C O M M I S S I O N O F I N Q U IR Y 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

3 1 M AY 2 0 1 9

D AY 1 0 3

20

31 MAY 2019 – DAY 103
P R O C E E D I N G S O N 3 1 M AY 2 0 1 9
C H A I R P E R S O N : G o o d m o r n i n g M s S e l l o , g o o d m o r n i n g e v e r y b o d y.
A D V M A H L A P E S E L L O : M o r n in g C h a ir
C H A I R P E R S O N : T h a n k y o u . Ar e y o u r e a d y ?
A D V M A H L A P E S E L L O : W e a r e r e a d y.
CHAIRPERSON: Okay let us proceed.
ADV MAHLAPE SELLO:

T h a n k y o u C h a ir.

Mr Mnyandu when we

p a r t e d y e s t e r d a y w e h a d c o m p l e te d a n n e x u r e – s l id e I a m s o r r y – s li d e
2 7 a n d w e n o w g e t o n to 2 8 .
10

M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
A D V M A H L A P E S E L L O : O k a y. O k a y M r M n y a n d u t h e n y o u c a n le a d u s
t h r o u g h s l id e 2 8 w h e n y o u a r e r e a d y.
M R T H O B A N I T R E V O R M N YA N D U : T h a n k y o u c o u n s e l . C h a ir a t s li d e
2 8 w e n o w s e e k t o ta k e y o u t h r o u g h t h e a p p r o v a l p r o c e s s o f t h e
r e l o c a ti o n c o s ts .

In p a r tic u la r w e d e a l w it h fir s t a m e m o r a n d u m t h a t

w a s d o n e b y – c o m p il e d b y Ms L i n d iw e M d le ts h e i n r e s p e c t o f th e C N R
OEM.

T h e m e m o r a n d u m w a s p r e p a r e d o n 2 2 J u ly 2 0 1 5 .

It was a

r e q u e s t f o r t h e a p p r o v a l o f t h e r e l o c a t i o n c o s ts f o r C N R a t a n a m o u n t
of R647 181 494.00.
20

C h a ir t h a t i s to b e f o u n d in y o u r Vo l u m e 1 3 a t

page 9135.
C H A I R P E R S O N : I h a v e g o t Vo lu m e 1 3 i t i s p a g e 9 1 2 ?
M R T H O B A N I T R E V O R M N YA N D U : 9 1 3 5 .
A D V M A H LA P E S E L L O :

I t s ta r t s a t 9 1 3 4 C h a ir b u t t h a t is t h e c o v e r

n o t e . Th e a c t u a l d o c u m e n t is 9 1 3 5 .
C H A I R P E R S O N : Ye s I h a v e g o t it .

Page 2 of 212

31 MAY 2019 – DAY 103
ADV MAHLAPE SELLO:
a p o lo g i e s .

I f I m a y in t e r r u p t y o u M r M n y a n d u m y

W e o u g h t t o h a v e s ta r t e d o n t h e a s s i g n m e n t I t h i n k t h a t

C h a ir g a v e y o u y e s t e r d a y.

C o u ld w e d e a l w i t h th a t a n d d i s p o s e o f it

a n d th e n w e c a n c o n t in u e w i th y o u r te s ti m o n y t h is m o r n i n g ?
M R T H O B A N I T R E V O R M N YA N D U : Ye s w e m a y C h a ir.
ADV MAHLAPE SELLO:

I t r e la t e d t o th e q u e s t io n o f w h e n t h e t e r m

r e l o c a ti o n f ir s t a p p e a r e d i n t h is e n t ir e t r a n s a c ti o n .

W e r e y o u a b le t o

determine that?
M R T H O B A N I T R E V O R M N YA N D U :
10

C h a ir u p o n r e f l e c ti o n y o u w i ll

r e c a l l t h a t w e – t h e d o c u m e n t a t io n w e t o o k y o u t h r o u g h y e s t e r d a y a n d
s p e c i f ic a l ly a d o c u m e n t c o n t a i n e d i n t h e E x h i b it B B 8 [ c ] n o t e d t h a t th e r e
w a s e m a il c o r r e s p o n d e n c e w r i t t e n to a t l e a s t o n e o f th e O E M ’s in
r e l a ti o n t o t h e m h a v i n g to p u t u p a p r i c e f o r t h e D u r b a n o r f a c to r in th e
p r i c e fo r m a n u fa c t u r i n g fr o m D u r b a n .

N o w C h a ir w e a ls o t o o k y o u

t h r o u g h th e f a c t t h a t t h e a g r e e m e n t s t h a t w e r e c o n c l u d e d o n 1 7 M a r c h
2 0 1 7 d i d n o t m a k e m e n t i o n o f t h e a ll o c a t io n o f D u r b a n a s s u c h . A n d
t h e r e f o r e a s th e p r o c e s s e s m o r p h e d o u t a n d a s d is c u s s i o n s w e r e h a d
w i t h e a c h o f t h e O E M ’s i t s e e ms t h e w o r d r e l o c a ti o n r e a r e d i ts h e a d
d u r i n g t h e c o u r s e o f t h o s e n e g o ti a ti o n s fi r s t ly b y e m a i l c o r r e s p o n d e n c e
20

– b y w a y o f e m a il c o r r e s p o n d e n c e a n d f o r n o w w e c a n s a y in r e l a ti o n to
t h e m e m o r a n d u m d o n e b y M s L in d iw e M d le ts h e r e q u e s ti n g th e a c ti n g
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 M r S iy a b o n g a G a m a to a p p r o v e th e
n e g o ti a ti o n t e a m . H o w e v e r C h a i r i n d is c u s s io n s w it h t h e e v id e n c e te a m
o f th e c o m m i s s io n w e h a v e r e q u e s te d a n i n d u lg e n c e i n o r d e r to c o n f ir m
t h is f a c t , r e a s s e s s o n t h e d o c u m e n ts o n h a n d a n d c o m e b a c k t o th e

Page 3 of 212

31 MAY 2019 – DAY 103
c o m m i s s io n i n th e s t a te m e n t .
C H A I R P E R S O N : J a n o th a t is fi n e . I t m a y p r o v e s i g n i fic a n t, i t m i g h t
n o t p r o v e s ig n i f ic a n t b u t i t m i g h t b e h e lp f u l to tr y a n d tr a c e w h e r e i t g o t
u s e d f o r t h e f ir s t ti m e a n d o n e c a n ta k e it fr o m th e r e .

B u t th e o t h e r

q u e s t io n s t h a t I w o u ld w a n t y o u t o d e a l w it h a t s o m e s ta g e b e f o r e y o u
fi n i s h y o u r e v id e n c e i s w h e t h e r t h e u s e o f th e w o r d ‘r e l o c a ti o n ’ m a y
have – it may have been simply the use of a wrong term but other than
t h a t e v e r y b o d y u n d e r s t o o d w h a t w a s h a p p e n i n g . I n o th e r w o r d s w a s i t
ju s t th e u s e o f a w r o n g w o r d – i n c o r r e c t w o r d o r w e r e t h e r e – w a s t h e r e
10

s o m e m o tiv e to c h o o s i n g to u s e t h a t w o r d b e c a u s e f o r e x a m p le th a t
m i g h t s e e m o n t h e f a c e o f it t o j u s ti f y c h a r g i n g c e r t a in c o s t s .

Yo u

understand?
M R T H O B A N I T R E V O R M N YA N D U : I d o 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. S o y o u d o n o t h a v e to d e a l w i t h
t h a t n o w y o u c a n d e a l w i t h i t a t s o m e – a t s o m e s t a g e b e f o r e y o u f in is h
y o u r e v i d e n c e a n d i f it i s s o m e t h in g t h a t y o u a r e n o t a b l e t o s a y
a n y th in g y o u j u s t te ll m e .
M R TH O B A N I T R E V O R M N YA N D U : C h a ir I w o u l d li k e t o s a y t h a t w e –
I w il l d e a l w i t h i t .
20

C H A I R P E R S O N : Ye s .
M R T H O B A N I T R E V O R M N YA N D U : W h e n I d e a l w i t h o u r c o n c lu s i o n .
C H A I R P E R S O N : O k a y a lr i g h t . T h a n k y o u .
ADV MAHLAPE SELLO:

T h a n k y o u C h a ir.

A n d i n r e g a r d s t o th e

q u e s t io n a b o u t w h e n th e t e r m r e l o c a ti o n fir s t r e a r e d i ts h e a d y o u w il l
r e s p o n d t o t h a t h a v in g p e r u s e d a ll o t h e r d o c u m e n t s t h a t d o n o t f o r m o f

Page 4 of 212

31 MAY 2019 – DAY 103
t h e r e c o r d c u r r e n t ly a n d y o u w il l r e s p o n d b y w a y o f s t a t e m e n t ?
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
A D V M A H L A P E S E L L O : A n d b a s e d o n y o u r a n s w e r t h e n th e C h a ir w i ll
d e t e r m i n e w h e th e r i t i s n e c e s s a r y f o r y o u t o – t o r e t u r n a n d p e r h a p s –
f o r s o m e e n g a g e m e n t o n t h a t s ta t e m e n t.
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
CHAIRPERSON:

Ja

and

in

th a t

regard

it

may

be

that

the

d o c u m e n t a ti o n y o u lo o k a t fo r t h a t p u r p o s e i f t h e d o c u m e n ta t io n t h a t
y o u c a n lo o k a t is li m i t e d i n t h e s e n s e th a t m a y b e y o u c a n n o t l o o k a t
10

d o c u m e n t a ti o n th a t o th e r w it n e s s e s u s e d t h e n w e w o u ld w a n t t h o s e
w i t n e s s e s a ls o t o d o th e s a m e .

B u t i f y o u a r e a b l e to h a v e a l o o k a t

e v e r y t h i n g t h a t w o u l d b e fi n e .
M R T H O B A N I TR E V O R M N YA N D U :

T h a t i s u n d e r s t o o d C h a ir t h a n k

you.
C H A I R P E R S O N : O k a y.
ADV MAHLAPE SELLO:

T h a n k y o u C h a i r a n d th a n k y o u f o r t h a t M r

M n y a n d u . W e t h e n c a n t u r n to y o u r Vo lu m e 1 3 p a g e 3 1 – 9 1 3 4 a n d I
t h i n k th e C h a ir h a s lo c a t e d i t i n t h e f il e .
M R T H O B A N I T R E V O R M N YA N D U : T h a n k y o u C h a ir.
20

A D V M A H L A P E S E L L O : Yo u m a y th e n l e a d u s t h r o u g h i t .
M R T H O B A N I T R E V O R M N YA N D U :

C h a i r w e w o u ld l ik e t o n o w r e a d

o u t t h e s a l i e n t p a r ts o f t h e m e m o r a n d u m i n r e s p e c t o f t h e a p p r o v a l fo r
t h e c o s t s o f r e l o c a ti o n f o r C N R ?
C H A I R P E R S O N : A n d th a t is t h e o n e s t a r t i n g a t 9 1 3 5 ?
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.

Page 5 of 212

31 MAY 2019 – DAY 103
CHAIRPERSON: Thank you.
M R T H O B A N I T R E V O R M N YA N D U : C h a ir it is a d d r e s s e d t o S i y a b o n g a
G a m a in h is c a p a c it y a t t h e ti m e a s a c ti n g G r o u p C h ie f E x e c u ti v e . I t is
fr o m Mr R a v i N a i r w h o w a s a t th e t i m e t h e a c ti n g C h i e f E x e c u t iv e o f
Tr a n s n e t

Fr e i g h t

Rail which

is

the

o p e r a t in g

d iv is io n

c o n c e r n e d w i t h t h e p u r c h a s e o f t h e 1 0 6 4 l o c o m o ti v e s .

that

was

The subject

reads:
“ R e q u e s t fo r …
CHAIRPERSON:
10

I a m s o r r y, I a m s o r r y.

I f y o u a r e a b le to t e ll m e

d u r i n g t h is ti m e w h e n M r G a m a w a s a c t in g G r o u p C h i e f E x e c u t iv e w a s
t h a t t h e t i m e w h e n M r B r i a n M o l e f e h a d le f t Tr a n s n e t o r w a s h e j u s t
a w a y t e m p o r a r i ly ?
M R T H O B A N I T R E V O R M N YA N D U : H e h a d l e ft a t t h is s t a g e C h a ir.
CHAIRPERSON:

Okay thank you.

A n d M r N a ir w a s a c ti n g i n t h e

p o s i ti o n i n w h ic h – i n t h e p o s it i o n t h a t M r G a m a h a d o c c u p ie d b e f o r e
w h e n Mr M o l e f e w a s t h e r e ?
M R T H O B A N I T R E V O R M N YA N D U : Ye s 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 . Yo u m a y p r o c e e d .
M R T H O B A N I T R E V O R M N YA N D U : T h a n k y o u . C h a ir th e s u b j e c t r e a d
20

– reads:
“ R e q u e s t fo r a c t i n g G C E t o a p p r o v e t h e r e lo c a ti o n o f
C N R R o l li n g S t o c k S o u t h A fr ic a [ C N R ] t o T E ’s
f a c i li t ie s in D u r b a n f o r th e m a n u f a c t u r i n g o f 2 3 3
C l a s s 4 5 D e le c t r ic lo c o m o t iv e s . ”
C H A I R P E R S O N : Is t h e r e a g o o d c h a n c e t h a t t h is is th e fir s t ti m e th a t

Page 6 of 212

31 MAY 2019 – DAY 103
t h is w o r d r e l o c a t i o n i s b e i n g u s e d i n a m e m o r a n d u m a t t h is h i g h l e v e l?
O r y o u m ig h t n o t b e a b l e t o s a y ?
M R T H O B A N I TR E V O R M N YA N D U : C h a ir I s ta n d t o b e c o r r e c te d b u t i f
w e g o b a c k t o th e m e m o r a n d u m t h a t w e d e a l t w i t h y e s te r d a y.
C H A I R P E R S O N : Ye s .
M R T H O B A N I T R E V O R M N YA N D U :

To r e q u e s t t h e a c t in g G C E M r

S iy a n b o n g a G a m a
C H A I R P E R S O N : Ye s .
M R T H O B A N I T R E V O R M N YA N D U : To a p p r o v e th e n e g o t i a t i o n t e a m
10

C H A I R P E R S O N : Ye s .
M R T H O B A N I T R E V O R M N YA N D U : T h e w o r d r e lo c a t io n is m e n t i o n e d .
C H A I R P E R S O N : W a s u s e d a s w e ll .
M R T H O B A N I T R E V O R M N YA N D U : Ye s .
C H A I R P E R S O N : O k a y.
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
CHAIRPERSON:

O k a y.

B e c a u s e i t m i g h t a ls o b e i m p o r ta n t to s e e

w h e n d id s e n i o r p e o p l e w i t h i n th e – w i t h i n [ in d i s ti n c t ] s ta r t u s i n g t h e
s a m e t e r m in o lo g y.
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
20

C H A I R P E R S O N : O k a y.
MR

TH O B A N I

TREVOR

M N YA N D U :

C h a ir

under

purpose

memorandum reads:
“ R e q u e s t fo r a c t in g G r o u p C h i e f E x e c u tiv e t o
a . N o t e t h e f in a l o u t c o m e o f t h e n e g o ti a ti o n f o r t h e
r e l o c a ti o n t o D u r b a n w i th C N R .

Page 7 of 212

the

31 MAY 2019 – DAY 103
b . A p p r o v e th e v a r ia t io n o r d e r f o r t h e r e l o c a ti o n t o
Durban to a maximum value of R647 181 494.00
with CNR and
c . S i g n o ff a l e t te r t o b e is s u e d to C N R to a c c e p t th e ir
fi n a l p r o p o s a l . ”
The memorandum then goes on to deal with the background.
“ I t n o t e s t h a t o n t h e 1 7 M a r c h 2 0 1 4 Tr a n s n e t a c ti n g
t h r o u g h i ts Tr a n s n e t Fr e i g h t R a il d i v is i o n e n te r e d
in t o v a r io u s l o c o m o ti v e s u p p l y a g r e e m e n ts w i t h C S R ,
10

C N R , G E a n d B T a f te r n e g o t ia t io n s w h ic h s t a r te d i n
February 2014.”
It then says Chair at 3:
“ D u r i n g n e g o t ia t io n s B T a n d C N R w e r e in f o r m e d t h a t
t h e y w il l u s e t h e D u r b a n Tr a n s n e t E n g i n e e r in g T E
f a c i li ty f o r t h e c o n s tr u c ti o n o f l o c o m o ti v e s w h i c h
w e r e a l l o c a t e d to t h e m . T h e D u r b a n f a c i l it y a n d t h e
m o v e w e r e i n tr o d u c e d t o b o t h C N R a n d a f te r t h e
t e n d e r h a d c l o s e d a n d e v a lu a ti o n s w e r e d o n e . ”
At number 4 it then says:

20

“ O n t h e 1 0 J u n e 2 0 1 5 th e a c t in g G r o u p C h i e f
E x e c u t iv e

approved

the

team

to

n e g o ti a te

the

r e l o c a ti o n t o D u r b a n w i th C N R . ”
Number 5.
“ T I A w h ic h is Tr a n s n e t I n te r n a l A u d i t w a s p r e s e n t
during

n e g o t ia t io n s

and

are

in

Page 8 of 212

th e

process

of

31 MAY 2019 – DAY 103
fi n a l is i n g th e i r r e p o r t . ”
CHAIRPERSON:

T h a n k s f o r – f o r r e m i n d i n g m e o f th a t f u ll n a m e o f

that acronym because there are so many of these acronyms one gets
c o n fu s e d s o m e ti m e s .
M R T H O B A N I T R E V O R M N YA N D U : C o n f u s e d . A lr ig h t C h a ir.
C H A I R P E R S O N : Ye s o k a y.
M R T H O B A N I T R E V O R M N YA N D U : A n d t h e n u n d e r m o t iv a ti o n n u m b e r
6 reads:
“ C N R ’s f in a l o ff e r t o Tr a n s n e t is R 6 4 7 1 8 1 4 9 4 . 0 0
10

w h ic h h a s b e e n a b s o r b e d .

B e lo w t h a t t h e p r i m a r y

d r i v e r s o f t h is i n c r e a s e a r e i n fl a ti o n a n d f i n a n c e
c o s ts d e ta il e d b e l o w. ”
CHAIRPERSON:

I a m s o r r y le t m e i n t e r r u p t y o u .

Do you understand

what – which has been absorbed means there?
M R T H O B A N I T R E V O R M N YA N D U : N o C h a ir.
C H A I R P E R S O N : Yo u d o n o t ?
M R T H O B A N I T R E V O R M N YA N D U : N o C h a ir.
C H A I R P E R S O N : O k a y a lr i g h t t h a n k y o u . C o n ti n u e .
M R T H O B A N I T R E V O R M N YA N D U :
20

a . “ I n fl a ti o n c o s t s in c r e a s e d fr o m R 1 6 6 m i ll i o n t o R 2 0 4
m il li o n [ i n c r e a s e o f a p p r o x i m a te ly R 3 8 m il l io n . ]
b . Fi n a n c e c o s ts o n f o r w a r d c o n tr a c t i n c r e a s e d fr o m
R81

m i ll io n

to

R88

m i ll io n .

Increase

of

a p p r o x i m a te ly R 7 m i ll io n .
c. Interest

on

stockholdings

w h ic h

Page 9 of 212

rather

would

31 MAY 2019 – DAY 103
in c r e a s e fr o m R 1 6 m i ll io n t o R 2 1 m i l li o n [ i n c r e a s e o f
a p p r o x i m a te ly R 5 m i ll io n ] .
Therefore total project cost is an increase from R669
m il li o n to R 7 1 9 m i l li o n .

I n c r e a s e o f a p p r o x i m a t e ly R 5 0

m il li o n . ”
A D V M A H L A P E S E L L O : If y o u c o u l d j u s t p a u s e t h e r e f o r a m o m e n t M r
M n y a n d u . A g a in w e a l w a y s tr y in g t o k e e p tr a c k o f t h e in c r e a s e s . T h e
la s t w e h a d o f i n c r e a s e s w a s R 6 6 9 a s p e r t h e m e m o r a n d u m o f J u n e
20…
10

M R T H O B A N I T R E V O R M N YA N D U : 1 5
ADV MAHLAPE SELLO: 15
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
A D V M A H L A P E S E L L O : Fr o m M s M d le t s h e .
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
ADV MAHLAPE SELLO:

And that was the approval that was being

s o u g h t fr o m th e a c ti n g G C E ?
M R T H O B A N I T R E V O R M N YA N D U : T h e …
A D V M A H L A P E S E L L O : A t t h e ti m e .
M R T H O B A N I T R E V O R M N YA N D U : Th e r e q u e s t w a s t h a t it b e k e p t a t
20

R669.
ADV MAHLAPE SELLO: Be kept as R699?
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
A D V M A H L A P E S E L L O : A n d t h a t is a t Vo l u m e 1 3 p a g e 9 111 .
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
A D V M A H LA P E S E L L O :

Fo r r e f e r e n c e p u r p o s e s .

Page 10 of 212

This memorandum

31 MAY 2019 – DAY 103
comes a month after that approval.

I s e e i t is d a t e d 2 2 J u ly 2 0 1 5 a t

page 9137 the signature page.
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
ADV MAHLAPE SELL O: So then since the approval of a cap of R669
m il li o n i n a m o n t h a c c o r d i n g t o t h is m e m o r a n d u m a m I i n te r p r e ti n g t h is
m e m o r a n d u m c o r r e c tl y to u n d e r s t a n d t h a t t h e r e w a s a f u r t h e r i n c r e a s e
t a k i n g t h e t o t a l c o s t n o w t o a n e w l e v e l o f R 7 1 9 m il li o n ?
M R T H O B A N I T R E V O R M N YA N D U :

I n s o fa r a s i t w a s a d v a n c e d b y

C N R . In d e e d i t is s o C h a ir t h e r e w a s a f u r t h e r in c r e a s e .
10

ADV MAHLAPE SELLO: R719?
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
A D V M A H L A P E S E L L O : O k a y. I fo ll o w.
M R T H O B A N I T R E V O R M N YA N D U :

T h e n e w p r o je c t r e lo c a t io n c o s t

e s ti m a t e a m o u n ts t o R 7 1 9 0 9 0 5 4 8 . 0 0 .

O n t h is p r ic e C N R ’s o ffe r –

C N R o ff e r s a 1 0 % s e t t le m e n t d is c o u n t a m o u n t i n g t o R 7 1 9 0 9 0 5 4 . 0 0 .
T h i s r e s u l ts i n a r e v i s e d p r o j e c t r e l o c a ti o n c o s t o f R 6 4 7 1 8 1 4 9 4 . 0 0 .
A n y f u r t h e r d e la y s in c o m m e n c in g t h e p r o j e c t b e y o n d fi v e m o n t h s w il l
have

further

cost

c o n s i d e r a ti o n .
20

CNR.

i m p li c a t io n s

that

w i ll

have

to

be

taken

into

T h e f o ll o w i n g p a y m e n ts t e r m s h a v e b e e n p r o p o s e d b y

5 0 % p a y a b l e w i th i n 1 4 d a y s

R 3 2 3 5 9 0 7 4 7 .0 0

th e r e m a in d e r b e in g

in s t a l m e n t s

R13 482 948.00.

of

of signature amounting
5 0 % p a y a b le
The

to

in 24 equal

“[relocation

payment]”

C o m m e n c in g th e e n d o f t h e f ir s t m o n th t h a t th e p r o je c t c o m m e n c e s
p r o v i d e d t h a t t h e p r o je c t is o n tr a c k . T h e r e fo r e C N R R S S A w i ll i n v o ic e
f o r 2 4 m o n t h l y i n s ta l m e n ts o f R 1 3 4 8 2 9 4 8 . 0 0 .

Page 11 of 212

Tr a n s n e t is c u r r e n tly

31 MAY 2019 – DAY 103
h o l d i n g c a s h o f a p p r o x i m a t e ly R 4 b i ll io n w i t h a c o s t o f c a r r y o f
a p p r o x i m a te ly 4 % w h ic h p r o v i d e s s u p p o r t f o r ta k i n g a d v a n t a g e o f t h e
d is c o u n t b a s e d o n th e p r o p o s e d p a y m e n t r e g i m e .
A D V M A H LA P E S E L L O : B e f o r e y o u p r o c e e d . Th a t l a s t p o i n t w h a t d i d
you

in t e r p r e t

it

to

mean?

That

Tr a n s n e t

is

h o ld in g

cash

of

a p p r o x i m a te ly R 4 b i ll io n w i t h a c o s t o f c a r r y o f a p p r o x i m a t e l y 4 % w h ic h
p r o v i d e s s u p p o r t fo r t a k in g a d v a n t a g e o f t h e d is c o u n t ?
M R T H O B A N I TR E V O R M N YA N D U : W h a t w e u n d e r s t o o d t h a t t o m e a n
w a s th a t t h e r e w e r e m o n i e s w h ic h w e u n d e r s t a n d t o b e p a r t o f th e R 4 .9
10

b i ll io n c o n ti n g e n c i e s t h a t Tr a n s n e t w a s h o l d i n g a n d t h e r e f o r e w o u l d n o t
h a v e t o r e q u e s t c a p i ta l e x p e n d i tu r e o u t s i d e o f th e c o n tr a c t.
A D V M A H LA P E S E L L O : S o t h e p a y m e n t o f t h i s R 6 4 9 – 7 m ill i o n 5 0 %
u p o n s ig n a tu r e a n d t h e n o v e r 2 4 m o n t h s in s t a l m e n t w o u l d b e p a y a b l e
o u t o f t h a t R 4 b il li o n ?
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
A D V M A H L A P E S E L L O : A s p a r t o f – w h ic h w a s p a r t o f th e c o n ti n g e n c y
1 0 % c o n ti n g e n c y f o r t h e …
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
A D V M A H L A P E S E L L O : 1 0 6 4 – t h a n k y o u . Pl e a s e p r o c e e d .

20

M R T H O B A N I T R E V O R M N YA N D U : A lr ig h t .
“9.

R e fe r t o a n n e x u r e A f o r t h e fi n a l d e t a i le d p r o p o s a l .

Budget

i m p l ic a t i o n s .
10

T h e b o a r d a t i ts m e e t i n g o f 2 8 M a y 2 0 1 4 a p p r o v e d a n a m o u n t o f

R 4 . 9 b il li o n i n c o n ti n g e n c i e s a s p a r t o f t h e r e v i s e d E T C w h ic h m e a n s
t h e e s ti m a t e d to t a l c o s t s .

Page 12 of 212

31 MAY 2019 – DAY 103
11 . T h e c o n ti n g e n c i e s b u d g e t w e r e t o f o ll o w i n g it e m s .
a.

C a p i ta l s p a r e s b e y o n d th e w a r r a n ty p e r io d .

b . Va r i a ti o n o r d e r s a n d o p ti o n s [s u c h a s e le c t r o n ic a ll y c o n tr o l l e d
p n e u m a ti c b r a k i n g a n d w ir e d is tr i b u t e d p o w e r e tc e t e r a ] .
c.

R e l o c a ti o n o f t h e p r o g r a m m e t o Tr a n s n e t E n g i n e e r in g ’s D u r b a n

f a c i li t ie s . ”
A D V M A H LA P E S E L L O : I w o u ld lik e y o u t o p a u s e o n c e a g a in . A r e w e
t o u n d e r s t a n d t h a t p a r a g r a p h 11 t o m e a n w h e n t h e R 4 .9 b il li o n – w h e n
t h e R 4 9 b i ll io n E T C w a s a p p r o v e d w i t h t h e R 4 . 9 b il li o n c o n ti n g e n c y th e
10

c o n ti n g e n c y a l r e a d y m a d e p r o v is i o n fo r t h e r e l o c a ti o n ?
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
A D V M A H LA P E S E L L O : A n d t h a t a p p e a r s i n t h e – i n w h i c h d o c u m e n t ?
W h e r e d o w e d o fi n d t h a t?
M R T H O B A N I TR E V O R M N YA N D U : C h a ir t h a t w o u l d b e i n a d o c u m e n t
t h a t h a s b e e n p r e s e n t e d t o t h e c o m m i s s io n .

It i s a m e m o r a n d u m

p r e p a r e d b y th e th e n a c t in g G r o u p C h i e f – s o r r y th e t h e n G r o u p C h i e f
E x e c u t iv e M r B r i a n M o le f e to t h e b o a r d . I t i s d a te d 2 3 M a y 2 0 1 4 a n d i n
it M r Br ia n M o l e f e s o u g h t t o r a t io n a l is e t o t h e b o a r d th e j u s t if ic a ti o n f o r
t h e in c r e a s e .
20

ADV MAHLAPE SELLO:

F o r t h e in c r e a s e a n d i n d o i n g s o a s t o w h a t

c o v e r s – w h a t c o n t i n g e n c i e s a r e c a t e r e d f o r r e l o c a ti o n is o n e o f t h e
it e m s ?
M R T H O B A N I T R E V O R M N YA N D U : E v e n t h o u g h th e w o r d r e lo c a t io n i n
t h e m e m o r a n d u m d o e s n o t a p p e a r y e s th e s u b je c t o f a l lo c a t in g th e t w o
O E M ’s t o D u r b a n i s c o v e r e d .

Page 13 of 212

31 MAY 2019 – DAY 103
A D V M A H L A P E S E L L O : O k a y. T h a n k y o u .
M R T H O B A N I T R E V O R M N YA N D U : U n d e r p a r a g r a p h 1 2 .
T h e c u r r e n t s t a t u s o f th e u ti li s a t io n o f t h e c o n ti n g e n c y ’s b u d g e t is a s
f o ll o w s :
Yo u w i ll s e e t h a t b e l o w C h a i r th e r e i s a d e s c r ip t io n o f w h a t th e
c o n ti n g e n c ie s h a v e b e e n a p p r o v e d f o r a n d t h e r e is a n a m o u n t r e l a t e d
t o e a c h s p e c i fi c l in e i t e m .

C o n ti n g e n c ie s a p p r o v e d R 4 . 9 b i ll io n .

Va r ia t io n o r d e r s a p p r o v e d to d a t e R 1 . 2 b i l li o n . R e l o c a ti o n o f B T R 6 1 8
m il li o n .
10

R e l o c a ti o n o f C N R R 6 4 7 m i lli o n .

T h e n t h e r e is u n u til is e d

p o r t i o n o f c o n t in g e n c i e s a m o u n t in g to s o m e R 2 . 5 1 9 b il li o n .
A D V M A H L A P E S E L L O : T h e n a n o t h e r – i f I m a y I a m s o r r y t o i n te r j e c t .
O n r e a d – o n t h e r e a d i n g o f p a r a g r a p h 1 2 p a r t ic u l a r l y i n r e s p e c t o f
r e l o c a ti o n o f B T a n d C N R r e g a r d b e i n g h a d t o th e a m o u n ts th e b u d g e t
r e fe r r e d t o i n h e r e c a n n o t b e th e b u d g e t o f th e b u s i n e s s c a s e b e c a u s e
t h a t w a s t h e y e a r p r e v io u s ?
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
A D V M A H LA P E S E L L O : A n d t h a t c o u l d n o t h a v e b e e n a b u d g e t s p e l t
o u t i n th e m e m o r a n d u m o f M r M o l e fe b e c a u s e th a t w a s i n M a y 2 0 1 4 a n d
a t t h e t i m e th e r e l o c a ti o n c o s t a t l e a s t i n s o f a r a s C N R is c o n c e r n e d w a s

20

not R647?
M R T H O B A N I T R E V O R M N YA N D U :

I n d e e d C h a ir e v e n t h o u g h a

s p e c i f ic a m o u n t w a s m a d e o u t f o r c o n t in g e n c i e s a s it w e r e .
A D V M A H L A P E S E L L O : Ye s f o r c o n t in g e n c ie s .
M R T H O B A N I T R E V O R M N YA N D U : Ye . s
ADV MAHLAPE SELLO:

S o m y q u e s ti o n t h e n is – is t h e r e a n y

Page 14 of 212

31 MAY 2019 – DAY 103
d o c u m e n t th a t r e f le c ts t h i s b u d g e t a s s e t o u t i n p a r a g r a p h 1 2 b y M r –
b y M s L in d iw e M d l e ts h e ?
M R T H O B A N I T R E V O R M N YA N D U : A p a r t fr o m t h e fi r s t l in e i t e m .
A D V M A H L A P E S E L L O : Ye s .
M R T H O B A N I T R E V O R M N YA N D U : W h i c h is s e t o u t a s w e h a v e s a i d i n
t h e m e m o r a n d u m d a t e d 2 3 M a y.
A D V M A H L A P E S E L L O : Ye s .
M R T H O B A N I T R E V O R M N YA N D U : 2 0 1 4 p r e p a r e d b y M r Br ia n M o l e fe
t h e r e i s n o o t h e r d o c u m e n t th a t l is ts th is b u d g e t.
10

A D V M A H LA P E S E L L O :

S o w e a r e s e e i n g it f o r t h e f ir s t ti m e in t h is

memorandum?
M R T H O B A N I T R E V O R M N YA N D U : I t i s s e e i n g f o r th e fir s t t i m e h e r e .
A D V M A H L A P E S E L L O : O k a y. T h a n k y o u .
M R T H O B A N I T R E V O R M N YA N D U :

Th a n k y o u C h a ir.

C h a ir t h e n – i f

t h e C h a ir tu r n s o v e r le a f to 9 1 – p a g e 9 1 3 7 p a r a g r a p h 1 3 r e a d s :
“ C o n s e q u e n tl y a n a m o u n t o f R 6 4 7 1 8 1 4 9 4 . 0 0 is p a r t
o f t h e c o n t in g e n c i e s b u d g e t i n c lu d e d in th e fi n a l
approved

estimated

t o ta l

cost

th e

project.

R e c o m m e n d a t io n . ”
20

Paragraph 14 reads:
“ R e q u e s t fo r t h e a c t in g G r o u p C h i e f Ex e c u ti v e t o
a . N o t e t h e fi n a l o u tc o m e o f t h e n e g o ti a ti o n s f o r t h e
r e l o c a ti o n t o D u r b a n w i th C N R .
b . A p p r o v e v a r ia t io n o r d e r f o r t h e r e l o c a ti o n t o D u r b a n
t o a m a x i m u m v a lu e o f R 6 4 7 1 8 1 4 9 4 .0 0 w i t h C N R

Page 15 of 212

31 MAY 2019 – DAY 103
and
c . S i g n o ff a l e t t e r to b e i s s u e d t o C N R t o a c c e p t th e
fi n a l p r o p o s a l . ”
C h a ir w h a t t h e n a p p e a r s b e l o w a r e th e n a m e s o f th e p e o p l e t h a t
a . T h e c o m p i l e r o f th e m e m o r a n d u m a n d th e i n d i v i d u a ls t h a t t h e n
r e c o m m e n d e d a s w e l l a s t h e a p p r o v a l s ig n a t u r e b y M r G a m a
w h ic h d a t e d 2 3 J u ly 2 0 1 5 .
CHAIRPERSON:

S o t h e m e m o r a n d u m w a s c o m p i l e d b y Ms L i n d i w e

M d le t s h e w h o s i g n e d . It w a s r e c o m m e n d e d b y t h e – r e c o m m e n d e d b y
10

M r R a v i N a ir a c t i n g C h i e f E x e c u tiv e Tr a n s n e t F r e ig h t R a il .
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
C H A I R P E R S O N : I t w a s s i g n e d b y h i m o n 2 2 J u ly 2 0 1 5 .
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
CHAIRPERSON:

It w a s a l s o r e c o m m e n d e d b y M r N d p h iw e S il in g a

G r o u p E x e c u tiv e L e g a l a n d C o m p l ia n c e a n d s i g n e d o n 2 2 J u ly 2 0 1 5
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
CHAIRPERSON:

I t w a s r e c o m m e n d e d b y M r A n o j S in g h G r o u p C h i e f

Fi n a n c i a l O ff ic e r o n 2 2 J u ly 2 0 1 5 .
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d .
20

C H A I R P E R S O N : I t w a s r e c o m m e n d e d b y M r T h a m s a n q a J iy a n i o n t h e
s a m e d a te a n d s i g n e d o n th e s a m e d a te a s w e ll a s b y Mr G a r r y P i t a
a n d t h e n t h e f o ll o w i n g d a y i t w a s s i g n e d b y – a p p r o v e d a n d s ig n e d b y
M r G a m a i n h is c a p a c i ty a s a c ti n g G r o u p C h i e f Ex e c u ti v e o f Tr a n s n e t ?
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
CHAIRPERSON:

W e l l I d o n o t k n o w w h e t h e r y o u h a v e p ic k e d u p

Page 16 of 212

31 MAY 2019 – DAY 103
s o m e t h i n g t h a t I c a n n o t s e e o r h a v e n o t b e e n a b l e t o s e e in t h is
memorandum.

T h is m e m o r a n d u m s e e k s a p p r o v a l th a t a v e r y l a r g e

a m o u n t o f m o n e y w h a t R 6 4 7 0 0 0 ,0 0 b e a p p r o v e d f o r …
A D V M A H L A P E S E L L O : M i ll io n C h a ir.
M R T H O B A N I T R E V O R M N YA N D U : M i ll io n C h a ir.
C H A I R P E R S O N : M il li o n y e s . M i ll io n b e a p p r o v e d t o b e p a i d f o r w h a t
is c a ll e d r e l o c a ti o n c o s t s b u t I c a n n o t s e e a n y th in g i n t h e m e m o r a n d u m
w h e r e t h o s e w h o M s M d l e t s h e a n d t h o s e w h o r e c o m m e n d a n d u l ti m a t e l y
M r G a m a w h o a p p r o v e s w h ic h s a y s w h y is t h i s a m o u n t a r e a s o n a b l e
10

a m o u n t t o s p e n d o n th is s o c a ll e d r e l o c a ti o n .

A ll I c a n s e e is t h e

b a c k g r o u n d a n d t h e f a c t t h a t t h e a m o u n t f a l ls w i t h i n w h a t w a s b u d g e t e d
f o r u n d e r c o n ti n g e n c ie s . B u t t h e f a c t t h a t t h e r e i s b u d g e t f o r a n i t e m i s
n o t j u s ti fi c a t i o n f o r p a y i n g a c e r t a i n a m o u n t f o r t h a t i t e m .

Yo u m u s t

s t il l c h e c k w h e th e r t h a t a m o u n t is j u s t if i a b le . I h a v e n o t s e e n t h a t h e r e
on this memorandum so I wonder whether you have seen that?
M R T H O B A N I T R E V O R M N YA N D U : C h a ir w e h a v e n o t b e e n a b l e t o s e e
a n y th in g t h a t s p e a k s to e it h e r a c r i ti q u e o f th e f in a l p r o p o s a l o r t h e
fi n a l a m o u n t o r t h a t ju s t i fi e s o r d e t a i ls a s u p p o r t o f t h e fi n a l a m o u n t
w h ic h i s b e i n g r e q u e s te d fo r a p p r o v a l .
20

CHAIRPERSON: Hm. So approval …
A D V M A H L A P E S E L L O : S o r r y C h a i r y o u r m ic r o p h o n e is o ff .
C H A I R P E R S O N : T h a n k y o u . T h e – th a t th is a m o u n t b e s p e n t o n t h e s o
c a l l e d r e l o c a ti o n is r e c o m m e n d e d b y

v a r io u s s e n i o r p e o p l e a n d

a p p r o v e d b y th e a c t i n g G r o u p C h i e f E x e c u tiv e w i th o u t a n y o f t h e m
a s k in g th is v e r y c r i ti c a l q u e s ti o n w o u l d w e b e s p e n d i n g – w o u l d w e b e

Page 17 of 212

31 MAY 2019 – DAY 103
ju s t i fi e d t o s p e n d s o m u c h m o n e y o n t h is r e lo c a t io n – s o c a l le d
r e l o c a ti o n ? H o w i s t h is a m o u n t ju s t i fi a b l e ? W h y is i t R 6 4 7 m i lli o n a n d
n o t R 1 0 0 m il li o n ? W h y is it n o t R 5 0 m il li o n ? A n d n o w h e r e h e r e i n t h i s
m e m o r a n d u m i s – is th a t a m o u n t o f R 9 m ill i o n t h a t w a s fir s t g iv e n b y
C N R r e fl e c t e d . . .
M R T H O B A N I T R E V O R M N YA N D U : M e n ti o n e d .
CHAIRPERSON:

To s a y th a t i s w h e r e w e c o m in g fr o m i n i t ia ll y t h e s e

c o s ts w e r e e s ti m a t e d a t R 9 m il li o n b u t n o w w e a r e ta lk i n g a b o u t R 6
h u n d r e d a n d s o m e th in g m i ll io n r a n d . S o t h a t t h e f u ll p i c t u r e i s s h o w n .
10

T h a t is n o t m e n ti o n e d .
M R T H O B A N I T R E V O R M N YA N D U :

I t is n o t d e a l t w i th C h a ir n o t

m e n ti o n e d a t a l l .
CHAIRPERSON:

N o w i n y o u r i n v e s t ig a ti o n d i d y o u fi n d th a t Tr a n s n e t

a n d m a y b e t h e p r e v i o u s w i t n e s s e s w o u l d h a v e d e a l t w i t h t h is I j u s t
c a n n o t r e m e m b e r n o w – d id w e h a v e p r o o f t h a t Tr a n s n e t d id r e c e i v e
t h a t e s t i m a t e o f R 9 m i ll io n o r a c k n o w l e d g e d h a v in g r e c e iv e d it a n d
r e s p o n d e d t o i t i n o n e w a y o r a n o t h e r t h a t w a s m a d e in i ti a l ly ?
M R TH O B A N I T R E V O R M N YA N D U :

Chair the best way to answer it

e v e n t h o u g h w e d id n o t h a v e p r o o f o f e m a i l c o r r e s p o n d e n c e th a t
20

r e s p o n d s t o th e o ffe r o f R 9 m i ll i o n t h e d o c u m e n t a ti o n th a t i n c l u d e d t h a t
q u o t a t i o n o f R 9 m i ll io n w h ic h is a d d r e s s e d t o M r G a r r y P i ta a n d Ms
L i n d i w e M d l e ts h e w a s r e c e iv e d fr o m Tr a n s n e t i ts e l f . It w a s r e c e iv e d i n
p a r t ic u l a r fr o m t h e s u p p ly c h a i n s e r v i c e s p e r s o n n e l a t Tr a n s n e t Fr e ig h t
R a il .

W h e n M s M d l e t s h e b e c a m e th e in t e r fa c e f o r u s t o r e c e iv e

in f o r m a ti o n th a t w a s r e q u ir e d t o b e p e r u s e d f o r t h e c o u r s e o f o u r

Page 18 of 212

31 MAY 2019 – DAY 103
in v e s t i g a t io n s o th e d o c u m e n ts t h a t w e h a v e p e r u s e d c a m e fr o m
Tr a n s n e t .
C H A I R P E R S O N : S o c e r t a i n ly i t w a s r e c e iv e d b y Tr a n s n e t ?
M R T H O B A N I T R E V O R M N YA N D U : C e r ta i n ly i t w a s r e c e i v e d C h a ir.
C H A I R P E R S O N : H m – b u t w e r e y o u a b l e – w e r e y o u o n l y a b le to te ll
t h a t S u p p l y C h a i n M a n a g e m e n t r e c e i v e d i t b u t y o u d i d n o t fi n d a n y
e v i d e n c e t h a t o th e r p e o p l e i n Tr a n s n e t t h e G C E O , Mr G a m a , M r M o l e fe ,
M r Pi t a , M r A n o j S in g h d id y o u c o m e a c r o s s a n y th in g th a t s u g g e s t e d
t h a t th e y a t l e a s t k n e w o f t h i s a m o u n t a t s o m e s t a g e o r a n o t h e r ?
10

M R T H O B A N I T R E V O R M N YA N D U : N o C h a ir. I h o w e v e r w o u l d li k e t o
a ls o p o i n t o u t th a t a t t h e ti m e t h a t t h e q u o ta t io n i s s e n t w a s d u r i n g t h e
fi n a l s t a g e s o f th e n e g o ti a ti o n s .
C H A I R P E R S O N : Ye s .
M R T H O B A N I T R E V O R M N YA N D U : Ye s .
C H A I R P E R S O N : T h e R 9 mi ll i o n ?
M R T H O B A N I T R E V O R M N YA N D U : T h e R 9 .7 m i lli o n …
C H A I R P E R S O N : Ye s .
M R T H O B A N I T R E V O R M N YA N D U :

Is r e c e i v e d a w e e k p r i o r t o th e

c o n c l u s i o n o f t h e n e g o t ia t io n s w h i c h w e r e c o n c l u d e d o n 1 7 M a r c h .
20

CHAIRPERSON: Oh.
M R T H O B A N I T R E V O R M N YA N D U :

Th a t is w h e n t h e a g r e e m e n t w a s

t h e n s ig n e d .
C H A I R P E R S O N : Ye s a n d y o u h a v e n o t c o m e a c r o s s – h a v e y o u c o m e
a c r o s s a n y t h i n g t h a t s h o w s t h a t t h e B o a r d w a s to l d o f t h is R 9 m il li o n
quotation?

Page 19 of 212

31 MAY 2019 – DAY 103
M R T H O B A N I T R E V O R M N YA N D U : N o C h a ir.
C H A I R P E R S O N : Yo u h a v e n o t f o u n d a n y t h i n g ?
M R T H O B A N I T R E V O R M N YA N D U : N o C h a ir.
CHAIRPERSON:

O k a y b e c a u s e i t is i m p o r t a n t t o fi n d o u t t o e s t a b lis h

t h a t Tr a n s n e t r e c e iv e d t h is q u o ta t io n o f R 9 mi ll i o n f o r th is c o s t .

It is

i m p o r t a n t to e s t a b l is h w h a t t h e ir r e a c t i o n w a s t o i t b e c a u s e t h a t
b e c o m e s q u i t e i m p o r ta n t f o r th e m t o ju s t i fy h o w t h e y w e r e r e a c ti n g t o
o ffe r s o f h u n d r e d s o f m i ll io n s o f R a n d fo r s o m e th in g t h a t t h e y w o u ld
h a v e k n o w n a t s o m e s ta g e p r o d u c e d a q u o t a ti o n o f R 9 m il li o n a n d I
10

t h i n k fr o m w h a t M r M n y a n d u s a id e v e n w i t h th a t R 9 m i ll io n m a y b e
s h o u l d – s h o u l d h a v e b e e n l o w e r – y o u k n o w - I t h i n k . S o - s o i t is v e r y
i m p o r t a n t t o c o n n e c t a l l o f t h e s e th i n g s .
m il li o n q u o t a ti o n ?

W h o w a s a w a r e o f t h is R 9

W h a t d i d t h e y d o a b o u t i t?

