th e P r e f e r r e d B i d d e r o f th is R F P” .
T h e p u r p o s e o f t h is s u b m is s i o n is t o r e q u e s t t h e G r o u p C h i e f E x e c u t iv e
t o a p p r o v e t h e p r o c u r e m e n t p r o c e s s a n a w a r d o f b u s in e s s to N e o t e l
( Pt y ) L td , s i g n t h e l e t te r o f i n te n t f o r t h e p r e f e r r e d b i d d e r, s i g n l e t t e r s
o f r e g r e t fo r t h e fo u r u n s u c c e s s f u l b id d e r s , s ig n t h e le t t e r to e x t e n d t h e
c u r r e n t N e o t e l c o n tr a c t .
ADV PHILLIP MOKOENA:

A n d w h o w a s th e A c ti n g G r o u p C h ie f

E x e c u t iv e a t t h e ti m e ?
MR MOHAMMED SULEMAN MAHOMEDY:

Th e Ac t in g

Group

Chief

E x e c u t iv e w a s M s S h a r l a P il la y.
20

A D V P H I L L I P M O K O E N A : If I m a y r e f e r to p a g e 5 9 8 .
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s .
ADV PHILLIP MOKOENA:

A t p a r a g r a p h o r o n th a t p a g e w h o a r e t h e

in d i v i d u a ls w h o s ig n e d t h a t d o c u m e n t ?
MR MOHAMMED SULEMAN MAHOMEDY:

There

is

a

PP

for

M a c d o n a ld M a l u l e k e w h o is t h e C o m m o d i t y M a n a g e r. M a n d l a D u b e t h e

Page 161 of 182

16 MAY 2019 – DAY 94
C a t e g o r y M a n a g e r, M r F a n i e Va n D e r Wa lt w h o w a s E x e c u tiv e M a n a g e r
of

Group

S t r a t e g ic

S o u r c in g ,

M r G e r r ie Va n D e r W e s t h u i z e n

the

E x e c u t iv e M a n a g e r i n t h e o ffic e o f t h e C I O , M r P e te r Vo l m in k . T h is is a
P P o n h is b e h a l f w h o i s t h e E x e c u t iv e M a n a g e r o f G o v e r n a n c e a n d
C o m p l ia n c e , M r Yu s u f L a h e r Ex e c u ti v e M a n a g e r E I M S S e r v ic e D e l iv e r y,
M r G a r r y P i ta

the

Group

Chief

S u p p ly

Chain

O ffi c e r,

M s H a n s ik a M o t w a n i t h e C h i e f In f o r m a t io n O ff ic e r, m y s e l f a s t h e A c ti n g
G r o u p C h i e f Fi n a n c i a l O ffic e r a n d f i n a ll y a p p r o v e d b y M s S h a r l a P i ll a y
w h o i s t h e A c ti n g G r o u p C h ie f E x e c u t iv e O ffi c e r.
10

ADV PHILLIP MOKOENA:

So all the necessary signatures of the

r e l e v a n t a u th o r i ti e s w e r e a p p e n d e d o n th a t d o c u m e n t ?
M R M O H A M M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
A D V P H I L L I P M O K O E N A : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

Ev e n t h o u g h s o m e o f u s

w e r e a c ti n g w i th f u l l d e l e g a t e d a u t h o r i ty.
A D V P H I L L I P M O K O E N A : Ye s . Ye s , p r o c e e d .
MR MOHAMMED SULEMAN MAHOMEDY:

C h a ir t h is w a s a s I s a i d t o

a p p r o v e th e p r o c u r e m e n t p r o c e s s a n d a w a r d b u s i n e s s t o N e o te l .

I

move to folder number 42 under the document …
20

ADV PHILLIP MOKOENA : Page 600.
MR MOHAMMED SULEMAN MAHOMEDY:

Page 600.

C h a ir t h is is a

m e m o r a n d u m f r o m M r B r i a n M o l e fe t h e G r o u p C h i e f E x e c u tiv e a t t h e
ti m e t o M r A n o j S in g h , M s H a n s i k a M o t w a n i a n d M r G a r r y P i ta t h e
G r o u p S u p p ly

– C h i e f S u p p l y C h a in O ff ic e r a t t h a t ti m e d a t e d

20 November 2013.

Page 162 of 182

16 MAY 2019 – DAY 94
“RFP

number

GSM13040722

Network Services.

fo r

P r o v is io n

of

R e q u e s t f o r th e A p p r o v a l t o

A p p r o v e t h e P r o c e s s Aw a r d C o n tr a c t a n d Is s u e a
L e t t e r o f I n te n t .”
T h i s d o c u m e n t a s it s p u r p o s e s ta t e s :
“ To i n f o r m t h e G r o u p C h i e f Fi n a n c i a l O f fi c e r, t h e
G r o u p C h i e f I n f o r m a t i o n O ff ic e r a n d t h e G r o u p
C h i e f S u p p ly C h a i n O ffi c e r o f m y d e c is i o n s t o a w a r d
t h e a b o v e m e n ti o n e d b u s i n e s s t o T- S y s t e m s S o u th
10

A fr ic a

in

terms

of

your

r e q u e s ti n g

in

your

m e m o r a n d u m d a t e d 3 1 O c to b e r 2 0 1 3 . ”
C h a ir t h e d o c u m e n t g o e s o n t o e x p la in a f e w t h i n g s b u t u n d e r p a g e 6 0 3
– u n d e r p a g e 6 0 3 in th e a p p r o v a l i t n o t e s t h e f o l l o w i n g u n d e r i te m
number 26.
“ Ba s e d o n t h e e x p l a n a ti o n s g i v e n a b o v e I r e q u e s t
t h e G r o u p C h ie f Fi n a n c i a l O ffi c e r, th e G r o u p C I O
a n d t h e G r o u p S u p p ly C h a i n O ffi c e r to n o t e m y
d e c is i o n s t o a w a r d b u s in e s s t o T- S y s t e m s i n t e r m s
o f S e c ti o n 2 5 o f t h e P P M … ”
20

The Procurement Procedure Manual
“ …a n d t h a t I a m o v e r r id in g t h e r e c o m m e n d a t io n
m a d e i n t h e Ti e r R e p o r t .”
W h i c h is th e E v a l u a t io n R e p o r t o f Pr o c u r e m e n t .
A D V P H I L L I P M O K O E N A : Ye s .
MR MOHAMMED SULEMAN MAHOMEDY:

Page 163 of 182

E s s e n ti a l ly

C h a ir

t h is

16 MAY 2019 – DAY 94
memorandum

on

20 November

discarded

th e

memorandum

of

3 1 O c to b e r r e p la c i n g N e o t e l w it h T- S y s t e m s . T h e n C h a ir u n d e r M S M o r
u n d e r f o l d e r 4 3 p a g e 6 0 7 t h e r e i s a f u r t h e r m e m o r a n d u m d a te d
5 D e c e m b e r 2 0 1 4 w h ic h is a d d r e s s e d fr o m Mr A n o j S in g h , M r G a r r y P i ta
a n d M s H a n s i k a M o t w a n i to M r Br ia n M o le f e .
“ T h e p u r p o s e o f t h i s s u b m is s i o n is to r e q u e s t th e G r o u p C h i e f
E x e c u t iv e to a p p r o v e t h e a w a r d o f n e t w o r k s e r v i c e s t o N e o t e l ,
f o r a p e r io d o f f iv e y e a r s w i t h e ff e c t D e c e m b e r 1 4 t o N o v e m b e r
2 0 1 9 , s i g n e d th e M S A , t h e M a s t e r S e r v i c e s A g r e e m e n t f o r th e
10

p r o v i s i o n o f n e t w o r k s e r v ic e s b e t w e e n Tr a n s n e t a n d N e o t e l ,
s ig n a l e t te r i n f o r m i n g N e o te l th a t Tr a n s n e t w il l n o t e v o k e i ts
r ig h t a n d s t e p i n a s p e r C la u s e 5 1 1 5 s h o u l d th e Vo d a c o m
purchase of Neotel be approved.

S i g n t h e le t t e r in f o r m i n g

N e o t e l t h a t Tr a n s n e t w il l w i t h h o l d R 7 9 m i ll i o n u n t il t h e f in a n c ia l
g u a r a n te e i s f in is h e d , e t c e t e r a .”
ADV PHILLIP MOKOENA SC :

Ye s .

And you make some key

o b s e r v a t i o n s fr o m p a r a g r a p h 5 . 3 0 .6 o n p a g e 3 2 o f y o u r s t a t e m e n t , c a n
y o u t a k e th e C h a ir t h r o u g h y o u r o b s e r v a t io n s ?
MR MOHAMED SULEMAN MAHOMEDY :
20

C h a ir w h a t i s i m p o r t a n t is

t h a t a s w e p o in t e d o u t t h e fi r s t m e m o r a n d u m w h ic h h a d g o n e th r o u g h a
p r o p e r p r o c e s s h a d a l l o f th e r e l e v a n t s u p p o r t in g d o c u m e n ts i n p la c e ,
w a s a p p r o v e d b y th e t h e n G r o u p C h ie f E x e c u ti v e M s C h a r l a P il l a y o n
t h e 3 1 s t o f O c t o b e r.
O n th e 2 0 t h o f N o v e m b e r 2 0 1 3 M r M o l e fe r e s c in d s t h a t e n t ir e
p r o c e s s a n d m a k e s a u n il a te r a l d e c is i o n t o a w a r d th e e n ti r e c o n t r a c t t o

Page 164 of 182

16 MAY 2019 – DAY 94
T- S y s te m s

and

th e n

a

year

later

or

more

than

a

year

l a te r

. . .( i n te r v e n t io n )
C H A I R P E R S O N : B y th a t t i m e – I’ m s o r r y – b y t h e ti m e M r B r i a n M o l e fe
d i d th a t h a d N e o te l b e e n t o l d o f t h e d e c i s i o n , d o y o u k n o w ?
MR MOHAMED SULEMAN MAHOMED Y :

C h a ir a l l th e d o c u m e n t s t h a t

w e h a v e , t h e d o c u m e n ts w e r e s ig n e d , I’ m n o t s u r e i f th e y w e r e s e n t .
C H A I R P E R S O N : O k a y, o k a y.
MR MOHAMED SULEMAN MAHOMEDY :

A n d t h e n s u d d e n ly a y e a r

la t e r N e o te l is th e n a p p o in t e d , s o th e r e ’s a d e c is i o n t o a p p o i n t N e o t e l
10

t h r o u g h th e c o r r e c t p r o c u r e m e n t p r o c e s s , t h e n s u d d e n ly i t’s T - S y s t e m s
a n d t h e n a f u l l y e a r la t e r f in a l ly N e o t e l is a p p o in t e d .

They key

o b s e r v a t i o n C h a i r i s u n d e r t h e f o l d e r 4 3 o n p a g e 6 0 8 , a n d t h a t t a lk s to
t h e f a c t t h a t t h e tr a n s i ti o n c o s t m o v e d f r o m 1 7 5 m ill i o n t o 2 2 5 m i ll io n
a n d i n t e r m s o f w h a t is p r o v id e d th e r e d o e s n o t s e e m t o b e a n a d e q u a t e
e x p l a n a t io n a s t o w h y th e tr a n s i t io n c o s t m o v e d b y a p p r o x i m a t e ly a
c le a n R 5 0 m il li o n .
T h a t ’s t h e f ir s t o b s e r v a t i o n , a n d t h e s e c o n d o b s e r v a t i o n a n d
the

second

s u g g e s t io n
20

observation

was

that

was a three year

in

the

fir s t

with a two year

memorandum
option

th e

a n d t h is

m e m o r a n d u m w a s e ffe c t iv e l y n o w b e i n g g iv e n fo r a fiv e y e a r c o n tr a c t
o p t io n .
T h o s e a r e th e k e y i s s u e s o n th e N e o t e l p r o c e s s .
ADV PHILLIP MOKOENA SC :

Ye s .

C H A I R P E R S O N : Yo u o b v i o u s l y h a v e h a d a c h a n c e t o e x a m i n e M r B r ia n
M o le f e ’s r e a s o n s f o r g o in g a g a i n s t t h e d e c i s i o n t h a t h a d b e e n ta k e n

Page 165 of 182

16 MAY 2019 – DAY 94
w h ic h y o u h a d s u p p o r t e d b y w a y o f t h e m e m o r a n d u m t o w h ic h y o u
r e fe r. A r e y o u a b l e t o s a y s o m e th in g a b o u t th e t w o s i d e s o f r e a s o n s ,
o n t h e o n e h a n d t h e r e a s o n s w it h w h ic h y o u a s s o c i a t e d y o u r s e l f f o r
s a y in g N e o t e l m u s t b e a w a r d e d a n d th e r e a s o n s t h a t Mr B r i a n M o l e f e
g a v e f o r o v e r r i d in g th e p o s i ti o n ?
M R M O H A M E D S U L E M A N M A H O M E D Y : C h a ir I t h i n k i n r e v i e w i n g th e
d o c u m e n t o n e f in d s t h a t th e r e ’s a fa ir l y t e c h n ic a l d is c u s s i o n a r o u n d
w h o i s t h e f in a l a u th o r it y w h e n t h e r e ’s a d is p u te .

A s fa r a s w e w e r e

c o n c e r n e d o n t h e 3 1 s t o f O c t o b e r 2 0 1 3 t h e r e w a s n o d i s p u te , t h e c r o s s 10

f u n c t i o n e v a l u a t i o n t e a m h a d r e v i e w e d a ll o f t h e r e l e v a n t s u b m is s i o n s
a n d t h e y h a d p r o v i d e d t o u s a d e t a il e d r e p o r t th a t p r o p o s e d t h a t N e o t e l
w a s t h e p r e f e r r e d b id d e r.
Now

in

the submission

fr o m M r

Molefe he

ta lk s a b o u t

c o n c e n tr a ti o n r i s k a s Tr a n s n e t i s N e o te l ’s la r g e s t c li e n t, c o u n te r p a r ty
r is k e t c e t e r a .

Th e s e r is k s e x is t e d w i t h N e o t e l i n t h e p a s t s o I ’ m n o t

s u r e a n d fr o m m y p e r s p e c tiv e t h e r e ’s a n u m b e r o f o t h e r is s u e s o n t h e
C C T V c a m e r a s a n d v a r i o u s p o r ts w e r e n o t o p e r a t i o n a l e tc e te r a . Th e r e
m a y h a v e b e e n s o m e d is c o m f o r t , b u t th a t w o u ld h a v e h a d t o h a v e b e e n
a d d r e s s e d th r o u g h t h e r e le v a n t p r o c u r e m e n t c h a n n e ls .
20

C H A I R P E R S O N : A m I r i g h t t o s a y t h a t a s s u m i n g t h a t M r Br ia n M o le f e
d i d h a v e th e p o w e r t o m a k e t h a t d e c is i o n a m I r i g h t t o s a y y o u a r e n o t
in a p o s i ti o n t o s a y th a t t h e r e a s o n s h e g a v e w h e n w e i g h e d a g a in s t
those that are contained in the memo with which you associated
y o u r s e l f w e r e s u c h t h a t o n e j u s t c o u l d n ’ t u n d e r s t a n d t h e d e c is i o n , n o w
I’ m n o t ta lk in g a b o u t w h e t h e r h e h a d t h e p o w e r o r n o t b u t ju s t d e c i d in g

Page 166 of 182

16 MAY 2019 – DAY 94
t o g iv e t h e c o n tr a c t to T- S y s t e m s a s o p p o s e d t o N e o te l?
M R M O H A M E D S U L E M A N M A H O M E D Y : C h a ir w h a t is n o t n e c e s s a r il y
s i tt i n g w e l l fr o m a n u n d e r s t a n d i n g p e r s p e c tiv e is w h y a s t h e C h i e f
E x e c u t iv e h e p r e p a r e d th e m e m o r a n d u m h i m s e l f , w h y it ’s n o t s u p p o r te d
b y t h e s u p p ly c h a i n o ffic e t o a g r e e , c o n c u r w i th h is a s s e s s m e n t , t h e
g o v e r n a n c e t e a m o r l e g a l r e p r e s e n t a tiv e t o a g r e e w it h t h e p r in c i p l e s
t h a t w e r e e s p o u s e d i n th a t d o c u m e n t , t h a t’s t h e f ir s t th in g .
T h e s e c o n d t h i n g i n h i n d s i g h t o b v i o u s ly C h a ir o n e is n o t c l e a r
a s t o w h y w e t h e n w e n t b a c k t o t h e o r i g i n a l d e c is i o n w i t h a n a d d i t io n a l
10

R 5 0 m i ll io n ( i n d i s t i n c t) .
CHAIRPERSON :

I k n o w w e h a v e – I h a v e h e a r d e v i d e n c e fr o m o t h e r

Tr a n s n e t w it n e s s e s . . .( in t e r v e n ti o n )
ADV PHILLIP MOKOENA SC :

M r Vo l m i n k C h a ir.