H o w d o t h e y j u s ti f y –

h o w d o t h e y ju s t i fy a p p r o v i n g R 6 0 0 - a n d s o m e th i n g m i l li o n a f t e r w a r d s ?
W h e r e i s th e i n t e r r o g a t i o n o f t h e s e a m o u n ts t h a t t h e y w e r e o b li g e d t o
u n d e r t a k e o n b e h a l f o f Tr a n s n e t i n o r d e r t o p r o t e c t Tr a n s n e t’s in t e r e s t
a n d th e t a x p a y e r s m o n e y.
A D V M A H L A P E S E L L O : I n d e e d C h a ir.
C H A I R P E R S O N : O k a y.
20

ADV MAHLAPE SELLO:

P e r h a p s o n th a t s c o r e th e n le t u s ju s t c l a r i fy

a t l e a s t n o w d i d y o u m a k e e n q u ir ie s M r M n y a n d u fr o m M s M d le ts h e w h o is th e a u th o r o f t h i s m e m o r a n d u m w e ju s t w e n t t h r o u g h a n d a s y o u
s a y w a s th e i n t e r fa c e b e t w e e n Tr a n s n e t a n d M N S d u r in g t h e c o u r s e o f
y o u r in v e s t i g a t io n s – d id y o u i n q u i r e f r o m h e r w h e t h e r s h e d i d r e c e iv e
t h e R 9 m i ll io n q u o t e – o r i g in a l R 9 m ill i o n q u o t e - fr o m C N R …

Page 20 of 212

31 MAY 2019 – DAY 103
M R T H O B A N I T R E V O R M N YA N D U : C h a ir …
ADV MAHLAPE SELLO: And what was her response if you did?
M R T H O B A N I T R E V O R M N YA N D U : C h a ir I c a n n o t r e c a l l w i t h c e r t a i n ty
w h e t h e r t h a t a c tu a l q u e s ti o n w a s p o s e d w it h h e r – t o h e r - r a th e r. L e t
m e s a y t h i s f o r t h e r e c o r d C h a ir t h a t a s f o r f o r e n s i c i n v e s t ig a t o r s w h o
are

ta s k e d

with

perusing

c e r ta i n

documents,

c o n d u c t in g

c e r t a in

in t e r v ie w s w i t h p e r s o n n e l w h o w e r e i n v o l v e d i n a m y r i a d o f tr a n s a c t io n s
y o u a r e t a s k e d w i t h n u m b e r o n e , r e a d i n g d o c u m e n t a t i o n a n d m a k in g
n e c e s s a r y d e d u c ti o n s . Yo u h a v e t o r e a c h c e r t a in c o n c l u s io n s b e c a u s e
10

it is n o t e a c h a n d e v e r y w i tn e s s w h o i s g o i n g t o b e o n e , w i lli n g to
s p e a k to y o u i n th e f ir s t p l a c e b u t m o r e o v e r b e w i ll in g t o a n s w e r c e r ta in
q u e s t io n s t h a t w o u l d i n a n y e v e n t s e e m a s th o u g h y o u a r e la y i n g b la m e
o r p l a c i n g r e s p o n s i b i li ty o n t h e m .

T h e C h a ir w i ll r e c a l l t h a t i n a n y

e v e n t y e s t e r d a y w e i n f o r m e d th e C h a ir t h a t w h i ls t Ms L i n d i w e M d l e ts h e
h a d fir s t - w h o w a s t h e l e a d i n te r f a c e i n s o fa r a s t h e c o ll a ti o n o f
d o c u m e n ts w e r e c o n c e r n e d fo r M N S A t t o r n e y s m i g h t n o t h a v e b e e n
h o s til e b u t w h e n it g o t c e r t a i n d is c u s s i o n s s h e w a s .

S o i n e x p la i n i n g

t h a t I a m tr y i n g t o p o i n t o u t t o th e C h a i r t h a t i t i s n o t e a c h a n d e v e r y
d e t a i l th a t w o u l d h a v e b e e n i n te r r o g a te d w i t h h e r i n o r d e r t o r e a c h
20

certain conclusions and having said that I would go further but not
s p e a k o u t o f tu r n . I n r e l a ti o n t o t h e a p p r o v a l o f th e s e c o s t s C h a ir y o u
w i ll r e c a ll th a t y e s te r d a y w e t o o k y o u th r o u g h p r i o r t o g e t t in g t o t h is a n
e m a i l s e n t b y M r G a r r y P i t a o n 1 0 J u l y. I n p a r tic u la r h e r e q u e s te d t h a t
n o t o n l y s h o u ld s h e c o m p i le t h e d o c u m e n t a ti o n f o r t h e a p p r o v a l o f t h e
r e l o c a ti o n c o s t s b u t t h a t s h e s h o u ld a ls o g e t t h e s i g n o ff fr o m

Page 21 of 212

31 MAY 2019 – DAY 103
Tr a n s n e t’s In t e r n a l A u d i t Te a m .

T h e C h a ir w il l n o t e fr o m p a g e 9 1 3 7

w h ic h w e h a v e j u s t ta k e n y o u th r o u g h t h a t n o t o n ly is i t n o t s i g n e d b y a
r e p r e s e n t a tiv e o f t h e Tr a n s n e t In t e r n a l A u d i t Te a m b u t t h e r e i s a c t u a ll y
n o s i g n a t u r e li n e t h a t w a s e v e r a d d e d t o t h e m e m o r a n d u m . Ye s C h a ir.
CHAIRPERSON:

N o , n o th a t is – t h a t i s u n d e r s ta n d a b le a n d – a n d I

a c c e p t t h a t i t is n o t a ll t h e q u e s t i o n s t h a t I m ig h t th in k o f o r M s S e l lo
m i g h t t h i n k o f t h a t y o u a n d y o u r t e a m m a y h a v e t h o u g h t o f a n d n o t a ll
t h e q u e s ti o n s t h a t w e t h in k o f a r e q u e s ti o n s t h a t p e o p l e w a t c h i n g f r o m
t h e ir h o m e s c a n t h i n k o f .
10

T h e r e w il l a lw a y s b e q u e s ti o n s t h a t

s o m e b o d y e ls e t h i n k s o f t h a t y o u m i g h t n o t h a v e th o u g h t o f a n d t h a t o n
it s o w n a n d d e p e n d in g o n t h e q u e s ti o n - o n t h e n a t u r e o f th e q u e s ti o n –
a n d w h a t y o u r ta s k w a s a n d w h a t y o u h a d b e f o r e y o u – y o u k n o w –
t h e r e m i g h t b e n o b la m e – y o u k n o w.

S o o b v i o u s ly t h e r e m a y b e

c e r t a i n q u e s ti o n s t h a t a r e to o o b v io u s s o t h a t i f y o u d o n o t a s k t h e m
p e o p l e s a y b u t w h a t w a s h e d o i n g i f h e d i d n o t a s k th is q u e s ti o n . S o –
s o – b u t a t th is s t a g e I – I u n d e r s t a n d – y o u k n o w. I u n d e r s t a n d th a t
t h e r e a r e c e r ta i n q u e s t io n s th a t y o u m a y n o t h a v e a s k e d b u t o f c o u r s e
t h e r e a r e s o m e t h a t e v e n i f a w i tn e s s i s h o s til e i f th e y a r e i m p o r ta n t
y o u h a v e t o a s k a n d i f t h e y d o n o t a n s w e r th a t i s – a n d y o u h a v e n o
20

p o w e r o v e r t h e m – j u s t r e c o r d t h a t t h e y d i d n o t w a n t to a n s w e r b u t …
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
CHAIRPERSON:

Ye s . N o , n o t h a t is f in e . S o w e m i g h t h a v e t o – t o

lo o k a t a l l o f t h e s e t h i n g s to r e a l ly e s t a b l is h w h o k n e w w h a t in – y o u
k n e w a b o u t th is …
A D V M A H L A P E S E L L O : Ye s C h a ir.

Page 22 of 212

31 MAY 2019 – DAY 103
C H A I R P E R S O N : R 9 m il li o n q u o ta t io n a n d la t e r g o t t o k n o w a b o u t o v e r
R 6 0 0 m il li o n f o r th e s a m e t h i n g …
A D V M A H L A P E S E L L O : Ye s C h a ir.
CHAIRPERSON:

A n d w h y w a s t h e R 9 m il li o n n o t a c c e p t e d b u t a s

M r M n y a n d u i m p li e s e v e n th a t R 9 m ill i o n s h o u ld n o t h a v e j u s t b e e n
a c c e p te d .

T h e y s h o u l d i n te r r o g a te e v e r y t h i n g t h a t h a s g o t c o s t

i m p l ic a t i o n s f o r – f o r Tr a n s n e t a n d fo r t h e t a x p a y e r s .
A D V M A H L A P E S E L L O : I n d e e d C h a ir.
CHAIRPERSON: Ja.
10

A D V M A H L A P E S E L L O : A n d t h e C h a ir w il l r e c a ll th a t t h a t R 9 m i ll io n –
t h a t q u o t a t i o n w a s fir s t in tr o d u c e d b y M r G o n s a lv e s .
C H A I R P E R S O N : Ye s .
A D V M A H L A P E S E L L O : W e w i ll g o b a c k t o Mr G o n s a lv e s …
C H A I R P E R S O N : Ye s .
A D V M A H L A P E S E L L O : F i le s a n d s e e w h a t – h o w m u c h o f t h e a n s w e r
- o f t h e q u e s ti o n w e c a n b e g i n to a n s w e r a n d t o t h e e x t e n t t h a t w e s ti ll
h a v e a g a p . T h e n o u r i n v e s ti g a to r s w il l b e r e q u e s t e d t o s e e i f t h e y c a n
c lo s e t h a t g a p .
CHAIRPERSON:

20

Ye s .

N o th a n k s a n d I d o n o t k n o w i f w e a s k e d

M r G o n s a lv e s b u t w e n e e d to k n o w w h e t h e r f r o m h i s s id e h e k n o w s a n y
r e a c ti o n th a t m a y h a v e c o m e fr o m o n e o r o th e r o ffi c i a l fr o m Tr a n s n e t i n
regard to it.
A D V M A H L A P E S E L L O : W e w i ll d e te r m i n e t h a t t h r o u g h th e p a p e r s …
C H A I R P E R S O N : Ye s .
A D V M A H L A P E S E L L O : A n d t h e tr a n s c r ip t a n d i f th e q u e s t i o n w a s n o t

Page 23 of 212

31 MAY 2019 – DAY 103
posed …
C H A I R P E R S O N : Ye s .
A D V M A H L A P E S E L L O : W e p e r h a p s m a y p o s e i t t o Mr G o n s a l v e s …
CHAIRPERSON: Ja.
ADV MAHLAPE SELLO:

A n d t o t h e e x t e n t n e c e s s a r y h e w i ll f il e a

s u p p l e m e n t a r y s t a t e m e n t in t h a t r e g a r d .
C H A I R P E R S O N : J a . T h a t is f in e , t h a n k y o u .
A D V M A H L A P E S E L L O : T h a n k y o u C h a ir. Ye s M r M n y a n d u w e m a y –
we may proceed.
10

M R T H O B A N I T R E V O R M N YA N D U :

T h a n k y o u C h a ir.

It is now

n e c e s s a r y f o r u s to m o v e to s li d e 2 9 to t a k e y o u t h r o u g h t h e
m e m o r a n d u m p r e p a r e d i n r e s p e c t o f B T.

The memorandum was

p r e p a r e d o n t h e v e r y s a m e d a y. I t is t o b e f o u n d a t A p p e n d i x 1 5 w h ic h
is c o n t a i n e d in v o lu m e 1 3 o f t h e C h a ir ’s f il e s a t 9 1 2 9 .
A D V M A H L A P E S E L L O : Ye s .
M R T H O B A N I T R E V O R M N YA N D U :

9 1 2 9 b e i n g t h e c o v e r in g p a g e a n d

t h e d o c u m e n t b e g in n in g a t 9 1 3 0 .

C h a ir I w il l r e a d th e m e m o r a n d u m

ju s t lik e I d id w it h th e p r e v i o u s o n e .
C H A I R P E R S O N : Ye s .
20

M R T H O B A N I T R E V O R M N YA N D U :

“ Th e p u r p o s e is to o n e ,

r e q u e s t t h e A c ti n g G r o u p C h i e f E x e c u tiv e ( G C E ) t o
a , n o t e t h e f in a l o u t c o m e o f th e n e g o t i a t i o n fo r t h e
r e l o c a ti o n

to

Durban

with

Bombardier

Tr a n s p o r t a t i o n S A ( B T) . B , a p p r o v e v a r i a t io n o r d e r
f o r t h e r e l o c a ti o n t o D u r b a n to a m a x i m u m v a lu e o f

Page 24 of 212

31 MAY 2019 – DAY 103
R 6 1 8 4 5 7 1 2 5 w i th B T a n d c , s i g n o ff a le t te r t o b e
is s u e d t o B T t o a c c e p t th e i r f in a l p r o p o s a l . ”
B e lo w th a t i t s a y s “ T h e B a c k g r o u n d ” .
“ O n 1 7 M a r c h 2 0 1 4 Tr a n s n e t a c ti n g t h r o u g h i ts
Tr a n s n e t Fr e i g h t R a i l D iv is i o n ( Tr a n s n e t Fr e i g h t
R a il )

entered

in t o

v a r io u s

lo c o m o t iv e

s u p p ly

a g r e e m e n ts w i th C N R – C S R , C N R , G E a n d B T.
A f t e r n e g o t i a t i o n s w h i c h s t a r t e d in F e b r u a r y 2 0 1 4 .
D u r i n g n e g o ti a ti o n s B T a n d C N R w e r e i n f o r me d t h a t
10

t h e y w il l u s e t h e D u r b a n Tr a n s n e t E n g i n e e r i n g ( T E )
F a c ili t y f o r t h e c o n s tr u c ti o n o f t h e lo c o m o t iv e s
w h ic h w e r e a l lo c a t e d t o t h e m . Th e D u r b a n F a c il it y
a n d t h e m o v e w e r e i n tr o d u c e d to b o th C N R a n d B T
a ft e r t h e t e n d e r h a d c lo s e d a n d e v a l u a ti o n s w e r e
done.

N u m b e r fo u r, o n 1 0 J u n e 2 0 1 5 t h e A c ti n g

G C E – G r o u p C h ie f Ex e c u ti v e – a p p r o v e d t h e t e a m
to

n e g o t ia t e

the

r e lo c a t io n

B o m b a r d i e r Tr a n s p o r t a ti o n S A .

to

Durban

with

F iv e , T I A w a s

p r e s e n t a t t h e n e g o t i a ti o n s a n d a r e in t h e p r o c e s s
20

o f f in a lis i n g t h e ir r e p o r t . ”
B e lo w th a t i s t h e “ M o t iv a ti o n ” . P a r a g r a p h 6 r e a d s a s fo ll o w s :
“ B o m b a r d ie r ’s

fi n a l

o ff e r

to

Tr a n s n e t

is

an

a d d it i o n a l d is c o u n t o f 2 .5 p e r c e n t a n d t h e f o l lo w in g
c o s t w h ic h h a s b e e n a b s o r b e d .
e s c a l a t io n .

A, further price

B , f i n a n c in g c o s t o f o w n a d d it i o n a l

Page 25 of 212

31 MAY 2019 – DAY 103
e ffo r t s s u p p li e r s a n d a l r e a d y a c c u m u l a te d s t o c k a n d
C , c l a i m s f r o m t h e s u p p li e r s t h a t B T h a s a lr e a d y
r e s c h e d u le d a n d d e l a y e d . ”
T h e C h a ir tu r n s o v e r l e a f . I t s a y s :
“ A , fu r t h e r p r ic e e s c a la t io n t h e c o s t o f t h e fu r t h e r
price

escalation

of

m a t e r i a l,

layby

and

other

e x p e n s e s w e r e e v a lu a te d a t 4 p e r c e n t d u e t o t h e
a d d it i o n a l ti m e f o r d e l iv e r. 2 . 5 p e r c e n t w a s d u e t o
t h e i n c r e a s e o f t h e E u r o / R a n d r a t io n o v e r th e l a s t
10

year

since

th e

i n s tr u c ti o n

to

change

Tr a n s n e t

E n g i n e e r i n g F a c i li ty w a s r e c e i v e d f r o m Tr a n s n e t
Fr e i g h t R a il a n d s i n c e B o m b a r d ie r Tr a n s p o r ta t io n
s u b m i tt e d th e fir s t n o ti c e o f c o m p a n y p r o p o s e d
v a r ia t io n o n th e s u b j e c t .

T h e a d d i ti o n a l fi n a n c i n g

cost due to our ongoing expenses on the internal
e ffo r t s a n d c o s t fr o m o u r s u p p li e r s i n a d d it io n to t h e
lo g i s t ic s a n d w a r e h o u s i n g c o s t ( n e g a tiv e c a s h f lo w )
c r e a te a n a d d i ti o n a l 2 . 5 p e r c e n t ( t w o a n d a h a l f o f
t h e c o s t) .
20

In a d d i ti o n t h e e s c a l a ti o n m e n ti o n e d

a b o v e c la i m s fr o m s u p p l ie r s w e r e c o s t e d a t 1
p e r c e n t ( o n e p e r c e n t) . ”
ADV MAHLAPE SELLO:

C a n I ju s t in q u i r e a t ti m e s u n d e r A a t p a g e

9 1 3 1 - t h e s e c ti o n y o u j u s t r e a d – t h e r e i s r e f e r e n c e t o “ o u r ” . D o w e
in t e r p r e t t h e “ o u r ” t o b e r e f e r e n c e d t o C N R a n d n o t o u r Tr a n s n e t . S o i t
is n o t Tr a n s n e t s p e a k in g h e r e ?

Page 26 of 212

31 MAY 2019 – DAY 103
M R T H O B A N I T R E V O R M N YA N D U : I t s e e m s t o r e fe r e n c e B Ts .
A D V M A H L A P E S E L L O : B T r a th e r s o r r y.
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
A D V M A H L A P E S E L L O : S o i t is a – s e e m in g l y a d ir e c t q u o t e f r o m t h e
BT proposal?
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
ADV MAHLAPE SELLO: Thank you.
M R T H O B A N I T R E V O R M N YA N D U :

“ I f th e v a r ia t io n o r d e r is

n o t is s u e d b y 2 4 J u ly 2 0 1 5 t h e v a l u e o f B Ts n o t ic e
10

o f c o m p a n y p r o p o s e d v a r i a t i o n o r d e r w il l i n c r e a s e
b y 2 0 p e r c e n t . B Ts c u r r e n t o ff e r r e p r e s e n ts a to t a l
d is c o u n t

of

32.5

percent.

When

ta k in g

in t o

c o n s i d e r a ti o n th e i n d ic a t e d p o t e n t ia l p r ic e i n c r e a s e
o f a p p r o x i m a t e ly 2 0 p e r c e n t i n i n s t a n c e s w h e r e b y
t h e n o t ic e o f c o m p a n y p r o p o s e d v a r i a ti o n o r th e V O
is n o t a p p r o v e d b y T F R b y 2 4 J u l y 2 0 1 5 ( v a l i d i ty o f
B Ts o ff e r ) .

T h e 3 2 . 5 p e r c e n t i s th e s u m o f t h e 1 0

p e r c e n t a b s o r b e d c o s t o f f u r t h e r p r ic e e s c a l a t io n
t h e a b o v e m e n t io n e d 2 0 p e r c e n t i n c r e a s e p r ic e
20

a ft e r 2 4 J u ly a n d a f u r t h e r 2 . 5 p e r c e n t d is c o u n t
g iv e n b y B T. ”
T h e f o ll o w i n g p a y m e n t t e r m s h a v e b e e n p r o p o s e d b y B T i n a c c o r d a n c e
w i t h S e c ti o n 1 . 2 o f S c h e d u l e 1 ( P r ic i n g a n d P a y m e n t Te r m s ) o f th e
L o c o m o t iv e S u p p ly A g r e e m e n t . I t q u o t e s :
“ T h e f ir s t t w o m il e s t o n e s ( t h e e ffe c t iv e d a t e a n d th e

Page 27 of 212

31 MAY 2019 – DAY 103
6 m o n th s a f t e r e ff e c tiv e d a te ) a m o u n t in g t o a
c o m b in e d t o t a l o f 1 8 p e r c e n t o f t o ta l c o n t r a c t p r ic e
o f a l l l o c o m o tiv e s h a v e a lr e a d y b e e n a c h i e v e d d u e
a n d w il l b e i n v o ic e d b y B T o n c e t h e v a r ia t io n o r d e r
is is s u e d . T h e t h ir d m il e s t o n e p a y m e n t to t h e v a lu e
o f 9 p e r c e n t o f t h e t o ta l c o n tr a c t p r i c e o f a ll
lo c o m o t iv e s

w il l

be

due

17

m o n th s

a ft e r

th e

e ffe c tiv e d a t e a n d w il l b e i n v o i c e d a c c o r d i n g ly. ”
C h a ir w h a t fo ll o w s b e l o w e v e n t h o u g h t h e w o r d i n g is n o t c l e a r w e k n o w
10

t h is fr o m p r e v i o u s e m a il c o r r e s p o n d e n c e t h a t w a s n e e d e d t o b e
c h e c k e d b y th e L e g a l D e p a r t m e n t i s th a t t h is w o u ld m e a n – w h a t
changes

would

need

to

be

e ffe c t e d

to

the

L o c o m o t iv e

Agreement.
“ O n e , d e fi n i ti o n – T E F a c il i ty - a s i t r e a d s c u r r e n t ly
K o e d o e s p o o r t G a u t e n g a m e n d e d t o d e f in i ti o n – T E
F a c ili t y D u r b a n K w a Z u lu - N a t a l .
–

as

it

reads

a c c e p ta n c e

of

c u r r e n tly
a

Tw o , C l a u s e 9 . 1 . 1

Clause

l o c o m o ti v e

9.1:

occurs

if

the

a ft e r

i ts

s c h e d u l e d a c c e p t a n c e d a t e ( a d e la y ) t h e c o n tr a c to r
20

s h a l l s u b j e c t t o C l a u s e 9 . 2 ( d e l a y p e n a l ty c a p ) p a y
a d e l a y p e n a l ty t o t h e c o m p a n y in r e s p e c t o f t h e
d e l a y e d lo c o m o t iv e a t th e a p p lic a b l e r a t e . A d e l a y
p e n a l ty g r a c e p e r io d f o r t h r e e m o n t h s s h a l l a p p l y to
t h e in i ti a l s ix lo c o m o t iv e s s c h e d u l e d a c c e p t a n c e
d a t e . A m e n d m e n t to C l a u s e 9 . 1 . I f th e a c c e p t a n c e

Page 28 of 212

Supply

31 MAY 2019 – DAY 103
of

a

l o c o m o ti v e

occurs

after

it s

scheduled

a c c e p ta n c e d a te ( a d e l a y ) th e c o n tr a c t o r s h a l l
s u b j e c t to C l a u s e 9 . 2 ( d e l a y p e n a lt y c a p ) p a y a
d e l a y p e n a lt y t o t h e c o m p a n y in r e s p e c t o f t h e
d e l a y e d lo c o m o t iv e a t th e a p p lic a b l e r a t e . A d e l a y
p e n a l ty g r a c e p e r i o d o f t h r e e m o n t h s s h a l l a p p ly to
t h e in i ti a l 3 5 lo c o m o t iv e s s c h e d u l e d a c c e p t a n c e
d a t e . A n a d d i ti o n a l g r a c e o f t w o m o n t h s s h a ll a p p ly
to the remainder of the fleet.”
10

B u d g e t i m p li c a t i o n s u n d e r p a r a g r a p h 9 i t r e a d s :
“ T h e B o a r d a t i ts m e e ti n g o f 2 8 M a y 2 0 1 4 a p p r o v e d
a n a m o u n t o f R 4 . 9 b i ll io n in c o n t in g e n c i e s a s p a r t
of

the

r e v is e d

e s ti m a t e d

t o ta l

cost.

The

c o n ti n g e n c ie s b u d g e t w e r e t o c o v e r th e f o l l o w in g
it e m s :

a , c a p i t a l s p a r e s b e y o n d th e w a r r a n t e e

p e r i o d ; b , v a r i a ti o n o r d e r s a n d o p t io n s ( s u c h a s
e l e c tr o n ic a lly

conclude

p n e u m a ti c

b r e a k in g

and

w ir e d i s t r i b u t e d p o w e r a n d c , r e l o c a ti o n o f t h e
program
20

to

Tr a n s n e t

E n g in e e r i n g ’s

Durban

th e

of

F a c ili t ie s . ”
U n d e r p a r a g r a p h 11 :
“The

current

s t a tu s

of

u ti lis a ti o n

the

c o n ti n g e n c ie s b u d g e t is a s f o l lo w s . ”
T h e C h a ir w il l r e c a l l th a t t h is w a s a t a b l e r e fe r r e d t o i n t h e p r e v i o u s
memorandum. Under paragraph 12 it says:

Page 29 of 212

31 MAY 2019 – DAY 103
“ C o n s e q u e n tl y a n a m o u n t o f R 6 1 8 4 5 7 1 2 5 i s p a r t o f
t h e c o n t in g e n c i e s b u d g e t i n c l u d e d i n t h e

fi n a l

a p p r o v e d e s t i m a t e d t o ta l c o s t o f th e p r o j e c t . ”
A n d i f th e C h a ir t u r n s o v e r le a f a t p a g e 9 1 3 3 t h e r e is a r e c o m m e n d a t io n .
Under paragraph 13:
“ R e q u e s t t h e A c ti n g G r o u p C h i e f E x e c u t iv e t o a ,
n o t e t h e f in a l o u t c o m e o f t h e n e g o ti a ti o n s fo r t h e
r e l o c a ti o n

to

Durban

with

Bombardier

Tr a n s p o r t a t i o n ; b , a p p r o v e v a r i a ti o n o r d e r f o r t h e
r e l o c a ti o n

10

to

Durban

to

a

maximum

value

of

R 6 1 8 4 5 7 1 2 5 w i th B T a n d c , s i g n o ff a le t te r t o b e
is s u e d t o B T t o a c c e p t th e i r p r o p o s a l . ”
A s t h e C h a ir w il l t h e n n o t e th e m e m o r a n d u m i s a ls o c o m p il e d b y
M s L i n d iw e M d le ts h e .

She

has

s ig n e d

it

but

has

not

d a te d .

M r R a v i N a ir Ac t in g C h i e f Ex e c u t iv e a t Tr a n s n e t Fr e ig h t R a il w h o
s ig n e d i t o n 2 2 J u l y 2 0 1 5 i n r e c o m m e n d a t io n .

It was also signed and

r e c o m m e n d e d b y M r N d i p h i w e S ili n g a a G r o u p E x e c u tiv e L e g a l a n d
C o m p l ia n c e o n 2 2 J u ly 2 0 1 5 . I t is a ls o s ig n e d a n d r e c o m m e n d e d b y t h e
Group
20

Chief

2 2 J u ly 2 0 1 5 .
E x e c u t iv e

of

F in a n c i a l

O ffi c e r

at

the

ti m e

M r A n o j S in g h

on

A ls o s i g n e d a n d r e c o m m e n d e d b y t h e t h e n C h i e f
Tr a n s n e t

Engineering

M r T h a m s a n q a J iy a n e

on

2 2 J u ly 2 0 1 5 a s w e l l a s M r G a r r y P i ta G r o u p C h i e f P r o c u r e m e n t O ff ic e r
o n 2 2 J u ly 2 0 1 5 a n d t h e n b e l o w t h a t i s t h e a p p r o v a l s i g n a t u r e o f
M r Si y a b o n g a G a m a o n 2 3 J u ly 2 0 1 5 .
ADV MAHLAPE SELLO:

Thank

you.

Page 30 of 212

Before

we

le a v e

th a t

31 MAY 2019 – DAY 103
m e m o r a n d u m I w o u l d l ik e to t a k e y o u b a c k t o p a g e 9 1 3 1 .
u n d e r t h e h e a d in g a , “ F u r th e r Pr ic e E s c a la ti o n ” .

At 9131

Yo u r e a d fo u r i t e m s

a n d a t t i m e s i t w o u l d a p p e a r t h a t i t i s a d ir e c t - a s y o u c o n f ir m e d I t h i n k
– a d ir e c t q u o t a ti o n fr o m t h e B T p r o p o s a l ?
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
ADV MAHLAPE SELLO:

N o w I w o u l d lik e t o r e f e r to t h e p a r a g r a p h s

t h a t fo ll o w th a t . T h e r e a r e t w o p a r a g r a p h s th e fir s t s ta r t in g :
“ I f t h e v a r i a t i o n o r d e r i s n o t is s u e d b y 2 4 J u l y a n d
subsequent …”
10

C a n I ta k e th a t t o n o w b e th e d r a f te r o f t h e m e m o r a n d u m s p e a k in g ? I t
is n o l o n g e r a q u o ta t io n – d ir e c t q u o t a ti o n – f r o m t h e p r o p o s a l .
M R T H O B A N I T R E V O R M N YA N D U :

I t is d r a f t e d in th a t m a n n e r b u t i t

c o m e s fr o m t h e l e t t e r s e n t b y B T t o Tr a n s n e t.
A D V M A H L A P E S E L L O : I u n d e r – b u t n o w t h is i s w h a t M s M d le ts h e a s
a d r a f t e r is s a y i n g – is in f o r m i n g .
M R T H O B A N I T R E V O R M N YA N D U : Is c o m m u n i c a t in g .
A D V M A H L A P E S E L L O : Ye s .
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
ADV MAHLAPE SELLO:
20

I a m i n t e r e s t e d in t h e p a r a g r a p h t h e r e a f te r

a n d I w a n t t o s e e w h e t h e r y o u – y o u c o n s id e r i t in y o u r i n v e s t ig a ti o n s
a n d w h e t h e r y o u h a v e g o t a c le a r u n d e r s t a n d in g o f i t a n d i f s o t o s h a r e
t h e u n d e r s t a n d in g w i t h u s . I t r e a d s :
“ B Ts c u r r e n t o ff e r r e p r e s e n te d t o ta l d i s c o u n t o f 3 2 . 5
percent

when

t a k in g

into

c o n s id e r a ti o n

th e

in d i c a t e d p o te n ti a l p r ic e i n c r e a s e o f a p p r o x i m a t e ly

Page 31 of 212

31 MAY 2019 – DAY 103
20

percent

in

i n s ta n c e s

where

the

n o t ic e

of

c o m p a n y p r o p o s e d v a r i a t i o n o r th e V O i s n o t
a p p r o v e d b y 2 4 J u ly 2 0 1 5 . ”
I h a v e g o n e b a c k t o y o u r s li d e 1 9 w h e r e y o u h a v e li s te d th e v a r i o u s
p r i c e o ff e r s g iv e n b y B T. T h e h ig h e s t w a s 6 3 4 .
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
ADV MAHLAPE SELLO:

T h e h i g h e s t k n o w n a n d th e a c c e p t e d o ff e r –

t h e lo w e s t w a s 6 1 8 m i ll io n w h ic h t u r n e d o u t to b e t h e a c c e p t e d o ff e r ?
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
10

ADV MAHLAPE SELLO:
d is c o u n t .

I a m tr y i n g t o u n d e r s t a n d t h is 3 2 p e r c e n t

W h e r e a n d h o w d o I f a c t o r i t in ?

I do not if – unless my

m a t h e m a t ic s is f a ili n g m e . If y o u g o t o y o u r s li d e 1 9 y o u w il l s e e th e
prices compared.
M R T H O B A N I T R E V O R M N YA N D U : C h a ir i t is n o t e x p la in e d .
A D V M A H L A P E S E L L O : O k a y.
M R T H O B A N I T R E V O R M N YA N D U :

In fact if one has regard to

EXHIBIT BB8 …
A D V M A H L A P E S E L L O : Ye s .
M R T H O B A N I T R E V O R M N YA N D U : A n d a t p a g e 9 5 .
20

CHAIRPERSON: Just one second please.
M R T H O B A N I T R E V O R M N YA N D U : 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 .
A D V M A H L A P E S E L L O : Yo u n o w – y o u n o w w a n t u s t o t u r n to …
CHAIRPERSON: Where – where are we – which page are we going to
…

Page 32 of 212

31 MAY 2019 – DAY 103
ADV MAHLAPE SELLO: We are back to …
C H A I R P E R S O N : A n d ju s t – j u s t te ll m e a g a i n w h a t t h e q u e s ti o n w a s .
A D V M A H L A P E S E L L O : T h e q u e s t i o n C h a ir e m a n a t e s fr o m p a g e 9 1 3 1
of volume 13.
CHAIRPERSON: Ja.
ADV MAHLAPE SELLO:

The volume at hand.

T h e r e is r e f e r e n c e in

t h a t m e m o r a n d u m w h e r e i t is s t a t e d t h a t th e B- B o m b a r d i e r ’s c u r r e n t
p r i c e r e p r e s e n t s a to t a l d i s c o u n t o f 3 2 . 5 p e r c e n t .
CHAIRPERSON: Hm.
10

ADV MAHLAPE SELLO:

I then referred Mr Mnyandu back to page 19

o f h is s l i d e w h ic h h a s s h o w n u s a ll B Ts c o s t o ffe r s .
CHAIRPERSON: Hm.
A D V M A H L A P E S E L L O : T h e h i g h e s t c o m i n g in a t 6 3 4 …
CHAIRPERSON: Hm.
A D V M A H L A P E S E L L O : A n d th e l o w e s t c o m in g i n a t 6 1 8 m il li o n . It i s
a g a in s t t h a t b a c k g r o u n d I s e e k a n u n d e r s t a n d i n g a s t o w h e r e t h e 3 2 . 5
p e r c e n t s a v in g …
CHAIRPERSON: Hm.
ADV MAHLAPE SELLO:
20

I s t o b e f o u n d a c c e p ti n g t h a t p e r h a p s I – I

m a y h a v e m a d e a n e r r o r in m y m a th e m a t ic s .
CHAIRPERSON: Hm.
ADV MAHLAPE SELLO:

M r M n y a n d u is a t t e m p ti n g t o a n s w e r t h a t

q u e s t io n f o r m e …
CHAIRPERSON: Hm.
A D V M A H L A P E S E L L O : H a s r e f e r r e d u s n o w t o B B 8 C t h a t i s th e s l i d e

Page 33 of 212

31 MAY 2019 – DAY 103
fi le .
C H A I R P E R S O N : O h , o k a y.
ADV MAHLAPE SELLO:

A n d h e h a s r e f e r r e d u s i n p a r ti c u la r t o p a g e

95.
C H A I R P E R S O N : O k a y.
A D V M A H L A P E S E L L O : T h a t w il l b e u n d e r 6 C h a ir.
M R T H O B A N I T R E V O R M N YA N D U :
C H A I R P E R S O N : Ye s . I h a v e g o t it t h a n k y o u .
A D V M A H L A P E S E L L O : O k a y. W e h a v e l o c a te d T T M 6 .
10

M R T H O B A N I T R E V O R M N YA N D U :

C h a ir Ms S e ll o s a y s in a t t e m p ti n g

t o a n s w e r t h e q u e s ti o n w h e n I a m a c tu a l ly tr y i n g to c o m p o u n d t h e
c o n fu s i o n e v e n m o r e .
A D V M A H L A P E S E L L O : O h , o k a y. I w a s o v e r ly o p t i mi s tic t h e r e .
CHAIRPERSON:

I guess you

are

–

you

are

answering

it

by

compounding it.
M R T H O B A N I T R E V O R M N YA N D U :

C h a i r t h i s i s a l e t te r s e n t b y

B o m b a r d i e r Tr a n s p o r t a ti o n . I t is d a te d 7 J u ly 2 0 1 5 .
A D V M A H L A P E S E L L O : Ye s .
M R T H O B A N I T R E V O R M N YA N D U : I t is t h e c o v e r in g le t t e r o f w h a t w a s
20

t h e fi n a l p r o p o s a l s e n t b y B T w h ic h a s w e h a v e e x p la i n e d to th e C h a ir
d i d n o t c h a n g e m a t e r i a ll y b u t fo r w h a t is r e c o r d e d in t h e le t t e r.
CHAIRPERSON: Hm.
M R T H O B A N I T R E V O R M N YA N D U : I t is a d d r e s s e d t o Tr a n s n e t Fr e ig h t
R a il .

I t is f o r t h e a t te n ti o n o f M s L i n d i w e M d l e t s h e a s w e ll a s

M r Fr ik k i e H a r r is . I t s a y s :

Page 34 of 212

31 MAY 2019 – DAY 103
“Copy

to

Mr A n o j S i n g h ,

Mr T h a m s a n q a J iy a n e ,

M r G a r r y P i ta . ”
A D V M A H L A P E S E L L O : Ye s .
M R T H O B A N I T R E V O R M N YA N D U : I t i s ti t le d : “ P r i c e R e d u c ti o n o n t h e
N o t ic e o f C o m p a n y P r o p o s a l Va r i a ti o n D u r b a n V O . ”
“ D e a r L in d iw e / Fr ik k ie , w e r e f e r t o o u r l a s t n o t ic e o f
c o m p a n y p r o p o s a l v a r ia t io n s u b m i t te d t o Tr a n s n e t
Fr e i g h t R a i l … ”
C H A I R P E R S O N : O r r a th e r l a t e s t ?
10

A D V M A H L A P E S E L L O : To o u r l a t e s t .
C H A I R P E R S O N : R e f e r to o u r l a t e s t .
M R T H O B A N I T R E V O R M N YA N D U : L a te s t .
CHAIRPERSON: As opposed to last.
M R T H O B A N I T R E V O R M N YA N D U : O h , a p o l o g i e s .
CHAIRPERSON: Hm.
M R T H O B A N I T R E V O R M N YA N D U :

“ W e r e fe r t o o u r l a te s t

n o t ic e o f c o m p a n y p r o p o s a l v a r ia t io n s u b m i t te d t o
Tr a n s n e t

Fr e i g h t

correspondence
20

R a il
w h ic h

B T / T F R / C / 1 5 /0 0 3 4

dated

(TFR)
has

a

as

per

reference

10 April 2015.

our
of
As

d is c u s s e d i n t o o u r o n g o in g d is c u s s i o n s … ”
C H A I R P E R S O N : O r d e s c r ib e d .
M R T H O B A N I T R E V O R M N YA N D U : O h d e s c r i b e d .
CHAIRPERSON: Ja.
M R T H O B A N I T R E V O R M N YA N D U :

“ … in t o

Page 35 of 212

our

o n g o in g

31 MAY 2019 – DAY 103
d is c u s s io n s

Bombardier

Tr a n s p o r ta t i o n

has

e n d e a v o u r e d t o m i n i m is e p r o j e c t i m p a c t fr o m th e
c h a n g e o f T E F a c ili t y f r o m K o e d o e s p o o r t t o D u r b a n .
A s a f u r t h e r s h o w o f g o o d f a i t h B T is w i ll in g to o ff e r
a n a d d i t io n a l d is c o u n t o f 2 .5 p e r c e n t . In e v a l u a t i n g
t h e d i s c o u n t p l e a s e ta k e i n t o c o n s id e r a ti o n th a t th is
r e d u c t i o n i n r e a l i ty is m u c h h ig h e r d u e t o t h e fa c t
that

10

s in c e

our

fi r s t

proposed

v a r ia t io n

absorbed

the

o ff e r

in

2014

fo ll o w i n g

n o ti c e

of

we

have

costs:

company

further

a lr e a d y
p r ic e

e s c a l a t io n , fi n a n c i n g c o s ts o f o u r o w n a d d it i o n a l
e ffo r t s , o u r

suppliers

and

a lr e a d y

a c c u m u la t e d

s t o c k a n d c l a i ms fr o m t h e s u p p li e r s t h a t w e h a v e
a lr e a d y r e s c h e d u l e d a n d d e l a y e d .

T h e r e v is e d

a m o u n t a f t e r t h e 2 . 5 p e r c e n t d i s c o u n t w il l b e
R618 457 125.”
C h a ir f o r t h e p u r p o s e s o f w h a t w e a r e t r y in g to c o m m u n ic a t e w e c a n
stop there …
CHAIRPERSON: Hm.
20

M R T H O B A N I T R E V O R M N YA N D U : I n r e a d i n g t h i s l e tt e r …
CHAIRPERSON: Hm.
M R T H O B A N I T R E V O R M N YA N D U :

B u t e v e n o n B Ts o w n a c c o u n t

in s o f a r a s t h is l e t te r is c o n c e r n e d o n 7 J u l y …
CHAIRPERSON: Hm.
M R T H O B A N I T R E V O R M N YA N D U : W h ic h n o t e s th e fi n a l o ffe r m a d e …

Page 36 of 212

31 MAY 2019 – DAY 103
CHAIRPERSON: Hm.
M R T H O B A N I T R E V O R M N YA N D U :

T h e r e is n o t a lk o r m e n ti o n o f a

d is c o u n t a m o u n ti n g t o 3 2 . 5 p e r c e n t .
CHAIRPERSON: Hm.
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
CHAIRPERSON: Hm.
A D V M A H L A P E S E L L O : I t i s 2 . 5 p e r c e n t?
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d i t is s o C h a ir.
CHAIRPERSON: Hm.
10

ADV MAHLAPE SELLO:

S o I g u e s s i t is a q u e s t io n o f t h e a u t h o r w i ll

e x p l a i n to u s w h e t h e r 3 2 .5 p e r c e n t d i s c o u n t is d e r i v e d fr o m ?
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
ADV MAHLAPE SELLO:

Because that is what is communicated to the

A c ti n g G C E ?
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
CHAIRPERSON: But …
ADV MAHLAPE SELLO: If …
C H A I R P E R S O N : O h , ja .
ADV MAHLAPE SELLO:
20

Before we get there though was there any

d o c u m e n t a ti o n y o u w e r e a b l e to c o m e a c r o s s i n th e c o u r s e o f y o u r
in v e s t i g a t io n s t h a t w o u ld s u p p o r t a c l a i m o f a 3 2 . 5 p e r c e n t d is c o u n t?
M R T H O B A N I T R E V O R M N YA N D U : I w o u l d l ik e to s a y t o t h e C h a ir a t
t h is m o m e n t t h a t a s w e s a id y e s t e r d a y t h e r e is d o c u m e n t a ti o n s e n t b y
B o m b a r d i e r Tr a n s p o r t a ti o n t o w a r d s t h e e n d o f 2 0 1 4 …
A D V M A H L A P E S E L L O : Ye s .

Page 37 of 212

31 MAY 2019 – DAY 103
M R T H O B A N I T R E V O R M N YA N D U :

W h i c h w i ll b e p r o v i d e d t o t h e

C o m m i s s i o n w h i c h s o u g h t t o b e e x p l a n a t o r y o r le t t e r s t h a t w e r e
e x p l a i n in g o r e x p a n d in g o n t h e o ffe r s o f B o m b a r d i e r Tr a n s p o r t a ti o n t o
Tr a n s n e t .
ADV MAHLAPE SELLO:

J a b u t – y e s I u n d e r s t a n d b u t a n a n a ly s is o f

t h a t v e r y d o c u m e n t a ti o n t o g e t h e r w i t h w h a t w e h a v e b e f o r e u s w e r e y o u
a b l e t o e s t a b li s h d e fi n i t iv e ly t h a t th is w o u l d – th e n e g o ti a ti o n s h a v e
r e s u l t e d i n a 3 2 . 5 d is c o u n t?
M R T H O B A N I T R E V O R M N YA N D U : N o w e w e r e n o t .
10

A D V M A H L A P E S E L L O : O k a y. T h a n k y o u C h a ir.
C H A I R P E R S O N : I th in k y o u m a d e th e p o i n t t h a t th e m e m o r a n d u m t h a t
y o u w e r e r e a d i n g ta lk s a b o u t a c e r t a i n d is c o u n t . I s t h a t r i g h t ?
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
C H A I R P E R S O N : D is c o u n t w h ic h y o u s a y c a n n o t b e f o u n d in t h is le t t e r
fr o m B T. I s t h a t r i g h t ?
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
C H A I R P E R S O N : I n t e r m s o f th e a m o u n ts o n c e t h e y t a l k a b o u t d i ffe r e n t
fi g u r e s t h a t s h o u l d a ffe c t t h e a m o u n ts .

D o e s i t a ffe c t th e a m o u n t s –

t h e f in a l a m o u n t o r d o e s i t n o t a ff e c t – I j u s t – d i d n o t - h a v e n o t l o o k e d
20

a t it .

T h e a m o u n ts t h a t th e y t a lk a b o u t i n – i n t h e m e m o r a n d u m in

r e g a r d t o B T c o m p a r e d to t h e a m o u n t B T t a lk s a b o u t i n t h is l e t te r w h e r e
t h e y d o n o t m e n t io n t h i s o t h e r d is c o u n t t h a t t h e m e m o r a n d u m t a lk s
a b o u t.
M R T H O B A N I T R E V O R M N YA N D U : C h a ir if o n e h a s r e g a r d t o t h e f a c t
t h a t th e fir s t o ff e r i n S e p te m b e r 2 0 1 4 …

Page 38 of 212

31 MAY 2019 – DAY 103
CHAIRPERSON: Hm.
M R T H O B A N I T R E V O R M N YA N D U : Is s o m e R 6 3 4 - o d d mi ll i o n .
CHAIRPERSON: Hm.
M R T H O B A N I T R E V O R M N YA N D U : A 3 2 . 5 p e r c e n t d is c o u n t …
CHAIRPERSON: Hm.
M R T H O B A N I T R E V O R M N YA N D U :

W o u l d b e m u c h m o r e s i g n i f ic a n t

t h a n th e a m o u n t m o v i n g fr o m …
C H A I R P E R S O N : Ye s .
M R T H O B A N I T R E V O R M N YA N D U : 6 3 4 t o 6 1 8 .
10

C H A I R P E R S O N : Ye s , y e s .
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
C H A I R P E R S O N : B u t y o u d id n o t d o th e e x e r c is e o f – o f e s t a b l is h i n g –
e s t a b li s h in g e x a c tl y w h a t t h e a m o u n t w o u l d b e th e r e a l a m o u n t i f …
M R T H O B A N I T R E V O R M N YA N D U :

N o C h a i r w e d i d n o t d o th e

e x e r c is e b a s e d o n th e …
C H A I R P E R S O N : Ye s , y e s .
M R T H O B A N I T R E V O R M N YA N D U : 3 2 .5 p e r c e n t .
CHAIRPERSON:

O k a y.

S o I t h i n k i t w o u ld b e i m p o r t a n t to – f o r

s o m e b o d y t o d o it i f w e h a v e n o t d o n e i t a l s o .
20

ADV MAHLAPE SELLO:

C h a ir i t w o u ld b e a n a r it h m e t ic e x e r c is e

r e a l ly.
C H A I R P E R S O N : J a , i t is a n a r i th m e t ic e x e r c is e .
A D V M A H L A P E S E L L O : I t i s a c a l c u l a t o r.
CHAIRPERSON: Ja.
A D V M A H L A P E S E L L O : T h e fir s t o ff e r is 6 3 4 .

Page 39 of 212

31 MAY 2019 – DAY 103
C H A I R P E R S O N : Ye s .
A D V M A H L A P E S E L L O : T h e l a s t a n d a c c e p t a b l e o ff e r is 6 1 8 m il li o n .
C H A I R P E R S O N : Ye s .
ADV MAHLAPE SELLO:

N o w o n e c a n w o r k o u t o n a c a lc u l a t o r w h a t

t h a t r e p r e s e n ts b y w a y o f p e r c e n t a g e – t h e d is c o u n t.
C H A I R P E R S O N : Ye s . T h a t is w h a t I a m t a lk i n g a b o u t , j a .
ADV MAHLAPE SELLO:

W h a t I w a s tr y i n g to d e t e r m i n e is – is th e r e

a n o t h e r f ig u r e w e a r e mi s s in g .
CHAIRPERSON: Ja.
10

A D V M A H L A P E S E L L O : T h a t i f w e i n c o r p o r a t e in t o th e c a l c u l a t i o n w i ll
g iv e u s t h e 3 2 .5 p e r c e n t d is c o u n t b e c a u s e w h a te v e r d i s c o u n t t h e r e m a y
b e fr o m 6 3 4 t o 6 1 8 i s n o t 3 2 . 5 , t h a t w o u l d b r i n g u s c lo s e r t o t h e
4 0 0 m i lli o n m a r k i f i t w e r e .
CHAIRPERSON:

J a w h a t I ’ m l o o k i n g a t is t o s e e w h e t h e r t h e r e m a y

h a v e b e e n s o m e g e n u in e e r r o r s s o m e w h e r e b y s o m e b o d y o r w h e t h e r
there is much more to it.
ADV MAHLAPE SELLO:

W e w il l C h a ir, i t m a y b e – i n s t e a d o f 3 2 .5 i t

m i g h t b e 3 . 2 5 , w e w i ll d o t h a t c a lc u l a ti o n C h a ir.
CHAIRPERSON: Thank you.
20

A D V M A H L A P E S E L L O : A n d M r M n y a n d u y o u m a k e t h e p o in t t h a t b o t h
t h e B T a n d th e C N R m e m o r a n d a t o M r S i y a b o n g a G a m a w e r e a p p r o v e d
o n t h e s a m e d a y.
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir
A D V M A H L A P E S E L L O : S o th e c o s ts o f r e l o c a ti o n a s q u o t e d b y b o t h
w e r e a c c e p te d b y Tr a n s n e t .