C H A I R P E R S O N : Is th a t w h e r e t h e r e w a s a c o u r t ju d g m e n t ?
ADV PHILLIP MOKOENA SC :

Ye s Mr Vo l m i n k g a v e q u it e d e t a i l e d

a n a ly s is o f t h e ( in d i s ti n c t) a n d h e w e n t b a c k a n d e v e n t o l d u s h is
reasons.
C H A I R P E R S O N : Ye s t h e r e w a s s e n i o r c o u n s e l ’s o p i n i o n a n d s o o n .
ADV PHILLIP MOKOENA SC :
20

Ye s .

C H A I R P E R S O N : J a , o k a y, t h a n k y o u .
ADV PHILLIP MOKOENA SC :

Yo u c o n c l u d e th a t p o r t io n o f y o u r

s t a te m e n t w i th p a r a g r a p h 5 . 1 3 .7 a n d 5 . 1 3 .8 , i f y o u c a n s i m p ly r e a d
t h e m i n to t h e r e c o r d , w e w i ll th e n d e a l w i t h th e n e x t t o p ic .
MR MOHAMED SULEMAN MAHOMED Y:

It has also been reported

w i d e ly t h a t N e o t e l m a d e , a l l e g e d l y m a d e v a r i o u s p a y m e n t s t o H o m ix , a

Page 167 of 182

16 MAY 2019 – DAY 94
k n o w n G u p t a c o m p a n y.

T h e p a t t e r n is d is c e r n i b l e i n th e m a n n e r in

w h ic h t h e e s ti m a t e d t o t a l c o s t o f t h e 1 0 6 4 lo c o m o t iv e tr a n s a c ti o n w a s
in c r e a s e d . T h e r e s e e m s t o b e a p a t t e r n i n m y v i e w.
ADV PHILLIP MOKOENA SC :

Ye s , n o w y o u th e n d e a l w it h w h a t y o u

t e r m a c u l t u r e o f in t i m id a ti o n a n d i n v e s ti g a t io n s , y o u c a n s u m m a r i s e
t h a t fo r u s .
MR MOHAMED SULEMAN MAHOMEDY :

C h a ir in 2 0 1 6 i n S e p te m b e r

t h e r e w a s a n in v e s ti g a t i o n th a t w a s lo d g e d in Tr a n s n e t t o d e t e r m i n e
w h e t h e r i n d i v i d u a ls w e r e i m p li c a t e d o r in v o lv e d i n t h e le a k in g o f
10

Tr a n s n e t d o c u m e n t a ti o n . I h a d in f o r m e d t h e i n v e s t ig a t o r s o n n u m e r o u s
o c c a s i o n s t h a t th e w o r k t h a t Tr il li a n d i d o r t h e y w o r k th a t th e y – m y
a p o lo g i e s t h e i n v o ic e s t h a t w e r e p r e s e n t e d b y Tr il li a n t h e r e w a s n o
w o r k p e r fo r m e d a s I te s t i fi e d t o e a r li e r o n , a n d th a t t h e s e in v o ic e s w e r e
a u t h o r i s e d b y Mr P i t a a n d M r T h o m a s a n d t h e y c o u l d n o t b e f o r b o n a
fi d e s e r v ic e s .

T h is w a s p r e s e n t e d i n t h e fi r s t i n t e r v i e w w h ic h w a s i n

t h e m i d d le o f S e p t e m b e r 2 0 1 6 to a g r o u p o f in v e s ti g a t o r s fr o m b o t h t h e
fir m o f a t to r n e y s , W e r k s m a n s , a s w e ll P W C .
A n u m b e r o f te s t i m o n y a r o u n d th e Tr i lli a n i n v o ic e s w e r e
p r e s e n t e d t o t h a t p a r t ic u l a r, t h o s e p a r t i c u l a r f ir m s . W e w e r e s u b j e c t e d
20

t o v o ic e a n a l y s i s t e s t s , h a n d w r i t in g a n a ly s i s a n d m a n y h o u r s o f f o r e n s ic
in t e r r o g a ti o n .

This commenced as I said in the middle of September

2 0 1 6 a n d c o n t in u e d u p t o th e b e g in n i n g o f A p r il 2 0 1 7 .
A t t h a t t i m e Tr a n s n e t h a d a n n o u n c e d a v o l u n ta r y s e p a r a ti o n
p r o g r a m f o r m a n a g e m e n t a n d I t h e n m a d e a n a p p l ic a ti o n t o t a k e t h a t u p
a s w o r k i n g a t Tr a n s n e t a t t h e ti m e b e c a m e u n b e a r a b l e w i t h t h e

Page 168 of 182

16 MAY 2019 – DAY 94
E x e c u t iv e s t h a t h a d o r ig i n a ll y o r a t t h e t i m e t h a t w e r e th e r e . A t s o m e
p o i n t to w a r d s t h e m i d d le o f A p r i l 2 0 1 7 I w a s c a l le d t o a m e e t in g w it h M r
P i ta , w h o a d v i s e d m e t h a t th e W e r k s m a n s / P W C t e a m s r e p o r t e d o n ly to
t h e B o a r d , t h e f o r e n s ic te a m h a d f o u n d n o c o n c lu s iv e e v i d e n c e t h a t I
w a s in v o lv e d i n a n y w r o n g d o i n g a n d t h a t m y V S P a p p li c a t io n w a s n o t
g o i n g t o b e a p p r o v e d a s Tr a n s n e t n e e d e d t h e s k i ll s a n d e x p e r i e n c e .
I a m n o t a w a r e if – I’ m n o t a w a r e w h y m y V S P w a s r e je c t e d a s
I d i d n o t r e c e iv e a n y f u r th e r c o r r e s p o n d e n c e o n t h a t m a t t e r.
CHAIRPERSON :
10

B u t d i d n ’ t y o u j u s t s a y t h e y s a i d th e y n e e d e d y o u r

e x p e r i e n c e a n d s k i ll s ?
MR MOHAMED SULEMAN MAHOMEDY :

Ye s C h a i r t h a t w a s v e r b a l

c o m m u n ic a ti o n .
C H A I R P E R S O N : O h y o u d i d n o t g e t i t i n w r it i n g .
MR MOHAMED SULEMAN MAHOMEDY :

I d i d n ’ t r e c e iv e a n y w r i t te n

feedback.
C H A I R P E R S O N : In w r i t i n g o k a y.
MR MOHAMED SULEMAN MAHOMEDY:
ADV PHILLIP MOKOENA SC :

Ye s C h a ir.

A n d n o w fr o m p a r a g r a p h 7 y o u a r e

d e a li n g w i th t h e r e m e d i a l a c ti o n , c a n I p r o p o s e t h a t w e s k i p t h a t t o p i c
20

a n d w e w il l c o n c l u d e w i t h i t a n d w e w il l m o v e o n t o d e a l w i t h i t e m e i g h t
w h ic h is n o w y o u r p e r s o n a l d e c l a r a ti o n s . J u s t s u m m a r i s e f o r u s w h a t
y o u ’r e s t a ti n g u n d e r t h a t h e a d i n g ?
MR MOHAM ED SULEMAN MAHOM EDY : Thank you. I think during my
ti m e a t Tr a n s n e t a n d m y c a r e e r o v e r m a n y y e a r s I h a v e w o r k e d
e x t e n s iv e ly

with

many

s e r v ic e

p r o v id e r s

Page 169 of 182

i n c lu d in g

M c K i n s e y,

16 MAY 2019 – DAY 94
R e g i m e n t s , P W C a n d t h e li k e , a m o n g s t o t h e r s , I w o u ld h a v e b e e n
in v i te d to m a n y c o n f e r e n c e s , b e n c h m a r k i n g v is it s l o c a l ly a s w e ll a s
g l o b a ll y th a t w e r e a r r a n g e d t o b u y th e s e e n t i ti e s .

A ll o f t h e r e l a te d

c o s ts w o u l d h a v e b e e n p a i d fo r b y Tr a n s n e t a t t h e ti m e .
I a l s o h a v e d e v e l o p e d m a n y r e l a ti o n s h i p s , b o t h p e r s o n a l a n d
p r o f e s s i o n a l w i t h k e y in d iv i d u a ls a t t h e s e fi r ms , i n c l u d i n g b u t n o t
n e c e s s a r i ly li m i t e d t o Mr P a r b h o o , P r a k a s h P a r b h o o , Mr C a n n a l a c
M i h a r a n , M r D a v i d Fi n e , D r A n d r e w S h a w. S o m e o f t h e s e r e l a t i o n s h i p s
w i ll e n d u r e to t h is d a y.
10

T h e r e a r e c e r ta i n s p e c i fi c e n ti t i e s a n d

in d i v i d u a ls t h a t h a v e c r o s s e d p a t h s w it h m e o r I c r o s s e d p a t h s w i t h
t h e m o v e r t h e y e a r s th a t I t h in k r e q u ir e s s p e c i a l m e n ti o n . C u t t in g E d g e
a n d M r A l th a f E m m a m a ll y.

A m o n g s t m y f ir s t jo b s i n t h e C o r p o r a t e

S e c t o r I w o r k e d a t E s k o m fr o m 2 0 0 1 t o 2 0 0 4 , A u g u s t a n d t h e t h e n C h i e f
Fi n a n c i a l O ffi c e r o f t h e Tr a n s m is s i o n D iv is i o n , w h o m I w o r k e d u n d e r
w a s M r A lt h a f E m m a m a lly.

My appointment at Eskom went through

n o r m a l r e c r u i t m e n t p r o c e s s e s w i t h m e r e s p o n d in g t o a n a d v e r t i n t h e
S u n d a y Ti m e s .
O n l e a v i n g E s k o m i n 2 0 0 4 , A u g u s t , I j o i n e d S p o o r n e t, w h a t
w a s t h e n c a l le d S p o o r n e t .
20

Th is t i m e I w a s a p p r o a c h e d b y M r

E m m a m a ll y a n d a p p o i n t e d b y Ex e c u ti v e A u th o r it y u n d e r t h e le a d e r s h i p
o f t h e th e n C h i e f E x e c u ti v e o f S p o o r n e t , M s D o ll ie M o g a tl e , w h o w a s
a ls o a t E s k o m i n m y t e n u r e .
I n m id - 2 0 0 6 I r e s i g n e d fr o m m y p o s i ti o n a t S p o o r n e t a f t e r
b e i n g a p p r o a c h e d b y M r J o h a n G r i m b e e c k , d ir e c to r a n d s h a r e h o ld e r o f
t h e C u t t in g E d g e G r o u p .

I w a s o ffe r e d a p o s i ti o n o f m a n a g i n g th e

Page 170 of 182

16 MAY 2019 – DAY 94
fi n a n c e d iv is i o n w i t h t h e k e y f o c u s o f c r e a ti n g a c o n s u l t a n c y a n d
d e v e l o p in g fi n a n c e b u s i n e s s in t e l li g e n t s o f t w a r e .
A s D iv i s i o n a l D ir e c to r s w e w e r e g iv e n a m in i m u m s h a r e h o l d in g
in t h e g r o u p e n t i ty o f 2 % . T h is w a s r e li n q u is h e d i n A p r il 2 0 0 8 . I n A p r il
2008

after

d i ffe r e n c e s

with

the

shareholders

and

the

d ir e c to r s ,

in c l u d i n g M r E m m a m a ll y I h a d a m u tu a l s e p a r a ti o n a g r e e m e n t w i th
C u t t in g E d g e a s p a r t o f – w i th C u t t in g E d g e , a n d a s p a r t o f t h is p r o c e s s
C u t t in g E d g e Fi n a n c e w a s tr a n s fe r r e d t o m e a s i t w a s t h e d iv is io n t h a t
w a s d e v e lo p e d b y th e fi n a n c e te a m a n d m y s e l f, a n d I w a s g iv e n 1 0 0 %
10

o f th e s h a r e h o ld i n g o f t h is c o m p a n y. M r E m m a m a l ly h a s b e e n n a m e d i n
a r ti c l e s i n th e m e d i a a s h a v i n g li n k s t o t h e G u p t a Fa m i ly.
S i n c e 2 0 0 8 I h a v e h a d l i m i te d in t e r a c ti o n s w i t h M r E m m a m a l ly
a n d C u t ti n g E d g e C o m m e r c e .
c o n fi d e n t ,

s o r r y,

my

I a m a w a r e t h a t Tr a n s n e t th r o u g h a

apologies,

th r o u g h

a

confinement

process

a p p o i n t e d C u tt i n g E d g e a r o u n d A p r il 2 0 1 4 t o p r o v i d e a s o l u t i o n f o r
s y s te m s a n a ly tic a l t o o l a n d c a p a b i li ti e s t h a t w il l e n a b l e o r th a t w il l
p r o v i d e k e y p r o c u r e m e n t m a tr ix a n d a n a l y s is .

N e i t h e r m y s e lf n o r m y

d e p a r t m e n t a t t h e t i m e , D C I A , w a s in v o lv e d i n t h e a p p o in t m e n t o f
C u t t in g E d g e . D u r in g t h e c o u r s e o f th e ir a p p o in t m e n t a t Tr a n s n e t I h a d
20

n o d e a li n g s w i t h C u t ti n g E d g e w h e n t h e y e x e c u t e d t h e ir m a n d a t e .
C u t t in g E d g e Fi n a n c e , w h i c h i s a c o m p a n y t h a t I o w n , h a s
b e e n d o r m a n t s i n c e l a t e 2 0 0 9 a n d h a s d o n e n o w o r k fo r a n S t a t e
O w n e d E n ti ty p o s t 2 0 0 9 .
Under 8.6 on page 36 Mr Mohamed Bobat, Mr Boba t has been
named

in

the

media

as

b e in g

one

of

Page 171 of 182

the

a d v is o r s

that

was

16 MAY 2019 – DAY 94
c o n tr o v e r s i a lly a p p o i n t e d t o a d v is e t h e t h e n M i n is te r o f F i n a n c e , M r
Des van Rooyen. I purchased land in a gated complex in October 2003,
w i t h n o u n d e r s t a n d i n g o f w h o th e o t h e r h o m e o w n e r s a r e o r w e r e . T h i s
is a f r e e h o l d p r o p e r ty a n d n o t a s e c t io n a l t it le d e v e l o p m e n t a n d is u s e d
a s m y p r i m a r y r e s id e n c e . A f t e r I b u i l t my h o u s e I s u b s e q u e n t ly le a r n e d
t h a t Mr B o b a t a ls o o w n e d a fr e e h o l d p r o p e r ty i n t h e s a m e g a t e d
c o m p le x , a n d h e r e s i d e s a t t h is p r o p e r ty a s w e l l .