Page 40 of 212

31 MAY 2019 – DAY 103
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
A D V M A H L A P E S E L L O : Yo u m a y p r o c e e d th e n f r o m t h e r e .
M R T H O B A N I T R E V O R M N YA N D U : C h a ir h a v i n g t a k e n y o u th r o u g h t h e
a p p r o v a l p r o c e s s fo ll o w e d w e n o w d e a l w i t h th e in v o lv e m e n t o r th e
li m i te d i n v o lv e m e n t o f Tr a n s n e t I n te r n a l A u d i t … ( i n te r v e n t io n ) .
CHAIRPERSON:

B e f o r e w e d o t h a t , w h a t i t d o e s m e a n i s th a t w h e n

y o u p u t t h e tw o a m o u n ts a p p r o v e d f o r b o t h B T a n d C N R t h e n y o u h a v e
a b o u t w h a t , 1 ,4 b il li o n ?
M R T H O B A N I T R E V O R M N YA N D U :
10

I t ’s a n a g g r e g a te a m o u n t o f

1 .2 b i ll i o n .
CHAIRERSON:

A b o u t 1 , - I th i n k it s h o u l d b e a b o u t o n e m o r e th a n

t h a t , b o t h a r e m o r e th a n 6 0 0 m il li o n … ( in t e r v e n ti o n ) .
ADV MAHLAPE SELLO: 647 and 618.
M R T H O B A N I T R E V O R M N YA N D U : Ye s .
CHAIRPERSON: So – or is it just under 1.3?
M R T H O B A N I T R E V O R M N YA N D U :

I t’s j u s t u n d e r 1 . 3 .

C H A I R P E R S O N : J a , o k a y a lr i g h t , f o r t h e r e l o c a ti o n – f o r t h e s o - c a l le d
r e l o c a ti o n c o s ts .
M R T H O B A N I T R E V O R M N YA N D U : O f b o t h O E M ’s , y e s C h a ir.
20

C H A I R P E R S O N : J a , n o w b e fo r e w e p r o c e e d l e t m e a s k t h is q u e s ti o n .
W h e n y o u l o o k a t b o th m e m o r a n d a , t h e o n e f r o m C N R a n d th e o n e fr o m
B T, t h e y a p p e a r to s a y, l o o k , t h is m o n e y th a t w e a r e a s k i n g y o u to
a p p r o v e h a s a lr e a d y b e e n – o r f a lls u n d e r c o n ti n g e n c ie s , c o n t i n g e n c ie s
t h a t h a v e a lr e a d y b e e n a p p r o v e d , s o i t’s r e a l ly n o t a p r o b le m , y o u
k n o w, ju s t a p p r o v e , o k a y a n d i t l o o k s lik e , t h e n M r G a m a is s a ti s fi e d

Page 41 of 212

31 MAY 2019 – DAY 103
a n d t h e n a p p r o v e s . S o n o w, s in c e w e k n o w t h a t fr o m t h e m e m o r a n d a
t h a t w a s s e n t t o h i m , b o t h i n r e g a r d t o B T a n d in r e g a r d t o C N R , d i d n o t
r e a l ly i n c l u d e m o ti v a t i o n b y t h e c o m p il e r o f t h e m e m o r a n d a a s t o w h y
t h o s e a m o u n ts w e r e a c c e p t a b l e . Th e q u e s ti o n w o u ld b e , w h e t h e r, w h e n
c o n ti n g e n c ie s

were

approved

there

was

a n y th i n g

that

r e l a te d ,

s p e c i f ic a l ly t o t h e s e s o - c a l l e d – th is s o - c a l l e d r e lo c a t io n o r w h e t h e r
c o n ti n g e n c ie s w e r e s i m p ly a p p r o v e d o n t h e g e n e r a l b a s is , w h a t e v e r
c o n ti n g e n c ie s m a y c o m e u p , t h e y s h o u l d b e ta k e n c a r e o f u n d e r t h is
a m o u n t w e ’v e p u t a s id e fo r f o u r c o m m a s o m e th i n g b i lli o n r a n d a s I
10

r e c a l l . S o i s t h a t s o m e t h in g t h a t y o u r t e a m l o o k e d a t a s t o s e e w h e t h e r
o n e c a n s a y, l o o k t h e a p p r o v a l o f th e c o n t in g e n c i e s , t h e i n f o r m a t io n
t h a t w a s b e f o r e t h o s e w h o a p p r o v e d c o n ti n g e n c ie s w a s s u c h t h a t t h e r e
w a s n o n e e d w h e n t h is r e q u e s t w a s m a d e , t o in t e r r o g a t e t h is is s u e
m o r e b e c a u s e i t h a d a lr e a d y b e e n d e a lt w it h , is t h a t s o m e th i n g y o u
lo o k e d a t ?
M R T H O B A N I T R E V O R M N YA N D U :

C h a ir, I’ d l ik e t o d r a w y o u r

a tt e n ti o n t o t h e f a c t th a t w e ’v e s a i d t h e 2 3 M a y m e m o r a n d u m p r e p a r e d
b y Mr B r i a n M o l e fe , i n s o f a r a s i t r e l a te s t o 4 . 9 b il li o n r a n d f o r
c o n ti n g e n c ie s i t m a k e s m e n ti o n o f t h e u s e o r t h e a ll o c a ti o n o f Tr a n s n e t
20

E n g i n e e r i n g D u r b a n f a c i li ty i n o r d e r t o s t i m u l a t e , a m o n g s t o t h e r
r e a s o n s , th e e c o n o mi c tr a d e o f S o u t h A fr ic a a l o n g th e c o a s t l in e .
H o w e v e r, th e r e i s n o li n e i te m t h a t s p e a k s t o a c e r t a i n n u m b e r th a t th e n
b u d g e t s fo r t h e “r e l o c a ti o n ” .

H o w e v e r, C h a ir e v e n i f th e r e w a s , o u r

v ie w, b a s e d o n t h e f i n d i n g s w e h a v e c o m e t o a n d w h a t o n e w o u l d
e x p e c t fr o m s ta n d a r d c o n tr a c t m a n a g e m e n t p r o t o c o l , e v e n i f i t w a s , t h a t

Page 42 of 212

31 MAY 2019 – DAY 103
a n e x a c t a m o u n t o f 1 .5 b i ll i o n r a n d h a d b e e n s e t a s id e , t h a t w o u ld n o t
e x c u s e Tr a n s n e t a n d it s o ff ic ia ls fr o m r e v i e w i n g , c r i ti q u i n g a n d s e e k i n g
a j u s t if ic a ti o n f r o m e a c h o f t h e O E M ’s f o r t h e c o s ts . O n e c e r ta in ly d o e s
n o t w o r k f r o m t h e p r e m is e th a t t h e r e is 2 b il li o n r a n d i n t h e k i t ty a n d
t h e r e f o r e i f o n e c la i m s a b i lli o n , w h ic h is 5 0 p e r c e n t o f t h a t I ’ m g o in g t o
b e c o m f o r t a b l e w i th i t . I t ’s s o m e t h i n g t h a t w e c o n s i d e r e d a n d w e c a m e
t o t h a t c o n c lu s i o n C h a ir.
CHAIRPERSON:

O n e w o u l d r e a lly e x p e c t t h e m t o in t e r r o g a t e th e s e

is s u e s b u t I’ m j u s t tr y i n g to s e e w h a t k i n d o f p o s s i b l e ju s t i fic a t io n t h e y
10

m i g h t h a v e b e c a u s e i t’s a l o t o f m o n e y a n d y o u e x p e c t t h a t th e y – a n y
m e m o r a n d a th a t s e e k s to s a y s u c h b i g a m o u n t s m u s t b e a p p r o v e d
w o u ld d e a l w it h w h y i t ’s a c c e p ta b l e t o p a y in t h e fir s t p l a c e a n d w h y i t’s
a c c e p ta b l e t o p a y t h e p a r ti c u l a r a m o u n t in t h e s e c o n d p la c e , h o w i s
t h a t a m o u n t m a d e u p , w h a t a r e th e i t e m s , y o u k n o w, a n d th a t ’s l a c k i n g
in b o t h m e m o r a n d a , s o – ja , o k a y.
ADV MAHLAPE SELLO:

T h a n k y o u C h a i r.

I t is , a s t h e C h a ir s ta t e s ,

a n d th e r e a s o n s p e r h a p s m ig h t b e a d v a n c e d a t a fu t u r e d a te w h e n t h e
C h a ir h a s t h e o p p o r t u n i ty t o t a l k to s o m e o f th e d r a f te r s a n d a p p r o v e r s
o f t h e s e m e m o r a n d a ’s .
20

C H A I R P E R S O N : Ye s , y e s – n o w e ’l l h a v e t o h e a r fr o m t h e m i t ’s a l o t o f
m o n e y a n d a s Mr M n y a n d u s a y s y o u d o n ’ t e x p e c t p e o p le t o s a y, l o o k
t h e r e i s b u d g e t fo r i t s o w e c a n ju s t p a y.
ADV MAHLAPE SELLO: Indeed.
C H A I R P E R S O N : J a o k a y.
ADV MAHLAPE SELLO:

Yo u a r e n o w tu r n in g y o u r a t t e n t i o n M r

Page 43 of 212

31 MAY 2019 – DAY 103
M n y a n d u t o t h e i n v o l v e m e n t o r n o n i n v o lv e m e n t o f T I A .
M R T H O B A N I T R E V O R M N YA N D U :

In d e e d C h a ir, C h a ir ju s t a s a n

o v e r v ie w w e c o v e r t h is in o u r r e p o r t , t h e Tr a n s n e t P r o c u r e m e n t
P r o c e d u r e s M a n u a l w h ic h w a s a p p l ic a b le a t t h is ti m e o f v o l u m e 3 2 0 1 5
r e q u ir e s t h a t f o r a n y c o n tr a c t n e g o t ia t io n o r v a r i a t i o n , t h a t e x c e e d s
5 0 m i ll io n r a n d a s a n e s ti m a t e m u s t i n v o lv e t h e h ig h v a l u e t e n d e r t e a m
w h ic h is Tr a n s n e t In t e r n a l A u d i t w h o m u s t u n d e r ta k e th r o u g h e a c h a n d
e v e r y s t a g e o f s u c h n e g o ti a ti o n , w h a t a r e c a l l e d , g a t e w a y r e v ie w s . Yo u
w i ll r e c a ll C h a ir t h a t w h e n w e t o o k t h e C h a ir t h r o u g h t h e tr a n s c r i p t o f
10

t h e m e e t in g h e l d – r a t h e r t h e m e e t i n g s h e ld w i th e a c h o f t h e O E M ’s o n
1 9 J u n e 2 0 1 5 t h e r e w a s a r e p r e s e n t a tiv e fr o m th e h i g h v a lu e te n d e r
t e a m o r t h e Tr a n s n e t In t e r n a l A u d i t te a m . C h a ir w e ’v e g o t a r e p o r t fr o m
Tr a n s n e t I n t e r n a l A u d it d a t e d 7 J u n e 2 0 1 7 , i t is fo u n d i n v o lu m e 1 3 o f
p a g e r a t h e r a t p a g e 9 1 4 7 , i t ’s n o t n e c e s s a r y to t a k e t h e C h a ir th r o u g h
t h e r e p o r t b e c a u s e i n th e s l id e w e h i g h li g h t t h e s a l i e n t p a r ts .

Th e y

c o n fir m t h a t th e y a t t e n d e d t h e i n i t ia l m e e t in g h e l d - o r r a th e r m e e ti n g s
h e l d w i th e a c h o f t h e O E M ’s o n 1 9 J u n e 2 0 1 5 . T h e r e p o r t s p e c i f ic a ll y
r e c o r d s th a t th e l e a d o f th e n e g o t i a t i o n s M r A n o j S i n g h w a s th e G r o u p
C h i e f F i n a n c i a l O ff ic e r a t t h e ti m e , r e q u e s t e d t h a t th e b i d d e r s s u b m it
20

r e v is e d p r o p o s a ls t h a t w o u ld e x p l a i n t h e ir o ffe r s in m o r e d e t a i l a n d t h e
r e p o r t a ls o c o n fir m s t h a t a f o ll o w - u p m e e t i n g w a s t h e n s c h e d u l e d f o r 2 3
J u n e 2 0 1 5 f o r f u r th e r n e g o ti a ti o n s .

T h e r e p o r t a ls o th e n r e c a ll s t h a t

u n f o r t u n a t e ly Tr a n s n e t In t e r n a l A u d i t w a s n o t i n v i te d t o s u b s e q u e n t
m e e ti n g s
c o n ti n u e d .

where

the

n e g o ti a ti o n s

for

the

r e lo c a t io n

c o s ts

th e n

T h e r e p o r t a l s o m a k e s m e n t io n o f th e fa c t t h a t a

Page 44 of 212

31 MAY 2019 – DAY 103
r e p r e s e n t a tiv e o f Tr a n s n e t I n t e r n a l A u d i t M s E m m a M o l e ts a n e w a s
c o p i e d i n t h e e m a il c o r r e s p o n d e n c e o f M r G a r y P i t a o n 1 0 J u ly 2 0 1 5 , i n
w h ic h , a s w e ’v e t a k e n t h e C h a i r t h r o u g h t h i s m o r n in g , t h e r e w a s a
r e q u e s t th a t Tr a n s n e t I n te r n a l A u d i t s ig n o ff o n t h e – t o u s e th e w o r d
lo o s e l y, t h e p r u d e n c y o f t h e c o s t s o f r e l o c a ti o n , h a v i n g c o n fi r m e d t h a t
t h e n e c e s s a r y g a t e w a y r e v i e w s w e r e u n d e r ta k e n . A s w e ’v e ta k e n t h e
C h a ir th r o u g h i t , i t is m a d e m e n ti o n o f i n t h e r e p o r t th a t , t h a t r e q u e s t
f o r a s i g n a t u r e – a r e v i e w n e v e r c a m e t h r o u g h t o Tr a n s n e t In t e r n a l
A u d i t a n d t h e r e fo r e th e r e p o r t c o n c l u d e s b y s a y i n g t h a t, u n f o r t u n a t e l y
10

t h e Tr a n s n e t I n t e r n a l A u d i t te a m i s n o t a b l e to c o n f ir m t h a t, i n d e e d , t h e
p r o c e s s f o l lo w e d w a s i n a c c o r d a n c e w i t h w h a t is r e q u i r e d b y t h e
P r o c u r e m e n t Pr o c e d u r e s M a n u a l .
ADV MAHLAPE SELLO:

A n d I s e e a t p a g e 9 1 4 7 , w h ic h is t h e a c t u a l

r e p o r t , i t i s a d d r e s s e d t o M r S iy a b o n g a G a m a , th e G r o u p C h ie f
E x e c u t iv e .
M R T H O B A N I T R E V O R M N YA N D U :
ADV MAHLAPE SELLO:

In d e e d C h a ir.

S o i t ’s a r e p o r t b y I n t e r n a l A u d i t f o r M r

S iy a b o n g a G a m a d a te d J u n e 2 0 1 7 .

A t p a g e 9 1 5 2 , w h ic h i s th e

s ig n a tu r e p a g e o f t h a t d o c u m e n t , I s e e M r S iy a b o n g a G a m a h a s s i g n e d
20

it w h ic h m e a n s h e b e c a m e a w a r e o f h is c o n te n ts .
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
ADV

M A H LA P E

in v o lv e m e n t

in

SELLO:
t h is

Understanding

e n ti r e

t r a n s a c t io n

then
was

that TIA –
minimal

to

TI A’s
none?

U n d e r s t a n d in g fr o m t h is r e p o r t , t h a t t h e r e is n o c o n f ir m a ti o n th a t w h a t
y o u c a ll g a t e w a y r e v i e w s w e r e c o n d u c t e d a t a l l r e l e v a n t p o in t s o r

Page 45 of 212

31 MAY 2019 – DAY 103
ju n c ti o n s .
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
ADV MAHLAPE SELLO:

D o y o u k n o w w h a t Mr G a m a ’s r e s p o n s e o r

r e a c ti o n t o th is r e p o r t w a s ?
M R T H O B A N I T R E V O R M N YA N D U :

C h a ir i t i s a c t u a l ly a t p a g e 9 1 5 2 ,

a p a r t fr o m n o ti n g i t, a n d i t is d a t e d t h a t h e n o te d i t o n 8 J u n e 2 0 1 7 , h e
h a s s c r i b b l e d a n o te a n d I’ d l ik e t o r e a d it i n t o t h e r e c o r d fo r t h e
C h a ir ’s b e n e fi t .
“ in a l e tt e r t o a c t i n g G r o u p C h i e f E x e c u tiv e o n 2 3 J u ly
10

r e fe r e n c e is m a d e t o th e e ff e c t th a t t h e h i g h v a l u e te n d e r
r e p o r t is b e in g f i n a lis e d . I w o u l d li k e th a t t h e E d g e V T r e p o r t
is p r o d u c e d . F u r th e r a ll i n f o r m a ti o n r e q u ir e d fo r s a m e m u s t b e
m a d e a v a il a b l e t o th e C A E ” ,
w h ic h is fo r C h i e f A u d i t Ex e c u ti v e , th e C h a ir w i ll s e e th a t n e x t
t o M r S iy a b o n g a ’s s ig n a tu r e i s th e n a m e M s M m a t h a b o S u k a ti w h o w a s
t h e C h i e f A u d i t E x e c u t iv e a n d s h e h a s s i g n e d . C h a ir t h e le t t e r t h a t M r
G a m a r e f e r s t o i n t h i s r e g a r d c a n o n ly b e th e t w o m e m o r a n d a th a t w e
r e a d fo r t h e C h a ir, fo r t h e a p p r o v a l o f t h e c o s t s , t h e C h a i r w i ll
r e m e m b e r th a t u n d e r b a c k g r o u n d a n d j u s t b e f o r e m o t iv a t i o n i t n o t e s

20

t h a t T I A , Tr a n s n e t I n t e r n a l A u d i t , w a s p a r t o f t h e n e g o ti a ti o n s a n d th e
fi n a l is i n g th e r e p o r t .
A D V M A H LA P E S E L L O : S o t h e – I s e e n o w w h e r e M r S i y a b o n g a G a m a
h a s s ig n e d i t r e a d s n o w, G r o u p C h i e f E x e c u ti v e , a n d th is is J u n e 2 0 1 7
a n d b y th is ti m e h a d b e e n a p e r m a n e n t a p p o i n t e e t o t h a t .
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.

Page 46 of 212

31 MAY 2019 – DAY 103
ADV MAHLAPE SELLO:

S o w h e n h e s a y s in th e n o te , i n a l e tt e r to

A G C E , t h a t ’s A c ti n g G r o u p C h ie f E x e c u t iv e , w h o is h e t a lk i n g a b o u t ?
M R T H O B A N I T R E V O R M N YA N D U : H e is r e fe r r i n g t o h i m s e l f C h a ir.
ADV MAHLAPE SELLO:

O h h e ’s s p e a k i n g a b o u t h i m s e l f i n t h e th ir d

person?
M R T H O B A N I T R E V O R M N YA N D U :

In t h e t h ir d p e r s o n .

A D V M A H L A P E S E L L O : O k a y b e s id e s t h a t n o t e , d o y o u k n o w w h e t h e r
M r G a m a t o o k a n y p a r ti c u l a r s t e p s in r e g a r d t o t h e p r o c e s s fo ll o w e d
a n d th e c o n c e r n s r a is e d h e r e o r r e c o r d e d i n a n y d o c u m e n t w h a t h e
10

p r o p o s e s b e d o n e a b o u t n o n - c o m p li a n c e , w h ic h I th i n k t h is r e p o r t
c o n s ti t u te s ?
M R T H O B A N I T R E V O R M N YA N D U : N o C h a ir.
C H A I R P E R S O N : S o y o u r in v e s t i g a t io n d i d n o t fi n d a n y th i n g s u g g e s t i n g
t h a t th e h ig h v a l u e t e a m r e p o r t t h a t h e s a i d s h o u l d b e m a d e a v a i la b le
t o C A E , n a m e ly t h e C h ie f A u d i t E x e c u t iv e , y o u fo u n d n o e v i d e n c e t h a t i t
w a s m a d e a v a i la b le t o t h e C h i e f A u d i t Ex e c u ti v e ?
M R T H O B A N I T R E V O R M N YA N D U : W e f o u n d n o r e c o r d C h a ir.
CHAIRPERSON:

Ye s , d i d y o u a s k t h e C h i e f – t h e p a r tic u la r C h i e f o r

d i d th e E x e c u t iv e w h e t h e r s h e – i s i t a s h e ?
20

M R T H O B A N I T R E V O R M N YA N D U : I n d e e d i t is a S h e .
CHAIRPERSON: She ever received it?
M R T H O B A N I T R E V O R M N YA N D U :

Ye s w e d i d a s k b u t i t w a s n e v e r

r e c e i v e d . C h a i r I w o u l d j u s t l ik e t o n o t e a s w e ll t h a t t h e n o te in i ts e l f
a n d t h e r e q u e s t t o u s e th e w o r d u s e d b y t h e C h a i r y e s te r d a y is s t r a n g e .
I t is s tr a n g e fo r t h e r e a s o n t h a t t h e r e p o r t fr o m Tr a n s n e t I n t e r n a l A u d i t

Page 47 of 212

31 MAY 2019 – DAY 103
r e c o r d s t h a t i n l i g h t o f t h e f a c t t h a t w e h a v e n o t b e e n a b l e to f u lly
p a r t a k e in t h e n e g o t ia t io n s o u t o f , n o t o u r f a u l t , w e a r e u n a b le a s t h e
I n t e r n a l A u d it Te a m to p r o v i d e a s s u r a n c e t h a t t h e p r o c e s s w a s fo ll o w e d
o u t i n a c c o r d a n c e w i th t h e s p ir i t a n d p u r p o r t o f w h a t ’s c o n ta i n e d in t h e
p r o c u r e m e n t p o li c y m a n u a l.
CHAIRPERSON:

O k a y w h e n a n d w h e r e d o t h e y s a y t h a t , is t h a t

something we have just dealt with or is it one of the things we didn’t
r e a d in r e l a t i o n t o th is le t t e r t o t h e d a t e o f th is s i g n a t u r e b y Mr G a m a ,
when was this, when they said this?
10

M R T H O B A N I T R E V O R M N YA N D U : C h a ir t h is w a s i n 2 0 1 7 – i t ’s 7 J u n e
2 0 1 7 i t is s o m e t h i n g th a t w e d id n o t r e a d i n to t h e r e c o r d b u t i f t h e
C h a ir is a b l e to , w e ’ d li k e t o t u r n y o u r a t t e n ti o n t o p a g e 9 1 5 1 .
C H A I R P E R S O N : Ye s .
M R T H O B A N I T R E V O R M N YA N D U : C h a i r I w o u l d ju s t li k e t o r e a d th e
conclusion.
C H A I R P E R S O N : Ye s t h i s is j u s t – ju s t – t h is i s a m e m o fr o m Tr a n s n e t
I n t e r n a l A u d i t a d d r e s s e d t o Mr S iy a b o n g a G a m a , G r o u p C h ie f E x e c u t iv e
a n d w h a t d a t e – th e r e ’s n o d a t e g i v e n o n t h e f ir s t p a g e , w h a t d a t e w a s
it … ( in t e r v e n ti o n ) .

20

M R T H O B A N I TR E V O R M N YA N D U : C h a i r t h e f ir s t d a t e – t h e f ir s t p a g e
notes a date at 9148 as 7 June 2017.
C H A I R P E R S O N : 7 J u n e 2 0 1 7 , t h e r e is a s t a m p o n th e r ig h t- h a n d s i d e ,
o n t h e le f t- h a n d s id e i t ’s … ( in t e r v e n ti o n ) .
ADV MAHLAPE SELLO: At 9148?
M R T H O B A N I T R E V O R M N YA N D U : 9 1 4 8 , a p o lo g i e s C h a ir.

Page 48 of 212

31 MAY 2019 – DAY 103
C H A I R P E R S O N : O h s o i t w a s r e c e i v e d b y t h e o ffic e o f t h e G r o u p C h ie f
E x e c u t iv e , w h i c h w o u l d h a v e b e e n M r G a m a a t th a t ti m e .
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
A D V M A H LA P E S E L L O : I t w a s r e c e iv e d o n t h e 7 t h o f J u n e 2 0 1 7 a n d i t
w a s c o m in g fr o m th e i n t e r n a l a u d i t o r, is th a t r i g h t ?
M R T H O B A N I T R E V O R M N YA N D U :
CHAIRPERSON:

In d e e d C h a ir.

O k a y s o n o w w e k n o w t h a t ’s J u n e 2 0 1 7 a n d – th a t ’s

J u n e 7 , s o h e is m a k i n g t h is n o t e t h e f o ll o w i n g d a y ?
M R T H O B A N I T R E V O R M N YA N D U :
10

Ye s C h a ir.

C H A I R P E R S O N : H e m i g h t o r m ig h t n o t h a v e s e e n it y e t , i s n ’ t i t?
M R T H O B A N I T R E V O R M N YA N D U : I b e g y o u r s C h a ir.
CHAIRPERSON:

He might or might not have seen it yet. What do you

s a y, i f it a r r iv e d t h e p r e v io u s d a y i n h is o ffi c e a n d h e s i g n s th e
f o ll o w i n g – h e s i g n s th is m e m o t h e f o ll o w i n g d a y w e d o n ’ t k n o w w h e t h e r
h e h a d – i t h a d r e a c h e d h i m o r a m I m is s in g s o m e th in g ?
M R T H O B A N I T R E V O R M N YA N D U :

C h a ir h e c o m m e n ts o n t h e a c tu a l

memorandum.
C H A I R P E R S O N : O h t h i s is t h e m e m o r a n d u m h e ’s c o m m e n t i n g o n ?
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
20

C H A I R P E R S O N : O k a y i n a l e t t e r t o – o n 2 3 J u ly r e f e r e n c e is m a d e t o
t h e f a c t t h a t t h e H V T r e p o r t is b e i n g fi n a l i s e d , I w o u ld l ik e th a t t h e H V T
r e p o r t is p r o d u c e d , is th is th e H V T r e p o r t?
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
C H A I R P E R S O N : I n h is n o t e t h a t w e ’r e ta lk i n g a b o u t a f t e r – b e l o w h i s
s ig n a tu r e , h e t a lk s a b o u t a l e t te r to h i m s e l f , a s y o u h a v e to l d u s , w h ic h

Page 49 of 212

31 MAY 2019 – DAY 103
is d a t e d 2 3 J u ly, th is i s n o t t h is n o t e a t 9 1 4 8 / 9 1 4 9 h e y ?
M R T H O B A N I T R E V O R M N YA N D U : C h a ir c a n w e ta k e y o u to 9 1 4 8 .
C H A I R E R S O N : Ye s I a m a t 9 1 4 8 .
M R T H O B A N I T R E V O R M N YA N D U : T h e s u b j e c t r e a d s H V T.
CHAIRPERSON:

HVT negotiations for Durban relocation, yes, CNR

c o n s o r ti u m a n d B T, B o m b a r d i e r, y e s f o r y o u r a p p r o v a l/ s i g n a t u r e ,
c o m m e n t s . Yo u m i g h t b e a b l e t o r e a d t h a t b e t t e r, th a t h a n d w r i t in g A D
T h o m a s / G a r y P i t a , k i n d ly e n s u r e th a t a l l i n fo r m a t i o n t h a t w a s r e q u ir e d
f o r t h e H V T r e p o r t is p r o d u c e d o r b e p r o d u c e d – is m a d e a v a i la b le t o
10

t h e C A E i n o r d e r f o r t h e H V T t o fi n a l is e i ts r e p o r t .

S o w h o i s w r i t in g

t h e r e b e c a u s e th a t i s a d d r e s s e d t o Mr G a m a is n ’ t i t ?
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
C H A I R P E R S O N : B u t w h e n y o u g o t o h is n o t e o n p a g e 9 1 5 2 h e s e e ms
to repeat that.
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
CHAIRPERSON:

I s t h a t w h y y o u s a y h e ’s c o m m e n t in g o n i t ?

M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
C H A I R P E R S O N : B u t t h e l e tt e r o f 2 3 J u l y i s s o m e o th e r le t t e r ?
M R T H O B A N I TR E V O R M N YA N D U :
20

C h a ir a s w e ’v e s a i d w e h a v e n ’ t

f o u n d a l e tt e r o f 2 3 J u ly, i t c a n o n ly b e , in o u r d e d u c t io n , t h e t w o
m e m o r a n d a t h a t w e r e p r e p a r e d f o r h i m in r e s p e c t o f B T a n d C N R
r e s p e c ti v e ly f o r h i m t o a p p r o v e th e r e l o c a ti o n c o s ts .

We say so

b e c a u s e i n t h e m e m o r a n d u m , i t is r e c o r d e d t h a t Tr a n s n e t I n te r n a l A u d i t
w a s p a r t o f t h e n e g o ti a ti o n s a n d i s c o m p l e t in g i ts r e p o r t .
C H A I R P E R S O N : O h o k a y, s o – a n d th o s e w e r e s i g n e d o n t h e 2 2 n d w e

Page 50 of 212

31 MAY 2019 – DAY 103
m i g h t ju s t h a v e m a d e a m i s ta k e b y s a y in g 2 3 in s te a d o f 2 2 .
M R T H O B A N I T R E V O R M N YA N D U : Ye s t h e y w e r e c o m p i l e d o n th e 2 2 n d
a n d e v e r y b o d y t h a t s i g n e d a n d r e c o m m e n d e d d i d s o o n th e 2 2 n d , h e
s ig n e d t h e m o ff t h e n e x t d a y o n th e 2 3 r d .
C H A I R P E R S O N : O h h e s i g n e d o n th e 2 3 r d s o t h a t ’s m a y b e t h e r e a s o n
why he used the 23rd.
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
C H A I R P E R S O N : O k a y s o w h a t d o y o u m a k e o f h is – y o u w e r e m a k i n g
a c e r t a i n p o i n t a b o u t is n o te b e lo w h is s i g n a t u r e a t 9 1 5 2 , th a t is w h a t
10

tr i g g e r e d m y q u e s ti o n s , y e s th e r e w a s a p o in t y o u w e r e m a k in g .
M R T H O B A N I T R E V O R M N YA N D U : I n o r d e r to tr y a n d … ( in t e r v e n ti o n ) .
C H A I R P E R S O N : It w a s s tr a n g e th a t h e m a d e th is n o t e .
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
CHAIRPERSON: Ja just repeat that point.
M R TH O B A N I T R E V O R M N YA N D U :

A n d w e w o u l d l ik e to ta k e y o u to

9151.
C H A I R P E R S O N : Ye s .
M R T H O B A N I T R E V O R M N YA N D U :

The request was that we read for

y o u , C h a ir, t h e c o n c l u s io n .
20

C H A I R P E R S O N : Ye s .
M R T H O B A N I T R E V O R M N YA N D U :

Th e r e a r e th r e e p a r a g r a p h s , th e y

r e a d a s f o ll o w s ,
“ T I A w a s n o t i n v i te d fo r s u b s e q u e n t n e g o t i a ti o n m e e ti n g s
w h e r e n e g o ti a ti o n s o n r e l o c a t i o n c o s ts w e r e d is c u s s e d w it h t h e
b i d d e r s i n a t t e n d a n c e a s r e q u ir e d p e r t h e h ig h v a lu e te n d e r

Page 51 of 212

31 MAY 2019 – DAY 103
m e t h o d o l o g y.

P a r a g r a p h 7 , d e s p i t e th e G r o u p C h i e f S u p p ly

C h a in O ff ic e r ’s r e q u e s t f o r Tr a n s n e t I n te r n a l A u d i t t o s ig n o ff
o n t h e m e m o t h a t w a s to b e s e n t t o th e a c t in g G r o u p C h ie f
E x e c u t iv e

for

a p p r o v a l, Tr a n s n e t

In t e r n a l A u d i t w a s

not

p r o v i d e d w i th t h e m e m o o r t h e o u tc o m e o f t h e n e g o ti a ti o n s o r
t h e l e t te r s o f a c c e p t a n c e o f t h e p r o p o s a ls b y t h e a c t in g G r o u p
C h i e f E x e c u tiv e . Fi n a ll y, p a r a g r a p h 8 r e c o r d s , b a s e d o n
Tr a n s n e t I n t e r n a l A u d it s li m i t e d i n v o lv e m e n t i n t h e p r o c e s s
in d i c a t e d a b o v e , a fo r m a l r e p o r t to i n d ic a te a d e q u a c y a n d / o r
e ffe c tiv e n e s s

10

of

th e

process

u n d e r ta k e n

in

th e

Durban

r e l o c a ti o n n e g o t ia t io n s c o u l d n o t b e p r o d u c e d ” .
CHAIRPERSON:

O h n o w I s e e t h e p o i n t y o u a r e m a k in g , y o u w e r e

s a y in g – y o u w e r e s a y i n g h o w c o u l d h e b e t a lk i n g a b o u t t h e p r o d u c t i o n
o f t h a t r e p o r t b e c a u s e h e h a d j u s t b e e n t o ld i n t h a t m e m o t h a t T I A
cannot

–

c o u ld

not

produce

anything

because

of

t h e ir

li m i t e d

in v o lv e m e n t .
M R T H O B A N I T R E V O R M N YA N D U : Ye s 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 MAHLAPE SELLO:
20

S o t h e n f o l lo w i n g o n th a t , w h a t o n e w o u ld

e x p e c t fr o m a G r o u p C h i e f E x e c u t iv e is t o e n g a g e w i t h t h e c o n c lu s i o n s
a n d th e c o n s e q u e n c e s – th e c o n c l u s i o n s d r a w n a t 6 7 8 b y th e i n te r n a l
a u d it a n d t h e n t o a d d r e s s h i ms e lf to th e c o n s e q u e n c e s o f th e e x c l u s io n
o f i n t e r n a l a u d it fr o m t h e p r o c e s s ?
M R T H O B A N I T R E V O R M N YA N D U : O n e w o u l d e x p e c t s o C h a ir.
A D V M A H L A P E S E L L O : I s t h e r e a n y d o c u m e n t a ti o n th a t w o u l d r e fl e c t

Page 52 of 212

31 MAY 2019 – DAY 103
that he did?
M R T H O B A N I T R E V O R M N YA N D U : N o t h e r e i s n ’ t.
ADV MAHLAPE SELLO:

O k a y, a r e y o u a w a r e o f w h e t h e r o r n o t Mr

S iy a b o n g a G a m a e v e r m a d e a n y f o ll o w - u p , e i t h e r o n t h i s r e p o r t o r t h e
n o t e h e m a k e s o n t h e r e p o r t i ts e lf ?
M R T H O B A N I T R E V O R M N YA N D U :

N o C h a ir, w e a r e n o t a w a r e .

A D V M A H LA P E S E L L O : O k a y, i f t h a t ’s a l l y o u i n t e n d e d t o h i g h l i g h t o n
t h e i n te r n a l a u d i t r e p o r t, w e a r e r e a d y t o p r o c e e d b u t I t h i n k t h e C h a i r
m i g h t n o t – m i g h t w a n t t o h a v e – m i g h t h a v e a q u e s ti o n o r t w o o n t h e
10

r e p o r t s t il l .
CHAIRPERSON: No we can continue.
ADV MAHLAPE SELLO: Thank you.
M R T H O B A N I T R E V O R M N YA N D U :

T h a n k y o u C h a ir.

C h a ir p r i o r t o

t a k i n g y o u t h r o u g h s l id e 3 2 I ’d lik e t o g i v e y o u c o n t e x t a s t o h o w i t
c a m e a b o u t th a t w e in s t r u c t e d t h e p e o p l e t h a t w e i n s tr u c t e d o n b e h a l f
o f Tr a n s n e t t o c o n d u c t a n a s s e s s m e n t o f t h e r e lo c a t io n c o s ts a n d t h e
n e g o ti a ti o n s . H a v in g f o r m e d a p r i m a fa c i e v i e w o n f a c e v a l u e t h a t t h e
c o s ts o f r e l o c a t io n o f b o t h O E M ’s w e r e e x c e s s iv e w e d e e m e d i t p r u d e n t
t o a c q u ir e t h e s e r v ic e s o f a r a i l l o g i s t ic s c o m p a n y t h a t a ls o i s i n t h e
20

b u s i n e s s o f m a n u fa c tu r i n g lo c o m o t iv e s a n d w o u l d t h e r e f o r e h a v e th e
n e c e s s a r y k n o w le d g e o n h o w m u c h i t w o u l d c o s t t o s e t - u p p r o d u c ti o n
li n e s in th e c o a s t . W e t h e n i n s tr u c t e d L o li w e R a il S o l u ti o n s , a t e a m l e d
b y M r K e v in M c G il l o f th e c o m p a n y t o c o n d u c t a n a s s e s s m e n t f o r u s
a n d p r o v i d e a r e p o r t o n t h e f i n a l p r o p o s a ls a c c e p t e d b y Tr a n s n e t i n
r e s p e c t o f t h e r e l o c a ti o n c o s ts . C h a ir th i s is t o b e f o u n d i n v o lu m e 1 3

Page 53 of 212

31 MAY 2019 – DAY 103
o n p a g e 9 4 4 6 , w h a t w e h a v e t r i e d t o d o f o r t h e C h a i r i n s l id e 3 2 i s t o
s u m m a r i s e t h e s a l i e n t fi n d i n g s m a d e b y L o li w e R a i l S o l u ti o n s a s a n
in d e p e n d e n t e x p e r t a s i t w e r e w h i c h s u p p o r t s h e p r i m a f a c i e v i e w o r
v ie w s t h a t w e h e ld i n r e l a ti o n t o t h e r e l o c a ti o n c o s ts a p p r o v e d a n d
a c c e p te d b y Tr a n s n e t a n d b a s i c a ll y C h a ir L o li w e R a il S o l u t i o n s , i n t h e ir
r e p o r t c o m e t o th e fo ll o w i n g c o n c l u s i o n s . T h a t t h e r e w a s n o r e l o c a ti o n
o f e i th e r O E M , t h a t t h e v a r i a t i o n o r d e r s w e r e in f l a t e d i n te n ti o n a ll y b y
t h e O E M ’s a n d i n a d e q u a t e ly e v a l u a t e d b y Tr a n s n e t p r io r to th e
c o n c l u s i o n a n d a p p r o v a l o f th e a m e n d m e n t o f t h e c o n tr a c ts .
10

That

t h e r e ’s n o j u s ti fi c a t io n f o r e i th e r t h e d ir e c t o r th e i n d ir e c t c o s t s
p r e s e n t e d b y B T a n d C N R . T h a t i t w a s i m p r o p e r f o r Tr a n s n e t t o h a v e
a g r e e d t o l u m p s u m s fo r t h e r e lo c a t io n .
T h e C h a ir w i ll r e c a ll t h a t w h e n w e t o o k y o u t h r o u g h t h e
memorandum of – in respect of CNR there was a request that CNR be
p a i d a n u p fr o n t p a y m e n t 3 2 3 m il li o n r a n d w h ic h is 5 0 p e r c e n t o f w h a t
h a d b e e n a g r e e d t o . T h a t t h e a p p r o v a l o f th e d ir e c t a n d i n d ir e c t c o s ts
was

done

without

th e

p r e s e n t a ti o n

of

valid

and

s u b s ta n ti a t e d

d o c u m e n t a ti o n a n d fi n a l ly, t h a t t h e p r o c e s s f o ll o w e d in th e a p p r o v a l o f
t h e r e l o c a ti o n c o s ts w a s n o t i n a c c o r d a n c e w i th t h e s t a n d a r d c o n t r a c t
20

m a n a g e m e n t p r o t o c o l.

J u s t o n th e la s t p o i n t C h a ir, w e ’ d j u s t li k e t o

d r a w y o u r a t t e n t i o n t o t h e f a c t t h a t w h e n r e fe r e n c e is m a d e to s t a n d a r d
c o n tr a c t m a n a g e m e n t p r o t o c o l i t i s n o t a d r a f t e d s t a n d a r d b y a n y b o d y
w h o a p p r o v e d a n d g a z e tt e d b y a n y b o d y b u t i t s p e a k s t o th e n o r m i n th e
in d u s tr y o f m a n u fa c t u r in g , c o n s tr u c ti o n a n d

engineering and what it

a c t u a ll y p o i n ts o u t i s t o th e fa c t t h a t i f t h e r e is to b e a v a r i a ti o n t h a t

Page 54 of 212

31 MAY 2019 – DAY 103
t h e p a r ti e s a c c e p t is g o i n g t o i n c r e a s e in c o s t b e c a u s e i n c e r t a i n
in s t a n c e s w h a t o n ly i n c r e a s e s , is t h e d u r a t io n o f a c o n tr a c t o r a
project.

I f t h e r e i s t o b e a n i n c r e a s e i n c o s t t h e n th e r e i s a n a g r e e d

a m o u n t t h a t is r e a c h e d o r r a th e r r e d u c e d t o w r i t in g a n d p e o p l e o r
c o n tr a c to r s a li k e t h e n c l a i m o n p r o v e n c o s t , to s a y, t h i s is h o w m u c h w e
a g r e e d u p o n , t h is i s n o w w h a t I’ v e p r o d u c e d , h e r e a r e t h e i n v o ic e s
r e l a t e d t o th e p a r tic u l a r c l a i m a n d th e r e f o r e y o u n e e d t o p a y m e t h is
c e r t a i n a m o u n t . C h a ir a r i s i n g fr o m o u r p r i m a f a c i e v ie w a s w e ll a s t h e
fi n d i n g s o f L o li w e R a i l S o l u t i o n s w e t h e n t a k e y o u th r o u g h o u r fi n d i n g s
10

w h ic h is t h e c o n c l u s io n o f th e p r e s e n t a ti o n a n d n o t e t o y o u o u r
r e c o m m e n d a ti o n s t o Tr a n s n e t .
CHAIRPERSON:

W e l l y o u h a v e s a id s o m e t h i n g a b o u t in v o ic e s a n d I

w a s s t il l t o a s k w h e t h e r a p a r t fr o m th e f a c t th a t t h e t w o e n t it i e s g a v e
t h e ir q u o t a t i o n s a n d t h e r e w a s – th e r e w e r e t e r m s o f p a y m e n ts t h a t
t h e y p u t f o r w a r d w h ic h Tr a n s n e t a g r e e d t o p a y m e n t u lt i m a t e ly w h e n i t
w a s d o n e w a s it d o n e o n t h e b a s is o f a n y i n v o ic e s a n d s u p p o r ti n g
d o c u m e n ts a n d s o o n ? H e r e I h a v e i n m i n d t h a t i f y o u h a v e h a d t o b u y
s o m e m a t e r ia l w h ic h a r e f o r t h i s s o c a l l e d r e l o c a ti o n y o u c a n p r o d u c e
what you have spent on them?
20

M R T H O B A N I TR E V O R M N YA N D U : C h a ir w i th o u t s p e a k i n g o u t o f t u r n
b e c a u s e w e h a v e b e e n a d v i s e d b y th e e v i d e n c e le a d e r s .
CHAIRPERSON: Ja.
M R T H O B A N I T R E V O R M N YA N D U : T h a t a w i t n e s s fr o m Tr a n s n e t
CHAIRPERSON: Ja.
M R T H O B A N I T R E V O R M N YA N D U :

W i ll c o m e a n d t e s ti fy a s t o t h e

Page 55 of 212

31 MAY 2019 – DAY 103
payments done.
C H A I R P E R S O N : Ye s .
M R T H O B A N I T R E V O R M N YA N D U : W e c a n c o n f ir m
CHAIRPERSON: Hm.
M R T H O B A N I T R E V O R M N YA N D U :

T h a t i n s o fa r a s fir s tly C N R is

concerned.
CHAIRPERSON: Hm.
M R T H O B A N I T R E V O R M N YA N D U :

A n i n v o ic e w a s d r a w n f o r a n

a m o u n t – d r a w n u p fo r a n a m o u n t o f R 3 6 8 m ill i o n t h is is i n c l u s i v e o f
10

tax.
CHAIRPERSON: Hm.
M R T H O B A N I T R E V O R M N YA N D U :
s u b s e q u e n t ly p a i d .

At 14% at the time and it was

T h e d e t a i ls i n r e l a ti o n t o p a y m e n t w i ll b e a s w e

say…
CHAIRPERSON: Ja.
M R T H O B A N I T R E V O R M N YA N D U :

E x p a n d e d u p o n b y a d i ff e r e n t

witness.
C H A I R P E R S O N : O k a y n o th a t i s f in e .
M R T H O B A N I T R E V O R M N YA N D U : I n s o fa r a s B T is c o n c e r n e d .
20

CHAIRPERSON: Hm.
M R T H O B A N I T R E V O R M N YA N D U : W e c a n c o n f ir m t h a t a s a t t h e d a te
o n w h ic h Tr a n s n e t to o k t h e d e c i s i o n t o s to p m a k i n g p a y m e n t s i n
r e l a ti o n t o th e t w o v a r i a ti o n o r d e r s a n a m o u n t o f R 2 4 8 7 1 0 0 0 0 , 0 0 h a d
a lr e a d y b e e n p a i d i n r e s p e c t o f i ts r e l o c a ti o n c o s t s .
CHAIRPERSON: Hm. Okay thank you.

Page 56 of 212

31 MAY 2019 – DAY 103
A D V M A H L A P E S E L L O : Th a n k y o u . T h a t th e n l e a d s y o u to M N S o w n
fi n d i n g s .
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
ADV MAHLAPE SELLO: May you proceed?
M R T H O B A N I T R E V O R M N YA N D U :

C h a ir t h e fi r s t a n d th e m o s t

o b v i o u s f i n d in g th a t w e h a v e m a d e i s t h a t t h e r e l o c a ti o n c o s ts w e r e
e x c e s s iv e . I w o u l d j u s t l ik e t o a d d t o th a t C h a ir t h a t i t s e e ms Tr a n s n e t
c o m m u n ic a te d to b o th O E M ’s th a t th e y w o u l d b e l o c a te d a t a d i ff e r e n t
f a c i li ty a s o p p o s e d t o t h e K o e d o e s p o o r t t h a t h a d i n i ti a lly b e e n
10

p r o p o s e d o r s p o k e n o f . It i s n o t c le a r a s t o w h y Tr a n s n e t th e n c h o s e t o
lo c k i ts e l f i n t o a g r e e m e n ts t h a t w o u l d n e c e s s it a t e t h e e x e c u ti o n o f
v a r ia t io n o r d e r s . A s I s a y C h a i r i t is n o t c l e a r a n d w e h a v e n o t b e e n
a b l e t o fi n d t h e r e a s o n f o r t h i s b u t i t w a s c e r ta i n ly n o t p r u d e n t t o
c o n c l u d e t h e a g r e e m e n ts o n t h e b a s is o f o n e a s p e c t th a t i s c l e a r l y n o t
g o i n g t o b e b e n e f ic ia l f o r Tr a n s n e t .

C h a ir i n s o f a r a s t h e a p p r o v a l o f

t h e r e l o c a ti o n c o s ts a r e c o n c e r n e d w e h a v e f o u n d t h a t t h e f o r m e r
G r o u p C h i e f E x e c u t iv e a t t h e t i m e M r S i y a b o n g a G a m a b r e a c h e d t h e
p r o v i s i o n s o f S e c t io n 7 6 [ 3 ] o f th e C o m p a n y ’s A c t i n s o fa r a s h e w a s
r e q u ir e d t o e x e r c is e f id u c i a r y d u t ie s a n d t o t a k e p a r ti c u l a r c a r e a n d b e
20

d i li g e n t in s o f a r a s t h e e x e c u ti o n o f h i s d u ti e s a r e c o n c e r n e d i n th a t h e
a u t h o r i s e d t h e e x p e n d i tu r e o f R 1 . 2 – a n a g g r e g a t e a m o u n t o f R 1 . 2
b i ll io n w i th o u t s a ti s fy i n g h i ms e lf a s t o t h e c o s t a n a ly s is th a t h a d b e e n
d o n e b y h is t e a m t h a t n e g o ti a te d o n b e h a l f o f Tr a n s n e t o r a th ir d p a r ty
t h a t w o u l d h a v e b e e n a p p o i n te d b y Tr a n s n e t.