I was appointed as

the

and

Chairman

C h a ir m a n .
10

of the

H o m e o w n e r s A s s o c ia t i o n

s ti ll a m

the

Mr B o b a t w a s a ls o a p p o i n t e d t o t h e A s s o c ia t io n a s a

d ir e c t o r a n d w e r e m a i n e d c o - d ir e c t o r s o n t h e B o a r d o f th e H o m e o w n e r s
A s s o c ia t io n . I h a v e n o c o n t a c t w it h M r B o b a t o u ts id e o f t h e s e m e e t in g s
a n d c o r r e s p o n d e n c e s a s r e l a t e d to t h e H o m e o w n e r s A s s o c ia t io n .
I m u s t a ls o i n d ic a t e t h a t M r B o b a t a l s o w o r k e d fo r R e g i m e n ts
w h e n R e g i m e n t s r e n d e r e d s e r v ic e s t o Tr a n s n e t b e t w e e n 2 0 1 3 a n d
2015.

M r B o b a t w a s o n e o f t h e R e g i m e n ts p e r s o n n e l th a t w e r e

a s s ig n e d to t h is p r o j e c t .

I h a d n o d ir e c t r o l e o r i n fl u e n c e i n th e

a p p o i n t m e n t o f R e g i m e n ts f o r th e s e a s s ig n m e n ts .
ADV PHILLIP MOKOENA SC :

And Mr An oj Singh?

MR MOHAMED SULEMAN MAHOMED Y :
20

M r A n o j S in g h s u b s e q u e n t

t o p a s s in g m y B C o m m d e g r e e in 1 9 9 5 I e n r o l le d a t t h e t h e n U n iv e r s i t y
o f D u r b a n W e s tv il le f o r t h e p o s t - g r a d u a te a c c o u n t in g p r o g r a m in 1 9 9 6 .
M r S i n g h a t t h e ti m e w a s a ls o e n r o l le d fo r t h is p r o g r a m a n d a c c o r d i n g l y
w e w e r e c l a s s m a te s fo r t h a t y e a r. W h e n I j o i n e d S p o o r n e t i n 2 0 0 4 M r
S i n g h w a s th e m a n a g e r r e s p o n s i b le f o r fi n a n c i a l r e p o r ti n g a t t h e t i m e a t
Spoornet.

O u r i n te r a c t i o n s w e r e p r o f e s s i o n a l a n d a s f r e q u e n t a s o u r

Page 172 of 182

16 MAY 2019 – DAY 94
jo b s w o u l d h a v e r e q u ir e d . In D e c e m b e r 2 0 1 2 M r S i n g h a p p r o a c h e d m e
t o o ff e r m e a r o l e a s t h e G e n e r a l M a n a g e r o f G r o u p C a p i t a l . I a c c e p t e d
t h e r o l e a n d j o in e d t h e G r o u p Fi n a n c e Te a m o ffi c i a l ly i n F e b r u a r y 2 0 1 3 .
D u r i n g th e p e r i o d o f 2 0 1 3 u n t il 2 0 1 5 b e f o r e M r S i n g h m o v e d t o
E s k o m I r e p o r te d t o h i m d ir e c t ly, e ffe c t i v e l y M r A n o j S i n g h w a s m y
d ir e c t l in e m a n a g e r.

D u r i n g th e t h i s p e r io d in m y o p i n i o n w e h a d a

c o r d i a l a n d p r o fe s s io n a l r e l a ti o n s h i p .
M r P i ta w a s a c o ll e a g u e d u r i n g th e t i m e t h a t M r A n o j S i n g h
w a s th e C F O .
10

H e w a s a p p o in t e d b y t h e t h e n M i n i s te r o f P u b l ic

E n t e r p r is e s , M s Ly n n e B r o w n , a s t h e A c t in g G r o u p C h i e f F i n a n c i a l
O ff ic e r Tr a n s n e t e ffe c tiv e 1 s t A u g u s t 2 0 1 5 a n d s u b s e q u e n tl y c o n f ir m e d
a s t h e G r o u p C F O in 2 0 1 6 .

F o r t h e e n s u r in g 1 3 m o n t h s I r e p o r t e d

d ir e c t ly t o Mr P i t a u n t il m y a p p o i n t m e n t a s t h e G M F i n a n c e o f Tr a n s n e t
G r o u p C a p i t a l o n t h e 1 s t o f S e p te m b e r 2 0 1 6 , a p o s it i o n I a p p l i e d f o r
a n d w a s i n te r v i e w e d b y a m o n g s t o th e r s M r P i ta .
A D V P H I L L I P M O K O E N A S C : Ye s , a n d t h o s e a r e t h e d e c la r a ti o n s th a t
y o u s o u g h t t o m a k e b e f o r e t h e C h a ir ?
MR MOHAMED SULEMAN MAHOMEDY :
ADV PHILLIP MOKOENA SC :
20

Ye s .

Ye s . M a y I n o w r e f e r y o u b a c k to p a g e

3 4 o f t h e s t a t e m e n t a n d n o w d e a l w i t h t h e r e m e d i a l a c t io n .
M R M O H A M E D S U L E M A N M A H O M E D Y : I n t h e r e c e n t m o n th s to g e t h e r
w i t h t h e B o a r d a n d E x e c u t iv e M a n a g e m e n t I t h i n k t h e r e h a s b e e n a l o t
o f i n tr o s p e c t i o n a r o u n d w h a t h a s tr a n s p ir e d a t Tr a n s n e t a n d w h a t n e e d s
t o b e d o n e t o a v o id t h i s fr o m e v e r h a p p e n i n g a g a i n i n Tr a n s n e t o r i n
o u r c o u n tr y.

Page 173 of 182

16 MAY 2019 – DAY 94
There have been breaches of corporate governance, there
h a v e b e e n m a n i p u l a t i o n s o f c e r ta i n p r o c e s s e s a n d p o li c i e s w i t h i n
Tr a n s n e t a n d r i g h t u p fr o n t Tr a n s n e t , t o g e t h e r w it h th e B o a r d h a s
begun

lo o k i n g

at

and

procurement

processes

Management

and

making
and

i m m e d ia t e

c o n t r o ls ,

Oversight

i m p r o v e m e n ts

bringing

e m b e d d in g

th e

in

to

Tr e a s u r y,

financial

and

the
R is k

capit al

c o n tr o ls th a t s h o u ld e x i s t in a b u s in e s s t h a t u s e d t o b e t h e r e a s w e ll b y
t h e w a y, a n i m m e d i a te a c ti o n t h a t h a s a lr e a d y b e e n i m p l e m e n t e d i s t o
a m e n d t h e d e l e g a t io n o f a u th o r i ty to n o t a ll o w in d iv i d u a ls t h e a u th o r it y
10

to

sign

o ff

on

procurement

tr a n s a c t i o n s ,

on

capital

investment

d e c is i o n s , w h e r e i t’s p o s s i b l e .
The oversight process and assurance processes have been
i m p r o v e d s i g n i fic a n tly w it h t h e B o a r d ta k in g o n a v e r y, v e r y d i li g e n t
p e r s p e c t iv e

as

it

comes

to

th in g s

around

Tr e a s u r y,

F in a n c e ,

P r o c u r e m e n t a n d In v e s t m e n t d e c is i o n s .
Tr a n s n e t h a s a l s o e m b a r k e d o n a p r o g r a m t o r e c o v e r fu n d s
a n d a s w e s t a t e d a n d t e s ti fi e d e a r l ie r o n C h a ir w e h a v e r e c o v e r e d t h e
R 6 1 8 m il li o n f r o m C h i n a S o u t h R a il , t h e R 8 6 m i ll io n w e w il l c o n ti n u e t o
p u r s u e t h a t. W e a r e p u r s u in g le g a l o p i n i o n i n te r ms o f u n d e r s t a n d i n g
20

w h e t h e r . . .( in t e r v e n ti o n )
ADV PHILLIP MOKOENA SC :

Legal processes?

MR MOHAMED SULEMAN MAHOMEDY :

Legal processes and legal

o p i n i o n t o s e t a s i d e t h e i n t e r e s t r a te s w a p tr a n s a c t i o n s t h a t a r e c o s t in g
u s i n o u r v i e w a p p r o x i m a te ly R 4 0 0 m i ll io n p e r a n n u m i n a d d i ti o n t o t h e
in t e r e s t , f lo a ti n g i n te r e s t r a t e .

W e h a v e c o m m e n c e d a r e n e g o ti a ti o n

Page 174 of 182

16 MAY 2019 – DAY 94
process

with

the

original

e q u ip m e n t

manufacturers

to

a l ig n

all

r e q u ir e m e n t s in t h e s h o r t , m e d i u m a n d lo n g t e r m a n d w e a r e a l s o i n th e
p r o c e s s o f t a l k i n g t o c e r t a i n s e r v ic e p r o v i d e r s w h e r e t h e r e a r e c e r t a i n
a l le g a ti o n s a r o u n d th o s e s e r v ic e p r o v id e r s t o r e a c h a n a g r e e m e n t o n
s o m e s o r t o f s e t tl e m e n t to r e c o v e r s o m e o f th e s e m o n i e s b a c k to
Tr a n s n e t.
ADV PHILLIP MOKOENA SC :

Ye s .

M R M O H A M E D S U L E M A N M A H O M E D Y : I t h i n k th e o n e k e y th i n g C h a ir
t h a t is n e c e s s a r y t o m e n ti o n a s w e l l is t h a t Tr a n s n e t i s a s i g n i fic a n t
10

e n t i ty i n t h e l iv e s o f S o u t h A f r ic a n s , i n t h e l iv e s o f th e b u s i n e s s
c o m m u n i ty, b u t a t th e s a m e ti m e t h e r e a r e a n u m b e r o f p e o p l e i n t h e 5 5
0 0 0 s tr o n g Tr a n s n e t c o m m u n i ty t h a t r e m a i n c o m m i t t e d t o t h i s b u s i n e s s ,
and they are good people, they are passionate people, they are people
w h o h a v e li t e r a l ly g i v e n t h e ir l iv e s , t h e y a r e p e o p l e i n Tr a n s n e t t h a t w il l
b e h e r e f o r m o r e t h a n fo r t y y e a r s , w o r k i n g i n o n e e n ti ty, c o m m i t t e d t o
t h is c o u n t r y, s o t o g e t h e r w i th t h e s e p e o p l e w e w i ll e n s u r e t h a t w e t a k e
Tr a n s n e t t o th e n e x t l e v e l a n d m a k e s u r e t h a t a s S o u th A f r i c a n s w e
d e li v e r o n t h e m a n d a t e t h a t w e h a v e fr o m t h e c o u n t r y.
ADV PHILLIP MOKOENA SC:

20

Ye s a n d f i n a ll y y o u h a v e m a d e a

r e q u e s t t h a t y o u w a n t e d to r e a d th e c o n t e n t s o f y o u r c o n c l u s i o n a n d
w i t h t h e i n d u l g e n c e fr o m t h e C h a ir c a n I t h e n r e f e r y o u to p a g e 3 8 a n d
r e a d f o r u s fr o m p a r a g r a p h 9 . 1 , t h a t is n o w u n d e r y o u r – u n d e r th e
heading conclusion.
M R M O H A M E D S U L E M A N M A H O M E D Y : C h a ir in m y o p i n i o n , I t h i n k a l l
o f t h is i s m y o p in io n s u b s e q u e n t t o a ll t h e o b s e r v a t i o n s a n d r e v i e w s

Page 175 of 182

16 MAY 2019 – DAY 94
t h a t w e ’v e c o n d u c t e d in t h e la s t f e w m o n t h s .

I b e li e v e Tr a n s n e t w a s

s u c c e s s fu ll y m a n i p u l a te d t o b e n e fi t a f e w i n d iv id u a l s a n d e n t i ti e s
through

the

fo ll o w i n g

modus

operandi.

A focus

on

s ig n if ic a n t

p r o c u r e m e n t t r a n s a c t io n s f o r g o o d s a n d s e r v ic e s w h ic h r e q u ir e d w i ll in g
p a r t ic ip a n ts in t e r n a ll y a n d e x t e r n a ll y. T h r o u g h s u p p ly a n d d e v e lo p m e n t
r e q u ir e m e n t s f r o m Tr a n s n e t l o c a l c o n s u l t i n g h o u s e s w e r e i n s e r t e d b y
e x e c u tiv e s t o i d e n ti f y o p p o r t u n i ti e s a n d d e s i g n s c h e m e s t o s ip h o n
f u n d s o u t o f t h e c o m p a n y.

T h e d e s i g n a n d u s e o f c o m p le x f in a n c ia l

in s t r u m e n ts th a t h i d f l o w s t o b e n e fi c i a r i e s a n d c r e a t e d a n n u i ty l o s s e s
10

f o r S t a te e n ti t i e s , a n d i n te r n a l g o v e r n a n c e s tr u c t u r e s w e r e d e li b e r a t e l y
w e a k e n e d , o v e r l o o k e d a n d n o t u ti li s e d e ff e c t iv e ly.
M u c h h a s b e e n w r i t t e n a b o u t t h e r e c e n t e v e n t s i n S t a te O w n e d
E n ti t ie s a n d h o w t h e s e e n t it i e s w e r e r e p u r p o s e d f o r t h e b e n e fi t o f a
f e w, a l m o s t a ll w i th e i th e r li m i t e d a c c e s s t o i n fo r m a ti o n o r a v ie w o n ly
in t o a s i n g le tr a n s a c ti o n .
O v e r t h e la s t f e w m o n t h s i n m y c u r r e n t r o l e I h a v e c o m e to
r e a l is e h o w l e g i ti m a t e p r o j e c ts o r i n i ti a tiv e s w e r e d ir e c t e d i n a
p a r t ic u l a r w a y t o a c h ie v e t h e a g e n d a o f t h e c o r r u p t .

In my humble

o p i n i o n t h e p r o c e s s o f m a n i p u l a ti o n a n d r e p u r p o s in g o f Tr a n s n e t w a s
20

f a c i li t a te d b y p a r a ll e l a p p r o v a l p r o c e s s e s b y i n d iv id u a ls r a th e r th a n
s e l e c t e d c o m m i t t e e s , w h ic h w a s f a c il it a t e d b y w h a t I c a l l t h e d u a l it y in
t h e d e l e g a ti o n o f a u th o r i ty fr a m e w o r k . M a n a g e m e n t o v e r r i d in g c e r ta i n
k e y d e c i s i o n s w i th n o u p w a r d r e p o r t in g a n d o v e r s i g h t , B o a r d a p p r o v a ls
w i t h o u t s u b m is s i o n s s e r v i n g a t t h e E x e c u ti v e C o m m i t t e e s a c c o u n t a b le
for

th e

tr a n s a c ti o n .

Board

processes

Page 176 of 182

overturning

management

16 MAY 2019 – DAY 94
d e c is i o n s a n d t h e B o a r d in v o lv e d in p r o c u r e m e n t d e c i s i o n m a k i n g .
T h e c o m p l e x i ty o f t e r m s a n d tr a n s a c t io n s m o s t in th e fi n a n c i a l
in s t r u m e n ts e n v i r o n m e n t a n d i s o la t in g tr a n s a c ti o n s fr o m m a n a g e m e n t
t o a v o id o b t a in in g a n in t e g r a t e d v i e w o f S t a te C a p t u r e .
ADV PHILLIP MOK OENA SC:

Ye s .

M r C h a ir t h a t c o n c l u d e s m y

q u e s t io n s f o r M r M a h o m e d y.
CHAIRPERSON :

Thank you very much.