C h a ir th is w o u l d h a v e

b e e n r e a s o n a b ly e x p e c t e d o f a G r o u p C h i e f Ex e c u ti v e , a p e r s o n in h is

Page 57 of 212

31 MAY 2019 – DAY 103
p o s i ti o n w h o h a d b e e n w i th Tr a n s n e t a t t h e ti m e fo r w e ll o v e r fi f t e e n
y e a r s . H a d s e r v e d n o t o n ly a s t h e G r o u p C h i e f E x e c u t iv e b u t h a d t h e
k n o w l e d g e a n d e x p e r ti s e e x p e r i e n c e o f b e i n g th e C h i e f E x e c u t iv e o f t h e
p a r t ic u l a r o p e r a ti n g d iv is i o n t h a t w a s m a k i n g th e a c q u is i t io n i n t h is
r e g a r d . W e h a v e f o u n d C h a ir a s a r e s u l t t h a t a p o r t io n o f t h e a m o u n t
w h ic h u n f o r t u n a t e ly c a n n o t b e q u a n t i fi e d a n d i t c a n n o t b e q u a n ti f ie d fo r
a r e a s o n I w i ll e x p l a i n a m o u n t s t o fr u i t le s s a n d w a s t e f u l e x p e n d i t u r e .
B e c a u s e C h a ir y o u r a is e d a q u e s ti o n e a r l i e r o n a n d y o u r e q u e s t e d t h a t
I d e a l w i t h i t b e f o r e c o n c l u d in g t h e e v id e n c e .
10

I t is a c c e p t e d t h a t t h e

tender proposals were based on one understanding.

It could be

a c c e p te d b y t w o p a r ti e s – t h e r e is n o e n ti tl e m e n t – b u t i t c o u l d b e
a c c e p te d b y t w o p a r ti e s c o n tr a c ti n g a t a r m s - l e n g t h t h a t a s s o o n a s y o u
c h a n g e s o m e t h i n g a s s ig n i fic a n t a s m y l o c a ti o n t h e n m y p r ic e m i g h t
c h a n g e . A s I s a y C h a ir i f i t h a s n o t b e e n p r o v i d e d fo r i n t h e c o n tr a c t
t h a t w e h a v e s i g n e d t h e n i t m u s t b e d e a l t w i t h b y w a y o f a v a r i a ti o n
o r d e r.

I t h a v i n g b e e n a c c e p te d it w o u ld t h e n h a v e t o h a v e b e e n

q u a n ti fi e d p r o p e r ly. I n th is c a s e w e f o u n d t h a t it w a s n o t .

When one

r e a c h e s th e c o n c l u s i o n t h a t t h e r e l o c a ti o n c o s t s w e r e u n ju s t i fi a b l e a n d
t h e r e f o r e e x c e s s iv e t h e r e is t h e i n c u r r e n c e b y Tr a n s n e t o f fr u i t le s s a n d
20

w a s te f u l e x p e n d i tu r e w h ic h i s c o n te m p l a t e d b y S e c ti o n 1 o f T h e P u b li c
Fi n a n c e M a n a g e m e n t Ac t .

C h a ir w e h a v e a ls o f o u n d t h a t t h e c r i t ic a l

a s p e c ts o f th e a d v ic e t h a t h a d b e e n g iv e n b y P W C d u r i n g th e b e g i n n i n g
o f 2 0 1 4 w a s n o t c a r r ie d th r o u g h . Yo u w i ll r e c a l l C h a ir …
C H A I R P E R S O N : M a y b e i t m i g h t b e c o n v e n i e n t t h a t I a s k y o u q u e s ti o n s
in r e l a ti o n t o w h a t w e h a v e j u s t d e a l t w i t h b e f o r e y o u p r o c e e d .

Page 58 of 212

31 MAY 2019 – DAY 103
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
C H A I R P E R S O N : S o i n r e la t io n t o th is – th e u s e o f r e lo c a t io n fr o m w h a t
y o u a r e s a y i n g it w o u l d s e e m t o m e a n d I w o u l d l ik e y o u r c o m m e n t i t
w o u ld s e e m t o m e t h a t a r e l o c a t i o n m a y h a v e b e e n j u s t a w r o n g t e r m t o
u s e b u t t h e r e w o u ld b e le g it i m a c y to a n y e x tr a c o s ts t h a t m a y h a v e t o
b e d i s c u s s e d a n d n e g o ti a t e d t h a t m a y h a v e h a d t o b e d is c u s s e d a n d
n e g o ti a te d b e t w e e n Tr a n s n e t o n t h e o n e h a n d a n d C N R o n t h e o t h e r
a n d b e t w e e n Tr a n s n e t o n t h e o n e h a n d a n d B T o n t h e o th e r a r is i n g
fr o m th e f a c t t h a t Tr a n s n e t s a i d y o u a r e n o w g o in g t o h a v e t o d o t h is
10

jo b f r o m D u r b a n a n d n o t fr o m G a u t e n g . I t s e e m s t h a t t o t h e e x t e n t t h a t
t h a t w o u ld g i v e r is e t o c e r t a i n c o s ts th e r e w o u l d b e n o t h i n g w r o n g i n
p r i n c i p l e i n th e i d e a t h a t t h e r e w il l b e – t h e r e w o u l d b e a d d i ti o n a l
c o s ts .

W h a t w o u l d r e m a i n is w h e t h e r t h o s e c o s ts a r e r e a s o n a b l e a n d

w h e t h e r p r o c e d u r e s p r o c e s s e s a r e fo ll o w e d t h a t a r e s u p p o s e d t o b e
f o ll o w e d b e f o r e th o s e c o s t s a r e a p p r o v e d a n d p a id . D o e s t h a t a c c o r d
with your understanding?
M R T H O B A N I T R E V O R M N YA N D U : C h a ir I w o u ld li k e t o s a y i n s t e a d o f
a s ta t e m e n t t h a t s a y s th e y w o u l d h a v e b e e n .
CHAIRPERSON: Hm.
20

M R T H O B A N I T R E V O R M N YA N D U :

I w o u l d q u a l i fy it b y s a y i n g th e y

could have been.
C H A I R P E R S O N : Ye s .
M R T H O B A N I T R E V O R M N YA N D U : A n d I s a y t h a t o r r a th e r w e r e a c h e d
t h e c o n c lu s i o n o n t h e b a s is th a t i t c o u l d v e r y w e l l b e
CHAIRPERSON: Ja.

Page 59 of 212

31 MAY 2019 – DAY 103
M R T H O B A N I T R E V O R M N YA N D U :

Th a t w e c o n tr a c t o n t h e b a s is o f

R 5 4 m il li o n p e r lo c o m o t iv e .
CHAIRPERSON: Ja.
M R T H O B A N I T R E V O R M N YA N D U : A n d y o u r b a s e p r ic e a n d e v e r y th i n g
that you have included into the tender proposal or the agreement
reached.
CHAIRPERSON: Hm.
M R T H O B A N I T R E V O R M N YA N D U : Is a c t u a ll y r e d u c e d
CHAIRPERSON: Hm.
10

M R T H O B A N I T R E V O R M N YA N D U : B y y o u r l o c a ti o n .
CHAIRPERSON: Hm.
M R T H O B A N I T R E V O R M N YA N D U : S o i t d o e s n o t …
CHAIRPERSON: No I think we are on the same – on the same page.
W h a t I a m s a y i n g – t a l k i n g t o t h e p r i n c ip le . S o y o u s til l h a v e to j u s ti fy
t h e c o s t b u t in p r i n c i p l e i f th e a g r e e m e n t w a s y o u w il l o p e r a te fr o m
h e r e a n d t h e n la t e r o n t h e r e is a d e c i s i o n t o s a y n o y o u h a v e t o o p e r a t e
fr o m s o m e w h e r e e ls e i f p r i n c i p l e th e r e is n o p r o b le m w i t h t h e r e b e i n g a
d i ff e r e n c e i n p r i c e o r th e r e b e i n g a p o s s i b i li ty o f h i g h e r c o s ts – m o r e
c o s ts – e x tr a c o s ts b u t t h e y m u s t s til l b e j u s ti f ie d .

20

If you are being

moved from Pretoria to Johannesburg the cost might be minimal or
m a y b e t h e r e m ig h t n o t b e a n y. B u t i f y o u a r e b e i n g m o v e d fr o m a p l a c e
t h a t is c l o s e r to o n e th a t i s m u c h f u r th e r t h e r e m a y b e m o r e c o s ts b u t
e a c h i t e m o f c o s t m u s t b e j u s ti f ie d .

I t h i n k th a t – t h a t is w h a t y o u

p r o b a b ly a r e s a y in g a s w e ll ?
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.

Page 60 of 212

31 MAY 2019 – DAY 103
C H A I R P E R S O N : Ye s .
M R T H O B A N I T R E V O R M N YA N D U : C o r r e c t .
C H A I R P E R S O N : Ye s .
M R T H O B A N I T R E V O R M N YA N D U : A g r e e d i n f u ll .
C H A I R P E R S O N : Ye s t h e p r i n c ip l e th a t t h e r e c o u l d b e e x tr a c o s ts h a s
no problem.
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir.
C H A I R P E R S O N : T h e q u e s t i o n is w h e t h e r t h o s e c o s ts i f t h e y d o a r is e
a r e j u s ti f ia b l e .
10

M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
C H A I R P E R S O N : J a o k a y a lr i g h t .
A D V M A H LA P E S E L L O :

A n d t h e n i f I m a y j u s t f o ll o w u p o n t h a t M r

M n y a n d u . B u t i f t h e R F P a n d t h e c o n tr a c t s u b s e q u e n t ly c o n c lu d e d s a y s
y o u – l e t u s s a y th e R F P y o u a r e r e q u ir e d to b id f o r p r o d u c ti o n o f t h e
lo c o m o t iv e s i n K o e d o e s p o o r t o r a n y o t h e r l o c a ti o n in S o u th A fr ic a a n d
r e a d t h a t a s a c o m p l e te t e r m . I f i t r e a d t h a t w a y o n e w o u l d e x p e c t th a t
in c a lc u l a ti n g y o u r c o s ts a s a b i d d e r y o u w o u ld t a k e in t o c o n s i d e r a t i o n
t h a t t h is s i t e fo r p r o d u c ti o n m i g h t n o t n e c e s s a r ily b e K o e d o e s p o o r t a n d
m i g h t b e a n o th e r p o s i ti o n i n S o u t h A fr ic a a n d y o u w i ll h a v e c a te r e d f o r
20

t h a t e v e n t u a l it y. W o u ld t h a t b e a n u n r e a s o n a b le e x p e c ta t io n ?
M R T H O B A N I T R E V O R M N YA N D U : C h a ir I a m g o i n g t o a n s w e r y e s a n d
no.
CHAIRPERSON:

I think I know what your answer should be.

Yo u r

a n s w e r – y o u r a n s w e r h a s to b e w h e n y o u p u t in y o u r b i d fo r t h a t y o u
w i ll s a y w e l l i f it is in K o e d o e s p o o r t t h is i s w h a t th e c o s t w ill b e . Si n c e

Page 61 of 212

31 MAY 2019 – DAY 103
y o u h a v e n o t m e n ti o n e d w h a t o t h e r p l a c e i n S o u th A fr ic a I c a n o n ly
q u o t e o n c e I k n o w w h ic h o t h e r p la c e .
ADV MAHLAPE SELLO:

B u t t h e i s s u e b e i n g t h a t i t is n o t r e a lly a

c h a n g e p e r s e if th e R F P c o n t e m p la t e d t h a t t h e p r o d u c t io n p la c e m i g h t
b e d i ff e r e n t.
C H A I R P E R S O N : N o i t is n o t a c h a n g e o f p l a c e b u t in t e r m s o f c o u r s e i t
m a k e s i t – it m a y m a k e a d i ff e r e n c e .
A D V M A H L A P E S E L L O : I t m a y m a k e a d i ff e r e n c e .
CHAIRPERSON: Ja.
10

A D V M A H LA P E S E L L O : It m a y r e s u l t in a n in c r e a s e i n c o s t o r i t m a y
r e s u l t in a s a v i n g s .
CHAIRPERSON: In a decrease.
A D V M A H L A P E S E L L O : Ye s .
CHAIRPERSON:

J a b u t y o u o n ly k n o w w h e t h e r i t i s a n i n c r e a s e o r a

decrease once you know where?
ADV MAHLAPE SELLO: Indeed.
CHAIRPERSON: Ja, ja.
ADV MAHLAPE SELLO: Then…
M R T H O B A N I T R E V O R M N YA N D U : I n d e e d C h a ir.
20

C H A I R P E R S O N : D id I g u e s s y o u r a n s w e r c o r r e c t ly ?
M R T H O B A N I T R E V O R M N YA N D U : Ye s C h a ir h u n d r e d m a r k s .
C H A I R P E R S O N : O k a y.
ADV MAHLAPE SELLO:

I w il l te s t t h a t a ft e r t h e h e a r in g w h e t h e r h e

d i d g u e s s i t c o r r e c tly C h a ir. Yo u m a y c o n t i n u e M r M n y a n d u .
M R T H O B A N I T R E V O R M N YA N D U : Th a n k y o u C h a ir. A s w e h a v e s a i d

Page 62 of 212

31 MAY 2019 – DAY 103
w e h a v e f o u n d t h a t t h e a d v i c e t h a t w a s o ff e r e d b y P W C w a s n o t c a r r i e d
t h r o u g h in t h e n e g o ti a ti o n s . T h e C h a ir w i l l r e c a ll th a t t h e t w o p o i n ts o f
a d v ic e th a t w e g a v e e v id e n c e i n r e s p e c t o f y e s t e r d a y w e r e t h a t t h e
O E M ’s w e r e t o b e r e q u e s t e d t o j u s t i fy t h e i r c o s t s . A n d t h a t s e c o n d l y i f
t h e c o s ts w e r e g o i n g t o b e p r o h ib i tiv e t h e n Tr a n s n e t w e r e t o s e e k
a l t e r n a t iv e m e a s u r e s w h e r e l o o s e ly u s e d i n t h e r e p o r t o f P W C
a d d it i o n a l c o s t s w o u l d n o t b e i n c u r r e d . A n d w e r e a c h t h is c o n c lu s i o n
h a v i n g r e g a r d e v e n t o t h e f a c t t h a t t h e r e m i g h t h a v e b e e n th o s e
c o n c e r n s t h a t w e r e r a i s e d i n i t ia ll y in p a r t i c u l a r w e d r a w y o u r a t t e n t io n
10

C h a ir a n d t a k e y o u b a c k t o t h e e m a i l c o r r e s p o n d e n c e s s h a r e d b e t w e e n
t h e – a m o n g s t t h e n e g o t ia t io n t e a m m e m b e r s w h e r e M r L a h e r w r i t e s t o
M s L in d i w e M d l e ts h e a n d s a y s : h e r e a r e m y 1 8 a r e a s o f c o n c e r n . S h e
r e s p o n d s t w o d a y s l a te r a n d s h e s a y s :

H e r e i f th e r e v is e d p r o p o s a l .

And then he responds further to say: Well my concerns have not been
a d d r e s s e d s a v e fo r a d i ff e r e n t o ff e r i n r e l a ti o n t o p a y m e n t t e r m s .

So

t h a t e n g a g e m e n t w i t h t h e O E M i n s o fa r a s it d o e s n o t in t h e e n d r e s u l t
in a j u s t if ic a ti o n o f c o s t s m e a n s t h a t t h e r e h a s n o t b e e n a n e x e c u ti o n o f
t h e a d v i c e g i v e n o r i g i n a l ly b y P W C .
CHAIRPERSON:
20

W e ll d id y o u e s t a b l is h w h o a t Tr a n s n e t g o t to k n o w

a b o u t t h e P W C a d v ic e ? D id y o u g e t to k n o w a n u m b e r o f p e o p l e w h o
M R T H O B A N I T R E V O R M N YA N D U : C h a ir …
C H A I R P E R S O N : W h o c a n s a y d id b e c o m e a w a r e o f i t a t o n e s ta g e o r
another?
M R T H O B A N I T R E V O R M N YA N D U :

C h a ir w e c o n f ir m t h a t w e w e r e

a d v is e d b y M r Th a m s a n q a J iy a n i h is tr a n s c r i p t is o n e o f t h e a p p e n d ix e s

Page 63 of 212

31 MAY 2019 – DAY 103
t o o u r r e p o r t o n r e lo c a t io n t h a t t h e t h e n G r o u p C h i e f Fi n a n c i a l O ff ic e r
w a s th e o n e w h o s p e a r h e a d e d o r s o u g h t t h e a c t u a l a d v ic e fr o m P W C
a n d th a t h e c a m e b a c k t o t h e m w i t h a r e p o r t fr o m P W C a n d to l d t h e m
w h a t i t s a id . S o c e r t a in ly t h e n e g o ti a ti o n t e a m p r i o r to t h e c o n c l u s io n
o f t h e c o n tr a c t k n e w o f t h e a d v ic e fr o m P W C .
C H A I R P E R S O N : Ye s . T h a t is g o in g to b e i m p o r t a n t t o ta k e f u r th e r.
A D V M A H L A P E S E L L O : Ye s C h a ir.
C H A I R P E R S O N : O n e t h e p r o o f t h a t t h e y w e r e a w a r e o f i t b u t w e a ls o
n e e d to k n o w w h e t h e r th e G r o u p C h ie f E x e c u t iv e o r Ac t iv i n g G r o u p
10

C h i e f E x e c u ti v e d e p e n d i n g o n w h e n i t w a s b e c a m e a w a r e o f i t a n d t o
the extent that it was not followed what reasons – why it was not
f o ll o w e d .
A D V M A H L A P E S E L L O : Ye s C h a ir.
C H A I R P E R S O N : S o i t is ju s t li k e t h e R 9 m il li o n w e n e e d t o e s ta b lis h
e a c h a n d e v e r y p e r s o n i n t h e h ie r a r c h y
A D V M A H L A P E S E L L O : A b s o lu t e l y C h a ir.
C H A I R P E R S O N : O f Tr a n s n e t .
A D V M A H L A P E S E L L O : A b s o lu t e l y C h a ir.
C H A I R P E R S O N : W h o g o t to k n o w a b o u t i t a n d w h a t t h e y d i d a b o u t i t.

20

ADV MAHLAPE SELLO:

B u t o n e t h i n g w e c a n e s t a b l is h a lr e a d y a n d

b a s e d o n Mr M n y a n d u ’s r e s p o n s e t o th e C h a ir ’s q u e s ti o n i f t h a t w a s –
t h a t r e p o r t w a s – P W C R e p o r t a s c o n tr a c t e d f o r b y M r A n o j S i n g h a n d
t h a t i s t h e G r o u p C h i e f E x e c u t iv e y o u s u g g e s t .
M R T H O B A N I T R E V O R M N YA N D U : G r o u p C h ie f F in a n c ia l O ffic e r.
A D V M A H LA P E S E L L O : G r o u p C h i e f F in a n c i a l O ff ic e r. W e k n o w fr o m

Page 64 of 212

31 MAY 2019 – DAY 103
e v i d e n c e a d d u c e d b y Mr M n y a n d u t h a t M r A n o j S i n g h w a s p a r t o f th e
n e g o ti a ti n g t e a m
C H A I R P E R S O N : H e w a s t h e le a d e r a c t u a l ly.
M R T H O B A N I T R E V O R M N YA N D U : Ye s .
A D V M A H L A P E S E L L O : O f t h e n e g o ti a ti n g t e a m s f o r t h e r e l o c a ti o n .
C H A I R P E R S O N : Ye s .
A D V M A H L A P E S E L L O : S o a lr e a d y o n e c a n – a t le a s t o n e m e m b e r o f
t h a t te a m w a s a w a r e o f t h e r e p o r t [ i n d is ti n c t ] .
C H A I R P E R S O N : A v e r y i m p o r t a n t m e m b e r.
10

A D V M A H L A P E S E L L O : A v e r y i m p o r ta n t m e m b e r o f t h a t t e a m
CHAIRPERSON: What would remain is the GCE.
A D V M A H L A P E S E L L O : A b s o lu t e l y.
C H A I R P E R S O N : A n d th e C h ie f E x e c u t iv e o f t h e R a i l a n d Fr e i g h t .
A D V M A H L A P E S E L L O : Fr e ig h t y e s .
CHAIRPERSON: Ja. Unit yes.
A D V M A H L A P E S E L L O : Ye s w e w ill c l o s e th a t l o o p C h a ir.
CHAIRPERSON: Okay thank you.
M R T H O B A N I T R E V O R M N YA N D U :

T h a n k y o u C h a ir.

C h a ir w e h a v e

f o u n d t h a t t h e r e w a s a b r e a c h o f t h e P P M b y th e e n ti r e n e g o t ia t io n o r
20

n e g o ti a ti n g t e a m o f Tr a n s n e t i n p a r tic u la r Ms L i n d i w e M d l e t s h e h a v i n g
b e e n t h e le a d i n t e r f a c e i n s o fa r a s s h e fa il e d t o d e a l w it h th e c o n c e r n s
t h a t w e r e r a is e d t o th e s a t is fa c ti o n o f h e r c o l l e a g u e s a n d in t h e in t e r e s t
o f Tr a n s n e t .

W e h a v e a ls o f o u n d t h a t t h e c o n c l u d e d a g r e e m e n t o r

r a th e r th e a g r e e m e n t c o n c l u d e d b e tw e e n B E X a n d C N R is a v e r y
s u s p i c i o u s o n e . I t b r i n g s i n to q u e s ti o n a n d t o s h a r p l i g h t t h e q u e s t i o n

Page 65 of 212

31 MAY 2019 – DAY 103
o f f r a u d a n d c o r r u p ti o n w h ic h w e g e t b a c k to w h e n w e r e fe r t o o u r
r e c o m m e n d a ti o n s t o Tr a n s n e t .

W e m a k e t h e p o in t i n s li d e n u m b e r 3 5

t h a t a s a n S C S w h ic h is S u p p ly C h a in S e r v ic e s O ffi c i a l a n d th e l e a d
in t e r fa c e f o r t h e n e g o ti a ti o n s M s M d l e t s h e f a i l e d to a d e q u a t e l y m a k e
u s e o f a n i m p o r ta n t i n t e r n a l s tr u c t u r e e v e n w h e n s h e h a d b e e n
r e q u e s t e d b y t h e G r o u p C h ie f Pr o c u r e m e n t O ffi c e r.
A D V M A H L A P E S E L L O : A n d f o r t h e r e c o r d t h a t s tr u c tu r e is ?
M R T H O B A N I T R E V O R M N YA N D U : T h e Tr a n s n e t In t e r n a l A u d i t.
ADV MAHLAPE SELLO: Thank you.
10

M R T H O B A N I T R E V O R M N YA N D U : T h a n k y o u C h a ir. W e h a v e fo u n d
t h a t a s – w e a lr e a d y b e e n h i g h l ig h t e d t h a t a l l m e m b e r s o f t h e
n e g o ti a ti o n t e a m t h o s e w h o r e c o m m e n d e d t h e c o s ts d i d n o t a c t in
m a n n e r th a t w o u l d h a v e b e e n e x p e c t e d o f s e n i o r o ff ic i a ls w it h in th e
o r g a n i s a t io n o f Tr a n s n e t i n th e i r r e s p e c t iv e p o s i ti o n s .

C h a ir in o u r

r e c o m m e n d a ti o n s a n d a s a fi r s t b a s e p r in c i p l e w h ic h is s o m e t h i n g
r e l a t e d t o a p o in t t h a t t h e C h a ir h a s r a i s e d t h i s m o r n i n g o n in v o ic e s .
W e h a v e r e c o m m e n d e d t o Tr a n s n e t t h a t t h e t w o O E M ’s b e r e q u e s t e d t o
p r o v i d e a s t a te m e n t a n d d e b a s e m e n t o f t h e m o n ie s p a i d i n r e s p e c t o f
r e l o c a ti o n t h u s f a r. W e h a v e a ls o r e c o m m e n d e d th a t Tr a n s n e t c o n s i d e r
20

t h e w h o l e i s s u e o f th e v a r i a ti o n o r d e r s r e la t e d t o r e l o c a ti o n w i th in t h e
c o n te x t o f o u r fi n d i n g s i n Vo lu m e 1 a n d t o e x p a n d o n th a t C h a ir j u s t to
e x p l a i n i n o u r l e g a l a n a ly s is o f th e v a r i a ti o n o r d e r s w e h a v e f o u n d th a t
if t h e c o n tr a c t i ts e l f is u n l a w f u l f o r w a n t o f c o m p l i a n c e w it h a m o n g s t
o th e r t h i n g s S e c ti o n 5 4 o f t h e P u b li c Fi n a n c e M a n a g e m e n t A c t th e n
e v e r y t h i n g t h a t f o l lo w s fr o m i t i s u n l a w fu l . A n d s o i n t h e j u d ic ia l r e v i e w

Page 66 of 212

31 MAY 2019 – DAY 103
a p p lic a ti o n t h a t m u s t n o w e n s u e Tr a n s n e t m u s t s e e k a ju s t a n d
e q u it a b l e r e m e d y t h a t a ls o in c o r p o r a te s t h e c o n s i d e r a ti o n o f t h e
r e l o c a ti o n v a r i a t i o n o r d e r s . A s a m e a s u r e in o r d e r t o li m i t t h e e x p o s u r e
a lr e a d y

s u ffe r e d

by

Tr a n s n e t

thus

fa r

we

have

s p e c i f ic a l ly

r e c o m m e n d e d t o Tr a n s n e t t h a t th e y s t o p m a k in g a l l p a y m e n t s i n
r e l a ti o n t o r e l o c a t i o n . A n d fi n a l ly C h a ir i n r e l a ti o n t o t h e C N R a n d B E X
a g r e e m e n t t h a t I s a i d r a i s e s s h a r p i n te r e s t a n d f o c u s in r e l a ti o n t o
a l le g a ti o n s o f fr a u d a n d c o r r u p t io n w e h a v e r e c o m m e n d e d to Tr a n s n e t
t h a t t h e y c o n s u l t la w e n f o r c e m e n t a g e n c i e s i n o r d e r t o ta k e th e m a tt e r
10

f o r w a r d . A n d t h a t C h a ir b r i n g s u s t o th e e n d o f t h e p r e s e n t a t i o n .
CHAIRPERSON: Thank you very much.
A D V M A H L A P E S E L L O : C h a ir.
C H A I R P E R S O N : Yo u a r e d o n e .
ADV MAHLAPE SELLO:

I a m d o n e C h a ir.

T h a t b r i n g s u s to t h e

c o n c l u s i o n o f Mr M n y a n a d u ’s t e s ti m o n y b e f o r e y o u C h a ir.
C H A I R P E R S O N : Ye s .
ADV

M A H LA P E

SELLO:

Subject

of

course

to

the

f il in g

and

c o n s i d e r a ti o n o f t h e s u p p l e m e n ta r y s t a t e m e n t i n r e s p e c t o f t h e i s s u e s
r a i s e d b y th e C h a ir.
20

C H A I R P E R S O N : Ye s .
ADV MAHLAPE SELLO:

A t th a t ju n c t u r e t h e C h a i r w il l m a k e a

d e t e r m i n a t io n w h e t h e r M s M n y a n d u – Mr M n y a n d u n e e d a p p e a r a n y
f u r th e r.
C H A I R P E R S O N : Ye s .
A D V M A H L A P E S E L L O : T h a n k y o u C h a ir.

Page 67 of 212

31 MAY 2019 – DAY 103
C H A I R P E R S O N : N o t h a t is fi n e . A n d t h e r e is a ls o t h e a ffi d a v i t th a t w e
t a lk e d a b o u t fo r th e w i tn e s s e s w h o c a m e w it h o u t a n a ffi d a v it .

It may

w e ll b e t h a t w h e n o n e ta k e s t h e tr a n s c r i p t o f t h e ir e v i d e n c e a n d o n e
p u t s a n n e x u r e s – I a m n o t s u r e i t m a y w e ll b e t h a t i t m ig h t s e r v e th a t
p u r p o s e I a m n o t s u r e b u t i f – if it i s – i f o n e c o u l d h a v e a n a ff i d a v i t
t h a t b a s i c a ll y r e p e a t s th e e v i d e n c e t h a t th e y h a v e g iv e n b u t n o w p u ts i t
in a ffi d a v i t fo r m w i t h o u t th e i n te r r u p t io n s a n d e v e r y th i n g t h a t m a y b e
very convenient.
A D V M A H L A P E S E L L O : W e w i ll lo o k in t o t h a t C h a ir.
10

C H A I R P E R S O N : J a i f th e r e i s d i ffi c u l ty i n o n e o r a n o th e r a b o u t th a t I
a m o p e n to a n o t h e r o p ti o n t h a t in v o lv e s u s in g th e tr a n s c r i p t .
A D V M A H L A P E S E L L O : Ye s C h a ir.
M R T H O B A N I T R E V O R M N YA N D U :

B u t w h e n y o u t a lk a b o u t M r

Mnyandu and Mr Sedumedi these are lawyers
A D V M A H L A P E S E L L O : Ye s .
CHAIRPERSON:

O n c e th e y h a v e g o t t o t r a n s c r i p t o f t h e ir o w n

e v i d e n c e t h e y c o u l d e v e n p r e p a r e th a t t h e m s e lv e s a n d j u s t b r in g y o u a
d r a f t o f th e i r a ffi d a v i t a n d y o u c a n j u s t h a v e a lo o k b u t i t m u s t b e
something that you know goes in accordance
20

A D V M A H L A P E S E L L O : T h a t h a s g o t v a lu e .
CHAIRPERSON:

W i t h th e e v i d e n c e t h e y h a v e g iv e n .

And as an

a ffi d a v i t i t m ig h t th e n a t t a c h a n n e x u r e s . I f it d o e s n o t a t ta c h a n n e x u r e s
it c o u l d j u s t in d i c a t e th a t th e p a r t ic u l a r a n n e x u r e a p p e a r s i n v o l u m e
w h a t e v e r.
ADV MAHLAPE SELLO: Indeed.

Page 68 of 212

31 MAY 2019 – DAY 103
C H A I R P E R S O N : A t w h a t p a g e th e n it w o u l d b e c o n v e n ie n t . S o a t l e a s t
with regard to them
A D V M A H L A P E S E L L O : I t i s e a s ie r.
C H A I R P E R S O N : Yo u d o n o t h a v e a b ig j o b t o d o .
A D V M A H L A P E S E L L O : C h a ir
C H A I R P E R S O N : Ye s .
ADV MAHLAPE SELLO:

I f I m a y o n th a t w e w i ll g iv e th e a ff id a v i t a

fir s t s h o t w e w ill s e e i f it w o r k s . M i n d f u l o f t h e f a c t t h a t w e d o n o t w a n t
t o m a k e t h e C h a i r ’s r e c o r d u n d u ly v o l u m i n o u s . B u t i f t h e r e is a …
10

C H A I R P E R S O N : W e ll i t is t h e C h a ir th a t p r e fe r s i t th a t w a y.
A D V M A H L A P E S E L L O : T h e r e s u l t m i g h t c o m e w it h m o r e 1 7 v o l u m e s
a n d I a m s u r e th e C h a i r w o u l d n o t a p p r e c i a te th a t . B u t w e w i ll g i v e i t a
s h o t C h a ir a n d i f y o u p e r m i t u s s h o u ld w e r u n in t o d i ffi c u l ti e s o r …
C H A I R P E R S O N : J a – j a i f th e r e a r e d i ff ic u l ti e s y o u …
A D V M A H L A P E S E L L O : S h o u l d i t – if t h e a ff i d a v i ts f a i l t o a d d r e s s t h e
p o i n t t h a t t h e C h a ir
CHAIRPERSON: Ja
A D V M A H LA P E S E L L O :

R a is e s w e s h a l l r e v e r t C h a ir a n d w e w il l

consider other ways.
20

C H A I R P E R S O N : Ye s b u t I th i n k w i th l a w y e r s it is m u c h m o r e e a s i e r.
A D V M A H L A P E S E L L O : I w i ll l e a v e i t to t h e t w o l a w y e r s .
CHAIRPERSON:

B e c a u s e y o u r i n v o l v e m e n t w i ll b e l i m i te d . T h e y c a n

d r a w t h e a ff id a v i ts t h e m s e l v e s . T h e y k n o w w h a t t h e ir e v id e n c e w a s .
T h e y k n o w w h a t d o c u m e n ts t h e y r e f e r r e d t o i n t h e ir e v id e n c e .
ADV MAHLAPE SELLO:

I n d e e d C h a ir I ju s t n e e d t o c h e c k t h a t b o t h

Page 69 of 212

31 MAY 2019 – DAY 103
la w y e r s a r e h e r e .
CHAIRPERSON: They are here.
A D V M A H L A P E S E L L O : Ye s t h e y a r e C h a i r.
C H A I R P E R S O N : A n d th e y b o t h a g r e e .
ADV MAHLAPE SELLO: They both agree.
C H A I R P E R S O N : O k a y t h a n k y o u v e r y m u c h Mr M n y a n d u f o r c o m i n g t o
g iv e y o u r e v i d e n c e to th e e x t e n t th a t t h e r e m i g h t b e – t h e r e w i ll b e
s o m e a s p e c ts t h a t s ti ll n e e d t o b e a d d r e s s e d y o u w il l a d d r e s s t h e m
t o g e th e r w i t h th e M s S e l lo b u t t h a n k y o u v e r y m u c h . Yo u a r e e x c u s e d .
10

M R T H O B A N I T R E V O R M N YA N D U : T h a n k y o u C h a ir.
CHAIRPERSON: Thank you.
A D V M A H L A P E S E L L O : C h a ir w e k n o w w e h a v e e n c r o a c h e d o n t h e te a
b r e a k s o m e w h a t b u t w e a r e d o n e . T h e n e x t w i tn e s s is r e a d y.
CHAIRPERSON: Ja.
ADV MAHLAPE SELLO:

H e w i ll b e l e d b y m y l e a d e r M r – A d v o c a t e

Pretorius.
C H A I R P E R S O N : Ye s .
A D V M A H L A P E S E L L O : I d o n o t k n o w i f h e w o u l d li k e t o a d d r e s s y o u
n o w o r a f t e r te a w h e n h e ta k e s t h e p o d i u m .
20

C H A I R P E R S O N : I t d o e s n o t lo o k lik e h e is k e e n t o a d d r e s s m e n o w.
A D V M A H LA P E S E L L O :

Th e n i t w i ll h a v e t o b e a f t e r f if t e e n m i n u t e s

C h a ir.
C H A I R P E R S O N : S o w e w i ll t a k e t h e te a a d j o u r n m e n t . I t is n o w tw e n ty
fi v e p a s t e le v e n w e w i ll r e s u m e a t t w e n t y t o t w e l v e .
A D V M A H L A P E S E L L O : T h a n k y o u C h a ir.

Page 70 of 212

31 MAY 2019 – DAY 103
CHAIRPERSON: We adjourn.
R E G I S T R A R : Al l r i s e .
INQUIRY ADJOURNS
INQUIRY RESUMES
C H A I R P E R S O N : G o o d m o r n i n g Mr P r e t o r i u s .
A D V PA U L J O S E P H P R E TO R I U S S C : M o r n i n g C h a ir.
C H A I R P E R S O N : H o w a r e y o u fe e l i n g ?
A D V PA U L J O S E P H P R E TO R I U S S C : W e l l a t th e m o m e n t I a m f e e l in g
o k a y b u t i f n e c e s s a r y I w i ll l e t y o u k n o w C h a ir.
10

C H A I R P E R S O N : Ye s . O k a y. N o t h a t is a lr i g h t . O k a y, t h a n k y o u . T h e
fi le s t h a t I h a v e h e r e a r e t h e y n e w f il e s o r w h a t ?
A D V PA U L J O S E P H P R E TO R I U S S C : N o t h o s e a r e o l d f il e s .
CHAIRPERSON: Ja.
A D V PA U L J O S E P H P R E TO R I U S S C :

Yo u c a n s e t t h e m a s i d e .

I am

a b o u t t o h a n d u p a n e w f il e .
C H A I R P E R S O N : O k a y. T h a n k y o u .
A D V PA U L J O S E P H P R E TO R I U S S C :
a u s p ic e s o f M N S A t t o r n e y s c o n ti n u e s .

C h a ir th e e v id e n c e u n d e r t h e
The author of Report 2B is

D r J o n a t h a n B l o o m a n d h e w ill t e s t if y i n r e s p e c t o f t h a t r e p o r t. M a y I
20

h a n d u p h is p r e s e n t a ti o n w h ic h is E X H I B I T B B 8 D .
CHAIRPERSON: Thank you.
A D V PA U L J O S E P H P R E TO R I U S S C :
volume 2B.

It i s b a s e d o n M N S R e p o r t

I u n d e r s t a n d t h a t d u r i n g t h e c o u r s e o f h is e v i d e n c e

D r B lo o m w il l o n a t l e a s t o n e o c c a s io n r e fe r t o t h e r e p o r t .
C H A I R P E R S O N : I a m s o r r y – I a m s o r r y. Yo u j u s t s a i d i t is b a s e d o n

Page 71 of 212

31 MAY 2019 – DAY 103
MNS Report …
A D V PA U L J O S E P H P R E TO R I U S S C : 2 B .
CHAIRPERSON: 2B?
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 : O k a y.
A D V PA U L J O S E P H P R E TO R I U S S C : T h a t r e p o r t is i n t h e f il e s b e h i n d
y o u C h a ir.
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
10

SC:

In

volume

8/17

but

for

convenience I have asked that a further copy of the report be made
w i t h th e s a m e p a g i n a ti o n n u m b e r to s a v e y o u h a v i n g to lo o k b e h i n d
y o u . I f y o u w a n t t h a t I c a n g iv e i t t o y o u o th e r w i s e y o u c a n r e ly o n t h e
one …
CHAIRPERSON:

P le a s e g i v e m e t h a t .

T h a t w ill b e c o n v e n ie n t .

Z o n n e k e ( C h a i r s p e a k in g to R e g is tr a r ) . Ye s .
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 t h e a n n e x u r e s a n d t h e

r e p o r t a r e v o l u m e s 8 , n i n e a n d 1 0 I a m i n f o r m e d b u t y o u w i ll n o t h a v e
to go there.

W h a t y o u h a v e b e f o r e y o u is s u ff ic ie n t f o r p r e s e n t

p u r p o s e s . T h e n C h a i r t h e e v i d e n c e g o e s t o a n e x p l a n a ti o n a n d e x p e r t
20

o p i n i o n o f D r B l o o m - w e w i ll q u a li fy h i m i n d u e c o u r s e – b u t a s a
p r e c a u t io n th e le g a l t e a m t h e e v i d e n c e l e a d e r s i n r e l a t i o n t o D r Bl o o m
r e q u e s t e d t h i s w e e k th a t t h e S e c r e t a r i a t n e v e r th e le s s n o ti f y t h o s e
p e r s o n s m e n t i o n e d o f t h e fa c t t h a t th a t e v id e n c e h a s b e e n g iv e n . Th a t
e l ic i t e d a r e s p o n s e fr o m N e d b a n k a n d a ft e r d is c u s s i o n s b e t w e e n
o u r s e lv e s a n d A t t o r n e y G e r h a r d R u d o l p h o f A ll e n & O v e r y r e p r e s e n t i n g

Page 72 of 212

31 MAY 2019 – DAY 103
N e d b a n k t h e r e w a s a r e q u e s t to p l a c e a s t a te m e n t o n r e c o r d w h i c h i f
y o u g iv e m e l e a v e C h a ir I w il l d o n o w. I t i s t h e f o l lo w in g :
“ A c c o r d i n g t o t h e l e g a l r e p r e s e n t a tiv e s o f N e d b a n k
–

Nedbank

P r e li m i n a r y

was

fi r s t

provided

Report volume

with

the

2A and 2B

on

MNS
the

e v e n i n g o f 2 7 M a y 2 0 1 9 . N e d b a n k a n d i ts a d v is o r s
a r e s t u d y i n g th e r e p o r t w i th a v i e w t o p r o v id i n g t h e
C o m m i s s i o n w i th i ts c o m m e n t t h e r e o n a s s o o n a s
p o s s i b le . ”
10

A s I u n d e r s t a n d t h e in t e n ti o n o f t h a t c o m m u n ic a ti o n i t is s i m p ly to s t a te
t h a t t h e y h a v e n o t h a d e n o u g h t i m e to r e s p o n d i n f u l l b u t in t e n d s t o
c o o p e r a t e w i t h t h e C o m m is s i o n b y g iv in g f u l l s u b m is s i o n s . W h a t I h a v e
n o t p l a c e d o n r e c o r d a n d d o n o t in t e n d t o d o i t a t t h i s s t a g e is t h e f a c t
t h a t 3 3 n o tic e s w e r e is s u e d e a r l ie r a n d t h e fa c t th a t t h e r e h a v e b e e n
in t e r a c ti o n s b e tw e e n M N S a n d N e d b a n k p r io r to th e 2 7 M a y b u t I d o n o t
w a n t to g o i n t o a n y ( i n d is t in c t) .
C H A I R P E R S O N : O k a y. N o th a t i s f in e .
A D V PA U L J O S E P H P R E TO R I U S S C :

T h e n C h a ir i f I m a y b y w a y o f

b r i e f i n tr o d u c ti o n e x p la i n o r s t a t e w h a t D r B l o o m is g o in g to p u t b e f o r e
20

y o u C h a ir.

A s y o u k n o w t h e p u r c h a s e o f lo c o m o t iv e s f r o m C h i n a t h e

1 0 6 4 o r p a r t o f t h e 1 0 6 4 in v o lv e d a f o r e i g n m a n u f a c t u r e r d e l iv e r in g
lo c o m o t iv e s a c r o s s b o r d e r s in t o S o u th A f r ic a . Tr a n s n e t c o u ld n o t p a y
f o r t h e s e l o c o m o ti v e s i m m e d ia t e l y.

I t h a d t o b o r r o w th e m o n e y f ir s t ly

o ff s h o r e i n D o ll a r s a n d th e n l a t e r l o c a lly a s y n d i c a t e d l o a n i n R a n d s in
S o u th A f r i c a . T h e c o n tr a c ts i n v o l v e d p a y m e n ts t o C h i n a N o r t h R a il a n d

Page 73 of 212

31 MAY 2019 – DAY 103
C h i n a S o u t h R a i l in R a n d s in S o u t h A f r ic a . T h e m o n e y l o a n e d o ff s h o r e
w o u ld b e in D o l l a r s a n d e x c h a n g e d a c r o s s t h e b o r d e r i n t o R a n d s w h e n
b r o u g h t i n to S o u t h A fr ic a . F u r t h e r C h a ir t h e l o a n w o u l d n o t b e d r a w n i n
o n e s u m - a t o n e t i m e - b u t i n a s e r i e s o f tr a n c h e s o r a m o u n ts o v e r a
period of time.

T h e s e a r e r e f e r r e d t o a s d r a w d o w n s a n d o v e r t h is

p e r i o d o f t i m e o b v i o u s ly e x c h a n g e r a te s w h ic h fl u c t u a t e a n d i n t e r e s t s
w o u ld f lu c tu a te .

I n h e r e n t th e n i n s u c h a l o a n a r r a n g e m e n t a r e r i s k s .

T h e r e is t h e r is k t h a t t h e e x c h a n g e r a te c o u l d a l t e r t o p r e j u d ic e t h e
b o r r o w e r – Tr a n s n e t – o r t h e o t h e r w a y a r o u n d . T h e r e a r e i n te r e s t r a t e
10

fl u c t u a t i o n r is k s t h a t h ig h e r in t e r e s t r a te s m i g h t h a v e t o b e p a i d o v e r a
p e r i o d o f ti m e if a f lo a ti n g r a t e lo a n w a s e n te r e d i n t o . T h e r e a r e c r e d i t
r is k s .

T h e r e is t h e p o t e n ti a l r is k o f Tr a n s n e t – t h e b o r r o w e r – b e i n g

u n a b l e t o p a y th e in t e r e s t o n t h e l o a n i n s o m e t i m e in t h e fu t u r e a n d
t h e r e is w h a t is k n o w n a s a n d w h a t w i ll b e r e fe r r e d t o a s a f u r t h e r
r e l a t e d r is k a c o n t in g e n t c r e d i t r is k a n d t h a t i s t h e r is k t h a t Tr a n s n e t
might be unable to pay because of external factors. A downgrade or a
c o l l a p s e i n t h e e c o n o my o r s o m e t h in g t h a t m i g h t h a v e th e r e s u l t
e x t e r n a l t o Tr a n s n e t b u t a ls o t o Tr a n s n e t t h a t i t c o u l d n o t p a y t h e lo a n .
T h o s e a r e a ll r i s k s t h a t a r e a t t a c h e d t o t h e tr a n s a c t i o n s th a t w e r e
20

e n t e r e d i n t o a n d w h a t fi n a n c i e r s h a v e d o n e i n th e i r w is d o m C h a ir. T h e y
d e v e l o p e d a r a n g e o f i n s tr u m e n t s to a d d r e s s t h e s e r i s k s . S o m e m o r e
c o m p le x t h a n o t h e r s a n d C h a ir th e l a n g u a g e a tt a c h e d t o th e s e r is k s
d e r iv a ti v e s h e d g i n g , c o n t i n g e n t c r e d i t r is k s a n d t h e l ik e is a f o r e i g n
la n g u a g e a n d t h e p u r p o s e – o n e o f t h e p u r p o s e s – o f D r B l o o m ’s
evidence

is

to

f a c ili t a t e

an

u n d e r s ta n d i n g

Page 74 of 212

of

this

so

that

our

31 MAY 2019 – DAY 103
u n d e r s t a n d in g c a n b e u s e d l a t e r i n d e a l i n g w it h o th e r w i t n e s s e s a n d
m a k i n g s u b m is s i o n s to y o u C h a ir. S o t h e e v i d e n c e w il l s e e k to e x p la i n
t h e s e f in a n c i a l i n s tr u m e n ts t h a t a r e u s e d to m i t ig a t e r i s k , h e d g i n g
in s t r u m e n ts .

The

evidence

w ill

also

show

how

th e s e

hedging

in s t r u m e n ts a n d t h e tr a n s a c ti o n s r e l a t e d – C h a ir ju s t t o s a v e y o u th e
tr o u b le I h a v e h a d th is i n tr o d u c ti o n t y p e d o u t .

I do not know if you

w a n t a c o p y.
C H A I R P E R S O N : Ye s . J a , p l e a s e .
A D V PA U L J O S E P H P R E TO R I U S S C : S o fir s tly C h a ir t h e e v id e n c e w il l
10

s e e k – t h is i s a t th e b o t t o m o f t h e p a g e - t o e x p la in t h e u s e o f h e d g i n g
in s t r u m e n ts .

S e c o n d ly t h e e v id e n c e w i ll s e e k t o s h o w h o w t h e

i m p l e m e n ta t io n a n d u s e o f t h e s e in s t r u m e n ts w e r e m a n ip u la t e d t o
b e n e fi t – t o p r e ju d i c e Tr a n s n e t th a t s h o u l d b e – n o t b e n e fi t a n d to
b e n e fi t t h ir d p a r ti e s .

T h ir d l y t o s h o w h o w t h e f in a n c i a l a d v is o r s

in v o lv e d b e n e fi t t e d fr o m th e s e fi n a n c i a l tr a n s a c ti o n s a n d f o u r t h ly t o
p l a c e a n o p in io n b e f o r e y o u th a t i n t h e v i e w o f D r B l o o m i n t e r n a l
r e s o u r c e s c o u ld h a v e b e e n u t il is e d b y Tr a n s n e t m a k in g i t u n n e c e s s a r y
t o o u ts o u r c e f o r th e s e c o s tl y e x e r c is e s . O n c e t h is a n d o t h e r e v i d e n c e
is g iv e n C h a ir t h e l e g a l t e a m a n d i ts i n v e s ti g a to r s a r e o b v i o u s ly n o t
20

li m i te d t o t h e M N S m a n d a t e .

O u r i n v e s ti g a t io n s a n d e v i d e n c e w il l g o

f u r th e r a n d w e w ill s e e k to b u il d a p ic t u r e o f w h o m a d e a ll t h e s e
d e c is i o n s .

When were these decisions made?

d e c is i o n s m a d e ?

W h y w e r e th e s e

W h o b e n e f it t e d fr o m t h e s e d e c is io n s a n d t o tr y a n d

e s t a b li s h …
CHAIRPERSON: And what knowledge …?