T h a n k y o u v e r y m u c h Mr

M a h o m e d y f o r y o u r e v i d e n c e , th a n k y o u fo r h a v i n g c o m e f o r w a r d a n d it
m a y w e l l b e t h a t y o u w i ll c o m e b a c k a t s o m e s t a g e a n d I h a v e n o d o u b t
10

y o u w il l c o m e i f y o u a r e a s k e d t o c o m e .
M R M O H A M E D S U L E M A N M A H O M E D Y : Ye s C h a ir.
C H A I R P E R S O N : I t h in k t h a t – w e c a n l e a v e i t a t t h a t f o r n o w, i f th e r e
a r e a n y fu r th e r q u e s t io n s y o u w il l b e a p p r o a c h e d , b u t th a n k y o u v e r y
m u c h f o r c o m in g to g i v e e v id e n c e .
MR MOHAMED SULEMAN MAHOMEDY :

T h a n k y o u C o m m i s s io n e r,

t h a n k y o u C h a ir m a n f o r th e o p p o r tu n i t y.
CHAIRPERSON : Thank you, you are excused.
A D V P H I L L I P M O K O E N A S C : M r C h a ir a t s o m e p o i n t w e w i ll u p li f t y o u r
e x h i b i t s i n o r d e r t o e n s u r e t h a t y o u r e p l a c e t h o s e e l ig ib l e d o c u m e n t s
20

a n d a l s o t o m a k e s u r e th a t w e p r o v id e th o s e o th e r n e c e s s a r y
d o c u m e n ts t h a t y o u r e q u e s t e d .
CHAIRPERSON :

Ye s , I t h i n k t h e r e w e r e a ls o , I d o n ’ t k n o w w h e th e r

t h e s e tw o d o c u m e n ts t h a t w e r e h a n d e d u p t h i s a f te r n o o n c o v e r a l l t h e
d o c u m e n ts t h a t w e r e r e fe r r e d to w h ic h w e d i d n ’ t h a v e i n t h e b u n d le b u t
w h ic h i t w o u ld b e d e s i r a b le t o h a v e .. .( i n t e r v e n ti o n )

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16 MAY 2019 – DAY 94
A D V P H I L L I P M O K O E N A S C : W e w il l l o o k a t o u r n o t e s a n d m a k e s u r e
t h a t y o u c o v e r th o s e , o n e o f t h e a s p e c ts t h a t y o u r e q u e s t e d w a s t h e
c o m p o s i ti o n o f t h e Tr e a s u r y D e p a r t m e n t a n d h o w i t w a s . . .( i n t e r v e n t i o n )
CHAIRPERSON : Oh yes, yes.
ADV PHILLIP MOKOENA SC :
c o u r s e t o b e a v a il a b l e .

W e a l s o n e e d p r o p e r c o p ie s i n d u e

To th e e x t e n t n e c e s s a r y o th e r w i t n e s s e s o f

Tr a n s n e t m i g h t a c t u a l ly e v e n t e s ti fy o n t h o s e d o c u m e n ts .
CHAIRPERSON :

Ye s , th e r e w a s a l s o th e is s u e o f t h e c o m p o s i ti o n o f

t h e B o a r d o r t h e a c q u i s i ti o n s a n d d is p o s a l s a t a c e r t a i n ti m e .
10

A D V P H I L L I P M O K O E N A S C : W e h a v e m a d e n o t e s o f th o s e , t h e y w i ll
b e p r o p e r ly p l a c e d b e fo r e y o u .
CHAIRPERSON:

O k a y n o t h a n k y o u a n d th e n t h e s e t w o a c tu a l

d o c u m e n ts w i ll b e p u n c h e d a n d p l a c e d in t h e r i g h t p l a c e i n th e b u n d l e .
A D V P H I L L I P M O K O E N A S C : Ye s w e ( i n d is ti n c t) C h a ir a n d w e t h o u g h t
M r Pr e to r i u s s a y in g s o m e t h i n g C h a ir.
CHAIRPERSON :

Ye s , Mr Pr e t o r i u s , d o y o u h a v e s o m e t h i n g t h a t y o u

w a n t to s a y ?
A D V PA U L J O S E P H P R E TO R I U S S C : C h a ir y o u a r e a w a r e o f t h e n e e d
t o p l a c e b e fo r e th e C o m m i s s i o n a n a ffi d a v i t , I s e e it ’s fo u r o ’c lo c k ,
20

p e r h a p s . .. ( i n te r v e n ti o n )
C H A I R P E R S O N : Ye s n o w e c a n . . .( in t e r v e n ti o n )
A D V PA U L J O S E P H P R E TO R I U S S C : Yo u w a n t t o d o i t n o w ?
C H A I R P E R S O N : .. . d e a l w i th i t q u i c k l y j a .
A D V PA U L J O S E P H P R E TO R I U S S C :

I t’s t h e a ff i d a v i t o f Z w e l in i

M k h iz e , i t w il l b e E X H I B I T C 3 , a n d i f I m a y r e a d i t o n t o t h e r e c o r d , i t ’s

Page 178 of 182

16 MAY 2019 – DAY 94
n o t lo n g .
CHAIRPERSON :

Ja please do so.

I t r e l a te s t o t h e e v i d e n c e o f M r

J o n a s th a t J o n a s g a v e e v i d e n c e t h a t I th i n k o n t h e 1 6 t h o f J a n u a r y 2 0 1 6
h e h a d a m e e t i n g w i t h D r Z w e l i n i M k h iz e .
A D V PA U L J O S E P H P R E T O R I U S S C :

The evidence is quoted in the

a ffi d a v i t , s o i t w il l b e c o m e c l e a r w h a t t h e c o n t e x t o f t h e a ffi d a v i t is .
C H A I R P E R S O N : Ye s , n o , n o I j u s t w a n t t o m a k e s u r e t h a t – b e c a u s e i t
c o m e s o u t o f t h e b l u e , h e h a d g iv e n e v i d e n c e t h a t h e h a d m e t – t h a t is
M r J o n a s h a d g i v e n e v i d e n c e t h a t h e h a d m e t o n th e 1 6 t h o f J a n u a r y
10

w i t h D r Z w e l in i M k h iz e a n d i n t h a t m e e t in g h e h a d d i s c l o s e d t o D r
M k h iz e w h a t h a d h a p p e n e d a c c o r d i n g t o h is v e r s i o n w h e n h e m e t M r
A j a y G u p ta o r a n o th e r G u p t a b r o t h e r a t th e r e s id e n c e o f th e G u p ta s o n
t h e d a y th a t h e i n d ic a te d h e w a s t h e r e , s o th is i s a n a ffi d a v i t fr o m D r
M k h iz e to d e a l w i th w h e t h e r h e c o n f ir m s th a t o r n o t .
O k a y, y o u c a n r e a d i t.
A D V PA U L J O S E P H P R E TO R I U S S C : Ye s , th a t w a s p a r ti a lly c o n fir m e d
in t h e a ffi d a v i t C h a ir, it r e a d s :
“ I , Z w e l in i L a w r e n c e M k h iz e s t a t e u n d e r o a t h a n d s t a t e t h a t I
a m t h e M in is t e r o f C o o p e r a t iv e G o v e r n a n c e a n d Tr a d i ti o n a l

20

A ff a ir s ,

having

been

a p p o i n te d

by

the

P r e s id e n t,

E x c e l le n c y C y r il R a m a p h o s a o n 2 7 F e b r u a r y 2 0 1 8 .

H is

I was the

Tr e a s u r e r G e n e r a l o f th e A f r ic a n N a t i o n a l C o n g r e s s f o r t h e
p e r i o d 2 0 1 2 u n t il D e c e m b e r 2 0 1 7 .

I have been requested by

t h e C o m m i s s io n t o p r o v i d e a s t a t e m e n t r e g a r d in g a n a l l e g a ti o n
m a d e b y Mr M c e b e s i J o n a s i n s o fa r a s t h e y r e l a t e t o m y

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16 MAY 2019 – DAY 94
k n o w l e d g e w h ic h s p e c i fic a l ly r e l a t e s t o p a r a g r a p h 4 6 o f M r
J o n a s ’ s ta t e m e n t. T h e s a i d p a r a g r a p h s t a t e s th e fo ll o w i n g :
‘ S u b s e q u e n tl y i n J a n u a r y 2 0 1 6 I h a d a m e e ti n g w i t h D r Z w e l in i
M k h iz e i n J o h a n n e s b u r g , t h e th e n A N C Tr e a s u r e r G e n e r a l ,
a b o u t a n o t h e r m a t te r.