Page 75 of 212

31 MAY 2019 – DAY 103
A D V PA U L J O S E P H P R E TO R I U S

SC:

L in g s

between

all

these

q u e s t io n s .
C H A I R P E R S O N : A n d I g u e s s w h a t k n o w l e d g e t h e y h a d i n t h is s e c t o r.
D i d th e y h a v e th e r ig h t k n o w le d g e t o m a k e t h e d e c is io n s b e c a u s e o n e ,
if t h e y h a d t h e r ig h t e x p e r t is e b u t n e v e r t h e l e s s m a d e c e r t a in d e c is i o n s
t h a t w e r e m a y b e i n e x p l ic a b l e t h a t m i g h t p o in t to a n i n t e n ti o n a l …
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 ir.
CHAIRPERSON:

To p r e ju d ic e Tr a n s n e t b u t i f t h e y d id n o t h a v e t h e

r e q u ir e d e x p e r tis e t h a t m i g h t n o t s h o w in t e n t io n b u t i t m i g h t s h o w
10

n e g li g e n c e o r e v e n g r o s s n e g li g e n c e b u t i t m i g h t s h o w – i t m ig h t r a is e
t h e q u e s ti o n o f w h y t h e y m a k e d e c i s i o n s i n a fi e l d i n w h ic h t h e y k n e w
nothing.
A D V PA U L J O S E P H P R E TO R I U S S C : C o r r e c t C h a ir.
C H A I R P E R S O N : J a . O k a y.
A D V PA U L J O S E P H P R E TO R I U S S C : A n d in f a c t C h a ir w h a t D r B l o o m
w i ll h e lp u s w it h i s t o p o i n t u s i n t h e d i r e c t io n o f th o s e q u e s ti o n s t h a t
w e s h o u ld b e a s k i n g a n d a ls o b e g i n t o b u il d u p s o m e p i c t u r e o f
p o s s i b le a n s w e r s a n d th e n t h e i n v e s ti g a ti o n a n d l e g a l t e a m w ill b u il d
o n t h o s e h o p e f u l ly to p r e s e n t b e f o r e y o u a p ic t u r e w h ic h m i g h t f o r m t h e

20

b a s is o f fi n d i n g s t h a t y o u m a y m a k e w h i c h g o m u c h f u r t h e r t h a n ju s t t h e
tr a n s a c ti o n s th e m s e lv e s . F i n a ll y C h a ir i n a c c o r d a n c e w i th t h e d ir e c t iv e
y o u h a v e g iv e n th is w e e k w e w i ll i n t h e c o u r s e o f – o f t h e n e x t f e w
weeks prepare an expert report in the normal form with expert
q u a li fi c a t io n s a n d t h e lik e t o p r e s e n t t o y o u .
C H A I R P E R S O N : J a . N o t h a t is fi n e . T h a t i s f in e .

Page 76 of 212

31 MAY 2019 – DAY 103
A D V PA U L J O S E P H P R E TO R I U S S C : M a y th e w i t n e s s th e n b e s w o r n .
C H A I R P E R S O N : Ye s b u t j u s t b e f o r e th a t I th i n k it w o u l d h e lp i f a t t h e
b e g in n i n g o f h is e v id e n c e I c o u l d j u s t b e a l e r te d t o c e r t a i n s p e c i f ic
t e r m s t h a t o n e n e e d s t o u n d e r s t a n d fr o m t h e b e g i n n in g t h a t h e m a y b e
u s i n g th a t o b v i o u s l y I d o n o t k n o w a b o u t n o t b e in g i n h i s f i e l d o f
e x p e r t is e .
A D V PA U L J O S E P H P R E TO R I U S S C : N o C h a ir i t i s …
CHAIRPERSON: So that – so that I – as we go on one know there is
t h is t e r m .
10

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 : T h is is w h a t i t m e a n s a n d s o o n .
A D V PA U L J O S E P H P R E TO R I U S S C :

W e h a v e tr ie d t o a v o i d i n t h e

fir s t p a r t …
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 : A n d th a t i s n o t l o n g …
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 :

T h e r e fe r e n c e to a n y s p e c i a l is t

term …
C H A I R P E R S O N : Ye s , ja .
20

A D V PA U L J O S E P H P R E TO R I U S S C :

A n d a t t h e a p p r o p r i a t e ti m e w e

d o in t e n d t o d o th a t .
CHAIRPERSON:

O k a y.

N o t h a t i s f in e . As l o n g a s b y t h e t i m e t h e y

are used …
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 : I h a v e b e e n a l e r t e d a n d ( in t e r v e n e s ) .

Page 77 of 212

31 MAY 2019 – DAY 103
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 a n d – a n d I m u s t s a y t h a t
f o r s o m e o n e i n c lu d in g th a t is n o t u s e d t o t h e s e t e r m s …
CHAIRPERSON: Hm.
A D V PA U L J O S E P H P R E TO R I U S S C : Ve r y o f te n w h a t a n e x p e r t w o u ld
do …
CHAIRPERSON: Hm.
A D V PA U L J O S E P H P R E TO R I U S S C : Is b e c o n fr o n t e d w i th a q u e s ti o n
a b o u t t h e p r o p e r m e a n in g …
CHAIRPERSON: Hm.
10

A D V PA U L J O S E P H P R E TO R I U S S C : O f a p a r t ic u l a r te r m …
CHAIRPERSON: Hm.
A D V PA U L J O S E P H P R E TO R I U S S C :

A n d th e n u s e a n o t h e r te c h n ic a l

t e r m to e x p l a i n i t w h ic h d o e s n o t r e a l ly h e l p s o m e o n e in m y p o s it i o n
a n d I u n d e r s ta n d y o u r p o s it i o n t o o C h a ir.
CHAIRPERSON: Ja.
A D V PA U L J O S E P H P R E TO R I U S S C :

S o w e w il l – w e w il l a n d w it h

y o u r a s s is ta n c e C h a ir t o s t o p u s …
CHAIRPERSON: Ja.
A D V PA U L J O S E P H P R E TO R I U S S C : W h e n n e c e s s a r y w e w i ll a t t e m p t
20

t o c l a r if y …
CHAIRPERSON: Well …
A D V PA U L J O S E P H P R E TO R I U S

SC:

An

u n d e r s ta n d i n g

of

th e s e

in s t r u m e n ts .
C H A I R P E R S O N : W e ll M r Pr e t o r i u s t h a t d o e s h a p p e n a n d s o m e t i m e s i t
is a b o n a fi d e m i s ta k e o n t h e p a r t o f – o f t h e e x p e r t . S o m e t i m e s i t i s

Page 78 of 212

31 MAY 2019 – DAY 103
m e a n t t o s h o w y o u h o w li t t le y o u k n o w.
A D V PA U L J O S E P H P R E TO R I U S S C : Ye s .
CHAIRPERSON: So …
A D V PA U L J O S E P H P R E TO R I U S S C :

I n th is fi e l d I a m p r e p a r e d t o

a c c e p t t h a t w e s ta r t fr o m s c r a tc h .
C H A I R P E R S O N : A n d I a m s u r e o t h e r p e o p le s a y la w y e r s d o th e s a m e .
A D V PA U L J O S E P H P R E TO R I U S S C : O f c o u r s e w e d o .
C H A I R P E R S O N : O k a y, a lr ig h t .
A D V PA U L J O S E P H P R E TO R I U S S C : I t i s j u s t a d i ffe r e n t l a n g u a g e .
10

C H A I R P E R S O N : J u s t a d i ffe r e n t l a n g u a g e . T h e w i tn e s s m a y b e s w o r n
in p l e a s e o r a ffir m a t i o n m a y b e a d m i n i s te r e d .
R E G I S T R A R : P le a s e s t a te y o u r fu ll n a m e s f o r th e r e c o r d .
D R J O N AT H A N Z O R A H B L O O M : J o n a t h a n Zo r a h B lo o m .
REGISTRAR:

D o y o u h a v e a n y o b je c ti o n s t o t a k in g t h e p r e s c r i b e d

oath?
D R J O N AT H A N Z O R A H B L O O M : N o .
REGISTRAR:

D o y o u c o n s i d e r t h e o a th t o b e b i n d in g o n y o u r

conscience?
D R J O N AT H A N Z O R A H B L O O M : Ye s .
20

R E G I S T R A R : D o y o u s w e a r t h a t a ll t h e e v id e n c e y o u w i ll g i v e w il l b e
t h e tr u t h , t h e w h o l e tr u t h a n d n o t h i n g b u t t h e tr u t h i f s o p l e a s e r a i s e
your right hand and say so help me God.
D R J O N AT H A N Z O R A H B L O O M : S o h e lp m e G o d .
REGISTRAR: Thank you.
D R J O N AT H A N Z O R A H B L O O M : ( d u l y s w o r n , s t a t e s )

Page 79 of 212

31 MAY 2019 – DAY 103
CHAIRPERSON: Thank you very much.
A D V PA U L J O S E P H P R E TO R I U S S C : D r B l o o m f ir s t u p w o u l d y o u te ll
t h e C h a ir o f y o u r q u a l i fic a ti o n s a n d C h a i r i n t h is r e g a r d m a y I r e fe r y o u
t o t h e g r e e n d iv i d e r a t th e e n d o f y o u r b u n d l e ? Yo u w il l s e e t h e r e a n
a b b r e v ia t e d C V. Yo u m u s t …
CHAIRPERSON: Oh yes.
A D V PA U L J O S E P H P R E TO R I U S S C :

Dr Bloom with reference to that

w o u ld y o u p l e a s e t e l l t h e C h a ir o f y o u r q u a li fi c a t io n s ?
D R J O N AT H A N Z O R A H B L O O M :
10

Degree

with

majors

in

Th a n k y o u C h a ir.

s ta t is ti c s

and

fi n a n c e

I hold a BCom

fr o m

S t e l le n b o s c h

U n iv e r s i ty. A n H o n o u r s B C o m C u m L a u d e fr o m t h e s a m e in s ti t u t i o n . A
M C o m C u m L a u d e fr o m t h e s a m e i n s ti t u ti o n .

A PhD in Business

M a n a g e m e n t w it h th e C o r p o r a te Fi n a n c e S p e c ia li s a t io n f r o m t h e s a m e
in s t i tu 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 :

A n d w o u ld y o u te ll th e C h a ir

p l e a s e o f y o u r e x p e r ie n c e i n th e fi e l d a b o u t w h ic h y o u a r e t o te s t i fy ?
CHAIRPERSON:

S ir I a m s o r r y.

It is BCom from Stellenbosch you

said.
D R J O N AT H A N Z O R A H B L O O M : T h a t is r i g h t .
20

C H A I R P E R S O N : A n d B C o m H o n o u r s C u m L a u d e S t e ll e n b o s c h ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
CHAIRPERSON: And then MCom Cum Laude …
D R J O N AT H A N Z O R A H B L O O M : Fr o m S t e l le n b o s c h .
C H A I R P E R S O N : W h ic h u n iv e r s i ty, S t e ll e n b o s c h ?
D R J O N AT H A N Z O R A H B L O O M : Ye s .

Page 80 of 212

31 MAY 2019 – DAY 103
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M : Al l th e d e g r e e s .
CHAIRPERSON: And then PhD Cum Laude?
D R J O N AT H A N Z O R A H B L O O M :

No.

U n fo r t u n a t e l y th e r e is n o c u m

la u d e f o r a P h D .
C H A I R P E R S O N : Yo u t h o u g h t y o u h a d h a d e n o u g h . It i s f in e i f y o u j u s t
get the degree. No, thank – thank you Dr Bloom.
A D V PA U L J O S E P H P R E TO R I U S S C : Yo u r e x p e r i e n c e .
D R J O N AT H A N Z O R A H B L O O M : C h a ir I h a v e h a d th e o p p o r t u n i ty to –
10

t o c o n s u lt o n v a r i o u s fi n a n c i a l m a t te r s t o f i n a n c ia l i n s t it u ti o n s i n th e
Fi n a n c i a l S e r v ic e s I n d u s tr y.

A ls o fr o m a f in a n c e p o in t o f v i e w i n t h e

D e v e l o p m e n t I n d u s tr y w h e r e – w h e r e S t e l le n b o s c h I h e l d t h e p o s i ti o n
a s Pr o fe s s o r o f R e a l E s ta t e I n v e s t m e n t a n d Fi n a n c i n g a n d th e i d e a
b e h in d t h a t w a s t h a t w e – w e p r e p a r e d s t u d e n ts f o r a c h a r t e r e d
fi n a n c i a l a n a ly s t q u a l i fic a ti o n a n d I w a s p a r t o f t h e t e a m t h a t d i d t h a t .
S o f o r th e l a s t 2 2 y e a r s a l th o u g h I w a s p a r t – a t S t e ll e n b o s c h a t th a t
p o i n t in ti m e a s w e ll I h a d th e o p p o r tu n it y t o c o n s u l t i n th e i n d u s tr y a n d
ja .
CHAIRPERSON: Thank you.
20

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 i ll t e ll t h e C h a ir o f t h e

v a r io u s fi n a n c i a l i n s tr u m e n ts t h a t fi n a n c i e r s u s e a n d i n s ti t u ti o n s u s e t o
m i ti g a te r i s k i n tr a n s a c ti o n s s u c h a s th e l o a n s in v o lv e d in th e p u r c h a s e
o f l o c o m o tiv e s fr o m C h i n a ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

Do you have experience in

Page 81 of 212

31 MAY 2019 – DAY 103
s t u d y i n g t h e s e i n s tr u m e n ts ?
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a ir. I – I in v e s ti g a t e d a s p a r t
o f t h is a s s e s s m e n t t h e – t h e v a r i o u s in s t r u m e n ts u s e d a n d u n p a c k e d
t h e m t o u n d e r s t a n d w h a t Tr a n s n e t d i d o r w h a t t h e s e r v i c e p r o v id e r t h a t
a s s is t e d Tr a n s n e t d i d in t h e e x e c u ti o n o f t h e s e in s tr u m e n ts .

So the

f o c u s w a s e s s e n t i a l ly o n t h e i n s tr u m e n t s u s e d to h e d g e t h e r i s k s
r e l a t e d t o t h e f i n a n c in g .
A D V PA U L J O S E P H P R E TO R I U S S C :

A lr ig h t .

W e w i ll c o m e to y o u r

actual work …
10

D R J O N AT H A N Z O R A H B L O O M : Ye s .
A D V PA U L J O S E P H P R E TO R I U S S C :

A n d w h a t y o u le a r n t fr o m t h a t

w o r k d u r in g t h e c o u r s e o f y o u r e v i d e n c e b u t t h e q u e s t io n I a m a s k in g is
a m o r e g e n e r a l q u e s ti o n . Yo u h a v e - a n d I m a y a s k i t a g a in w h e n t h e
p a r t ic u l a r o p i n i o n t h a t y o u e x p r e s s is r e l e v a n t – b u t d o y o u h a v e
g e n e r a l e x p e r i e n c e i n th e s t u d y a n d u n d e r s t a n d in g o f th e u s e o f r is k
a v o i d i n g i n s tr u m e n ts …
D R J O N AT H A N Z O R A H B L O O M : I d o C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : I n fi n a n c i n g ?
D R J O N AT H A N Z O R A H B L O O M : I d o C h a ir.
20

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. Yo u w e r e p a r t o f t h e M N S
Te a m t h a t s t u d i e d t h e tr a n s a c t io n i n v o l v e d in R e p o r t 2 B ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

O v e r w h a t p e r io d o f t i m e h a v e

y o u b e e n w o r k in g o n t h is p r o j e c t ?
D R J O N AT H A N Z O R A H B L O O M : C h a i r s i n c e S e p t e m b e r l a s t y e a r a n d

Page 82 of 212

31 MAY 2019 – DAY 103
it c o n ti n u e s .
A D V PA U L J O S E P H P R E TO R I U S S C : R i g h t a n d w h a t w a s y o u r b r i e f i n
sum?
D R J O N AT H A N Z O R A H B L O O M :

My

brief

c o n s is t e d

of

several

c o m p o n e n ts . I t s t a r t e d o ff b y l o o k in g i n te r e s t in g l y e n o u g h a t t h e l o c a l
c o n te n t c o n tr i b u t io n s a n d a s s e s s m e n t t h e r e o f o f t h e – o f t h e O E M s
s p e c i f ic a l ly t h e C h i n a N o r t h R a i l a n d C h in a S o u t h R a i l L o c o m o tiv e l o c a l
c o n te n t .

I t m o v e d to u n d e r s t a n d in g th e a d v is o r y s e r v ic e s th a t w e r e

provided through an LOI and an MSA. In other words (intervenes).
10

A D V PA U L J O S E P H P R E TO R I U S S C : W h a t is L O I a n d M S A ?
D R J O N AT H A N Z O R A H B L O O M :

T h e L e t t e r o f I n t e n t a n d t h e M a s te r

S e r v ic e s A g r e e m e n t th a t w a s a c tu a l ly t e s ti fi e d to i n t h is C o m m i s s i o n b y
M r S e d u m e d i i n v o l u m e 2 A a n d t h e n a ft e r t h a t I m o v e d o v e r t o
u n d e r s t a n d in g h o w t h e – h o w s e v e r a l tr a n s a c ti o n s w e r e i n tr o d u c e d i n
t h e fi n a n c i n g o f th e v e h ic le s a n d h o w t h e h e d g i n g o f th o s e – o f t h e – o f
t h e r is k s a s s o c i a t e d t h e r e w i t h w a s – w a s d o n e .
A D V PA U L J O S E P H P R E TO R I U S S C :

A lr ig h t .

Yo u h a v e a l r e a d y

in tr o d u c e d a w o r d in t h e fo r e ig n la n g u a g e in w h ic h y o u a r e a n e x p e r t –
h e d g i n g . L e t u s le a v e th a t fo r t h e m o m e n t .
20

D R J O N AT H A N Z O R A H B L O O M : O k a y.
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 fo r th e m o m e n t f in a n c ia l

in s t r u m e n ts u s e d t o m i ti g a t e r i s k .
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

And I have in my opening

m e n ti o n e d th e s e b r i e fl y a n d y o u w il l d e a l w i t h th e m i n d e ta il i n d u e

Page 83 of 212

31 MAY 2019 – DAY 103
course?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : A s I u n d e r s t a n d i t y o u r e v id e n c e
here

d e a ls

o n ly

w it h

the

p a r t o f t h a t p a r t o f th e

lo c o m o t iv e s

tr a n s a c ti o n s i n v o l v i n g C h i n a N o r t h R a i l a n d C h i n a S o u t h R a il ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : R ig h t a n d a s I u n d e r s ta n d it y o u
h a v e e x a m i n e d h o w th e p u r c h a s e o f t h e s e l o c o m o ti v e s w e r e f ir s t ly
fi n a n c e d . I s t h a t c o r r e c t?
10

D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : A n d y o u h a v e a ls o e x a m in e d h o w
t h e r i s k s a s s o c i a t e d w i th t h e tr a n s a c ti o n - t h e lo a n tr a n s a c ti o n i n
p a r t ic u l a r – w e r e d e a l t w i t h . L e t u s ju s t p u t i t th a t w a y f o r th e m o m e n t .
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : I f w e m a y t h e n g o t o y o u r r e p o r t
a n d d e a l w i t h w h a t w e h a v e p l a c e d o n r e c o r d b y w a y o f i n tr o d u c t i o n
m o r e m e t h o d ic a l ly. A t p a g e 2 y o u h a v e a n in tr o d u c ti o n . W o u l d y o u j u s t
t a k e t h e C h a ir t h r o u g h t h a t p le a s e ?
D R J O N AT H A N Z O R A H B L O O M :

20

Ye s .

C h a ir t h is is a – t h is is a

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

So

t h e p r e s e n t a ti o n d e a l s w it h Tr a n s a c ti o n A d v is o r y S e r v ic e s a n d a s
M r Pr e to r i u s in d ic a t e d i t r e f e r s t o 2 3 2 d i e s e l l o c o m o tiv e s f r o m C h i n a
N o r t h R a i l a n d 3 5 9 e l e c tr i c l o c o m o t iv e s fr o m C h in a S o u t h R a il . S o a s –
a s p a r t o f t h e i n tr o d u c t io n Tr a n s n e t a p p o i n te d Tr a n s a c ti o n A d v is o r s i n

Page 84 of 212

31 MAY 2019 – DAY 103
2 0 1 2 t o p r o v i d e i t w i th a Tr a n s a c t io n A d v is o r S e r v i c e s r e l a t e d t o t h e
a c q u is i ti o n o f 1 0 6 4 lo c o m o t iv e s a n d Tr a n s n e t a w a r d e d a t t h a t t i m e t h e
Tr a n s a c t io n A d v is o r y C o n tr a c t to t h e M c K i n s e y C o n s o r ti u m i n J u ly o f
t h a t y e a r. T h e s c o p e o f t h e c o n tr a c t w a s a m e n d e d fr o m ti m e t o t i m e .
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.

So before we proceed

e v e n b e f o r e i t e n t e r s i n t o a n y t r a n s a c t io n Tr a n s n e t a p p o i n t e d a d v i s o r s
t o a s s is t i t i n o b ta i n i n g a l o a n a n d d e te r mi n i n g h o w th a t lo a n w o u ld
w o r k - a s I u n d e r s t a n d i t?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
10

A D V PA U L J O S E P H P R E TO R I U S

SC:

Right

and

th a t

tr a n s a c ti o n

a d v is o r y c o n tr a c t w a s a w a r d e d to M c K i n s e y in J u ly 2 0 1 2 ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

Te ll t h e C h a ir o f h o w t h e

C o n s o r t iu m w a s in i ti a l ly c o m p o s e d p le a s e b e c a u s e w e w il l s e e in t h e
c o u r s e o f ti m e th e d e v e lo p m e n t o f a tr a n s f e r o f th e w o r k t o p a r ti c u la r
in s t i tu t io n s

which

are

c e n tr a l

to

th e

in v e s t i g a t iv e

work

of

the

Commission.
D R J O N AT H A N Z O R A H B L O O M :

T h e M c K i n s e y C o n s o r ti u m C h a i r w a s

le d b y M c K i n s e y I n c o r p o r a t e d - th e S o u t h A fr ic a n b r a n c h o f th e
20

c o m p a n y.
A D V PA U L J O S E P H P R E TO R I U S S C : Yo u a r e a t p a g e 3 ?
D R J O N AT H A N Z O R A H B L O O M :

Page 3.

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

C o m p r is i n g

o f M c K in s e y I n c o r p o r a t e d a s t h e m a in b i d d e r, L e ts e m a C o n s u l ti n g a s
t h e c o b i d d e r a n d th e n s e v e r a l s u b - c o n tr a c t o r s - A d v a n c e d R a il
Te c h n o l o g i e s , N e d b a n k C a p i t a l , E d w a r d N a th a n S o n n e n b e r g s – E N S –

Page 85 of 212

31 MAY 2019 – DAY 103
( in d is ti n c t) Yo u n g I n c o r p o r a t e d a n d ( i n d is t i n c t) C a p i t a l. S o r r y C h a ir.
C H A I R P E R S O N : Ye s o k a y.
A D V PA U L J O S E P H P R E TO R I U S S C : T h e n l e t u s g o t o p a g e 4 a n d w e
b e g in t o s e e c h a n g e s i n w h o t h e tr a n s a c ti o n a d v is o r s a r e .
C H A I R P E R S O N : I a m – I a m s o r r y. Th is m i g h t b e a q u e s t io n th a t h a s
n o t h i n g t o d o w i t h y o u . I j u s t s e e t h a t t h e r e is a n in d ic a t i o n o f a t p a g e
3 o f th o s e w h o w e r e s u b - c o n tr a c t o r s b u t I w o n d e r w h e t h e r t h e y h a d –
t h e y h a d b e e n p u t i n a s p a r t o f t h e c o n s o r ti u m fr o m th e b e g i n n i n g b u t
a s I s a y it m i g h t b e s o m e t h i n g t h a t y o u k n o w n o th i n g a b o u t . S o m e b o d y
10

e ls e w o u ld t e l l m e a b o u t i t .
D R J O N AT H A N Z O R A H B L O O M : C h a i r y o u a r e c o r r e c t .
C H A I R P E R S O N : O h , o k a y a lr i g h t. M r Pr e t o r i u s is th e r e s o m e t h i n g t h a t
s o m e b o d y w a n t s t o d o t o a s s i s t t h e w i tn e s s ?
A D V PA U L J O S E P H P R E TO R I U S S C : I f y o u c o u l d j u s t b e a r w i t h m e .
CHAIRPERSON: Hm.
A D V PA U L J O S E P H P R E TO R I U S S C :

I a m j u s t c o n c e r n e d th a t th e

p r o g r e s s o n th e s c r e e n is n o t a s i t s h o u l d b e .
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 : W e h a v e w r e s t le d c o n tr o l …
20

CHAIRPERSON: Hm
A D V PA U L J O S E P H P R E TO R I U S S C :

W e h a v e w r e s t l e d c o n tr o l f r o m

o th e r s o v e r t h e s c r e e n C h a ir.
CHAIRPERSON: Oh.
A D V PA U L J O S E P H P R E TO R I U S S C : S o w e w i ll ta k e r e s p o n s i b i li ty fo r
any errors.

Page 86 of 212

31 MAY 2019 – DAY 103
C H A I R P E R S O N : O k a y b u t – b u t I w a s c o n c e r n e d a b o u t th e m o v e m e n 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 . T h a t is – t h a t is i t C h a ir.
C H A I R P E R S O N : It h a s b e e n s o r t e d o u t n o w ?
A D V PA U L J O S E P H P R E TO R I U S S C : I h o p e i t h a s b e e n s o r te d o u t .
C H A I R P E R S O N : O k a y, a lr ig h t .
A D V PA U L J O S E P H P R E TO R I U S S C : I a m t o l d i t c a n .
C H A I R P E R S O N : J a , o k a y b e c a u s e a n y m o v e m e n t t o th e w i t n e s s w h il e
t h e w i t n e s s i s g iv in g e v i d e n c e o n e n e e d s t o b e c a r e fu l a b o u t i t .
10

A D V PA U L J O S E P H P R E TO R I U S S C : I u n d e r s ta n d th a t C h a ir.
C H A I R P E R S O N : O k a y, a lr ig h t .
A D V PA U L J O S E P H P R E TO R I U S S C : I t w a s e n t ir e ly in o r d e r t o …
C H A I R P E R S O N : ( In t e r v e n e s ) .
A D V PA U L J O S E P H P R E TO R I U S S C : Ta k e c o n tr o l o f t h e s c r e e n .
C H A I R P E R S O N : If I a m – I m e a n I a m a d v is e d i f I a m in f o r m e d th e n i t
helps.
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 : I f I d o n o t k n o w I d o n o t k n o w w h a t i s h a p p e n in g a n d
…

20

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 ir.
CHAIRPERSON:

A n y b o d y w a tc h in g m i g h t b e t h i n k in g t h e w i t n e s s is

b e i n g t o l d w h a t t o s a y. O k a y, a lr ig h t . Th a n k y o u . S o …
A D V PA U L J O S E P H P R E TO R I U S S C : I c a n a s s u r e y o u th a t t h a t w o u ld
b e v e r y d i ffic u l t w it h D r B lo o m .
CHAIRPERSON: I – I can imagine.

Page 87 of 212

31 MAY 2019 – DAY 103
A D V PA U L J O S E P H P R E TO R I U S S C :

O n e w o u l d h a v e t o fir s t l e a r n a

new language.
CHAIRPERSON: But are we – are we okay now?
A D V PA U L J O S E P H P R E TO R I U S S C : Ye s w e a r e C h a ir.
C H A I R P E R S O N : O k a y, a lr ig h t th a n k y o u .
A D V PA U L J O S E P H P R E TO R I U S S C :
please?

A lr ig h t .

Can we go to page 4

J u s t e x p la i n a t a v e r y h i g h l e v e l w h a t h a p p e n e d to t h e

s e q u e n c e th a t y o u o u t li n e h e r e …
D R J O N AT H A N Z O R A H B L O O M : C h a i r …
10

A D V PA U L J O S E P H P R E TO R I U S S C : A n d p a r tic u la r t h e c o m p o s it i o n o f
t h e fi n a n c i a l a d v i s o r s .
D R J O N AT H A N Z O R A H B L O O M : O n 2 2 A u g u s t 2 0 1 2 Tr a n s n e t r a is e d a
c o n fli c t o f i n t e r e s t b e tw e e n L e ts e m a a n d ( i n te r v e n e s ) .
C H A I R P E R S O N : I a m s o r r y D r B lo o m .
D R J O N AT H A N Z O R A H B L O O M : N o p r o b l e m .
CHAIRPERSON:

I d o h e a r y o u , b u t m a y b e i f y o u c a n j u s t r a is e y o u r

v o i c e a b i t th a t w il l h e lp .
D R J O N AT H A N Z O H A R B L O O M :

C e r t a i n l y C h a ir.

CHAIRPERSON: Thank you.
20

D R J O N AT H A N Z O H A R B L O O M :

O n th e 2 2 n d o f A u g u s t 2 0 1 2 Tr a n s n e t

r a i s e d a c o n f lic t o f i n te r e s t b e t w e e n L e t s e m a a n d B a r l o w o r ld , i t w a s
b a s e d o n t h is c o n f li c t t h a t Tr a n s n e t a d v is e d M c K i n s e y o r t h e M c K i n s e y
C o n s o r t iu m t o c o n s i d e r t h e r e p l a c e m e n t o f L e ts e m a . A t th e d a t e o f t h e
a p p o i n t m e n t Mc K i n s e y

C o n s o r ti u m e x c l u d e d

r e p l a c e d b y R e g i m e n ts .

Page 88 of 212

L e ts e m a

and it was

31 MAY 2019 – DAY 103
A D V PA U L J O S E P H P R E T O R I U S S C :

R ig h t , s o th e f ir s t e n tr y o f

R e g i m e n t s i n to t h e C o n s o r t iu m w a s t o r e p l a c e L e ts e m a ?
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :
D R J O N ATH A N Z O H A R B L O O M :

And then what happened?

A n d t h e n s u b s e q u e n t ly R e g i m e n ts

w o u ld a ls o r e p l a c e N e d b a n k a n d U t u w h o w e r e a c o n s o r ti u m o n t h e ir
o w n o r a p a r t n e r s h i p o n t h e ir o w n , d u e to th e c o n fl ic t o f in t e r e s t a s a
m e m b e r w i th t h e M c K i n s e y C o n s o r t i u m a n d t h is o c c u r r e d o n t h e 1 9 t h o f
October 2013.
10

A D V PA U L J O S E P H P R E TO R I U S S C :

J u s t a c o m m e n t , a n d I’ m n o t

s u r e t h a t y o u ’r e e q u ip p e d t o d e a l w i th i t , b u t o r d in a r ily w h e n e n t e r i n g
in t o a r r a n g e m e n t s o f t h is s o r t a n d a p p o i n ti n g t r a n s a c t io n a d v i s o r s i n
s u c h a n i m p o r t a n t s e r i e s o f tr a n s a c t io n s , o n e w o u l d i m a g in e c o n fl ic ts o f
in t e r e s t w o u l d b e d e a lt w i t h b e f o r e t h e a p p o i n t m e n t o f t h e c o n s o r t i u m ?
D R J O N AT H A N Z O H A R B L O O M :

T h a t’s c o r r e c t C h a i r b e c a u s e

ty p i c a ll y y o u w o u ld a s k t h e c o n s o r ti u m m e m b e r s , d o t h e y h a v e a n y
c o n fli c ts o f i n te r e s t a n d i t – a n d th e n t h a t w o u l d b e – i n o t h e r w o r d s
t h e y w o u l d n ’ t b e a b l e to p a r t ic ip a t e a s a c o n s e q u e n c e s o y e s , y o u
w o u ld s o r t t h a t o u t , o r y o u w o u ld a d d r e s s t h a t r ig h t i n th e b e g i n n i n g .
20

CHAIRPERSON:

A n d a p a r t fr o m a s k i n g , m a y b e , y o u m a y b e e x p e c te d

t o d o y o u r o w n i n v e s ti g a t i o n o f w h a t m a y b e i n t h e p u b l ic d o m a i n ?
D R J O N AT H A N Z O H A R B L O O M :

A b s o l u t e l y C h a ir, i t ’s a ll p a r t

o f … ( in t e r v e n ti o n ) .
CHAIRPERSON:

S o m e th i n g v e r y b a s ic a t l e a s t .

D R J O N AT H A N Z O H A R B L O O M :

C o r r e c t i t’s a l l p a r t o f th e

Page 89 of 212

31 MAY 2019 – DAY 103
p r o c u r e m e n t p r o c e s s a n d t h e e v a l u a ti o n .
CHAIRPERSON:

Ye s o k a y.

A D V PA U L J O S E P H P R E TO R I U S S C :

A n d t h e n if y o u w o u l d g o to

p a g e fiv e p l e a s e , t h e r e h a s b e e n e v id e n c e a n d th e r e w i ll b e m o r e
e v i d e n c e c o n c e r n i n g a s e s s i o n t h a t t o o k p l a c e i n Fe b r u a r y 2 0 1 4 a n d
t h e p r o p r i e ta r y i n n a t u r e o f t h a t s e s s io n b u t w i t h o u t g o i n g i n t o a n y
d e t a i l w o u l d y o u j u s t t e ll th e C h a ir p l e a s e w h a t h a p p e n e d t h e n ?
D R J O N AT H A N Z O H A R B L O O M :

Ye s C h a ir o n th e 5 t h o f Fe b r u a r y

2 0 1 4 M c Ki n s e y p u r p o r t e d to c e d e t h e i r r ig h ts a n d o b l ig a ti o n s t o
10

R e g i m e n t s f o r t h e t r a n s a c t io n a n d t h a t r e l a te d to t h e 1 0 6 4 l o c o m o tiv e s
a n d w h a t is i m p o r t a n t i n t h i s c o n t e x t i s t h a t R e g i m e n t s w a s n o w
r e s p o n s i b l e fo r t h e w h o l e o f t h e a d v i s o r y s e r v ic e s .
A D V PA U L J O S E P H P R E TO R I U S S C :

So if one reviews at a very high

le v e l, th e s e q u e n c e o f e v e n ts , in r e l a ti o n t o t h e a p p o i n t m e n t o f
tr a n s a c ti o n a d v is o r s , o n e w il l s e e t h a t i n i t ia lly R e g i m e n ts w a s n o t p a r t
o f t h e c o n s o r t iu m b u t o v e r a p e r io d o f t i m e i n s u c c e s s iv e s t e p s c a m e t o
b e t h e tr a n s a c ti o n a d v is o r.
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :
20

A n d t h e d e t a i ls o f th e m a n n e r i n

w h ic h th is h a p p e n e d a n d a n y i m p li c a t io n s f o r o u r o w n i n v e s t ig a ti o n s
a n d e v i d e n c e t h a t , t h a t m i g h t h a v e b e e n t h e s u b je c t m a t t e r o f o t h e r
evidence.
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :

W h a t d o e s v o l u m e 2 ( B ) , t h a t is

t h e r e p o r t t h a t y o u a u t h o r e d I u n d e r s ta n d i t .

Page 90 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :

What does volume 2 (B)

provide?
D R J O N ATH A N Z O H A R B L O O M :

I t p r o v i d e s a t e c h n i c a l a n a ly s is a n d

c o m m e n t o f t h e tr a n s a c ti o n s , t h e r e g u l a r tr a n s a c t i o n s c o n c lu d e d b y
Tr a n s n e t o n th e a d v ic e o f tr a n s a c ti o n a d v i s o r s .
A D V PA U L J O S E P H P R E TO R I U S S C :
related

to

th e

b o r r o w in g

A n d t h a t w o u l d b e t r a n s a c t io n s

of money

to finance

the

purchase

of

lo c o m o t iv e s .
10

D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t .

A D V PA U L J O S E P H P R E TO R I U S S C :

A n d t h e f in a n c ia l i n s tr u m e n t s

u s e d to m it i g a t e a g a i n s t t h e r i s k in v o lv e d in t h is lo a n tr a n s a c ti o n o r
t h e s e lo a n t r a n s a c t io n s .
D R J O N AT H A N Z O H A R B L O O M :
CHAIRPERSON:

T h a t ’s c o r r e c t C h a ir.

S o in o t h e r w o r d s i t’s t h e p r o d u c t o f t h e w o r k o f t h e

tr a n s a c ti o n a d v is o r s to Tr a n s n e t , to s a y t h is i s o u r a d v ic e a n d t h is is
t h e a n a ly s is o n w h ic h i t is b a s e d .
D R J O N AT H A N Z O H A R B L O O M :

Ye s C h a ir t h a t w o u l d b e a ty p i c a l

s i tu a ti o n t o … ( i n t e r v e n t io n ) .
20

CHAIRPERSON:

To e x p e c t fr o m t h a t k i n d o f r e p o r t.

D R J O N AT H A N Z O H A R B L O O M :
CHAIRPERSON:

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

O k a y.

A D V PA U L J O S E P H P R E T O R I U S S C :
second

b u ll e t

th e n

on

page

s ix

S o i f y o u w o u ld j u s t g o t o t h e
and

p r e s e n t a ti o n e n ta il s .

Page 91 of 212

te ll

th e

Chair

what your

31 MAY 2019 – DAY 103
D R J O N ATH A N Z O H A R B L O O M :

C h a ir t h e p r e s e n t a ti o n a n d t h e w o r k

a s w e ll e n t it l e d th e s e r v ic e s a n d a n a l y s i s o f th e s e r v ic e s r e n d e r e d b y
t h e tr a n s a c ti o n a d v is o r s , p r i n c i p a l ly R e g i m e n t s a n d h e f e e s p a i d to
t h e m , t h a t ’s t h e fir s t p a r t .

T h e s e c o n d p a r t , t h e lo a n s t h a t Tr a n s n e t

c o n c l u d e d to p u r c h a s e t h e C h i n e s e l o c o m o t iv e s w h i c h c o v e r e d , a n d I
t h i n k t h i s i s i m p o r t a n t t o p r o v i d e c o n te x t b e c a u s e t h is is a c t u a l ly w h e r e
it s t a r ts , a r e q u ir e m e n t e x i s t e d f o r a l o a n o f 2 .5 b i ll io n U S D o ll a r s t o
fi n a n c e

the

Chinese

l o c o m o t iv e s

that

we

are

ta lk in g

a b o u t …( i n t e r v e n ti o n ) .
10

A D V PA U L J O S E P H P R E T O R I U S S C :

When you say CDB loan, what

is t h a t t a lk o f ?
D R J O N AT H A N Z O H A R B L O O M :

I t w a s t h e lo a n t h a t w a s s o u r c e d

fr o m t h e C h i n a D e v e lo p m e n t B a n k i n C h in a a n d th a t w a s f o r a n a m o u n t
o f 2 .5 b ill i o n . W h a t h a p p e n e d , s u b s e q u e n t ly, is t h a t, t h a t l o a n w a s s p li t
in t o tw o p o r ti o n s , 1 . 5 b il li o n th a t w a s d r a w n d o w n a s A d v o c a t e P r e t o r iu s
a ls o in d i c a t e d i n t h e i n tr o d u c t io n a n d a f u r t h e r 1 b i ll i o n t h a t w a s
r e s e r v e d a s a f a c ili t y th a t Tr a n s n e t c o u l d d r a w o n s h o u l d t h e n e e d
a r i s e . T h e r e w a s – j u s t r e l a t e d t o t h a t 1 b il li o n r a n d f a c i li ty C h a ir, t h e r e
w a s n o t – t h e r e w e r e n o c o m m i t m e n t f e e s t h a t Tr a n s n e t p a i d a n d w e
20

w i ll s e e la t e r t h a t , t h a t w a s s h e lv e d i n fa v o u r o f , w h a t is t h e l a s t b u l le t
o n t h a t s l id e , i n fa v o u r o f a 1 2 b il li o n s y n d ic a te d S o u th A f r ic a n R a n d
Club Loan.
A D V PA U L J O S E P H P R E T O R I U S S C :

R i g h t b e fo r e y o u g o o n , t h e

in it i a l a r r a n g e m e n t w a s t h a t t h e l o a n e n t e r e d i n to t o f in a n c e t h e
p u r c h a s e o f th e l o c o m o tiv e s fr o m C h in a w o u ld e n t a i l a lo a n fr o m h e

Page 92 of 212

31 MAY 2019 – DAY 103
C h i n a D e v e l o p m e n t B a n k in t h e a m o u n t o f 2 .5 b i ll i o n D o ll a r s .
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :

T h e n t h e r e w a s th e c h a n g e o f

m i n d a n d i t w a s d e c id e d t h a t o n l y 1 .5 b il li o n r a n d w o u ld b e l o a n e d fr o m
C h i n a , fr o m t h e C D B .
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :

A n d t h a t a n o th e r l o a n w o u l d b e

e n t e r e d in t o w h ic h w e ’v e c a l l e d th e C l u b L o a n o r w h i c h w a s t e r m e d th e
Club Loan.
10

D R J O N AT H A N Z O H A R B L O O M :

Th a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E T O R I U S S C :

T h a t w a s a lo a n e n t e r e d in t o

b e t w e e n Tr a n s n e t a n d a s y n d ic a te o f l e n d e r, p r i n c i p a l ly.
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :

F o r t h e a m o u n t o f 1 2 b i ll ii o n

rand.
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E T O R I U S S C :

And then if you would go over

t h e p a g e to t e l l t h e C h a ir w h a t e ls e y o u ’r e g o i n g t o d e a l w i t h .
D R J O N ATH A N Z O H A R B L O O M :
20

C h a ir t h e – w h a t e ls e is a s s e s s e d is

t h e r is k s a s s o c i a t e d w i t h th e lo a n s a n d t h e p r o c e s s e s t o m i ti g a t e t h e m
a n d t h e r e ’s s p e c i fi c a ll y, a s A d v o c a t e P r e t o r i u s a ls o i n d ic a t e d , t h e r e ’s
s p e c i f ic a l ly t h r e e ty p e o f r i s k s th a t w e a r e in t e r e s t e d i n a n d t h a t a r e
a p p lic a b l e t o t h e t r a n s a c t io n s . T h e o n e r e fe r s t o i n t e r e s t – m o v e m e n t
in i n t e r e s t r a t e s … ( 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 :

A lr ig h t s o w h e n I b o r r o w m o n e y

Page 93 of 212

31 MAY 2019 – DAY 103
I p a y in t e r e s t to t h e le n d e r.
D R J O N AT H A N Z O H A R B L O O M :

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

A D V PA U L J O S E P H P R E TO R I U S S C :

I f – w e l l in a n y s i t u a ti o n

w h e t h e r i t ’s c r o s s b o r d e r o r l o c a l th o s e in t e r e s t r a t e s , a s w e k n o w,
fl u c t u a t e .
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E T O R I U S S C :

A n d w h a t d o e s – w h y i s th a t a

r is k ?
D R J O N ATH A N Z O H A R B L O O M :
10

B e c a u s e C h a ir, w h a t c a n h a p p e n i s ,

is th a t y o u b o r r o w m o n e y a t a c e r t a in r a t e w h ic h i s f l u c tu a ti n g , w h ic h is
v a r ia b le a n d i f in t e r e s t r a te s i n c r e a s e i t w i ll in c r e a s e y o u r c o s t o f
b o r r o w in g .
A D V PA U L J O S E P H P R E TO R I U S S C :

Right and then the second sub-

h e a d i n g t h e r e , f lu c tu a ti o n s i n th e e x c h a n g e r a t e , y o u w ill a ls o d e a l w i t h
that.
D R J O N AT H A N Z O H A R B L O O M :

Ye s C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :

W h y i s th a t – w e l l a s w e k n o w

t h a t w o u ld o n ly b e a r i s k i f th e l e n d e r is o u ts i d e t h e c o u n t r y a n d t h e
b o r r o w e r i s i n s id e th e c o u n tr y.
20

D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t .

A D V PA U L J O S E P H P R E TO R I U S S C :

Yo u ’ ll h a v e m o n e y c r o s s i n g

b o r d e r s a n d e x c h a n g e r a te s .
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :
D R J O N AT H A N Z O H A R B L O O M :

W h y is th a t a r is k ?
A s w e s a w, th e m o n e y th a t w a s

Page 94 of 212

31 MAY 2019 – DAY 103
b o r r o w e d w a s fr o m t h e C h i n a D e v e l o p m e n t B a n k w h ic h w a s 1 .5 b i ll i o n
D o ll a r s , t h a t m o n e y h a d t o b e t r a n s f e r r e d t o a S o u t h A f r ic a n b a n k a n d i t
a r r iv e s h e r e i n D o l la r s a n d b e c a u s e t h e c o n tr a c t w i t h t h e O E M ’s f o r t h e
p a y m e n t o f t h e v e h ic le s is in r a n d t h e m o n e y – th e D o ll a r s h a d t o b e
c o n v e r te d to r a n d . S o i f th e r a n d s t a r ts to w e a k e n t h e n t h e c o s t o f t h a t
b o r r o w in g a ls o i n c r e a s e s b e c a u s e t h e y w o u l d w a n t t h e ir m o n e y b a c k in
– t h e r e p a y m e n ts o n t h a t lo a n t h e y w o u l d w a n t i t b a c k i n D o l l a r s . S o
t h a t p l a c e s th e b o r r o w e r o f t h e f u n d s a t r is k .
A D V PA U L J O S E P H P R E TO R I U S S C :
10

S o i f th e e x c h a n g e r a t e m o v e s

a g a in s t t h e b o r r o w e r o r t o p r e j u d ic e t h e b o r r o w e r i t c o u l d f in d i ts e l f i n a
p o s i ti o n w h e r e i t c o u l d f e a s i b l y n o l o n g e r a ffo r d t o r e p a y t o th e f o r e i g n
le n d e r.
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t .

A D V PA U L J O S E P H P R E TO R I U S S C :

T h e n t h e t h i r d c a t e g o r y o f r is k

is c r e d i t r is k a n d y o u t a l k o f t w o c a t e g o r i e s o f c r e d i t r is k w h a t a r e
those?
DR

J O N AT H A N

ZOHAR

BLOOM:

The

fir s t

c a te g o r y

is

th e

… ( i n te r v e n t io n ) .
CHAIRPERSON:
20

I ’ m s o r r y ju s t b e f o r e y o u p r o c e e d , p l e a s e d o n ’ t f o r g e t

t h e q u e s t io n y o u w e r e a n s w e r i n g , I j u s t w a n t to g o b a c k t o t h e a n s w e r
you gave to the previous question.

D o e s t h a t – d o e s th e i n s tr u m e n ts

t h a t y o u ’r e ta lk in g a b o u t t o m it i g a t e s o m e o f t h e s e r is k s a r is e fr o m th e
f a c t th a t if t h e b o r r o w e r in S o u t h A fr ic a a n d th e le n d e r i n C h i n a , i f th e ir
a g r e e m e n t s i m p l y s a id , t h i s i s w h a t y o u o w e m e , m a y b e y o u ’ r e g o in g t o
p a y m e in t w o y e a r s ti m e w i t h o u t m a k in g a n y o t h e r – i n c l u d in g a n y

Page 95 of 212

31 MAY 2019 – DAY 103
o th e r a r r a n g e m e n ts t h e l e n d e r c o u l d e n d u p b e in g p a i d a t a m u c h – a t a
lo w e r a m o u n t i n v a l u e , in r e a l v a lu e o r t h a t ’s n o t r e a l ly w h a t i t ’s a b o u t ?
D R J O N AT H A N Z O H A R B L O O M :

C h a ir I th i n k b a s ic a l ly w h a t i t b o il s

d o w n t o is , t h a t w h e n t h e l e n d e r, e s p e c i a lly a f o r e i g n l e n d e r fi n a n c e s
s o m e t h i n g i n a c u r r e n c y o t h e r t h a n t h e ir o w n , t h e n t h e y w o u l d e x p e c t t o
o b t a i n t h e r e p a y m e n t s o n t h a t l o a n i n t h e c u r r e n c y t h a t t h e y l e n t th a t ,
in o t h e r w o r d s U S D o l la r s . S o t h e y w o u l d n ’ t b e w o r s e o ff i f I c a n p u t i t
t h a t w a y, t h e r is k s h i f ts e n t ir e ly t o t h e b o r r o w e r b e c a u s e t h e b o r r o w e r
is e x p e c te d t o p a y in D o ll a r s a n d t h e r e f o r e , in t h is p a r ti c u la r c a s e i f th e
10

r a n d h a d t o w e a k e n s u b s t a n t ia ll y t h a t w o u l d r e s u lt i n a tr e m e n d o u s
c a s h o u t fl o w fo r t h e b o r r o w e r.
CHAIRPERSON:

Ye s w e l l – s o t h a t m a k e s i t w h y i t’s i m p o r ta n t f o r t h e

le n d e r t o s p e c if y th a t th e r e p a y m e n t s w o u l d b e in t h e ir c u r r e n c y i f t h e y
w e r e to a l lo w th e r e p a y m e n ts to b e i n th e c u r r e n c y o f t h e b o r r o w e r th e y
m i g h t r u n t h e r i s k t h a t t h e c u r r e n c y o f t h e c o u n tr y o f t h e b o r r o w e r
w e a k e n s a n d t h e n th e y e n d u p g e t ti n g p a y m e n ts – r e p a y m e n ts t h a t a r e
m u c h le s s th a n t h e v a l u e t h a t t h e y l e n t .
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s e n t ir e ly c o r r e c t C h a ir i n o t h e r

w o r d s – b u t t h e y w o u ld n e v e r d o th a t b e c a u s e t h e y w o u l d n ’ t t a k e t h e
20

r is k .
CHAIRPERSON:

W e ll th e r e h a s b e e n s o m e e v i d e n c e , I j u s t c a n ’t

r e m e m b e r t h e d e ta il s , t h e r e h a s b e e n e v i d e n c e in r e g a r d t o s o m e t h i n g
in th is C o m m i s s i o n , I t h i n k , a b o u t t h e s e tr a n s a c ti o n s , I d o n ’ t k n o w
w h e t h e r i t w a s a b o u t Es k o m o r Tr a n s n e t w h e r e t h e tr a n s a c t io n w a s in a
c u r r e n c y t h a t w a s q u it e u n e x p e c t e d .

Page 96 of 212

31 MAY 2019 – DAY 103
A D V PA U L J O S E P H P R E TO R I U S S C :
CHAIRPERSON:

I c a n ’ t r e m e m b e r.

A D V PA U L J O S E P H P R E TO R I U S S C :
CHAIRPERSON:

Vo l a til e .

Vo l a til e .

I c a n ’ t r e m e m b e r b u t t h e q u e s t io n , w h e n y o u s a w i t

t h a t y o u r a n s w e r is , b u t w h e y d i d t h e y a g r e e to u s e th a t c u r r e n c y
b e c a u s e , y o u k n o w, t h a t ’s n o t w h a t y o u e x p e c t t h e m t o d o , I j u s t c a n ’ t
r e m e m b e r t h e d e t a i ls , y e s o k a y.
A D V PA U L J O S E P H P R E TO R I U S S C :

As I understand it and by way of

s u m m a r y D r Bl o o m , i n th is c a s e a n d in m a n y o t h e r c a s e s , t h e f o r e i g n
10

le n d e r f o r e x a m p le th e C h in a D e v e l o p m e n t B a n k s a y s , i f y o u w a n t t o
b o r r o w m o n e y fr o m m e , I w i ll l e n d y o u m o n e y i n D o l l a r s b u t y o u r e p a y
m e in D o ll a r s .
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :

I f y o u h a v e a p r o b le m w i th t h e

e x c h a n g e r a t e , th e n y o u m u s t d e a l w i th i t.
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t .

A D V PA U L J O S E P H P R E TO R I U S S C :

A n d th e b o r r o w e r t h e n , i n S o u th

A fr ic a , m i g h t b e fa c e d w it h a s i t u a ti o n w h e r e t h e r a n d w e a k e n s it h a s
t o , i n e ff e c t b u y D o ll a r s to m a k e a r e p a y m e n t o f t h e lo a n fr o m ti m e to
20

ti m e o r r e p a y m e n ts fr o m ti m e to ti m e a n d mi g h t fi n d it s e l f in fi n a n c i a l
tr o u b le o r d i ffi c u l ty i n r e p a y i n g t h e D o l la r a m o u n t
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a r.

A D V PA U L J O S E P H P R E TO R I U S S C :

D u e t o c ir c u m s t a n c e s b e y o n d

it ’s c o n tr o l , c o r r e c t ?
D R J O N AT H A N Z O H A R B L O O M :

Ye s C h a ir.

Page 97 of 212

31 MAY 2019 – DAY 103
A D V PA U L J O S E P H P R E TO R I U S S C :

So what it says is, I have a

s u b s t a n t ia l r is k , j u s t a r i s i n g o u t o f fl u c t u a t in g e x c h a n g e r a t e s , t h e y m a y
m o v e a g a i n s t m e , r ig h t I m u s t i n s u r e m y s e lf a g a i n s t th a t r is k a n d t h a t’s
w h a t w e ’ r e g o in g to a t t e m p t t o d e a l w i th i n p a r t o f t h e e v id e n c e t h a t
y o u ’r e a b o u t t o g iv e .
D R J O N AT H A N Z O H A R B L O O M :
CHAIRPERSON:

T h a t ’s c o r r e c t C h a ir.

A n d i f t h e – s a y S o u t h A fr ic a n , t h e r a n d s tr e n g th e n s ,

t h a t m i g h t o r m a y b e n o t m i g h t , w i ll b e n e fi t m e b u t t h a t d o e s n ’ t
n e c e s s a r i ly m e a n t h e l e n d e r g e ts p r e j u d ic e d , is t h a t r ig h t ?
10

D R J O N ATH A N Z O H A R B L O O M :

T h a t’s c o r r e c t C h a ir, in o th e r w o r d s

y o u ’ ll b e p a y i n g le s s b e c a u s e t h e r a n d is s tr e n g t h e n e d s o i t ’s w o r k i n g
in y o u r fa v o u r.
CHAIRPERSON:

Ye s b u t t h e l e n d e r r e m a in s i n t h e s a m e p o s it i o n t h a t

t h e y w e r e b e c a u s e i t ’s th e i r c u r r e n c y th a t c o u n t s f o r th e m .
D R J O N AT H A N Z O H A R B L O O M :
CHAIRPERSON:

T h a t ’s e n tir e l y c o r r e c t C h a ir.

O k a y, t h a n k y o u .

A D V PA U L J O S E P H P R E TO R I U S S C :

A lr ig h t , a n d y o u ’r e a ls o g o i n g t o

d is c u s s t h e c h a r g e s t h a t th e s e r v i c e p r o v i d e r s c h a r g e d f o r t h e ir
s e r v ic e s in r e l a t io n to t h e s e tr a n s a c ti o n s .
20

D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :

Yo u s a y i n th e s e c o n d b u l le t in

– o r o n p a g e s e v e n , a n d y o u ’v e d e s c r i b e d h o w t h e s e r v i c e s w e r e
in it i a l ly t o b e p r o v id e d b y Mc K i n s e y C o n s o r t i u m a n d s u b s e q u e n t ly
R e g i m e n t s , w h a t i n s u m w e r e t h e s e r v ic e s , i f th e y w e r e c o n tr a c te d t o
provide.

Page 98 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O H A R B L O O M :

C h a ir r e l a t e d t o t h e r a i s i n g o f t h e

fi n a n c e , i n o t h e r w o r d s a c c e s s i n g t h e fi n a n c e f o r th e a c q u is i t io n to a ls o
d e a l w it h t h e – o r s t r u c t u r i n g t h e d e a l i n o t h e r w o r d s th e n e g o t i a t i o n o f
t h a t l o a n a n d o t h e r a d v i s o r y s e r v ic e s r e l a ti n g t o t h e m it i g a t io n o f r is k .
A D V PA U L J O S E P H P R E TO R I U S S C :

R i g h t , s o t h e y w o u l d a d v is e o n

h o w t o o b ta in f in a n c e , c a p it a l r a is in g y o u c a l l i t .
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :

H o w t h o s e n e g o ti a ti o n s s h o u l d

b e c o n d u c te d a n d th e fi n a l l o a n a g r e e m e n t s s h o u l d b e s tr u c t u r e d .
10

D R J O N AT H A N Z O H A R B L O O M :

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

A D V PA U L J O S E P H P R E TO R I U S S C :

A n d h o w Tr a n s n e t s h o u ld d e a l

w i t h t h e r i s k s t h a t y o u ’ v e t a lk e d a b o u t s o f a r i n y o u r e v i d e n c e .
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E T O R I U S S C :

W h a t i n s u r a n c e p o l ic ie s y o u

n e e d a n d h o w t h e s e s h o u ld b e s tr u c t u r e d , I u s e t h e w o r d in s u r a n c e
p o li c y v e r y l o o s e l y b u t i t g iv e s u s a n i d e a o f w h a t t h e t h ir d tr a n c h e o f
a d v ic e w a s a b o u t , th a t t h e r e a r e – th a t ’s a ll t h e r e ’s n o r e a l c o in c i d e n c e
b e t w e e n a n in s u r a n c e p o l ic y a n d a fi n a n c i a l i n s tr u m e n t u s e d t o m i t ig a t e
r is k a n d w e ’ ll c l a r if y t h a t i n d u e c o u r s e . Yo u d e a l o n p a g e e ig h t w it h
20

f e e s a t a v e r y b r o a d le v e l a n d y o u ’ ll g o i n to m o r e d e ta il l a t e r w h a t d o
y o u s a y th e r e o n p a g e e ig h t , w il l y o u t e l l t h e C h a ir p l e a s e .
D R J O N AT H A N Z O H A R B L O O M :

Ye s C h a ir i t – a s p r e v i o u s ly

d is c u s s e d b y o t h e r w i t n e s s e s a n i n it i a l c o n t r a c t fo r th e a d v is o r y
s e r v ic e s w a s fix e d a t a n a m o u n t o f 3 5 .2 m il li o n , a n d i t’s i m p o r t a n t t o
n o t e C h a ir t h e w o r d s i n p a r e n t h e s i s o r i n b r a c k e ts w h e r e t h e r e w a s n o

Page 99 of 212

31 MAY 2019 – DAY 103
p e r f o r m a n c e f e e p a y a b le .
A D V PA U L J O S E P H P R E TO R I U S S C :

O r n o s u c c e s s fe e y o u u s e t h e

w o r d s u c c e s s f e e la t e r.
D R J O N AT H A N Z O H A R B L O O M :

T h a t’s c o r r e c t n o s u c c e s s f e e

h o w e v e r, t h e r o le o f R e g i m e n t s e x p a n d e d s o d i d t h e f e e s p a y a b l e t o i t
b u t i f I c o u ld c o n ti n u e , t h e c o n tr a c t v a l u e i n c r e a s e , i n o th e r w o r d s th e
c a p p e d a m o u n t o f 3 5 . 2 m il li o n … ( i n te 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 :
D R J O N ATH A N Z O H A R B L O O M :
10

in c r e a s e d

to

4 1 . 2 m il li o n

in

T h a t’s f e e s fo r R e g i m e n ts .

C o r r e c t C h a ir, i n D e c e m b e r 2 0 1 2 ,

Fe b r u a r y

2014, increased

f u r th e r

to

7 8 . 4 m il li o n i n A p r il 2 0 1 4 a n d b y J u ly 2 0 1 5 th e a m o u n t th a t w a s p a i d t o
R e g i m e n t s w a s 2 6 5 .5 m i ll i o n .

J u s t b y t h e w a y C h a ir, th e s e a m o u n ts

e x c lu d e VAT o r t a x .
CHAIRPERSON:

S o w h a t w a s it w i th i n t w o a n d a h a l f y e a r s t h e y h a d

in c r e a s e d f r o m 3 5 . 2 m il li o n t o 2 6 5 .5 m i ll io n ?
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E T O R I U S S C :

Ye s s o m e w h e r e i n n e w

r e g u la t o r y in s tr u m e n t w i t h i n Tr a n s n e t t h e r e is a p r o v is io n th a t a d v is o r y
s e r v ic e s o f t h is n a tu r e , in o t h e r w o r d s , p r o fe s s i o n a l a d v is o r y s e r v ic e s ,
20

e v e n i n f in a n c i n g s h o u l d b e c h a r g e d o u t a n h o u r ly r a t e , e ffe c tiv e l y, a r e
y o u a w a r e o f th a t ?
D R J O N AT H A N Z O H A R B L O O M :

Ye s C h a ir t h a t’s c o r r e c t a n d t h a t is

a ls o th e n o r m t h a t a d v is o r y c o m p a n i e s o r fir m s c h a r g e t h e ir s ta ff o u t i s
a t a h o u r ly b il l a b l e r a t e .
A D V PA U L J O S E P H P R E TO R I U S S C :

A n d j u s t o n t h e f a c e o f i t, t o

Page 100 of 212

31 MAY 2019 – DAY 103
a d v is e o n a l i mi t e d n u m b e r o f lo a n s a n d a li m i t e d n u m b e r o f f i n a n c ia l
tr a n s a c ti o n s

to

m i ti g a t e

r is k ,

2 6 5 m il li o n

s e e ms

an

e x tr a o r d i n a r y

amount.
D R J O N AT H A N Z O H A R B L O O M :

Ye s C h a ir i t is – it d o e s a p p e a r t o b e

e x c e s s iv e .
A D V PA U L J O S E P H P R E TO R I U S S C :

An d you can say that from your

own experience?
D R J O N AT H A N Z O H A R B L O O M :

Ye s C h a ir, e s p e c i a l ly i f – i t w o u ld b e

v e r y d i ff ic u l t t o – y o u w o u ld h a v e t o h a v e a tr e m e n d o u s n u m b e r o f
10

p e o p l e a t v e r y h ig h r a t e s w o r k i n g o n th a t c o n tr a c t f o r a n e x t e n d e d
p e r i o d o f ti m e t o g e t e v e n c l o s e t o t h a t n u m b e r a n d a s a c o n s e q u e n c e
t h a t i s – t h a t a p p e a r s e x tr e m e l y e x c e s s i v e f o r t h e p u r p o s e 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 y o u ’l l d e a l w i th t h a t i n y o u r

evidence?
D R J O N AT H A N Z O H A R B L O O M :

Ye s C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :

S o i f o n e lo o k s a t t h e

in f o r m a ti o n y o u ’v e s e t o u t i n t h e ta b l e o n p a g e 9 , o n e c a n c o m p a r e t h e
t o t a l c a p i ta l lo a n e d b y Tr a n s n e t a n d th e a d v is o r y fe e s c h a r g e d b y
R e g i m e n t s a n d a c t u a l ly p a i d b y Tr a n s n e t .
20

C o u l d y o u te ll t h e C h a ir o f

that please?
D R J O N AT H A N Z O H A R B L O O M :

Ye s C h a ir in r a n d te r m s t h e

2 .5 b i ll i o n D o ll a r s t h a t w e ’v e b e e n ta lk i n g a b o u t tr a n s la t e s t o 2 8 b i ll io n
r a n d . I f w e ta k e th e fe e p a i d to R e g i m e n t s , th e 2 6 5 .5 m i ll io n , e x c l u d i n g
VAT t h a t w o u l d r e p r e s e n t a b o u t – a l m o s t o n e p e r c e n t o f t h a t lo a n
a m o u n t a n d a s s a id t h is i s w e ll a b o v e t h e c a p p e d f e e o f 3 5 . 2 m il li o n

Page 101 of 212

31 MAY 2019 – DAY 103
w h ic h i s , a s in d i c a t e d , t h a t is q u i te e x c e s s i v e .
A D V PA U L J O S E P H P R E TO R I U S S C :

Just to revert to the make up of

t h e 2 8 b i ll io n r a n d , th e r e w a s a n in i ti a l C h i n a D e v e lo p m e n t B a n k l o a n o f
2 .5 m i ll io n r a n d o n l y, r ig h t – 2 . 5 b i ll io n , b il l io n r a n d , s o r r y I h a v e a c o ld
s o i t m a y n o t h a v e c o m e a c r o s s c o r r e c t ly, 2 .5 b i ll i o n r a n d .
D R J O N AT H A N Z O H A R B L O O M :

C o r r e c t C h a ir, D o l la r s .

A D V PA U L J O S E P H P R E TO R I U S S C :

S o r r y 2 . 5 b i lli o n D o ll a r s , o n ly

1 .5 b i ll i o n D o ll a r s w a s a c tu a l ly u t il is e d a n d t h e n a n o t h e r l o a n r e p l a c e d
t h e 1 b il li o n D o ll a r s t h a t w a s t h e 1 2 m il li o n r a n d C l u b L o a n .
10

D R J O N AT H A N Z O H A R B L O O M :

Ye s C h a ir t h e 1 2 b i ll io n .

A D V PA U L J O S E P H P R E T O R I U S S C :

R i g h t o n p a g e te n y o u d e a l w i th

w h a t y o u ’v e te r m e d ir r e g u la r s u c c e s s f e e s , p l e a s e … ( in t e r v e n ti o n ) .
CHAIRPERSON:

I’ m s o r r y M r P r e t o r i u s , D r B lo o m s e e i n g t h a t y o u a r e

a n u m b e r s p e r s o n a s I u n d e r s t a n d th e p o s i t io n , a n i n c r e a s e fr o m
3 5 . 2 m il li o n r a n d t o 2 6 5 . 5 m ill i o n r a n d w o u l d b e a n in c r e a s e o f w h a t
percentage.
D R J O N ATH A N Z O H A R B L O O M :

C h a ir i f y o u g i v e m e o n e m in u t e I ’l l

t e ll y o u .
CHAIRPERSON:
20

O k a y, a lr i g h t .

D R J O N ATH A N Z O H A R B L O O M :

C h a ir t h a t w o u ld i m p l y a d i ff e r e n c e

of 754 percent.
CHAIRPERSON:

7 5 4 P e r c e n t in c r e a s e ?

D R J O N AT H A N Z O H A R B L O O M :
CHAIRPERSON:

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

I n tw o a n d a h a l f y e a r s .

D R J O N AT H A N Z O H A R B L O O M :

Correct.

Page 102 of 212

31 MAY 2019 – DAY 103
CHAIRPERSON:

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

A D V PA U L J O S E P H P R E TO R I U S S C :

O n p a g e te n y o u b e g i n to

e x p l a i n s o m e o f th e s e – o r s o m e c o m p o n e n t s o f th e s e i n c r e a s e s
b e c a u s e t h e r e w e r e v a r io u s i n c r e a s e s t h a t h a p p e n e d o v e r a p e r io d o f
ti m e a n d y o u d e a l w i t h s o m e o f t h o s e i n d e t a il .
D R J O N AT H A N Z O H A R B L O O M :

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

A D V PA U L J O S E P H P R E TO R I U S S C :

P l e a s e t e l l th e C h a ir w h a t

h a p p e n e d i n A p r il 2 0 1 5 p l e a s e .
D R J O N ATH A N Z O H A R B L O O M :
10

Th a t i s w h e n – C h a ir t h a t i s w h e n

Tr a n s n e t’s G r o u p Tr e a s u r e r, M r P h e to l o R a m o s e b u d i s u b m i t te d a
m e m o r a n d u m t o t h e B o a r d A c q u is i t io n a n d D is p o s a l C o m m i t t e e o f
Tr a n s n e t B A D C ( i n d is t i n c t) f o r in t e r a l ia , t h e f o l lo w in g tw o p o i n t s . Th e
c o n fi n e m e n t o f J P M o r g a n to h e d g e t h e f i n a n c i a l r is k s , i n o th e r w o r d s
t o m it i g a t e th e r is k s w h ic h r e fe r r e d t o in t e r e s t r a te s , c r e d i t a n d
c u r r e n c y a n d – w h i c h e m a n a t e d f r o m t h e 1 .5 b i ll i o n C D B l o a n , th a t w a s
t h e n b a c k i n to S o u t h A f r i c a n R a n d s a n d t h e r e ’s a s e c o n d p a r t t o th e
fir s t b u ll e t t h e r e C h a ir, th a t r e f e r s to a l s o l e a d a n d u n d e r w r it e t h e
e q u iv a l e n t s y n d ic a t e d Z A R l o a n o f t h e U S D o ll a r. I n o t h e r w o r d s , t h a t
is t o a r r a n g e th e l o a n f o r 1 . 5 b il li o n D o ll a r s , i t’s t h e s a m e – s o t h e o n e

20

is t o h e d g e t h e r is k s o r to m i t i g a t e t h e f i n a n c i a l r is k s a n d t h e o t h e r is
t o a c t u a l ly n e g o ti a te t h e l o a n . S o th e r e a r e t w o p o i n ts i n th e fi r s t b u ll e t.
I n th e s e c o n d o n e , to a ls o m o t iv a te t h e c o n tr a c t e x t e n s i o n
2 6 5 . 5 m il li o n ,

the

number

that

we’ve

just spoken

about

for

of
th e

a p p o i n t m e n t o f R e g i m e n ts C a p i t a l f o r a n a d v is o r y o r a n Tr a n s a c ti o n
A d v is o r y

S e r v ic e

and

to

support

the

Tr a n s n e t

Page 103 of 212

1064

l o c o m o tiv e

31 MAY 2019 – DAY 103
tr a n s a c ti o n .

I t s o u g h t t o j u s ti fy th e e x t e n s i o n o f t h e c o n tr a c t b y

p r o p o s in g a s u c c e s s f e e o f 1 6 6 m il li o n a n d w e ’ v e h e a r d p r e v io u s ly
C h a ir, t h a t s u c c e s s f e e s a n d p e r f o r m a n c e f e e s w e r e n o t p e r m i tt e d . S o
t h is s e e m s t o b e a b i t ir r e g u l a r.
A D V PA U L J O S E P H P R E TO R I U S S C :

A l r ig h t w e ’r e n o w b a c k i n A p r i l

2 0 1 5 , a s I u n d e r s t a n d t h e r e c o m m e n d a t io n o r t h e m e m o r a n d u m
m o t iv a t i n g a p p r o v a l o f B A D C d e a l t w it h t h e a p p o i n t m e n t b y c o n f in e m e n t
a n d C h a ir h a s b e e n to ld a b o u t c o n f i n e m e n t a p p o i n t m e n t s o f J P M o r g a n .
D R J O N AT H A N Z O H A R B L O O M :
10

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E T O R I U S S C :

A n d t h e y w e r e t o d o t w o th in g s ,

o n e t h e y w e r e t o a s s is t a n d a d v i s e Tr a n s n e t, m i ti g a t e a g a i n s t t h e r is k s
in h e r e n t i n th e s e l o a n tr a n s a c ti o n s .
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

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 a ls o t o l e a d a n d u n d e r w r i te

t h e e q u iv a l e n t s y n d ic a te d Z A R l o a n o f 1 . 5 b ill i o n D o l la r s .
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E T O R I U S S C :

R i g h t , s o i t w a s r is k s a n d

a d v is o r y s e r v i c e s i n r e s p e c t o f t h e l o a n it s e l f .
D R J O N AT H A N Z O H A R B L O O M :
20

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :

A n d t h e n t h e r e ’s a ls o a c o n tr a c t

e x t e n s i o n t o 2 6 5 m i ll io n , t h e 3 5 m il li o n h a d b y th is t i m e a lr e a d y b e e n
e x t e n d e d o n o c c a s i o n y o u ’r e n o t d e a l in g w it h th a t .
D R J O N AT H A N Z O H A R B L O O M :

No.

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 y o u ’r e d e a l in g w i th a n

in c r e a s e

the

of

1 6 6 m i ll io n

which

a ll o w e d

Page 104 of 212

fu ll

amount

to

reach

31 MAY 2019 – DAY 103
2 6 5 m i lli o n .
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :

A n d t h a t M r R a m o s e b u d i s a id t o

t h e B A D C le t ’s g i v e t h e m a s u c c e s s f e e o r a p e r f o r m a n c e f e e .
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :

A n d y o u ’ v e s ta t e d th a t , t h a t

w a s n ’ t a ll o w e d i n t h e o r i g in a l c o n tr a c t u a l a r r a n g e m e n t .
D R J O N AT H A N Z O H A R B L O O M :

Correct.

A D V PA U L J O S E P H P R E T O R I U S S C :
10

W h a t d i d th e B A D C – is n ’ t t h e r e

a d u p l ic a t i o n h e r e .
D R J O N AT H A N Z O R A H B L O O M : W e l l C h a ir t h e …
A D V PA U L J O S E P H P R E TO R I U S S C :

O r w e d e a li n g w i th d i ff e r e n t

lo a n s ?
D R J O N ATH A N Z O R A H B L O O M :

N o w e d e a l in g w i t h t h e 1 .5 b i ll io n

CDB loan.
A D V PA U L J O S E P H P R E TO R I U S S C : R ig h t.
D R J O N AT H A N Z O R A H B L O O M : O n ly t h a t l o a n in r e s p e c t o f t h e s e …
A D V PA U L J O S E P H P R E TO R I U S S C :

J P M o r g a n a n d i n r e l a ti o n t o

Regiments?
20

D R J O N AT H A N Z O R A H B L O O M :

In r e l a t io n t o R e g i m e n ts t h a t i s t h e

2 6 5 . 5 m i ll i o n .
A D V PA U L J O S E P H P R E TO R I U S S C : N o , n o w h a t – w h a t tr a n s a c ti o n
a d v is o r y s e r v i c e s a r e t h e s u b j e c t m a t t e r o f th e c o n t r a c t e x t e n s i o n ?
D R J O N AT H A N Z O R A H B L O O M : T h a t [i n d is ti n c t ] .
CHAIRPERSON: In other words

Page 105 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M : Ye s I u n d e r s ta n d .
CHAIRPERSON:

I n o t h e r w o r d s a r e w e n o t d e a l in g w i t h a s i tu a ti o n

w h e r e tw o d i ff e r e n t p e o p l e a r e a s k e d to d o th e s a m e th i n g ?
D R J O N ATH A N Z O R A H B L O O M :

C o r r e c t C h a ir in o th e r w o r d s t h e y

w e r e – y o u – th e y w e r e p a i d t o d o th a t w o r k u n d e r t h e t r a n s a c t io n
a d v is o r y c o n tr a c t . I n o t h e r w o r d s t h a t w a s n o t t h e – a n d i t – t h e r e w a s
n o r e a s o n f o r th e n e e d t o – t o e n g a g e i n a s u c c e s s fe e a r r a n g e m e n t .
CHAIRPERSON:

B u t I t h i n k M r Pr e t o r i u s m a y b e a s k in g a n d t h a t is

p a r t o f w h a t I a ls o w a n t t o a s k is o n c e R e g i m e n ts w a s th e r e c o u l d t h e y
10

n o t d o c o v e r a l l o f t h is o r is t h i s a p a r t t h a t t h e y c o u l d n o t c o v e r a n d
t h e r e f o r e J P M o r g a n h a d t o b e b r o u g h t in ?
D R J O N AT H A N Z O R A H B L O O M :

C h a ir t h a t is - t h a t i s a d u p l ic a t e –

t h a t c o u l d b e a d u p li c a t io n .
CHAIRPERSON: Hm.
D R J O N AT H A N Z O R A H B L O O M : T h e – th a t is p o s s i b le y e s .
C H A I R P E R S O N : T h a t is p o s s i b l e .
A D V PA U L J O S E P H P R E TO R I U S S C : R ig h t.
C H A I R P E R S O N : O k a y. I s i t s o m e th in g t h a t y o u m i g h t b e a b l e t o s p e a k
m o r e c o n fi d e n tl y o n a ft e r m a y b e r e v ie w in g m o r e d o c u m e n ts b e c a u s e it
20

w o u ld b e i m p o r t a n t t o k n o w i f i t is in d e e d a d u p li c a t io n i n te r m s o f w o r k
t o b e d o n e o r w h e t h e r i t is n o t ?
D R J O N AT H A N Z O R A H B L O O M : C h a i r y e s I c a n m a y b e ju s t a d d .
CHAIRPERSON: Hm.
D R J O N AT H A N Z O R A H B L O O M : To e n li g h te n th a t p o in t .
C H A I R P E R S O N : Ye s .

Page 106 of 212

31 MAY 2019 – DAY 103
D R J O N ATH A N Z O R A H B L O O M :

T h a t i n t h i s tr a n s a c t io n w h e n J P

M o r g a n w a s a p p o in t e d w h e n th e y s ta r t e d th is R e g i m e n ts w a s th e ir
s u p p ly d e v e l o p m e n t p a r t n e r.
CHAIRPERSON: Hm.
D R J O N AT H A N Z O R A H B L O O M : S o t h e y w e r e p a r t o f J P M o r g a n a n d
t h e n t h e y w e r e – i t a p p e a r e d t h a t t h e y w e r e s t il l d o i n g o t h e r w o r k a n d
b e i n g p a i d . S o w h a t t h e a r r a n g e m e n t b e tw e e n R e g i m e n ts a n d J P
Morgan was I am unclear about.
CHAIRPERSON: Hm.
10

D R J O N AT H A N Z O R A H B L O O M : B u t i t a p p e a r s th a t t h e y d id n o t h a v e
t h e i n t e r m s o f h e d g i n g t h e – o r i n t e r ms o f m it i g a t in g t h e r is k s
R e g i m e n t s c o u l d n o t d o t h a t p a r t o f t h e e x e r c is e b e c a u s e J P M o r g a n
h a d a v e r y s tr o n g b a l a n c e s h e e t .
CHAIRPERSON: Hm
D R J O N AT H A N Z O R A H B L O O M :

A n d in o r d e r t o h a v e s u ff ic ie n t

fi n a n c i a l m u s c l e y o u w o u l d n e e d a fir m s u c h a s t h e m .
CHAIRPERSON: Hm.
D R J O N AT H A N Z O R A H B L O O M : S o I w il l lo o k i n t o t h a t C h a ir.
C H A I R P E R S O N : O k a y.
20

D R J O N AT H A N Z O R A H B L O O M : A n d c o m e b a c k t o y o u .
C H A I R P E R S O N : O k a y. O k a y t h a n k y o u .
A D V PA U L J O S E P H P R E TO R I U S S C :
in s u r a n c e a n a l o g y f o r t h e m o m e n t .

Right.

L e t u s s ta y w i th t h e

W e g o i n g t o d i tc h t h e i n s u r a n c e

a n a lo g y in d u e c o u r s e b u t th e i n s u r e r w h o i n s u r e s a g a i n s t r is k m u s t
h a v e t h e c a p a c it y – t h e fi n a n c i a l c a p a c it y t o m e e t it s o b l i g a t io n s .

Page 107 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

A n d y o u s a y t h a t is w h y J P

M o r g a n w a s c o n s i d e r e d a n d a p p o i n t e d a s t h e f o r th e m o m e n t i n s u r e r ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : Th e r is k m i ti g a t e r c o u n t e r p a r t y.
Right.

B u t y o u s a y t h a t R e g i m e n ts a lr e a d y h a d a p r e s e n c e i n t h a t

a r r a n g e m e n t?
D R J O N AT H A N Z O R A H B L O O M :

As th e s u p p l y d e v e l o p m e n t p a r t n e r

y e s C h a ir.
10

A D V PA U L J O S E P H P R E TO R I U S S C : To J P M o r g a n ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C : S o R e g i m e n t s h a d a p r e s e n c e i n
b o t h th e s e s e r ie s o f a r r a n g e m e n t s ?
D R J O N AT H A N Z O R A H B L O O M : It a p p e a r s s o .
A D V PA U L J O S E P H P R E T O R I U S S C : B u t w h a t d id B A D A C d e c i d e t h e n
a ft e r t h is r e c o m m e n d a ti o n w a s p u t b e f o r e i t ?
D R J O N ATH A N Z O R A H B L O O M :

C h a i r t h e y d e c id e d B A D A C o r t h e –

d e c i d e d n o t to a p p o i n t J P M o r g a n to l e a d a n d u n d e r w r i te t h e U S d o l la r
1 .5 b i lli o n l o a n .
20

I n o t h e r w o r d s t h a t o n e – o n e r e c o m m e n d a t io n th a t

w a s m a d e t o t h i s c o m m i t t e e w a s r e m o v e d a t t h a t p o i n t . S o o n ly – t h e
o n ly t h i n g t h a t J P M o r g a n w a s – w a s m a n d a t e d t o d o i n t e r m s o f th is
a p p r o v a l w a s t o e s s e n t ia ll y h e d g e o r m i ti g a t e t h e r is k r e la t e d t o t h a t
lo a n .
A D V PA U L J O S E P H P R E T O R I U S S C :

So J P Morgan then was

a p p o i n t e d w i th R e g i m e n ts i n th e w in g s t o d e a l w i t h t h e r i s k m i t ig a ti o n

Page 108 of 212

31 MAY 2019 – DAY 103
a s p e c t o f th is g r o u p o f tr a n s a c ti o n s th a t y o u a r e g o i n g t o t a l k a b o u t ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H

P R E TO R I U S S C :

And

who

was

the

le a d

u n d e r w r i t e r – t h e l e a d e r a n d u n d e r w r i te r o f t h e l o a n , th e lo a n s in v o lv e d
o r th e 2 . 5 – 1 . 5 b il li o n d o l la r l o a n ?
DR

J O N AT H A N

ZORAH

BLOOM:

W e ll R e g i m e n ts

–

R e g i m e n ts

a r r a n g e d th a t in t e r m s o f o r t h e y – t h e y w e r e – th e y – b e c a u s e B A D A C
d i d n o t a p p r o v e J P M o r g a n ’s a p p o i n t m e n t fo r u n d e r w r i ti n g o r le a d a n d
u n d e r w r i t in g t h a t w a s t a k e n o v e r b y R e g i m e n ts . A n d th e u n d e r – t h e –
10

who underwrote …
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 R e g i m e n ts w a s a lr e a d y i n

t h e p i c t u r e b e c a u s e o f t h e tr a n s a c ti o n s y o u h a v e a lr e a d y d e s c r i b e d .
D R J O N AT H A N Z O R A H B L O O M :

C o r r e c t t h i s w a s in a d d i t io n t o t h e

work.
A D V PA U L J O S E P H P R E TO R I U S S C :
requested

perhaps

a

th o r o u g h

O k a y.

analysis

of

As the Chair has
the

agreements

and

a r r a n g e m e n ts .
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :
20

B e t w e e n Tr a n s n e t a n d i ts

a d v is o r s w il l b e i n c lu d e d i n y o u r fi n a l r e p o r t .
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a i r.
A D V PA U L J O S E P H P R E TO R I U S S C : T h a t w e w i ll p r e s e n t. B u t o n t h e
f a c e o f i t a q u e s ti o n t h a t a r is e s a n d I a m n o t s u r e y o u c a n a n s w e r i t
n o w o r i t h a s b e e n a n s w e r e d to d a te i s t h e r e ju s t s e e m s to b e a
d u p lic a ti o n i n t h e r e c o m m e n d a ti o n b y Mr R a m o s e b u d i i f o n e h a s r e g a r d

Page 109 of 212

31 MAY 2019 – DAY 103
t o th e w o r d i n g y o u h a v e u s e d i n y o u r p r e s e n t a ti o n . B e c a u s e i f y o u l o o k
a t th e f ir s t b u l le t J P M o r g a n w a s r e q u e s te d t o b e a p p o i n te d o n
c o n fi n e m e n t t o l e a d a n d u n d e r w r it e t h e e q u iv a le n t s y n d i c a t e d r a n d l o a n
o f 1 . 5 b i ll io n d o l la r s a n d i t s e e ms t h a t th e s a m e a p p o in t m e n t e x is ts in
t h e s e c o n d b u ll e t a n d h a d a lr e a d y b e e n m a d e i n t e r m s o f t h e
a r r a n g e m e n t y o u h a v e a l r e a d y d e s c r ib e d ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

I s t h a t c o r r e c t? A lr i g h t . Th e n i f

y o u w o u l d g o o v e r th e p a g e p le a s e to p a g e 11 y o u t h e r e d e a l w i th t h e
10

s u c c e s s fe e o r p e r f o r m a n c e f e e a n d y o u m a k e a c o m m e n t , w h a t i s t h a t?
D R J O N AT H A N Z O R A H B L O O M :

C h a ir a s w e – a s m e n t io n e d

p r e v i o u s ly n o s u c c e s s f e e Tr a n s n e t d o e s n o t p e r m it s u c c e s s – th e
c h a r g i n g o f s u c c e s s f e e s s o n o s u c c e s s f e e s s h o u ld h a v e b e e n c h a r g e d
o r p a id a s s e r v ic e s p e r fo r m e d a s p a r t o f t h e tr a n s a c ti o n a d v is o r y
s e r v ic e s f o r R e g i m e n ts a s t h e y h a d a lr e a d y b e e n a p p o i n te d a n d th is
is s u e w ill b e d e a l t w i t h s e p a r a te ly.
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 T O R I U S S C :
you make.
20

O k a y b u t t h e r e a r e t w o p o in t s

T h e o n e is th a t th e Tr a n s n e t p o l ic ie s d o n o t p e r m i t th e

payment of success fees.
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : O r p e r f o r m a n c e f e e s .
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :

A l r ig h t .

They are presumably

t o o s u b j e c t iv e a n d t o o r a n d o m a n d i n c a p a b le o f p r e c is e d e fi n i t io n .

Page 110 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M :

Ye s C h a ir i t is a – i t is e s s e n t ia ll y

a b o u t w h a t p e r c e n t a g e y o u w a n t i f I c a n p u t it t h a t w a y a n d w h a t is th e
a m o u n t t h a t a p e r c e n t a g e is b e i n g a p p li e d to ?

S o y e s i t – fr o m a

s u c c e s s f e e b a s is i t is a q u e s ti o n o f y o u t a k e r is k if y o u d o in g i t o n th a t
b a s is . I n o t h e r w o r d s if y o u a r e n o t s u c c e s s f u l i n t e r m s o f w h a t y o u r
m a n d a t e is th e n y o u d o n o t g e t p a i d . I f y o u a r e y o u d o g e t p a i d . B u t
t h a t w a s n o t Tr a n s n e t p o l ic y.
A D V PA U L J O S E P H P R E T O R I U S S C : Ye s b u t i n th is c a s e th e s u c c e s s
f e e w a s j u s t o n e c o m p o n e n t o f a m u c h l a r g e r fe e ?
10

D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :

I t is n o t a s i f R e g i m e n ts t o o k

any risk?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : T h e y ju s t g o t a n a d d e d s u c c e s s
fee as a bonus or thank you?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :

But anyway you say that – you

s a y t w o t h i n g s I t h i n k o r y o u h a v e a l r e a d y s a i d tw o th in g s .

O n e is

Tr a n s n e t p o l ic y d o e s n o t p e r m i t s u c c e s s f e e s .
20

D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :

A n d y o u a ls o s a y t h a t t h e

o r i g in a l c o n tr a c t u a l a r r a n g e m e n t d i d n o t p e r m i t a s u c c e s s fe e ?
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a i r t h a t i s t r u e .
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 a n d t h e n th e s e c o n d b u ll e t
w h a t d o y o u s a y th e r e ?

Page 111 of 212

31 MAY 2019 – DAY 103
C H A I R P E R S O N : B e f o r e t h a t j u s t t o f o ll o w t h is – s o a r e y o u s a y i n g a s
y o u u n d e r s ta n d Tr a n s n e t ’s a g r e e m e n t w it h R e g i m e n t s i t w a s t h a t – t h e y
w o u ld b e p a i d fo r t h e ir s e r v i c e s i n i ti a lly w i t h o u t a n y s u c c e s s f e e . T h e r e
w a s n o s u c c e s s fe e m e n t io n e d b e c a u s e Tr a n s n e t p o l ic y d o e s n o t a ll o w
that.
D R J O N AT H A N Z O R A H B L O O M : 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 : Is t h a t r i g h t ?
D R J O N AT H A N Z O R A H B L O O M : Ye s .
C H A I R P E R S O N : S o w h e t h e r t h e y h a d s u c c e e d e d o r n o t t h e y w o u l d s ti ll
10

h a v e b e e n p a id , is th a t r i g h t?
D R J O N AT H A N Z O R A H B L O O M : As p a r t o f th e i r tr a n s a c ti o n ?
C H A I R P E R S O N : I n te r m s o f t h a t k i n d o f a r r a n g e m e n t .
D R J O N AT H A N Z O R A H B L O O M :

C o r r e c t a s p a r t o f t h e ir t r a n s a c t io n

a d v is o r y f e e .
C H A I R P E R S O N : Ye s , y e s .
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a i r.
CHAIRPERSON:

S o – b u t l a t e r o n w h a t h a p p e n s is t h a t M r P h e t o lo

R a m o s e b u d i p r e p a r e s a m e m o r a n d u m w h ic h r e c o m m e n d s th a t a p a r t
fr o m b e i n g p a i d w h a t h a d b e e n a g r e e d w h ic h w o u l d h a v e n o t h i n g t o d o
20

w i t h s u c c e s s o r f a i lu r e t h e y m u s t i n a d d i ti o n b e p a id a s u c c e s s f e e .
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
CHAIRPERSON:

A n d y o u a r e s a y i n g t h a t w h e n o n e ta lk s a b o u t th e

s u c c e s s fe e i n t h is c o n te x t a s u c c e s s fe e g e n e r a l ly a p p l ie s i f th e – i f
t h e b a s is is i f y o u a c h i e v e y o u r t a r g e t y o u w il l b e p a i d b u t i f – t h is is
w h a t y o u w i ll b e p a id . B u t i f y o u d o n o t s u c c e e d y o u w il l n o t b e p a i d

Page 112 of 212

31 MAY 2019 – DAY 103
a n y th in g .
D R J O N AT H A N Z O R A H B L O O M : 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 : S o h e r e w e g e t a c o m b i n a ti o n o f t h e t w o r e g i m e s th a t
is p a r t o f t h e p o i n t y o u m a k e .
D R J O N AT H A N Z O R A H B L O O M :

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

A s y o u c o r r e c tl y

p o i n t e d o u t th e s u c c e s s f e e is o n t o p o f t h e a d v is o r y f e e .
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M :

Fo r w h ic h t h e y h a v e a lr e a d y b e e n

paid.
10

CHAIRPERSON:

Ye s .

A n d o n e s h o u l d n o r m a l ly c h o o s e o n e o r t h e

o th e r a n d n o t h a v e b o t h .
D R J O N AT H A N Z O R A H B L O O M : 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 .
A D V PA U L J O S E P H P R E TO R I U S S C :

Then you make an important –

t h e n y o u m a k e a n i m p o r t a n t o b s e r v a t io n D o c to r B l o o m i n t h e s e c o n d
b u ll e t o n p a g e 11 . W h a t i s t h a t ?
D R J O N AT H A N Z O R A H B L O O M :

C h a ir i n 2 0 1 4 w h e n t h e – t h e C D B

lo a n w a s b e i n g n e g o t i a t e d a n d c o n c l u d e d Tr a n s n e t h a d a – o r Tr a n s n e t
h a d a fu n d i n g te a m t h a t i n c l u d e d t h r e e h i g h ly e x p e r i e n c e d f u n d i n g
20

managers

and an analyst.

B e tw e e n t h e m t h e y h a d c u m u la t iv e

e x p e r i e n c e o f i n e x c e s s o f f if t y y e a r s i n f u n d r a i s i n g i n m o s t c a p i t a l
m a r k e t s . S o a s a c o n s e q u e n c e o n e b e g s t o a s k th e q u e s t io n w h y w a s i t
n e c e s s a r y to e n g a g e a n e x t e r n a l p a r ty t o d o t h e w o r k w h e r e t h e
e x p e r t is e a n d c a p a c i ty e x i s t e d w i t h i n Tr a n s n e t a t th a t ti m e .
A D V PA U L J O S E P H P R E TO R I U S S C :

Right.

Page 113 of 212

A n d a s I u n d e r s ta n d i t

31 MAY 2019 – DAY 103
a n d y o u m a y s a y t h i s e ls e w h e r e i t w a s n o t – i t i s n o t o n ly y o u r o p in io n
t h e c a p a b i li t ie s a n d e x p e r ti s e th a t r e s i d e d w i t h i n Tr a n s n e t h a d b e e n
r e c o g n is e d e x t e r n a ll y a s w e l l .
D R J O N AT H A N Z O R A H B L O O M :

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

Ye s b e c a u s e

t h e r e is – th e p e o p l e t h a t w e r e – i f I c a n p u t i t t h is w a y t h e – t h e
tr e a s u r y d e p a r t m e n t w i t h – a n d a li g n e d w i t h t h e fu n d i n g te a m w e r e
r e c o g n is e d a n d w e w il l s e e th a t l a te r a s w e ll in a s u r v e y a s b e in g o n e
o f t h e b e s t tr e a s u r i e s i n t h e w o r l d i n 2 0 1 0 w h i c h – w h ic h p o i n ts to t h e
f a c t t h a t t h a t w o u ld n o t o c c u r if th e n e c e s s a r y c a p a c i t y a n d s k il ls w a s
10

n o t a v a i la b l e w i t h i n t h e in s ti t u t i o n .

S o y e s t h a t – it ju s t – o n e ju s t

w o n d e r s w h y w a s t h is p a r tic u la r s i t u a t io n a ll o w e d t o o c c u r.
A D V PA U L J O S E P H P R E TO R I U S S C :

W h a t d o Tr a n s n e t p o lic ie s s a y

a b o u t t h a t?
D R J O N ATH A N Z O R A H B L O O M :

C h a i r i n t e r m s o f th e Tr a n s n e t

procedure procurement procedures and procurement manual the PPM
b y le v e r a g i n g t h ir d p a r ti e s t o l e a d a n u n d e r – t o le a d , a r r a n g e a n d
n e g o ti a te t h e C D B l o a n w h il e h a v i n g a f u l l c a p a c i ta t e d i n t e r n a l d e b t
r a i s i n g te a m . A n d I w o u ld l ik e t o C h a ir if I m a y r e f e r y o u t o a p a g e in
the – in the report.
20

A D V PA U L J O S E P H P R E TO R I U S S C : Yo u ta lk in g o f r e p o r t 2 B n o w.
D R J O N AT H A N Z O R A H B L O O M : 2 B . R e p o r t 2 B i t i s p a g e 6 8 6 4 o n t h e
le f t h a n d – th e l e f t h a n d p a g e .
C H A I R P E R S O N : I a m s o r r y Mr P r e to r i u s I a m l o o k in g a t w h a t y o u g a v e
m e t h a t w i ll n o t h a v e t h e s a m e p a g e n u m b e r s o r w il l 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 e s a m e p a g e n u m b e r s

Page 114 of 212

31 MAY 2019 – DAY 103
have been put in.
C H A I R P E R S O N : O h o k a y.
A D V PA U L J O S E P H P R E T O R I U S S C :

A n d t h e y a r e i n th e to p r i g h t

hand column.
C H A I R P E R S O N : O k a y w h a t is t h e p a g e n u m b e r D o c to r B l o o m ?
D R J O N AT H A N Z O R A H B L O O M : 0 6 8 6 4 .
C H A I R P E R S O N : 0 6 – M r P r e t o r i u s I o n ly s e e a p a g e w it h a 0 6 o n t h e
la s t p a g e c o v e r b u t w h a t I h a v e i n s id e d o e s n o t h a v e 0 6 . .
A D V PA U L J O S E P H P R E TO R I U S S C : A lr i g h t C h a ir
10

CHAIRPERSON: Pages I have got 95.
D R J O N AT H A N Z O R A H B L O O M : O th e r w is e I c a n …
CHAIRPERSON: I have got 95, 81, 77 I got 64.
D R J O N AT H A N Z O R A H B L O O M : C h a i r i f I c o u l d a s s i s t ?
C H A I R P E R S O N : A m I l o o k i n g a t th e r i g h t t h i n g ?
D R J O N AT H A N Z O R A H B L O O M : Ye s y o u a r e .
A D V PA U L J O S E P H P R E T O R I U S S C : Ye s i f o n e h a s th e t w o p a g e s i n
fr o n t o f y o u C h a ir.
CHAIRPERSON: Ja.
A D V PA U L J O S E P H P R E TO R I U S S C :

20

S o if o n e ju t tu r n s i t s i d e w a y s

t h a t – t h e o th e r w a y C h a ir. S o y o u h a v e – y o u h a v e u n a b l e t o r e a d t h e
one page next to the other page.
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 : If y o u l o o k a t th e t o p r i g h t h a n d
c o r n e r.
CHAIRPERSON: Oh they…

Page 115 of 212

31 MAY 2019 – DAY 103
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 i ll s e e t h e p a g e s t h e r e .
CHAIRPERSON:

T h e y p u t t h e s t a p l e r t h e r e s o i t m a k e s i t d i ffi c u l t t o

see the page numbers.
A D V PA U L J O S E P H P R E TO R I U S S C : A h y e s C h a ir w e c h a n g e d .
C H A I R P E R S O N : J a . I t h in k t h e – I th in k t h is …
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 c a n I a s s is t ? C a n I g i v e
you another copy?
C H A I R P E R S O N : O k a y, o k a y.
A D V PA U L J O S E P H P R E T O R I U S S C :
10

W h ic h is n o t – w h e r e t h e p a g e

n u m b e r s a r e n o t o b s tr u c te d .
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 . Ta k e t h is o n e .
A D V PA U L J O S E P H P R E TO R I U S S C : P a g e 6 8 6 4 .
D R J O N AT H A N Z O R A H B L O O M : 6 8 6 4 y e s C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : J a I k n o w it .
C H A I R P E R S O N : A r e y o u g o in g to n e e d th i s c o p y o r n o t r e a ll y ?
A D V PA U L J O S E P H P R E TO R I U S S C : I h a v e b e e n g iv e n a n o t h e r c o p y
C h a ir.
C H A I R P E R S O N : O k a y. W il l y o u r j u n i o r n e e d t h i s o n e ?
A D V PA U L J O S E P H P R E TO R I U S S C : P e r h a p s w e c o u l d ta k e t h a t o n e

20

back.
CHAIRPERSON: Ja maybe take that one. Ja okay thank you. I think it
can be used if you know where the page numbers are or you get the
s t a p l e t o b e o n a d i ff e r e n t c o r n e r o f t h e d o c u m e n t . Ye s .
D R J O N AT H A N Z O R A H B L O O M :

O k a y. T h a n k y o u C h a ir.