D u r i n g t h e c o u r s e o f th e m e e t in g h e

s a i d h e h a d h e a r d a r u m o u r a b o u t t h e G u p t a s o ffe r i n g m e a n
in d u c e m e n t t o t a k e u p t h e p o s i ti o n o f F i n a n c e M i n is t e r a n d h e
a s k e d w h e t h e r t h is w a s tr u e . I to ld h i m w h a t h a d o c c u r r e d a n d
I m e n ti o n e d t h e r o l e p l a y e d b y Fa n a H l o n g w a n e a n d M r
10

D u d u z a n e Z u m a i n f a c il i ta t in g th e s a i d m e e ti n g .

D r Mk h iz e

in d i c a t e d t h a t h e w a s s h o c k e d a n d a d v i s e d t h a t h e n o t e d my
c o n c e r n s r e g a r d i n g t h e m a tt e r in c l u d i n g i n r e s p e c t o f t h e r o l e
o f M r D u d u z a n e Z u m a .’”
T h a t ’s t h e q u o t e fr o m t h e s ta t e m e n t o f M r J o n a s . T h e s t a te m e n t o f Mr
M k h iz e c o n t i n u e s :
“ H a v i n g r e a d t h e a b o v e p a r a g r a p h t o M r J o n a s ’ s t a te m e n t I
h e r e b y c o n f ir m t h e c o n t e n ts in i ts e n tir e t y.

A c c o r d i n g to m y

r e c o l l e c ti o n it w a s o n t h e f o l lo w in g w e e k t h a t I m e t t h e t h e n
S e c r e t a r y G e n e r a l o f th e A N C M r G w e d e M a n t a s h e a t L t h u l i
20

H o u s e a s h e w a s a ls o a f u ll ti m e o ff ic ia l o f t h e A N C w i t h m e . I
s h a r e d w i t h h i m w h a t M r J o n a s h a d t o l d m e . H e a ls o i n d ic a te d
t h a t h e w a s a w a r e o f t h e a ll e g a t io n .

The matter was then

d is c u s s e d b y s e n io r o ff ic ia ls a n d t h e r e a f t e r b y t h e N a t i o n a l
E x e c u t iv e C o m m i t t e e .

A r e s o l u ti o n w a s s u b s e q u e n t ly ta k e n

t h a t g iv e n t h e s e r io u s n e s s o f t h e a l le g a ti o n s o f S t a te C a p tu r e

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16 MAY 2019 – DAY 94
that were being made any ANC mem ber who had more
k n o w l e d g e a b o u t h a v in g b e e n a p p r o a c h e d b y t h e G u p ta s i n a
s i m il a r m a n n e r to M r J o n a s o r w h o w a s in a n y w a y a ff e c t e d b y
t h is

must come

fo r w a r d

and

provide

i n f o r m a t io n

to

th e

S e c r e t a r y G e n e r a l . M y u n d e r s ta n d i n g w a s t h a t t h is w a s m e a n t
t o a v o id t h e s e a ll e g a t i o n s o n ly b e in g d i s c u s s e d i n fo r m a l ly a n d
b e h in d th e s c e n e s w i t h n o r e s o l u ti o n b u t r a th e r t o d e a l w i t h
t h e m t h r o u g h a f o r m a l p r o c e s s a n d a p p r o p r ia t e c h a n n e ls .”
A n d t h a t s ta t e m e n t w a s s w o r n t o a n d c o m m is s i o n e d o n o a t h .
10

CHAIRPERSON :
the

persons

Th a n k y o u , I t h i n k a c o p y t h e r e o f s h o u l d b e s e n t t o
that

Mr

Jonas

in

h is

evidence

says

were

p r e s e n t a t t h e m e e ti n g a n d s o t h a t th e y k n o w th a t th e r e is a n a ffi d a v it
t h a t i s t o th is e ffe c t,
A D V PA U L J O S E P H P R E TO R I U S S C : Ye s .
C H A I R P E R S O N : W h a t th e y c a n o r c a n ’ t d o w i th i t , i t i s a d e c is i o n t h a t
t h e y w il l ta k e b u t th e y s h o u l d k n o w t h a t t h e r e is a n a ff id a v i t to t h a t
e ffe c t .

A t th is s ta g e t h e r e m i g h t b e n o n e e d to c a l l D r M k h iz i f o r

p u r p o s e s o f t h a t a s p e c t, b u t if t h e ir r e a c t i o n is s u c h t h a t t h e y f e e l th a t
h e s h o u l d b e c a l l e d t h e n w e w i ll h e a r w h a t th e y h a v e t o s a y.
20

A t t h i s s ta g e th e id e a i s t h a t t h is i s a c o n v e r s a t i o n b e tw e e n
t w o p e r s o n s , n o o n e e l s e s e e m s t o h a v e b e e n p r e s e n t w h o c a n s a y,
w h o c a n d is p u te w h a t t h e y s a y t h e y s a id , b u t i f t h e y h a v e a n y o f t h e
i m p l ic a t e d p e r s o n s w a n t s s o m e th i n g t o b e d o n e a b o u t i t t h e n t h e ir
r e q u e s t c a n b e c o n s i d e r e d t h e n o n t h e m e r it s .
A D V PA U L J O S E P H P R E TO R I U S S C : O k a y C h a ir, w e w il l d o s o .

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16 MAY 2019 – DAY 94
C H A I R P E R S O N : J a , o k a y t h a n k y o u . To m o r r o w s h o u ld w e s t a r t e a r li e r
t h a n n o r m a l , a r e w e lik e ly t o fi n is h th a t , t o m o r r o w ’s w i t n e s s i n o n e d a y
o r n o t , o r u n l ik e ly.
A D V PA U L J O S E P H P R E T O R I U S S C :

C h a ir th e n e x t w i t n e s s , M r

C a ll a r d , w il l t a k e s e v e r a l d a y s , p o s s i b ly m o r e th a n tw o d a y s b u t ti m e
h a s b e e n s e t a s id e f o r i t. I h a v e n ’ t c o n s u l t e d w i th t h e e v id e n c e l e a d e r,
M s S e l lo , a b o u t i t s o I a m n o t r e a l ly i n a p o s i t io n t o a n s w e r.
CHAIRPERSON :

W e l l y e s t e r d a y w e h a d d is c u s s e d t h e p o s s i b i li ty t h a t

h e c o u ld s t a r t h i s e v i d e n c e t o d a y, a n d I w a s s u b s e q u e n t ly to l d t h a t
10

t h e r e w a s d i ffic u lt y w i t h t h a t b e c a u s e t h e p r e p a r a t io n s f o r h i m t o g iv e
e v i d e n c e h a d n o t b e e n f in a lis e d , s o I th i n k it s h o u l d b e p o s s i b le t o s t a r t
e a r ly t o m o r r o w, s o . .. ( i n te r v e n t io n )
A D V PA U L J O S E P H P R E TO R I U S S C :

Ye s , t h e r e w a s a n o t h e r r e a s o n

w h y h e w a s n ’ t a v a il a b l e C h a i r a n d th a t is a t t h e ti m e in a n o t h e r e n q u ir y
w h e r e h e is a t p r e s e n t g iv i n g e v id e n c e , s o i t’s b e e n d i ff ic u l t t o a r r a n g e
ti m e s .
C H A I R P E R S O N : Ye s .
A D V PA U L J O S E P H P R E TO R I U S S C :

B u t h e i s a v a i la b l e t o m o r r o w,

a n d M s S e l lo i s n o t r e a lly o b je c t i n g t o a n e a r l y s t a r t , s h e is c o m f o r t a b l e
20

w i t h a n e a r ly s t a r t I a m i n f o r m e d .
C H A I R P E R S O N : Ye s , o k a y le t ’s s t a r t a t h a l f p a s t n i n e t h e n t o m o r r o w.
A D V PA U L J O S E P H P R E TO R I U S S C : A s y o u p l e a s e C h a ir.
C H A I R P E R S O N : Ye s , w e w il l a d j o u r n t h e n fo r t h e d a y a n d t o m o r r o w w e
I N Q U I RY A D J O U R N S TO 1 7 M AY 2 0 1 9

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