O k a y i t is

o n t h e l e ft h a n d – i n t h e l e f t h a n d p a g e o n t h a t d o u b le p a g e .

Page 116 of 212

31 MAY 2019 – DAY 103
P a r a g r a p h – I w o u ld l ik e t o r e f e r t o 1 6 . 2 w h ic h is – w h ic h is a m e n d e d
Tr a n s n e t P r o c u r e m e n t P r o c e d u r e s M a n u a l v e r s i o n 3 d a te d 1 J u n e 2 0 1 5 .
A n d I w o u l d l ik e t o r e f e r t o th e f ir s t p a r a g r a p h w h i c h is 1 6 . 2 .1 . a n d j u s t
r e a d it b y w a y o f e x p l a n a ti o n ? C h a p te r 8 o f t h e s a id m a n u a l r e f e r s t o
t h e i d e n t i fic a ti o n o f s tr a te g ic s p e c i a l is t u n i ts b u t w h a t i s in t e r e s t in g is
t h a t i n t h is p a r t ic u l a r m a n u a l i n t h e a m e n d e d o n e th e tr e a s u r y is n o t
in c l u d e d a s a s tr a t e g i c u n i t.
compulsory

u t il is a ti o n

A n d t h e r e f o r e i n 8 . 3 t h a t r e f e r s to t h e

o f s p e c i a lis t

u n i ts

the

m a n u a l s t a te s

the

f o ll o w i n g :
10

“ T h e s p e c ia li s t

u n i ts

m e n t io n e d

above

must be

u til is e d b y o t h e r Tr a n s n e t e n ti ti e s f o r r e q u i r e d g o o d s ,
c o n s tr u c ti o n w o r k s a n d s e r v i c e s f a ll in g w i t h i n t h e ir
s c o p e a n d th is i s i m p o r t a n t . T h e e x t e r n a l m a r k e t m a y
n o t b e a p p r o a c h e d fo r g o o d s c o n s tr u c t io n w o r k s a n d
s e r v ic e s f a l li n g w i th in t h i s s tr a t e g i c s p e c ia lis t u n i ts
o r d iv is i o n c o r e c o m p e t e n c y a r e a s . T h i s w o u ld a l s o
in c l u d e s p e c ia li s t s e r v i c e s th a t a r e r e q u ir e d w h ic h
m a y b e p e r f o r m e d b y a p a r ti c u l a r in t e r n a l fu n c t io n
a n d – a n d I u s e th e e x a m p l e o f g r o u p tr e a s u r y a n d
20

g r o u p ta x . ”
S o C h a ir t h is j u s t a l ig n s w i th t h e p o in t o n – i n 2 0 1 4 w h e n t h e C D B l o a n
w a s b e i n g n e g o t ia t e d t h a t t h e n e c e s s a r y e x p e r ti s e w a s a v a il a b l e a n d i n
t e r m s o f th e p r o c u r e m e n t a n d p r o c e d u r e s m a n u a l t h e y w e r e r e q u ir e d t o
u s e t h e ir in t e r n a l e x p e r t is e .
A D V PA U L J O S E P H P R E TO R I U S S C : A lr i g h t .

Page 117 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M :

Ex c e p t f o r t h e fa c t th a t in th is – a s

y o u c a n s e e t h is w a s i n J u n e 2 0 1 5 a n d t h a t w a s p r i o r t o – s o t h is w a s
c h a n g e d t h e n w h e n i t c a m e to f u r t h e r a n a – fu r t h e r u til is a ti o n o f
in t e r n a l u n i t s .
A D V PA U L J O S E P H P R E TO R I U S S C : A lr i g h t . D o c t o r B l o o m y o u h a v e
ju s t q u o t e d fr o m t h e r e p o r t w h i c h h a s in t u r n q u o t e d fr o m o r i g i n a l p o li c y
d o c u m e n t a ti o n o f Tr a n s n e t .
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C : I n y o u r f i n a l a ffi d a v it y o u r f i n a l
10

e x p e r t r e p o r t w e w il l o b v i o u s ly h a v e t o r e f e r to t h e o r i g in a l d o c u m e n t in
f o r c e a t th e ti m e t h e s e tr a n s a c t io n s w e r e e n te r e d i n to .
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C : A n d w h a t y o u s a y i n g in s u m is
t h a t w h e r e s p e c i a lis t u n i ts e x is te d w i t h i n Tr a n s n e t t h e r e w a s a n
e x p r e s s p o l ic y p r o h ib i ti o n a g a i n s t g o i n g o u t t o t h e m a r k e t f o r t h o s e
s a m e s e r v ic e s .
D R J O N AT H A N Z O R A H B L O O M : 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 : B u t – b u t i s th e p o i n t b e i n g m a d e a t 1 6 .2 o f t h e r e p o r t
t h e o n e y o u h a v e j u s t r e a d o r w e r e y o u a l s o m a k in g t h e p o i n t t h a t a t a

20

c e r t a i n s t a g e t h e - t – e i n te r n a l p o l ic y w a s a m e n d e d i n s u c h a w a y t h a t
tr e a s u r y w a s e x c l u d e d ?
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a i r a s a – in o th e r w o r d s th a t –
t h a t w o u l d h a v e p e r m i t te d i f i n t e r m s o f t h e P P m a n u a l a s a m e n d – P P P
o r th e P P M
C H A I R P E R S O N : Ye s .

Page 118 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M :

PP manual as amended that would

h a v e r e s u l te d in t h e m h a v i n g – h a v i n g t h e a b i li ty t o g o o u t to t h e
market.
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M :

B e c a u s e th e s tr a t e g ic u n i t s s u c h a s

tr e a s u r y i n th is c a s e i s e x c l u d e d .
CHAIRPERSON:

Ye s .

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

e x c lu s i o n w a s n o t a p p li c a b l e a t t h e t i m e o f th is tr a n s a c ti o n ?
D R J O N AT H A N Z O R A H B L O O M :
10

T h a t i s c o r r e c t b e c a u s e t h is w a s

2014.
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M : A n d t h i s w a s – t h is w a s 2 0 1 5
C H A I R P E R S O N : Ye s o k a y.
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
C H A I R P E R S O N : O k a y. O k a y.
D R J O N AT H A N Z O R A H B L O O M :

B u t C h a ir i t w il l b e c o m e a p p l ic a b l e

w h e n w e p r o c e e d f u r th e r t h a t is w h y I h a v e h i g h li g h te d i t h e r e s o I c a n
ju s t r e f e r y o u b a c k t o t h a t s e c t i o n 8 .3
C H A I R P E R S O N : Ye s . Ye s .
20

A D V PA U L J O S E P H P R E T O R I U S S C : S o w e a r e p a s t o n e o ’c lo c k b u t
p e r h a p s i f I c o u l d j u s t f i n is h th is C h a ir.
CHAIRPERSON: Ja, ja.
A D V PA U L J O S E P H P R E TO R I U S S C :

So are you saying that that

e x c lu s i o n o f t r e a s u r y o r t h e – l e t u s p u t it a d i ff e r e n t w a y w h ic h is m o r e
a c c e s s i b l e t o u s a t l e a s t . T h a t t h e p r o v is i o n i n Tr a n s n e t p o li c i e s w h i c h

Page 119 of 212

31 MAY 2019 – DAY 103
w o u ld h a v e p r e v e n t e d g o i n g o u t t o m a r k e t w a s r e m o v e d c e r t a i n ly i n
r e s p e c t o f tr e a s u r y ?
D R J O N AT H A N Z O R A H B L O O M : Ye s f r o m th e 1 J u n e 2 0 1 5 .
A D V PA U L J O S E P H P R E TO R I U S S C : A n d th a t w a s r e l e v a n t t o f u r th e r
tr a n s a c ti o n s t h a t y o u a r e g o i n g t o d e a l w it h ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V M A H LA P E S E L L O : S o i t is p o s s i b l e t h a t s o m e o n e w i th i n Tr a n s n e t
w o u ld h a v e s e e n w e c a n n o t g o o u t t o m a r k e t w e h a v e to a m e n d t h e
p o li c y s o w e c a n e m p l o y e x te r n a l a d v i s o r s ?
10

D R J O N AT H A N Z O R A H B L O O M : It a p p e a r s t o b e s o .
A D V PA U L J O S E P H P R E TO R I U S S C : I s t h is a c o n v e n ie n t ti m e C h a ir ?
CHAIRPERSON:

Ye s b u t I j u s t w a n t t o s a y th is b e f o r e w e – w e

adjourn. We just have to keep our eyes on certain things that we are
g e t t in g a s w e g o a lo n g .

W e h a v e s e e n t h a t i n r e g a r d to th e f e e s f o r

t h is tr a n s a c t io n a l – tr a n s a c ti o n a l a d v is o r y s e r v i c e s a n a m o u n t o f 3 5 ,
s o m e t h i n g m il li o n h a d b e e n f ix e d b u t t h e n t h e a m o u n t w e n t u p t o m o r e
t h a n 7 0 0 % a s I u n d e r s t a n d it 7 0 0 % t h a t is – t h a t is v e r y h u g e a n d
e a r l ie r t o d a y a n d y e s t e r d a y I w a s h e a r i n g e v i d e n c e o f s i m il a r t h in g s
w h e r e – I m e a n w e d e a l t y e s t e r d a y w i t h e v id e n c e th a t a s u p p l ie r s a i d i f
20

w e d o t h is f o r y o u Tr a n s n e t i t w o u ld c o s t R 9 m il li o n b u t w e k n o w t h a t
u l ti m a t e ly it c o s ts R 6 0 0 a n d s o m e t h i n g m i lli o n . S o h e r e w e h a v e t h a t
k in d o f s it u a ti o n b u t w e h a v e h e a r d I t h i n k i n r e g a r d t o E s k o m m a y b e
w i t h r e g a r d t o Tr a n s n e t a s w e ll a lr e a d y s i t u a t i o n s w h e r e t h e r i s k
c a p a c i ty w i th in t h e e n t i ty w i t h i n a p a r a s ta t a l f o r c e r t a i n w o r k t o b e d o n e
b u t t h a t w o r k is g i v e n t o a n d o u ts i d e s u p p l ie r i n c i r c u ms t a n c e s w h e r e a t

Page 120 of 212

31 MAY 2019 – DAY 103
le a s t s o f a r w e h a v e n o t h e a r d a n y e v i d e n c e w h a t w a s w r o n g w it h u s i n g
in t e r n a l c a p a c i ty a n d fr o m w h a t y o u h a v e s a i d tr e a s u r y h e r e Tr a n s n e t’s
o w n tr e a s u r y h a d t h e c a p a c i ty a n d h a d p e o p l e w h o w e r e in t e r n a t i o n a l ly
a c c la i m e d a s g o o d p e o p le f o r d o i n g t h e – p r o v i d i n g t h e s e r v ic e s t h a t
w e r e n o w b e i n g g i v e n t o o u ts i d e e n ti t ie s a t h u g e a m o u n ts .
D R J O N AT H A N Z O R A H B L O O M : T h a t i s c o r r e c t C h a ir I th in k w h a t is
i m p o r t a n t ju s t t o n o t e i s t h a t w e a r e s p e c i fi c a ll y t a l k i n g a b o u t t h e
funding side.
C H A I R P E R S O N : Ye s , y e s .
10

D R J O N AT H A N Z O R A H B L O O M : W e w i ll s ti ll g e t t o t h e
CHAIRPERSON: YEs.
D R J O N AT H A N Z O R A H B L O O M : U s e o f t h e t r e a s u r y w h e n i t c o m e s to
t h e m i ti g a ti o n o f th e r i s k i n s tr u m e n ts .
C H A I R P E R S O N : Ye s . B u t a t l e a s t t h e f u n d in g s i d e t h e r e w a s p r o p e r
c a p a c i ty t h a t c o u l d h a v e b e e n u s e d .
D R J O N AT H A N Z O R A H B L O O M : 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 . T h a n k y o u . W e …
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 m a y I j u s t s a y
C H A I R P E R S O N : Ye s .

20

A D V PA U L J O S E P H P R E TO R I U S S C :

T h a t w e w il l i n t h e r e p o r t d e a l

with the sequence.
C H A I R P E R S O N : W i t h a ll o f t h e s e t h i n g s .
A D V PA U L J O S E P H P R E TO R I U S S C : O f a p p o in t m e n ts
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 T O R I U S S C :

A n d w e w il l a ls o d e a l w i t h t h e

Page 121 of 212

31 MAY 2019 – DAY 103
s e q u e n c e o f c o s t e s c a la t io n .
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 th e y a r e a ls o d e a l t w i th in

report 2A.
C H A I R P E R S O N : Ye s o k a y.
A D V PA U L J O S E P H P R E TO R I U S S C : W h i c h i 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 : N o t w i th in t h e p r o v i n c e o f r e p o r t
2 B
10

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 w e w ill d o i t i n a n y e v e n t .
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 : C h a ir is t h is a c o n v e n ie n t ti m e ?
C H A I R P E R S O N : N o th a t is a lr ig h t . W e w i ll t a 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 r e s u m e a t f iv e p a s t t w o . W e a d j o u r n .
R E G I S T R A R : Al l r i s e .
INQUIRY ADJOURNS
INQUIRY RESUMES
C H A I R P E R S O N : Yo u m a y p r o c e e d M r Pr e t o r i u s .

20

A D V PA U L J O S E P H P R E TO R I U S S C :

T h a n k y o u C h a ir.

Dr Bloom

b e f o r e w e d e a l w i t h t h e c o n t e n t s o f p a g e 1 2 o f y o u r p r e s e n t a ti o n .

I

w o u ld j u s t lik e t o ta k e s te p b a c k . Yo u w i l l r e c a ll y o u r e v i d e n c e t h a t i n
r e s p e c t o f c e r t a i n a d v i s o r y s e r v ic e s t h e M c K in s e y C o n s o r ti u m w a s t h e
o r i g in a l a p p o in t e e ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .

Page 122 of 212

31 MAY 2019 – DAY 103
A D V PA U L J O S E P H P R E TO R I U S S C : A s e r i e s o f e v e n ts o c c u r r e d t h e
r e s u l t o f w h ic h w a s to in tr o d u c e R e g i m e n ts to l a r g e r c h u n k s o f t h e
c o n tr a c t u n til e v e n t u a l ly i t e n d e d u p a s t h e s o le s e r v ic e p r o v i d e r f o r
w h a t w a s o r ig i n a ll y M c K i n s e y ’s c o n tr a c t. C o r r e c t?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : T h e q u e s t i o n a r is e s a n y – i n a n y
o f t h o s e s t e p s i n w h ic h R e g i m e n t s to o k a n in c r e a s i n g p a r t o f t h e o v e r a ll
function

contracted

out

by

Tr a n s n e t

were

proper

procurement

p r o c e d u r e s f o l lo w e d ?
10

D R J O N AT H A N Z O R A H B L O O M : C h a i r I a m – I a m u n s u r e a b o u t t h a t .
C H A I R P E R S O N : Ye s b e c a u s e t h a t is n o t y o u r a r e a .
D R J O N AT H A N Z O R A H B L O O M : 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 D V PA U L J O S E P H P R E TO R I U S S C :

N o I j u s t h i g h l ig h t t h a t C h a i r to

point out …
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 : Th a t t h a t is p a r t o f e v id e n c e 2 A
b u t w e w il l i n c o r p o r a t e i t i n t h e r e p o r t …
C H A I R P E R S O N : Ye s .
20

A D V PA U L J O S E P H P R E TO R I U S S C : 2 B .
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 :

Vo l u m e 2 B o f t h e r e p o r t b u t m y

in s t r u c t i o n s a r e th a t …
CHAIRPERSON: Hm.
A D V PA U L J O S E P H P R E TO R I U S S C : N o p r o c e d u r e s …

Page 123 of 212

31 MAY 2019 – DAY 103
CHAIRPERSON: Ja.
A D V PA U L J O S E P H P R E TO R I U S S C : N o p r o c u r e m e n t p r o c e d u r e s …
CHAIRPERSON: Ja.
A D V PA U L J O S E P H P R E TO R I U S S C : O r o p e n t e n d e r p r o c e d u r e s w e r e
f o ll o w e d .
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 : I n e a c h o f th o s e s t e p s .
CHAIRPERSON: Ja.
A D V PA U L J O S E P H P R E TO R I U S S C :
10

Yo u h a v e a ls o to ld t h e C h a ir

D r B lo o m t h a t fr o m 3 5 m il li o n – t h e o r ig in a l c o n t r a c t p r i c e – t o 2 6 5
m il li o n – t h e – a t le a s t a fi n a l p a y m e n t a l t h o u g h i t a p p e a r s t h e r e w e r e
m o r e w h ic h y o u h a v e n o t d e a l t w i th in y o u r r e p o r t – s e v e r a l s t e p s t o o k
place between the 35 and 265. Correct?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C : O n e o f t h e m w a s a n in c r e a s e o f
w h a t y o u r e f e r to a s t h e s u c c e s s fe e ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

O f R 1 6 6 m il li o n .

Yo u h a v e

in v e s t i g a t e d h o w t h a t f e e w a s c a lc u la t e d a n d w i t h y o u r e x p e r i e n c e a n d
20

k n o w l e d g e i n t h e t r a d e a s it w e r e y o u a r e a b l e t o g iv e a n o p in i o n t o t h e
C h a ir a s t o h o w th a t w a s m a d e u p a n d w h e t h e r t h a t is w i t h i n
r e a s o n a b l e p a r a m e t e r s o r n o r m a l a c c e p t a b le p a r a m e t e r s .
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : T h a t is t h e t a s k w e a r e g o i n g t o
d o n o w.

Page 124 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M : O k a y.
A D V PA U L J O S E P H P R E TO R I U S S C : S o y o u s a y i n th e fir s t b u l le t o n
p a g e 1 2 t h a t th e i n v o ic e f o r R 1 6 6 m i ll io n e x c l u d i n g VAT w a s m a d e u p o f
t w o a m o u n t s . W h a t w e r e t h o s e a m o u n ts ? W e a r e o n p a g e 1 2 C h a ir.
D R J O N AT H A N Z O R A H B L O O M :

A n a m o u n t o f 1 5 2 . 7 m ill i o n

- 0 .8

m il li o n – f o r L e a d M a n a g e r a n d D e b t O r i g i n a t o r s e r v ic e s r e l a t e d t o t h e
C D B l o a n a n d C h a ir t h e r e w e r e tw o o t h e r a m o u n ts w h ic h a r e c o m b i n e d
in th e s e c o n d b u ll e t w h ic h r e f e r to a s s is t a n c e R e g i m e n t s p u r p o r t e d t o
p r o v i d e f o r c e r t a i n o f t h e h e d g in g i n s tr u m e n ts th a t w e w i ll d is c u s s l a t e r.
10

A D V PA U L J O S E P H P R E TO R I U S

SC:

That

is

the

debt

risk

m a n a g e m e n t i n s tr u m e n ts ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t . S o t h e r e w e r e – t h e r e w e r e
s p e c i f ic a l ly t w o o f th e i n s tr u m e n t s t h a t w e a r e g o i n g to d is c u s s t h r o u g h
t h e t e s ti m o n y t h a t r e l a t e t o f e e s o r r e l a te to t h a t p a r ti c u la r c o m p o n e n t
of the 166.
A D V PA U L J O S E P H P R E TO R I U S S C :

A n d w h a t d o y o u s a y in t h e

s e c o n d b u l le t t h e r e – s e c o n d p r i n c ip a l b u l l e t t h e r e o n p a g e 1 2 ?
D R J O N AT H A N Z O R A H B L O O M : Th e o n e b a s e d – w h e r e i t s a y s b a s e d
o n m y fi n a n c i a l ( in t e r v e n e s ) ?
20

A D V PA U L J O S E P H P R E TO R I U S S C : W e l l le t u s – b e fo r e w e g o th e r e .
D R J O N AT H A N Z O R A H B L O O M : O k a y.
A D V PA U L J O S E P H P R E TO R I U S S C :

Yo u h a v e e x p e r ie n c e in t h e

fi n a n c i a l in d u s tr y. C o r r e c t?
D R J O N AT H A N Z O R A H B L O O M : ( N o a u d i b l e r e p ly ) .
A D V PA U L J O S E P H P R E TO R I U S S C : A n d y o u h a v e to l d t h e C h a i r t h a t

Page 125 of 212

31 MAY 2019 – DAY 103
you have – and you must say yes because a nod …
D R J O N AT H A N Z O R A H B L O O M : Ye s .
A D V PA U L J O S E P H P R E TO R I U S S C : W ill n o t b e p ic k e d u p – a n d y o u
h a v e t o l d t h e C h a ir t h a t in c l u d e d i n y o u r r a f t o f e x p e r i e n c e is r is k
m a n a g e m e n t – f in a n c ia l r is k m a n a g e m e n t a n d t h e f e e s c h a r g e d
t h e r e f o r e . Is t h a t c o r r e c t ?
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a i r.
A D V PA U L J O S E P H P R E TO R I U S S C : R ig h t. S o y o u a r e a b le t o m a k e
– pass a judgment on whether fees charged are out of the norm or
10

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

Am I

correct?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

A lr ig h t .

S o w h a t is th e n o r m ?

H o w is a f e e f o r a L e a d M a n a g e r a n d D e b t O r ig i n a t o r f o r a l o a n m a d e
up?
D R J O N AT H A N Z O R A H B L O O M :

O k a y.

C h a ir

there

are

two

c o m p o n e n ts . I t is n o r m a ll y a v a lu e . I n o t h e r w o r d s t h e – t h e a m o u n t t o
w h ic h t h e p e r c e n ta g e o f t h e fe e – th e p e r c e n ta g e th a t i s – th a t i s th e
f e e is c a lc u la t e d .
20

A D V PA U L J O S E P H P R E TO R I U S S C :

L e t u s d e a l w i t h t h e f ir s t o n e –

t h e a m o u n t o f m o n e y.
D R J O N AT H A N Z O R A H B L O O M : Ye s .
A D V PA U L J O S E P H P R E TO R I U S S C : W h a t is t h a t a m o u n t ?
D R J O N AT H A N Z O R A H B L O O M :

T h a t a m o u n t c o u l d a ls o b e t w o

c o m p o n e n ts d e p e n d i n g o n – o n w h a t d e c i s i o n i s m a d e .

Page 126 of 212

T h e fi r s t

31 MAY 2019 – DAY 103
c o m p o n e n t w o u l d b e o n th e – o n t h e c a p i t a l v a l u e . I n o th e r w o r d s fo r
in s t a n c e i f y o u a r e a p p ly in g fo r a h o m e l o a n a n d y o u t a k e – a n d i t is
R 1 0 0 0 o r R 1 m i ll i o n o r w h a t e v e r th e c a s e m a y b e a n d s o m e b o d y is
t a k i n g a f e e w h ic h is a p e r c e n t a g e . I t w o u l d b e a p e r c e n t a g e o f t h a t .
T h a t is th e c a p i t a l v a l u e .
A D V PA U L J O S E P H P R E TO R I U S

SC:

The

o r i g in a l

capital

value

lo a n e d ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t . I t is a l s o r e fe r r e d to i n th e
tr a d e a s n o t io n a l . T h e n o t i o n a l v a lu e .
10

A D V PA U L J O S E P H P R E TO R I U S S C : S o t h e fi r s t t e r m o f a r t – w e w il l
g e t t o h e d g in g l a t e r b u t th e fir s t t i m e o f a r t i s n o ti o n a l?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

I n a n y l o a n i t is t h e o r i g i n a l

c a p i t a l a m o u n t o f t h a t lo a n e x c l u d i n g i n te r e s t ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
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. S o th a t is n o ti o n a l.
CHAIRPERSON:

J u s t s o th a t I u n d e r s ta n d t h a t – th a t p a r t .

Ar e y o u

s a y in g w h e n o n e w a n ts t o – w h e n o n e is d e a li n g w i th f e e s f o r a L e a d
M a n a g e r a n d D e b t O r i g i n a to r o f a l o a n - i n th is c o n t e x t – o n e o f th e
20

fir s t t h i n g s t o k n o w is w h a t t h e c a p i t a l a m o u n t o f t h e l o a n i s ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
CHAIRPERSON:

And depend – maybe depending on a number of

t h i n g s y o u m i g h t h a v e t o b e a r t h a t in m i n d b e c a u s e t h e f e e m ig h t b e o r
a c o m p o n e n t o f t h e fe e m ig h t b e li n k e d t o t h e a m o u n t o f t h e l o a n ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.

Page 127 of 212

31 MAY 2019 – DAY 103
C H A I R P E R S O N : O k a y, a lr ig h t .
A D V PA U L J O S E P H P R E TO R I U S S C :

O f c o u r s e s a id t h e r e w e r e t w o

m a t t e r s t o b e a r i n mi n d w h e n o n e d e a ls w i t h th e a m o u n t. Yo u h a v e to ld
t h e C h a i r t h a t w h a t o n e d o e s w h e n o n e c a lc u la t e s a f e e is o n e h a s a n
a m o u n t a n d o n e a p p l ie s a p e r c e n t a g e th e n t o th a t a m o u n t . S o m y f e e
for example would be one percent of that amount?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : N o w y o u h a v e a ls o to ld t h e C h a ir
t h a t o n e c o u ld u s e t h e o r ig i n a l c a p it a l v a l u e o f t h e lo a n – n o ti o n a l – a s
10

t h e a m o u n t t o w h i c h o n e a p p li e s t h e p e r c e n ta g e ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
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 y o u c o u ld u s e s o m e t h i n g

e ls e . W h a t i s t h a t?
D R J O N AT H A N Z O R A H B L O O M : C h a i r t h a t is …
C H A I R P E R S O N : I a m s o r r y. B e fo r e th a t .
D R J O N AT H A N Z O R A H B L O O M : N o it is f in e .
CHAIRPERSON:

T h e r e f e r e n c e t o t h e o r i g i n a l c a p it a l i s t h a t th e

a m o u n t th a t u l t i m a te ly g e ts g r a n t e d a s a lo a n o r is i t t h e a m o u n t t h a t
your client may have asked you to get as a loan but you might have got
20

a l e s s e r a m o u n t ? R e f e r e n c e t o o r ig i n a l w h a t d o e s i t r e l a te t o ?
D R J O N AT H A N Z O R A H B L O O M :

C h a ir t h a t w o u l d b e p e r a g r e e m e n t.

I n o t h e r w o r d s i f – i f I w a s f o r i n s t a n c e s o u r c i n g a l o a n fo r y o u w e
w o u ld a g r e e t h a t th is is th e a m o u n t o f t h e l o a n a n d th a t w o u l d b e …
CHAIRPERSON: That I want you to get for me?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .

Page 128 of 212

31 MAY 2019 – DAY 103
C H A I R P E R S O N : J a , 2 b i lli o n fo r e x a m p le ?
D R J O N AT H A N Z O R A H B L O O M : J a .
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
CHAIRPERSON:

S o – s o w h e n th e tw o o f u s a r e – w h e n I a m g iv i n g

you a mandate for our purposes that is the original loan that you are
t a lk in g a b o u t?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
C H A I R P E R S O N : O r i g in a l a m o u n t ?
10

D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir b e c a u s e th a t i s
w h a t y o u a r e l o o k i n g fo r.
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M : S o th a t i s – th a t is m y m a n d a t e .
CHAIRPERSON:

Ye s .

I f - i f y o u o n ly s u c c e e d t o g e t m e 1 b i ll io n

in s t e a d o f t w o t h e – w h e n w e ta lk a b o u t t h e o r ig i n a l i t w i ll r e m a in 2
b i ll io n a n d th e 1 b il li o n y o u g o t w o u l d n o t b e r e f e r r e d t o a s th e
o r i g in a l ?
D R J O N AT H A N Z O R A H B L O O M :

T h a t is c o r r e c t b e c a u s e t h a t w a s –

that what was not part of the mandate.
20

C H A I R P E R S O N : O k a y.
D R J O N AT H A N Z O R A H B L O O M : T h e m a n d a t e w a s 2 b i ll io n .
C H A I R P E R S O N : O k a y, th a n k y o u .
A D V PA U L J O S E P H P R E TO R I U S S C : I s t h a t a l w a y s t h e c a s e o r d o e s
it d e p e n d o n t h e 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 ?
D R J O N AT H A N Z O R A H B L O O M : I t is a b o u t t h e – i t h a s g o t t o d o w i t h

Page 129 of 212

31 MAY 2019 – DAY 103
t h e a g r e e m e n t b e tw e e n th e p a r ti e s b e c a u s e w h a t m i g h t h a p p e n is t h a t
t h e p e r c e n t a g e c h a n g e s . If I …
A D V PA U L J O S E P H P R E TO R I U S S C : L e t u s n o t g o t o t h e p e r c e n ta g e .
D R J O N AT H A N Z O R A H B L O O M : N o , w i t h a l l t h e f e e s .
A D V PA U L J O S E P H P R E TO R I U S S C :

T h e C h a ir is j u s t ta lk in g a b o u t

t h e n o t i o n a l o r t h e o r i g i n a l a m o u n t o f th e l o a n .

Is i t a lw a y s w h a t i s

m a n d a t e d o r is – c o u l d i t b e w h a t lo a n w a s a c tu a lly r e c e iv e d ?
D R J O N AT H A N Z O R A H B L O O M : I t w o u l d b e – i t w o u l d b e o n t h e l o a n
t h a t i s a c t u a l ly r e c e iv e d b e c a u s e t h a t w a s w h a t y o u w e r e a b le t o
10

achieve.
A D V PA U L J O S E P H P R E TO R I U S S C :

No, but now you have said two

t h i n g s t o t h e C h a ir. S o l e t u s g o b a c k a s t e p . W h e n y o u ta lk a b o u t a
f e e y o u t a l k a b o u t a n a m o u n t o f m o n e y o n th e o n e h a n d a n d a
p e r c e n t a g e a p p li e d t o th a t a m o u n t o f m o n e y.
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C : R i g h t. S o l e t u s le a v e a s id e th e
p e r c e n t a g e a p p l i e d fo r t h e m o m e n t a n d l e t u s j u s t l o o k a t th e b a s ic
amount of money to which you apply your fee.

Th e C h a ir a s k e d y o u

t h a t a m o u n t o f m o n e y i s i t w h a t I a s t h e b o r r o w e r w a n t fr o m y o u t h e
20

le n d e r in m y m a n d a t e t o t h e lo a n p r o v i d e r.
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :
c a p i t a l a m o u n t is ?

O r i s i t w h a t t h e a c tu a l l o a n

S o t h e C h a ir p o s t u l a t e s a s i tu a ti o n w h e r e I c o u ld

g e t to R e g i m e n ts a n d I c o u l d s a y lis t e n I w a n t a R 2 b il li o n . Yo u c o m e
b a c k o r R e g i m e n ts c o m e s b a c k t o m e a n d s a y s s o r r y y o u c a n n o t h a v e 2

Page 130 of 212

31 MAY 2019 – DAY 103
b i ll io n b u t I c a n g e t y o u 1 b i ll io n , r i g h t . W h a t i s t h e fi g u r e o n w h ic h t h e
f e e is b a s e d ?
D R J O N AT H A N Z O R A H B L O O M : It w ill b e 1 b ill i o n .
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. S o C h a i r I a m a fr a i d …
CHAIRPERSON: Ja.
A D V PA U L J O S E P H P R E TO R I U S S C : I h o p e t h a t c l a r i f ie s .
C H A I R P E R S O N : O k a y - t o th e e x te n t t h a t t h e t e r m o f o r i g i n a l a m o u n t
m a y s t il l b e u s e d m u s t w e u n d e r s t a n d i t t h e r e f o r e to r e f e r to t h e a m o u n t
that is loaned?
10

D R J O N AT H A N Z O R A H B L O O M : 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 : T h a t is a c tu a l ly l o a n e d ?
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a i r.
C H A I R P E R S O N : O k a y, th a n k y o u .
A D V PA U L J O S E P H P R E TO R I U S S C : R i g h t. N o w th e – w e a r e s t il l i n
t h e a m o u n t o f m o n e y b o x a t th e m o m e n t o r c a te g o r y r a th e r. T h a t – o n e
a m o u n t t h a t c a n b e u s e d t o a p p l y a p e r c e n ta g e i s th e a c t u a l a m o u n t o f
the loan.

T h e r e is a n o th e r a m o u n t th a t c o u l d b e u s e d .

W h a t is t h a t

amount?
D R J O N AT H A N Z O R A H B L O O M :
20

C h a ir t h a t i s a – t h a t is a n a m o u n t

w h ic h in c l u d e s a n a g g r e g a t e o f a l l th e r e p a y m e n t s m a d e o v e r th e f u l l
t e r m o f t h e lo a n . I n o th e r w o r d s i t i n c l u d e s a ll t h e c o s t s i n e v e r y t h in g
t h a t i s i n v o lv e d w i th – w i th r e g a r d t o t h a t l o a n . I t i s r e f e r r e d t o y ie l d t o
m a t u r i t y. Th a t is j u s t t h e t e r m f o r i t b u t i t is a - l e t u s p u t it . I f I c a n
p u t i t a n o th e r w a y – it i s a m u c h h i g h e r v a l u e th a n w h a t w e w e r e
r e fe r r i n g t o a s t h e n o ti o n a l v a l u e o f th e l o a n i n th e p r e v i o u s e x a m p l e .

Page 131 of 212

31 MAY 2019 – DAY 103
S o t h i s i s – t h is is t h e a m o u n t t h a t is r e p a i d in a g g r e g a t e o v e r t h e f u ll
p e r i o d o f th e l o a n .
A D V PA U L J O S E P H P R E TO R I U S S C : I t i s c a p i t a l p l u s i n t e r e s t?
D R J O N AT H A N Z O R A H B L O O M :

C a p it a l p l u s i n te r e s t a n d o v e r t h e –

o v e r th e te n u r e b u t t h e r e is – y e s w e c a n l e a v e i t t h e r e .
CHAIRPERSON:

S o w h a t y o u h a v e j u s t s a i d n o w i s i t a n o th e r w a y o f

a r r iv i n g – i s i t a n o t h e r w a y o f d e t e r m i n i n g a f e e f o r tr a n s a c ti o n a l
a d v is o r s s u c h a s R e g i m e n ts ? In o th e r w o r d s o n e w a y – a r e y o u s a y i n g
o n e w a y o f d o i n g th is is to s a y to a tr a n s a c ti o n a l a d v is o r I w a n t a l o a n
10

f o r R 2 b i ll io n . Yo u – y o u r a i s e i t a n d I w il l p a y y o u X p e r c e n ta g e o f t h e
a m o u n t o f l o a n th a t y o u g e t m e ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
C H A I R P E R S O N : T h a t is o n e w a y ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
CHAIRPERSON:

A r e y o u s a y in g t h e r e f o r e th e r e is a n o t h e r w a y a n d

a n o t h e r w a y is – is t h a t t h e fe e is c a lc u l a te d o n a d i ffe r e n t b a s is a n d
t h e d i ffe r e n t b a s i s i s y o u l o o k a t t h e r e p a y m e n t s o v e r a lo n g p e r i o d
in c l u d i n g in t e r e s t ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
20

C H A I R P E R S O N : O k a y, th a n k y o u .
A D V PA U L J O S E P H P R E TO R I U S S C :

N o w a s w e k n o w fr o m b o n d

r e p a y m e n t s i f I t a k e t h e c a p i ta l a m o u n t o f t h e b o u n d t h a t I h a v e t o p a y
a n d I a d d t h e i n t e r e s t I e n d u p p a y in g m o r e t h a n d o u b l e f o r m y h o m e .
I f I b u y a h o m e f o r R 1 m i lli o n a n d I t a k e t h e f u ll a m o u n t o f c a p it a l p l u s
in t e r e s t I e n d u p p a y in g m o r e th a n R 2 m il li o n f o r i t . I s t h a t c o r r e c t?

Page 132 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :

S o t h e y i e l d t o m a t u r i ty a s y o u

h a v e r e f e r r e d t o i s a f a r h ig h e r a m o u n t - m u c h h i g h e r a m o u n t – th a n
ju s t t h e n o t i o n a l o r ig i n a l c a p i ta l a m o u n t?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir. C a n I … ?
A D V PA U L J O S E P H P R E TO R I U S

SC:

Now

I

can

choose

e i t h e r.

C o r r e c t?
D R J O N AT H A N Z O R A H B L O O M :

C h a ir y e s .

It depends on what

a g r e e m e n t is r e a c h e d b e t w e e n th e p a r t i e s …
10

A D V PA U L J O S E P H P R E TO R I U S S C : Ye s .
D R J O N AT H A N Z O R A H B L O O M :

B u t t h e n o r m i n t h e i n d u s tr y is a

p e r c e n t a g e o n t h e n o ti o n a l v a l u e n o t o n t h e h ig h e r v a l u e .
A D V PA U L J O S E P H P R E TO R I U S S C : R ig h t.
D R J O N AT H A N Z O R A H B L O O M : T h a t is t h e – th a t is t h e n o r m .
A D V PA U L J O S E P H P R E TO R I U S S C : A n d w h a t – s o r r y.
C H A I R P E R S O N : Yo u – y o u m e n t io n e d a t e r m f o r t h e r e g i m e in t e r m s o f
w h ic h y o u r f e e is - a s a tr a n s a c ti o n a l a d v i s o r – y o u r f e e is d e te r m in e d
on the basis of the repayments.

I t h i n k M r Pr e t o r i u s h a s g o t th e

t e r m in o lo g y a l r e a d y. I h a v e n o t y e t g o t i t . S o m e t h i n g y i e l d t o v a l u e o r
20

s o m e t h i n g . W h a t is t h a t ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is y ie ld t o m a tu r i ty.
C H A I R P E R S O N : Yi e ld t o m a t u r i ty ?
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a i r.
C H A I R P E R S O N : S o th a t – t h a t r e f e r s – t h e y i e ld p a r t r e f e r s t o y o u r f e e
a n d m a t u r it y r e fe r s to t h e c a p i ta l a n d i n te r e s t o v e r t h e p e r io d t h a t

Page 133 of 212

31 MAY 2019 – DAY 103
repayments are made?
D R J O N AT H A N Z O R A H B L O O M : C h a i r t h e y i e l d …
C H A I R P E R S O N : O h t h a t is q u i t e c o n v o l u t e d – a c o n v o l u t e d w a y o f – o f
p u t t in g i t .
D R J O N AT H A N Z O R A H B L O O M : I t h i n k r a th e r s e e th e – w h e n w e t a l k
about a yield …
CHAIRPERSON: Ja.
D R J O N AT H A N Z O R A H B L O O M : W e ta lk a b o u t t h e i n te r e s t r a t e .
C H A I R P E R S O N : Ye s .
10

D R J O N AT H A N Z O R A H B L O O M :

Th a t is a p p l ic a b l e o v e r – o v e r t h e

e n t ir e p e r i o d th a t is t o m a tu r i ty …
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M : O v e r th e e n t ir e t e n u r e o f t h e l o a n .
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M : S o …
CHAIRPERSON:

O h , s o i t is i n te r e s t o v e r t h a t w h o l e lo n g p e r i o d o f

repayment?
D R J O N AT H A N Z O R A H B L O O M : P lu s a ll t h e c a p i t a l .
C H A I R P E R S O N : C a p i t a l a n d y e s , o k a y. T h a n k y o u .
20

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. L e t u s j u s t …
C H A I R P E R S O N : H o p e f u lly w e w il l g e t t h e r e D r B l o o m .
D R J O N AT H A N Z O R A H B L O O M : N o C h a ir y o u a r e d o in g w e ll .
C H A I R P E R S O N : H o p e f u lly w e w il l g e t – w e w il l g e t t h e r e , o k a y.
A D V PA U L J O S E P H P R E TO R I U S
t e r m in o lo g y.

SC:

Let

us

just

c o n f ir m

the

C a p i ta l o n ly t h e s m a l l e r a m o u n t t h e o r i g i n a l c a p i t a l

Page 134 of 212

31 MAY 2019 – DAY 103
a m o u n t y o u a r e g o i n g t o r e f e r to a s n o t i o n a l ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : C a p i t a l p l u s in t e r e s t r e p a i d o v e r
t h e f u l l p e r i o d o f t h e l o a n y o u a r e g o i n g t o r e fe r to a s y i e ld o r y i e ld t o
maturity?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

R i g h t a n d w e w i ll a lw a y s r e fe r

b a c k t o t h e u n d e r l y i n g s u b s ta n c e o f t h e t e r m in o lo g y w h e n w e g o
t h r o u g h y o u r e v id e n c e .
10

CHAIRPERSON: So …
A D V PA U L J O S E P H P R E TO R I U S S C : S o t h e r e a r e t w o c h o i c e s . I c a n
u s e th e s m a ll e r a m o u n t – n o ti o n a l o r – a n d t h a t is t h e i n d u s t r y n o r m
you say?
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a i r.
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 a l s o i t i s n o t u n h e a r d o f f o r
p a r t i e s to a g r e e th a t th e l a r g e r a m o u n t – t h e y i e l d – is u s e d ?
D R J O N AT H A N Z O R A H B L O O M : Ye s it i s u s e d b u t i t is – i t i s m o r e t h e
e x c e p ti o n t o t h e r u l e .
A D V PA U L J O S E P H P R E TO R I U S S C : A lr i g h t . N o w …

20

C H A I R P E R S O N : If …
A D V PA U L J O S E P H P R E TO R I U S S C : Th e n e x t s t e p .
CHAIRPERSON:

B e f o r e th a t M r Pr e to r i u s .

I f I w a n t t o d is t in g u is h

b e t w e e n t h e t w o c o r r e c t ly I w a n t t o c a l l t h e m i t is r e g i m e t h is r e g i m e
that.

T h e o n e w o u l d b e y i e l d to m a t u r i t y r e g i m e – I w o u l d i m a g i n e .

W o u l d th a t b e - w o u ld t h a t b e a g o o d d e s c r ip ti o n ?

Page 135 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M : Ve r y m u c h s o C h a ir.
C H A I R P E R S O N : A n d t h e o th e r o n e y o u w o u l d c a ll w h a t ?
D R J O N AT H A N Z O R A H B L O O M : N o t io n a l .
C H A I R P E R S O N : N o ti o n a l …
D R J O N AT H A N Z O R A H B L O O M : Va l u e .
C H A I R P E R S O N : A m o u n t ? N o ti o n a l v a l u e ( in t e r v e n e s ) .
D R J O N AT H A N Z O R A H B L O O M : O r n o t io n a l a m o u n t is r i g h t .
C H A I R P E R S O N : N o ti o n a l a m o u n t r e g i m e ?
D R J O N AT H A N Z O R A H B L O O M : Ye s .
10

C H A I R P E R S O N : S o w e c a n h a v e th o s e r e g i m e s ?
D R J O N AT H A N Z O R A H B L O O M : 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. T h a t m i g h t n o t s u it y o u M r P r e t o r iu s . I t i s ju s t
f o r my o w n .
A D V PA U L J O S E P H P R E TO R I U S S C : N o i t s u i ts m e a b s o l u te ly.
CHAIRPERSON: Ja.
A D V PA U L J O S E P H P R E TO R I U S S C : E x c e p t a s w i t h l a w y e r s …
CHAIRPERSON: Ja.
A D V PA U L J O S E P H P R E TO R I U S S C : Fi n a n c i e r s – i t is n o t n o t i o n a l a t
a l l. I t is a c t u a l .

20

C H A I R P E R S O N : T h a t is e x a c tly w h a t I a m th i n k i n g .
A D V PA U L J O S E P H P R E TO R I U S S C : Yo u c a n b e f o r g iv e n f o r d o in g s o
b u t w e w il l t a k e i t s t e p b y s t e p .
C H A I R P E R S O N : J a , o k a y.
A D V PA U L J O S E P H P R E TO R I U S S C :

A lr i g h t .

So you have two base

a m o u n ts . O n e th e s m a l le r a m o u n t – n o ti o n a l – o r t h e b i g g e r a m o u n t –

Page 136 of 212

31 MAY 2019 – DAY 103
y ie l d o r y i e l d to m a t u r i t y ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

O n e a p p l ie s a p e r c e n t a g e t o

e i t h e r o f th o s e a m o u n ts t o d e te r m in e th e f e e ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C : S o I c a n s a y - a n d w e w i ll g e t to
t h e a c t u a l p e r c e n ta g e s – I a s t h e tr a n s a c t i o n a l a d v is o r t o y o u Tr a n s n e t
I w a n t 1 p e r c e n t o f t h e s m a ll e r a m o u n t o r o n e p e r c e n t o f t h e la r g e r
amount?
10

D R J O N AT H A N Z O R A H B L O O M : Ye s C h a i r. N o r m a ll y …
A D V PA U L J O S E P H P R E TO R I U S S C : D o n o t g e t c o m p li c a t e d n o w.
D R J O N AT H A N Z O R A H B L O O M : O k a y.
A D V PA U L J O S E P H P R E TO R I U S S C :

One would image however that

t h e r e a r e a ls o i n d u s tr y n o r ms a b o u t th e a m o u n t o f t h a t p e r c e n ta g e o r
t h e s iz e o f t h a t p e r c e n t a g e o n e a p p li e s . I s th a t c o r r e c t ?
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a i r.
A D V PA U L J O S E P H P R E TO R I U S S C : A n d y o u a r e a w a r e o f t h o s e ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :
20

A n d y o u a r e g o in g t o t e l l t h e

C h a ir a b o u t th o s e i n a m o m e n t b u t j u s t a t a c o n c e p t u a l l e v e l i f w e m a y
– n o t io n a l le v e l – s o r r y – c o n c e p t u a l l e v e l j u s t a t a c o n c e p tu a l l e v e l
o n e w o u l d i m a g i n e t h a t i f o n e i s u s i n g t h e s m a l le r a m o u n t t h e
p e r c e n t a g e w o u ld b e b ig g e r ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C : A n d i f o n e w a s u s i n g t h e l a r g e r

Page 137 of 212

31 MAY 2019 – DAY 103
a m o u n t t h e p e r c e n t a g e w o u ld b e s m a ll e r ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : W h a t h a p p e n e d h e r e ?
D R J O N AT H A N Z O R A H B L O O M :

C h a ir if w e c a n m a y b e l o o k a t t h e

n u m b e r s t h a t w i ll b e – th a t w il l b e a d e q u a t e f o r t h e e x p l a n a t io n i n - o n
s li d e 1 2 . I f w e …
A D V PA U L J O S E P H P R E TO R I U S S C :

Th e r e is a d ia g r a m o n s l i d e 1 2

C h a ir w h ic h a t t e m p ts to e x p l a i n th is .
CHAIRPERSON: Hm.
10

A D V PA U L J O S E P H P R E TO R I U S S C :

I t i s o n t h e p a g e th a t y o u h a v e

before you.
C H A I R P E R S O N : W e ll I a m s t il l o n – o n y o u r q u e s ti o n . Yo u – y o u s a y
if o n e u s e s th e n o t io n a l a m o u n t r e g i m e t h e p e r c e n t a g e s h o u ld b e w h a t?
A D V PA U L J O S E P H P R E TO R I U S S C : S m a l le r.
C H A I R P E R S O N : S m a ll e r.
A D V PA U L J O S E P H P R E TO R I U S S C :

W it h i n a r a n g e w h i c h i s t h e

market norm.
CHAIRPERSON:

Ye s a n d y o u s a y i f y o u u s e t h e y ie l d to m a t u r i ty

r e g i m e it s h o u l d b e b i g g e r ?
20

A D V PA U L J O S E P H P R E TO R I U S S C : S m a l le r p e r c e n t a g e .
C H A I R P E R S O N : S m a ll e r th a n i f y o u u s e t h e … ?
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 : O k a y. M a y b e i f D r B l o o m c a n e x p l a i n th a t to m e w h y ?
D R J O N AT H A N Z O R A H B L O O M :

Ye s C h a ir b e c a u s e th e v a l u e – th e

n o t io n a l v a lu e – i s a l o t s m a l l e r i f o n e w a n t s t o p u t i t th a t w a y - th a n

Page 138 of 212

31 MAY 2019 – DAY 103
t h e y i e l d to m a t u r i ty r e g i m e .

I n o t h e r w o r d s i t i s a m u c h s m a ll e r

n u m b e r b e c a u s e r e m e m b e r a s w e d is c u s s e d th e y i e l d t o m a tu r i ty
in c l u d e s a l l th e r e p a y m e n ts a n d a l l o f t h a t o v e r th e m a t u r i ty.
C H A I R P E R S O N : O h , s m a ll i n t e r m s o f – o f th e R a n d – o f th e a m o u n t
n o t s m a l le r in t e r m s o f t h e p e r c e n t a g e ?
D R J O N AT H A N Z O R A H B L O O M : Th a t is c o r r e c t C h a ir a n d t h a t is w h a t
why the percentages become important.
CHAIRPERSON:
percentage.
10

O k a y.

I t h o u g h t – I t h o u g h t i t w a s i n r e l a ti o n t o a

T h e p e r c e n ta g e c o u l d b e th e s a m e b u t b e c a u s e t h e

a m o u n ts a r e d i ffe r e n t o n e is h ig h e r t h a n a n o t h e r o n e t h e a c tu a l a m o u n t
r e c e i v e d w o u ld b e d i ff e r e n t?
D R J O N AT H A N Z O R A H B L O O M : 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 : J a , o k a y.
A D V PA U L J O S E P H P R E TO R I U S S C : S o b y w a y o f e x a m p l e i f th e r e is
a loan of R100 1 percent would be R1?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : Th a t i s n o t io n a l . I f a t th e e n d o f
t h e d a y I fi n a l ly e n d u p p a y i n g R 2 0 0 b u t I s t il l w a n t 1 p e r c e n t w h a t a m I
paying?

20

D R J O N AT H A N Z O R A H B L O O M : Tw o .
A D V PA U L J O S E P H P R E TO R I U S S C : R 2 .
CHAIRPERSON: Hm.
A D V PA U L J O S E P H P R E TO R I U S S C : A lr i g h t . S o l e t u s – le t u s d e a l
w i t h y o u r d ia g r a m o r th e d i a g r a m t h a t w e h a v e d is c u s s e d i f w e m a y.
D R J O N AT H A N Z O R A H B L O O M :

C h a ir t h e d ia g r a m r e la t e s d ir e c t ly t o

Page 139 of 212

31 MAY 2019 – DAY 103
t h e R 1 . 5 b i lli o n l o a n fr o m t h e C D B o n t h e …
A D V PA U L J O S E P H P R E TO R I U S S C : W h i c h – b u t y o u h a v e tr a n s l a te d
them to Rand?
D R J O N AT H A N Z O R A H B L O O M : Ye s c o r r e c t .
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.
D R J O N AT H A N Z O R A H B L O O M :

S o l e t u s s t a r t w i th t h e - w it h t h e

r ig h t h a n d c o l u m n i f w e c a n . T h e n o t i o n a l o v e r t h e r e i s R 1 8 b i ll io n . S o
in o t h e r w o r d s t h a t r e p r e s e n ts t h e U S $ 1 . 5 b i lli o n l o a n fr o m t h e C h i n a
D e v e l o p m e n t B a n k t h a t in R a n d t e r m s i t i s 1 8 b i ll io n . J u s t b y t h e w a y
10

C h a ir th is is t h e in f o r m a t io n t h a t R e g i m e n ts u s e d i n th e c a lc u l a ti o n o f
t h e ir fe e s . S o th a t w e c a n j u s t a li g n a s w e ll .
A D V PA U L J O S E P H P R E TO R I U S S C : R ig h t. S o i n a c t u a l f a c t th e t w o
– t h e R 1 6 6 m i lli o n - a t l e a s t i n l a r g e p a r t - fe e w a s c a lc u l a te d a s y o u
h a v e s e t o u t h e r e . I t w a s b a s e d o n n o t io n a l . W e ll t h a t is g o i n g t o o f a r
too fast.
D R J O N AT H A N Z O R A H B L O O M : Ye s .
A D V PA U L J O S E P H P R E TO R I U S S C :

I a m s o r r y.

We start with a

n o t io n a l . T h a t is th e b a s ic a m o u n t o f t h e l o a n – o r i g i n a l c a p i ta l ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
20

A D V PA U L J O S E P H P R E TO R I U S S C : R ig h t.
D R J O N AT H A N Z O R A H B L O O M :

T h is is – t h is is m e r e l y b y w a y o f

e x a m p l e t h a t t h e n o t i o n a l is i n c lu d e d h e r e b e c a u s e t h e w a y R e g i m e n ts
d i d t h e c a lc u l a ti o n w a s o n t h e y i e l d to m a t u r i ty. S o – s o e s s e n ti a l ly i f
w e c a n m o v e th e n t o th e - th e l e f t h a n d p o r ti o n o f t h e d i a g r a m t h e y ie ld
– t h e y i e ld t o m a t u r i ty o f t h a t $ 1 . 5 b i ll io n l o a n w a s R 1 0 2 b i ll i o n .

Page 140 of 212

31 MAY 2019 – DAY 103
A D V PA U L J O S E P H P R E TO R I U S S C :

S o th a t is c a p i t a l p l u s i n t e r e s t

o v e r th e fu ll p e r i o d o f th e l o a n ?
D R J O N AT H A N Z O R A H B L O O M : O v e r th e fu ll d u r a t io n m a t u r i t y.
C H A I R P E R S O N : J u s t r e p e a t t h a t a b o u t R 1 0 2 b i ll io n .
D R J O N AT H A N Z O R A H B L O O M : S o th e R 1 0 2 b i ll io n …
C H A I R P E R S O N : Is b a s e d o n th e y ie l d t o m a t u r i t y r e g i m e ?
A D V PA U L J O S E P H P R E TO R I U S S C :
D R J O N AT H A N Z O R A H B L O O M :

Is t h e y ie l d – i t is t h e y i e l d t o

m a t u r i t y.
10

C H A I R P E R S O N : It is a y i e l d to – j a .
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
CHAIRPERSON: Ja.
D R J O N AT H A N Z O R A H B L O O M :

W h a t h a p p e n e d th e n w a s R e g i m e n ts

took …
A D V PA U L J O S E P H P R E TO R I U S S C :

W e l l l e t u s w h a t t h e n o r m is

fir s t. T h e n o r m w o u l d b e - i f y o u a r e g o i n g to u s e R 1 8 b i ll i o n w h a t i s
t h e in d u s tr y n o r m i n r e l a ti o n t o th e p e r c e n t a g e th a t y o u w o u l d a p p ly t o
R 1 8 b i ll io n ?
D R J O N AT H A N Z O R A H B L O O M :
20

C h a i t th a t – t h a t d i ffe r s w h a t – w h a t

t h e m a r k e t is – w h a t th e m a r k e t d ic ta t e s a n d – a n d w h o y o u a r e t a lk i n g
t o a n d w h o s e p r ic e s – w h o s e p r ic i n g y o u a r e c o m p a r i n g w it h w h o
e tc e t e r a . S o t o s a y t h e s e – t h i s is e x a c t – t h i s is w h a t th e p e r c e n t a g e
w o u ld b e is – is a l m o s t i m p o s s i b l e .
C H A I R P E R S O N : Is d i ffi c u l t, ja .
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t . S o …

Page 141 of 212

31 MAY 2019 – DAY 103
CHAIRPERSON:

B u t y o u – y o u w o u l d b e a b l e t o s a y I w o u ld i m a g i n e

t h a t b e lo w a c e r ta i n p e r c e n t a g e is - w o u ld b e h a r d t o g e t ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
CHAIRPERSON:

To g e t s o m e b o d y w h o c h a r g e b e l o w a c e r t a i n

p e r c e n t a g e a n d i t s h o u l d b e p o s s ib l e t o s a y i t w o u l d b e v e r y
e x tr a o r d in a r y

to

fi n d

somebody

who

charges

above

a

certain

percentage?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
CHAIRPERSON: So somewhere in between then you could have what
10

y o u r e g a r d a s m o r e o r le s s n o t s h o c k in g ?
D R J O N AT H A N Z O R A H B L O O M :

Ye s C h a ir.

S o in t h e – a t t h e ti m e

w h e n t h e s e tr a n s a c ti o n s w e r e o n g o i n g t h e – t h e b a s i c r a t e s t h a t o n e
c o u l d a c h i e v e o r t h e p e r c e n t a g e s , f e e s t h a t o n e c o u l d a c h i e v e in t h e
m a r k e t w a s b e t w e e n m o r e o r le s s 0 . 2 p e r c e n t a n d 0 .5 p e r c e n t .
CHAIRPERSON: Hm.
D R J O N AT H A N Z O R A H B L O O M : ( In t e r v e n e s ) .
A D V PA U L J O S E P H P R E TO R I U S S C :

( I n te r v e n e s ) i f y o u t a k e th e

le s s e r a m o u n t y o u c o u l d a c h i e v e b e t w e e n 0 .2 a n d 0 . 5 p e r c e n t . S o t h a t
is t h e r i g h t h a n d c o lu m n ?
20

D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : I s t h e n o r m ?
D R J O N AT H A N Z O R A H B L O O M :

T h a t is c o r r e c t a t th e t i m e o f t h e

tr a n s a c ti o n .
CHAIRPERSON: Hm.
A D V PA U L J O S E P H P R E TO R I U S S C : N o w p l e a s e t e l l t h e C h a ir i f y o u

Page 142 of 212

31 MAY 2019 – DAY 103
u s e d t h e y ie ld - th e h i g h e r a m o u n t – t h e R 1 0 2 b i lli o n w h a t p e r c e n t a g e
could one apply as the norm?
D R J O N AT H A N Z O R A H B L O O M :

C h a ir th a t w o u ld b e a b o u t 0 .0 1

p e r c e n t . I t w o u l d b e 0 . 0 1 p e r c e n t o r l e s s . Th is is n o t w h a t is s ta t e d
o v e r th e r e b u t …
CHAIRPERSON: Oh.
D R J O N AT H A N Z O R A H B L O O M :

B u t A d v o c a te P r e t o r iu s h a s a s k e d

w h a t th e n o r m i s .
C H A I R P E R S O N : Ye s .
10

D R J O N AT H A N Z O R A H B L O O M : S o i f w e c o m p a r e w h a t i s s t a te d o v e r
t h e r e 0 .1 5 p e r c e n t …
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M :

To w h a t t h e n o r m w o u l d b e w h ic h i s

0 .0 1 p e r c e n t …
CHAIRPERSON: Hm.
D R J O N AT H A N Z O R A H B L O O M : T h i s is 0 . 1 4 p e r c e n t m o r e .
C H A I R P E R S O N : O k a y.
A D V PA U L J O S E P H P R E TO R I U S S C : A lr i g h t . S o i f w e w a n t t o – le t u s
ju s t h a v e t h is p ic tu r e r e f l e c t t h e n o r m f o r t h e – t o s t a r t w i th b e c a u s e
20

t h e r ig h t h a n d c o l u m n r e f l e c ts th e n o r m . C o r r e c t ?
D R J O N AT H A N Z O R A H B L O O M : J a .
A D V PA U L J O S E P H P R E TO R I U S S C :

So in that box underneath

Z A R 1 0 2 b ill i o n i f w e w a n t t o s e e th e n o r m l e t u s p u t 0 . 0 1 p e r c e n t .
Correct/
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a i r.

Page 143 of 212

31 MAY 2019 – DAY 103
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. S o w e n o w h a v e a p i c tu r e
C h a ir i f y o u a r e g o in g to u s e th e b i g g e r a m o u n t …
CHAIRPERSON: Hm.
A D V PA U L J O S E P H P R E TO R I U S S C :

I f y o u w a n t to b e m o r e o r l e s s

w i t h i n th e n o r m …
C H A I R P E R S O N : H m . T h e n o t io n a l r e g i m e .
A D V PA U L J O S E P H P R E TO R I U S S C :

O f 1 0 2 b il li o n y o u w o u ld u s e a

f a c to r o f 0 . 0 1 .
C H A I R P E R S O N : Ye s .
10

A D V PA U L J O S E P H P R E TO R I U S S C :

I f y o u w e r e g o i n g to u s e th e

le s s e r o n e 8 b ill i o n – 1 8 b i ll i o n – o n e w o u l d w i th in n o r m a l p a r a m e t e r s
u s e 0 . 2 a n d 0 . 5 w h ic h is a f a r h i g h e r p e r c e n ta g e …
CHAIRPERSON: Hm.
A D V PA U L J O S E P H P R E TO R I U S S C : Th a n 0 . 0 1 .
CHAIRPERSON: Hm.
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. W e a r e o n t h e s a m e p a g e
s o fa r.
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir, y e s .
A D V PA U L J O S E P H P R E TO R I U S S C : W h a t d id R e g i m e n t s d o ?
20

D R J O N AT H A N Z O R A H B L O O M :

R e g i m e n ts a p p l i e d 0 . 1 5 p e r c e n t t o

t h e y i e ld to m a t u r i ty w h ic h is a r o u n d e d fi g u r e o f 1 0 2 b il li o n a n d i f I
m a y th e – i f y o u d o t h a t c a lc u l a ti o n t h e n y o u w o u l d g e t to t h e 1 5 2 . 7
b i ll io n – a g – m i ll io n th a t y o u – th a t is s t a t e d a t t h e to p o f t h e s li d e .
A D V PA U L J O S E P H P R E TO R I U S S C : A lr i g h t b u t l e t u s ta k e i t s t e p b y
step.

Page 144 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M : O k a y.
A D V PA U L J O S E P H P R E TO R I U S S C :

A n o r m w h i c h y o u k n o w - fr o m

y o u r e x p e r i e n c e a n d i n y o u r o p in i o n t h a t y o u a r e g iv i n g to t h e C h a i r –
t h e n o r m i s i f y o u u s e th e h i g h e r a m o u n t y o u u s e a l e s s e r p e r c e n t a g e ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C : I f y o u u s e a lo w e r a m o u n t – t h e
n o t io n a l – y o u u s e a h i g h e r p e r c e n ta g e ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C : A n d y o u a r e s a y in g to t h e C h a ir
10

w h a t R e g i m e n ts d i d w a s t h e y u s e d t h e h i g h e r a m o u n t a n d a h i g h e r
percentage?
D R J O N AT H A N Z O R A H B L O O M :

T h a t is c o r r e c t C h a ir e v e n – i f y o u

w a n t t o y o u c a n c o m p a r e t h e – t h e lo w e r p e r c e n t a g e o f o n t h e n o ti o n a l
s id e .

In o t h e r w o r d s t h e 0 .2 c o m p a r e t h a t t o t h e 0 . 1 5 .

I t is o n ly

s li g h t ly le s s …
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M : B u t t h e b a s is o n w h i c h i t w a s a p p l i e d
w a s s u b s t a n ti a l ly d i ff e r e n t .
A D V PA U L J O S E P H P R E TO R I U S S C :
20

S o l e t u s j u s t s u m m a r is e t h e r e .

Yo u h a v e a h i g h e r a m o u n t a n d a l o w e r a m o u n t a s t h e b a s e o n w h ic h
y o u a p p ly y o u r p e r c e n t a g e t o c a lc u l a t e a f e e ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : I f y o u u s e th e l o w e r a m o u n t t h e
n o r m s a y s y o u c a n u s e t h e h i g h e r p e r c e n ta g e ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .

Page 145 of 212

31 MAY 2019 – DAY 103
A D V PA U L J O S E P H P R E TO R I U S S C : I f y o u u s e th e h ig h e r a m o u n t t h e
norm says then you must use a lower percentage?
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t .

A D V PA U L J O S E P H P R E TO R I U S S C :

I f y o u u s e th e h ig h e r a m o u n t

t h e n o r m s a y s t h e n y o u m u s t u s e a lo w e r p e r c e n t a g e , lo g ic a l .
D R J O N AT H A N Z O H A R B L O O M :

Correct, ja.

A D V PA U L J O S E P H P R E TO R I U S S C :

W hat Regiments did was to use

the higher amount and a percentage beyond market norms.
D R J O N AT H A N Z O H A R B L O O M :
10

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :

I s t h a t c o r r e c t , a lr i g h t a n d y o u

e x p l a i n th a t th e n o n p a g e 1 3 .
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s r i g h t C h a ir.

A D V PA U L J O S E P H P R E T O R I U S S C :

A n d y o u s a y th a t t h e f e e

R e g i m e n t s c h a r g e d . 1 5 o n y i e l d is e q u iv a l e n t t o . 8 5 o n t h e n o t i o n a l
a m o u n t o f 1 8 b il li o n , r i g h t ?
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t .

A D V PA U L J O S E P H P R E TO R I U S S C :

And if one goes back a page

y o u w il l s e e t h e n o r m t h e r e is .2 t o . 5 .
D R J O N AT H A N Z O H A R B L O O M :
20

T h a t ’s c o r r e c t .

A D V PA U L J O S E P H P R E TO R I U S S C :

A n d i f y o u d o t h e m a th t h e y

w e r e . 8 5 if o n e b a s e s it o n t h e n o t io n a l a m o u n t o f 1 8 b il li o n . I n s h o r t
w h a t y o u ’r e s a y in g i s t h a t i t w a s b e y o n d m a r k e t n o r m s .
D R J O N AT H A N Z O H A R B L O O M :

Ye s C h a ir w e l l b e y o n d m a r k e t n o r m s .

A D V PA U L J O S E P H P R E TO R I U S S C :

Well beyond market norms and

y o u t e l l u s b y h o w m u c h y o u e s t i m a te th a t t o b e o n p a g e 1 3 , s o i f y o u

Page 146 of 212

31 MAY 2019 – DAY 103
w o u ld ju s t t a k e th e C h a i r t h r o u g h p a g e 1 3 p l e a s e .
D R J O N AT H A N Z O H A R B L O O M :

Ye s C h a ir, s o a s w a s i n d i c a t e d b y

A d v o c a t e P r e t o r iu s th e 0 . 1 5 % w h ic h w e k n o w o f o n th e y i e l d , is
e q u iv a l e n t to th e 0 . 8 5 % o n th e n o ti o n a l v a l u e , w h ic h is t h e R 1 8 b il li o n
that we've used.

T h e s e c o n d p o i n t r e f e r s to th e m a r k e t c o n v e n ti o n s

a n d Tr a n s n e t p r a c ti c e s to p a y le a d a r r a n g e m e n t f e e s o n n o t i o n a l a n d
n o t o n t h e y i e l d to m a t u r it y a s R e g i m e n ts d id o r c la i m e d .
A D V PA U L J O S E P H P R E TO R I U S S C :

L e t ’s p a u s e t h e r e , b e c a u s e y o u

h a v e t w o s o u r c e s o f i n fo r m a ti o n o n w h ic h y o u b a s e y o u r e x p e r t o p in io n ,
10

r ig h t .
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s r i g h t .

A D V PA U L J O S E P H P R E T O R I U S S C :

T h e o n e is y o u r o w n e x p e r i e n c e

in t h e fi n a n c i a l in d u s tr y, fi n a n c i n g i n d u s t r y, c o r r e c t ?
D R J O N AT H A N Z O H A R B L O O M :

Correct yes.

A D V PA U L J O S E P H P R E TO R I U S S C :

T h e o t h e r is y o u r e x a m in a ti o n o f

w h a t h a p p e n e d h i s to r ic a l ly in Tr a n s n e t ?
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :

A n d a g a in s t t h e n o r m s p r o d u c e d

in t h e in d u s tr y a n d p r o d u c e d i n Tr a n s n e t i ts e l f w a s t h e R e g i m e n t ’s fe e
20

w i t h i n th o s e n o r m s o r o u ts i d e o f t h o s e n o r m s ?
D R J O N AT H A N Z O H A R B L O O M :

Outside of those norms.

A D V PA U L J O S E P H P R E TO R I U S S C :

B o t h , b o t h t h e Tr a n s n e t p r a c t ic e

a n d i n d u s tr y n o r ms ?
D R J O N AT H A N Z O H A R B L O O M :

Ye s C h a ir t h a t’s c o r r e c t .

A D V PA U L J O S E P H P R E TO R I U S S C :

I f y o u g o t o th e th ir d b u ll e t.

Page 147 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O H A R B L O O M :

S o t h a t is w h a t w e ’ v e b e e n

d is c u s s in g , s o th e – b a s e d o n m a r k e t n o r m s o r c o n v e n ti o n s th e f e e
w o u ld h a v e b e e n c h a r g e d o f 0 . 2 % , b e t w e e n 0 . 2 a n d 0 . 5 % o n t h e
n o t io n a l v a lu e .
A D V PA U L J O S E P H P R E TO R I U S S C :
CHAIRPERSON:

Okay if you just go back.

I ’ m s o r r y Mr P r e t o r iu s , o n m a r k e t c o n v e n t i o n s y o u r

p o i n t n u m b e r t w o , m a r k e t c o n v e n ti o n s a n d Tr a n s n e t p r a c tic e s a r e t o
p a y le a d a r r a n g e m e n t f e e s o n n o t io n a l a n d n o t o n y i e ld to m a tu r i ty a s
Regiments did.
10

M a r k e t c o n v e n ti o n s w o u l d n ’ t t h a t b e w h a t w e t a lk e d

a b o u t w h e n w e t a l k e d a b o u t n o r m s i n th e m a r k e t ?
D R J O N AT H A N Z O H A R B L O O M :

Th a t ’s c o r r e c t C h a ir. I n o t h e r w o r d s

t h e f e e t h a t i s p a y a b le is c a l c u la t e d o n th e n o t i o n a l v a l u e a n d n o t t h e
y ie l d , t h a t ’s w h a t ’s t h e n o r m in t h e m a r k e t.
CHAIRPERSON:

Th a t is i n s o f a r a s t h e l e a d a r r a n g e m e n t is c o n c e r n e d

a n d a s f a r a s th e d e b t o r i g in a ti o n i f I c a n c a ll i t t h a t, a n d w h a t’s t h e
m a r k e t c o n v e n t io n s a n d p r a c t ic e s o r is t h a t s o m e t h in g t h a t y o u a r e s ti ll
going to come to?
D R J O N AT H A N Z O H A R B L O O M :

T h is w a s a – i t d e p e n d s , l e a d

m a n a g e r a n d d e b t o r i g i n a t o r is i n t h i s p a r ti c u la r c a s e a c o n s o li d a te d
20

t e r m i f I c a n p u t i t th a t w a y, s o i t w a s – i t d e p e n d s o n i f y o u ’ r e t h e l e a d
m a n a g e r y o u a r e t h e d e b t o r ig i n a t o r i n c e r t a i n c a s e s , b u t t h e , w h a t
w e ’r e r e f e r r in g to h e r e is t h e ir – R e g i m e n ts r e q u ir e m e n t o r t h e
R e g i m e n t s t h a t a c t e d a s t h e l e a d m a n a g e r a n d d e b t o r i g i n a t o r f o r w h ic h
t h e y ’r e c la i m in g th is f e e .
CHAIRPERSON:

O h , y o u k n o w I t h o u g h t, y o u s e e o n p a g e w e ta lk e d

Page 148 of 212

31 MAY 2019 – DAY 103
a b o u t th a t a m o u n t o f R 1 5 2 m il li o n , R 1 5 2 , 7 m il li o n th a t t h e y w e r e ,
R e g i m e n t s w e r e to b e th e l e a d m a n a g e r a n d d e b t o r i g i n a to r a n d h e r e
o n p o i n t 2 a t p a g e 1 3 y o u s a y m a r k e t c o n v e n t io n s a n d Tr a n s n e t
p r a c ti c e s a r e t o p a y l e a d a r r a n g e m e n t f e e s o n n o t io n a l a n d n o t o n y i e ld
t o ( i n d is ti n c t) , I t h o u g h t t h a t w h a t y o u m e a n t i s le a d m a n a g e r a n d d e b t
o r i g in a to r a r e – c a n b e t w o s e p a r a te p e o p l e o r e n ti t ie s b u t s o m e ti m e s
it ’s o n e .
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

C H A I R P E R S O N : B u t I t h o u g h t w h a t y o u m e a n t w a s t h e s e c o n v e n ti o n s ,
10

m a r k e t c o n v e n t io n s a n d p r a c tic e s t h a t y o u a r e ta lk in g a b o u t in b u ll e t
p o i n t n u m b e r t w o o n p a g e 1 3 r e l a te o n ly t o t h e le a d m a n a g e m e n t r o l e
a s o p p o s e d t h e d e b t o r ig i n a t io n r o le , b u t y o u a r e n o w c l a r i fy i n g t o s a y
y o u m e a n t a c o m b i n a t io n o f b o th in r e g a r d t o t h i s t r a n s a c t io n .
D R J O N AT H A N Z O H A R B L O O M :

1 0 0 % 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 n o w I u n d e r s ta n d , o k a y.
A D V PA U L J O S E P H P R E TO R I U S S C :

Right, and when you say market

c o n v e n t io n i s t o b a s e t h e f e e c a lc u l a ti o n o n n o ti o n a l , a s m a ll e r a m o u n t .
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :
20

Yo u ’r e s a y i n g t h a t t h e r e m a y y e t

b e e x c e p ti o n s ?
D R J O N AT H A N Z O H A R B L O O M :

Ye s C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :

And if one uses by way of

e x c e p ti o n t h e h i g h e r a m o u n t t h e n t h e p e r c e n t a g e s h o u l d b e m u c h
lo w e r ?
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir.

Page 149 of 212

31 MAY 2019 – DAY 103
A D V PA U L J O S E P H P R E T O R I U S S C :

L o g ic . A lr i g h t s o w h a t d o y o u

s a y t h e n i n th e t h ir d b u ll e t, i f R e g i m e n ts w a s to u s e n o ti o n a l ?
D R J O N ATH A N Z O H A R B L O O M :

S o i f w e a s s u m e th a t t h e m a r k e t

n o r ms o r w e a c c e p t t h a t t h e m a r k e t n o r m s i n t h a t p e r io d o f ti m e w e r e
b e t w e e n 0 .2 a n d 0 .5 % a n d if y o u l o o k a t t h e f ir s t b u ll e t C h a ir t h e
e q u iv a l e n t , i n o t h e r w o r d s i n t h e 0 .8 5 % t h a t’s w h a t o n e w o u l d b e
c o m p a r in g

t h is

w i th ,

w h ic h

in d ic a t e s

that

R e g i m e n t’s

charged

e x c e s s iv e ly h i g h e r f e e s o n t h e ir n o t io n a l e q u iv a le n t t h a n w h a t t h e
m a r k e t n o r ms w e r e .
10

A D V PA U L J O S E P H P R E TO R I U S S C :

S o y o u t a k e 1 8 b ill i o n w h i c h is

t h e o r i g in a l c a p i t a l a m o u n t .
D R J O N AT H A N Z O H A R B L O O M :

Correct.

A D V PA U L J O S E P H P R E T O R I U S S C :

M a r k e t n o r ms s a y y o u m u s t

c h a r g e . 2 b e t w e e n . 5 % o n y o u r c a lc u l a ti o n s t h e y c h a r g e . 8 5 w h i c h is
b e y o n d t h e n o r m a n d t h a t is a s u b s ta n ti a l a m o u n t y o u s a y.
D R J O N AT H A N Z O H A R B L O O M :

C o r r e c t C h a ir, I d i d n ’ t c a l c u l a t e i t

b u t i f o n e j u s t s u b tr a c ts t h e 0 . 8 5 % f r o m t h e 0 . 5 % o n e g e ts a g o o d
in d i c a 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 :
20

R i g h t t h e n e x t b u ll e t y o u s a y i f

h o w e v e r R e g i m e n ts w e r e t o s a y, a s t h e y d i d , w e d o n ’ t w a n t to u s e a
s m a ll e r a m o u n t , w e w a n t t o u s e t h e la r g e r a m o u n t .
D R J O N AT H A N Z O H A R B L O O M :

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

A D V PA U L J O S E P H P R E TO R I U S S C :

T h e la r g e r a m o u n t b e i n g

1 0 2 b i ll io n a s o p p o s e d t o 1 8 b i lli o n .
D R J O N AT H A N Z O H A R B L O O M : C o r r e c t C h a ir.

Page 150 of 212

31 MAY 2019 – DAY 103
A D V PA U L J O S E P H P R E TO R I U S S C :

Then the percentage fee that

t h e m a r k e t w o u ld o r d i n a r i ly d i c t a t e w o u l d b e w h a t?
D R J O N AT H A N Z O H A R B L O O M :

In the region of 0.01% in other – ja I

s a i d p r e v i o u s ly.
A D V PA U L J O S E P H P R E TO R I U S S C :

W e l l h e r e y o u s a y in t h e f o u r th

b u ll e t 0 . 0 6 .
D R J O N AT H A N Z O H A R B L O O M :

O k a y l e t m e e x p l a i n t h a t n o w i t ’s –

w h a t h a p p e n s is i f o n e r e v e r s e s t h e c a lc u la t io n s o i f w e w a n t to
c o m p a r e s o m e th i n g , s o w h a t I d id i n t e r m s o f t h e c a l c u la t io n I s a i d i f
10

t h e m a r k e t n o r m is b e t w e e n 0 . 2 a n d 0 . 5 a n d I t o o k t h e a v e r a g e o f t h o s e
t w o , w h ic h is t h e n 0 . 3 5 a n d I c o m p a r e th a t , i f I t a k e th a t p e r c e n t a g e a s
a n a s s u m p t io n a n d I c o m p a r e t h a t to w h a t t h e – w h a t w o u l d t h a t b e , i n
o th e r w o r d s I’ m d o i n g t h e c a lc u l a ti o n i n r e v e r s e , s o h o w m u c h p e r c e n t a
w o u ld th a t b e o n th e y i e l d t o m a t u r i ty, n o t t h e 1 5 b a s is p o i n ts , 0 . 1 5 %
s o r r y C h a ir, t h a t R e g i m e n ts c h a r g e d b u t i f t h r o u g h m a r k e t c o n v e n t i o n s
t h e n i t s h o u l d h a v e b e e n 0 .0 6 % a n d 0 . – 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 ’ m a fr a id y o u l o s t m e t h e r e a n d

I’ m s u r e t h e C h a ir f o ll o w e d y o u t o t h e l e t t e r, l e t m e t a k e a s te p b a c k i f I
m a y, i n th e f o u r th b u l l e t y o u t a lk a b o u t m a r k e t c o n v e n t i o n a n d Tr a n s n e t
20

p r a c ti c e , I w o u l d i m a g i n e in t e l li n g t h e h a i r w h a t m a r k e t c o n v e n t i o n a n d
p r a c ti c e w a s y o u a r e r e f e r r i n g to a n e x t e r n a l n o r m , d o y o u f o ll o w w h a t I
say?
D R J O N AT H A N Z O H A R B L O O M :

Ye s C h a ir.

A D V PA U L J O S E P H P R E TO R I U S S C :

S o w h a t w o u l d t h a t e x te r n a l

n o r m b e , if o n e w a s t o a p p ly th e y i e l d t o m a t u r i ty, y o u t o l d u s th a t a

Page 151 of 212

31 MAY 2019 – DAY 103
minute ago on page 12.
D R J O N AT H A N Z O H A R B L O O M :

0.01%.

A D V PA U L J O S E P H P R E TO R I U S S C :

A lr ig h t s o in f a c t w e s h o u l d

c o r r e c t t h e f o u r th b u l l e t , i f w e ’r e t a l k i n g a b o u t m a r k e t c o n v e n t io n a n d
Tr a n s n e t p r a c t ic e , r a t h e r t h a n y o u r c o m p le x c a lc u l a ti o n s .
D R J O N AT H A N Z O H A R B L O O M :

N o C h a ir th e – w h a t t h a t 0 . 0 6

r e p r e s e n ts is n o t th e – y e s f r o m t h a t p e r s p e c ti v e y o u ’ r e r ig h t .
A D V PA U L J O S E P H P R E TO R I U S S C :

W e l l i t ’s n o t fr o m t h a t

p e r s p e c t iv e , i t ’s th e w o r d s i n b u l le t f o u r.
10

D R J O N AT H A N Z O H A R B L O O M :

C o r r e c t , t h a t w o u l d b e i f th e f e e w a s

b a s e d o n y i e l d m a r k e t c o n v e n t i o n a n d Tr a n s n e t p r a c ti c e i t w o u l d d ic t t e
a p e r c e n ta g e o f 0 .0 1 % , t h a t’s r i g h t .
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, s o c a n – w o u l d y o u b e

c o m f o r t a b l e i f w e t o o k 0 . 0 6 o u t , I ’ m s o r r y t o – m y a p o l o g i e s fo r s e t ti n g
y o u r c a lc u l a ti o n s a s i d e , w e ’r e t a lk i n g a b o u t e x te r n a l c o n v e n t io n a n d
Tr a n s n e t p r a c tic e , n o w w h e th e r i t ’s e x t e r n a l h i s to r ic a l f a c t s y o u s a y
t h a t w o u ld p r o d u c e a f ig u r e o f 0 . 0 1 .
D R J O N AT H A N Z O H A R B L O O M :

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

C H A I R P E R S O N : T h a t ’s t h e m a r k e t c o n v e n ti o n a n d Tr a n s n e t p r a c ti c e ?
20

D R J O N AT H A N Z O H A R B L O O M : T h a t ’s c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : C a n w e g o t o th e n e x t b u l le t .
C H A I R P E R S O N : I’ m s o r r y.
A D V PA U L J O S E P H P R E TO R I U S S C : S o r r y C h a ir.
C H A I R P E R S O N : T h e Tr a n s n e t p r a c t ic e is i t a l w a y s i n a c c o r d a n c e w i t h
m a r k e t c o n v e n t io n s , i n th e – h e r e in w h a t w e a r e d e a li n g w i th ? I ’ m j u s t

Page 152 of 212

31 MAY 2019 – DAY 103
tr y i n g to u n d e r s t a n d i f t h e r e is a n y p a r t i c u l a r s ig n if ic a n c e in a l w a y s
p a ir in g th e m , t h e m a r k e t c o n v e n t io n a n d t h e Tr a n s n e t p r a c t ic e b e c a u s e
if t h e Tr a n s n e t p r a c ti c e is a l w a y s in a c c o r d a n c e w i th t h e m a r k e t
c o n v e n t io n t h e n a ll o n e n e e d s t o k n o w i s j u s t th e m a r k e t c o n v e n t io n .
D R J O N AT H A N Z O H A R B L O O M :

Ye s C h a ir Tr a n s n e t a s f a r a s I

u n d e r s t a n d a n d i n t h e d is c u s s io n s t h a t is w h a t t h e y d o , th e y w o u l d u s e
m a r k e t n o r ms a n d c o n v e n t i o n s i n o r d e r to p r i c e c e r t a i n tr a n s a c ti o n s .
CHAIRPERSON: Okay thank you.
A D V PA U L J O S E P H P R E TO R I U S S C :
10

A n d t h e y h a d a s k il le d t r e a s u r y

t o g u i d e t h e m in t h is r e g a r d .
D R J O N AT H A N Z O H A R B L O O M : T h a t ’s c o r r e c t C h a ir.
C H A I R P E R S O N : B u t u lt i m a t e ly a r e w e a m e n d i n g t h a t 0 .0 6 o n p a g e 1 3
to be 0.01?
A D V PA U L J O S E P H P R E TO R I U S S C :

Ye s , a s I u n d e r s ta n d y o u ’r e

c o m f o r t a b l e w i th t h a t ?
D R J O N AT H A N Z O H A R B L O O M : I’ m c o m f o r ta b l e w i t h t h a t C h a ir b u t I
t h i n k w e s h o u l d n ’ t l o s e s i g h t o f th e 0 . 0 6 % . . .( i n te r v e n t io n )
C H A I R P E R S O N : Fo r a d i ff e r e n t p o i n t ?
D R J O N AT H A N Z O H A R B L O O M : Fo r a d i ff e r e n t p o in t .
20

A D V PA U L J O S E P H P R E TO R I U S S C :

A lr i g h t .

D R J O N AT H A N Z O H A R B L O O M : I w il l c o m e b a c k to i t.
C H A I R P E R S O N : Yo u c a n – y o u w il l m a k e t h a t p o in t in d u e c o u r s e ?
D R J O N AT H A N Z O H A R B L O O M : Ye s C h a i r.
CHAIRPERSON: But here we can say 0.01.
D R J O N AT H A N Z O H A R B L O O M : C o r r e c t C h a ir.

Page 153 of 212

31 MAY 2019 – DAY 103
C H A I R P E R S O N : O k a y, a lr ig h t .
A D V PA U L J O S E P H P R E TO R I U S S C :

A n d in f a c t d id R e g i m e n ts

charge
D R J O N AT H A N Z O H A R B L O O M : 0 . 1 . .. ( i n t e 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 : O n t h e h i g h e r a m o u n t , y i e l d .
D R J O N AT H A N Z O H A R B L O O M : 0 . 1 5 % .
A D V PA U L J O S E P H P R E TO R I U S S C :

N o w w a s t h a t w i th i n m a r k e t

n o r ms ?
D R J O N AT H A N Z O H A R B L O O M : N o C h a ir.
10

A D V PA U L J O S E P H P R E TO R I U S S C :
D R J O N AT H A N Z O H A R B L O O M :

W a s it s l ig h tl y o u t o r . . .

Fr o m – i f o n e c o m p a r e s 0 .0 1 % t o

0 .1 5 % i t d o e s n ’ t s o u n d l ik e a b i g d i ff e r e n c e b u t o n a v e r y la r g e a m o u n t
it m a k e s i t a s u b s t a n t ia l d i ff e r e n c e s o th a t ’s w h y .. .( i n 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 :

W e ll c o r r e c t m e i f I’ m w r o n g ,

it ’s 1 5 t i m e s t h e a m o u n t ?
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t .

CHAIRPERSON: That must be quite high.
D R J O N AT H A N Z O H A R B L O O M :
CHAIRPERSON:
20

Ye s C h a ir.

L e t m e a s k y o u t h i s q u e s ti o n t h e n , it ’s p a r t o f m e

tr y i n g t o l o o k a t t h i s w i t h a s m u c h b e n e f i t o f y o u r k n o w l e d g e a s
p o s s i b le , w o u l d th is b e s h o c k i n g to s o m e b o d y w h o i s f a m i li a r w i t h th e
m a r k e t c o n v e n e ti o n ?
D R J O N AT H A N Z O H A R B L O O M : I b e l ie v e s o 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 .
A D V PA U L J O S E P H P R E TO R I U S S C :

O f c o u r s e t h e q u e s t io n t h a t w e

Page 154 of 212

31 MAY 2019 – DAY 103
w i ll a s k i n d u e c o u r s e w h o m a d e t h e s e d e c i s i o n s , w h y d i d t h e y m a k e
t h e m , w h e n d i d t h e y m a k e t h e m a n d f o r w h o s e b e n e fi t , w e b e g i n t o d e a l
w i t h t h o s e q u e s ti o n i n fu t u r e p a g e s .
D R J O N AT H A N Z O H A R B L O O M : Ye s C h a i r.
A D V PA U L J O S E P H P R E T O R I U S S C :

R i g h t , s o i n th e s i x th b u ll e t y o u

come to a conclusion and what do you say there?
D R J O N AT H A N Z O H A R B L O O M :

C h a ir t h a t R e g i m e n ts c h a r g e d a f e e

t h a t i s n o t n e a r l y i n li n e w i th m a r k e t c o n v e c t io n s a n d Tr a n s n e t p r a c tic e .
C H A I R P E R S O N : Ac t u a l ly w h e n y o u s a y n o t in l in e y o u ’r e b e i n g k in d to
10

t h e m is n ’t i t? Wa y o u t o f l i n e ?
D R J O N AT H A N Z O H A R B L O O M : Ye s i t ’s w a y o u t o f l in e C h a ir, t h a t’s
correct.
CHAIRPERSON: Ja.
A D V PA U L J O S E P H P R E TO R I U S S C : W e ll o n e w a y o f l o o k i n g a t i t i s
1 5 t i m e s m o r e th a n i t s h o u ld .
D R J O N AT H A N Z O H A R B L O O M : Ye s C h a i r.
A D V PA U L J O S E P H P R E TO R I U S S C :

A n d y o u ’v e p u t a n e s t i m a te o n

t h a t , w e n e e d n ’ t g o t o h o w y o u c a lc u la t e d t h a t b e c a u s e w e ’v e g o t
e n o u g h m a t h s to d o a s w e g o a lo n g . W h a t i s y o u r – i n y o u r o p i n i o n t h e
20

o v e r c h a r g e e s ti m a t e d t o b e ?
D R J O N ATH A N Z O H A R B L O O M :

C h a ir b a s e d o n – a n d th e s e

c a l c u l a ti o n s a s I in d ic a t e d p r e v i o u s ly a r e b a s e d o n t h e d a t a th a t
R e g i m e n t s u s e d i n th e ir c a lc u la t io n o f t h e fe e , s o i f y o u l o o k a t i t fr o m
t h e p e r s p e c t iv e o f th e y c h a r g e d 1 5 2 . 7 m il li o n a n d y o u u s e w h a t th e y d i d
a n d y o u c o n v e r t t h e n t h e y ’r e o v e r c h a r g e d b y 9 0 m il li o n , i n o t h e r w o r d s

Page 155 of 212

31 MAY 2019 – DAY 103
1 5 2 . 7 m i n u s th e 9 0 i s w h a t t h e f e e s h o u l d h a v e b e e n b a s e d o n t h e d a t a
t h a t th e y u s e d b u t th a t , a s w e ’ v e d e t e r m i n e d t h a t is w e ll b e y o n d m a r k e t
c o n 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 :

A lr ig h t l e t ’s g o t o t h e l a s t b u ll e t

y o u q u a l i fy e v e r y t h i n g t h a t y o u ’v e to l d th e C h a ir u p t il l n o w a n d i f y o u
d o t h e m a t h t h e r e ’s a n o v e r c h a r g e o n y o u r e s ti m a t e a n d i n y o u r o p in i o n
o f 9 0 m il li o n r a n d .
D R J O N AT H A N Z O H A R B L O O M : C o r r e c t C h a ir.
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 w h a t is th e p o i n t y o u m a k e ,
10

fi n a l ly o n p a g e 1 3 ?
D R J O N AT H A N Z O H A R B L O O M :

C h a ir t h is r e l a t e s – th e l a s t p o i n t is

t h e th a t R e g i m e n ts s h o u l d n o t h a v e b e e n p a i d a n y f e e f o r t h is w o r k
b e c a u s e a s w e d e t e r m i n e d p r e v io u s ly, th e r e w a s s u ff ic i e n t c a p a c it y a n d
k n o w l e d g e a n d s k il l w i t h i n t h e Tr a n s n e t F u n d i n g D e p a r t m e n t o r t h e
D e b t R a is in g D e p a r t m e n t a s i t w a s th e n t o p e r f o r m t h e r e q u ir e d
f u n c t i o n . S o i n m y o p i n io n th e r e w a s n o n e e d fo r Tr a n s n e t t o a c t u a l ly
o u t s o u r c e t h is f u n c ti o n t o a n e x te r n a l p a r ty.
C H A I R P E R S O N : T h a t i s th e o v e r a l l p o i n t y o u m a k e a n d t h e n th e o th e r
p o i n t is t h e o n e y o u h a v e b e e n d e a l in g w i t h I t h i n k i s e v e n i f t h e r e w a s
20

ju s t i fic a ti o n

to

give

R e g i m e n ts

t h is

work

to

do,

there

was

no

ju s t i fic a ti o n f o r c h a r g i n g t h e a m o u n t s t h a t t h e y c h a r g e d , is t h a t
correct?
D R J O N AT H A N Z O H A R B L O O M : T h a t ’s c o r r e c t C h a ir.
C H A I R P E R S O N : N o w i n t e r m s o f w h a t y o u c o n s id e r t o b e in e x c e s s o f
w h a t t h e n o r m w a s o r w h a t th e y s h o u ld h a v e p a id o r w h a t o n e c o u l d

Page 156 of 212

31 MAY 2019 – DAY 103
e x p e c t to b e a n a d v i s o r i n t h e ir p o s it i o n , t o h a v e b e e n p a id f o r t h is k i n d
of work,

is

there

a n y t h in g

that

you

came

across

in

terms

of

d o c u m e n t a ti o n t h a t s a y s t o y o u , m a y b e t h e y c a n c o m e u p w i t h s o m e
ju s t i fic a ti o n o r is i t o n e o f t h o s e s i t u a ti o n s w h e r e y o u a r e a b l e t o s a y,
t h e r e is j u s t n o w a y in w h ic h a n y b o d y c a n ju s t i fy t h i s k in d o f a m o u n t f o r
t h is k i n d o f w o r k .
D R J O N ATH A N Z O H A R B L O O M :

Chair I never came across any

d o c u m e n t a ti o n w h ic h p u r p o r te d to i n d i c a t e t h a t , y o u k n o w, th a t t h e r e
w a s i n s u ff ic i e n t c a p a c i ty o r t h a t t h i s – th e s e a r e th e ty p e s o f f e e s th a t
10

c o u l d b e c h a r g e d f o r th e n a tu r e a n d th e s c o p e fo r th e w o r k t h a t w a s
being done.
CHAIRPERSON: Okay thank you.
A D V PA U L J O S E P H P R E TO R I U S S C :

L e t’s j u s t s u m m a r i s e t o t h e r e ,

t h e a n a ly s is t h a t y o u ’v e d o n e u p t o n o w t o w h ic h l o a n d i d th a t r e l a t e .
R e m e m b e r w e h a d th e 2 . 5 b il li o n D o l la r s p li t in t o 1 . 5 a n d 1 b il li o n , r ig h t
a n d t h e n w e h a d f u r th e r a m o u n t s .

W h e n w e ’r e ta lk i n g a b o u t t h e

1 2 b il li o n C lu b L o a n th a t y o u t a lk a b o u t o n p a g e 1 4 , y o u h a v e to ld t h e
C h a ir t h a t t h e 1 b ill i o n D o l la r p o r ti o n o f th e 2 . 5 b i ll io n w a s s h e lv e d .
D R J O N AT H A N Z O H A R B L O O M : C o r r e c t C h a ir.
20

A D V PA U L J O S E P H P R E TO R I U S S C : A n d i t w a s – w h a t w a s – i t w a s
r e p l a c e d w i th a 1 2 b i ll i o n r a n d w h i c h w a s t h e n , p r e s u m a b ly m o r e o r le s s
e q u iv a l e n t t o 1 b i ll io n D o ll a r s , n o t r e a ll y b u t a l m o s t , t h e 1 2 b il li o n r a n d
r e p l a c e d t h e 1 b i ll io n r a n d , p o r t io n o f t h e 2 . 5 b il li o n .
D R J O N AT H A N Z O H A R B L O O M :

Ye s C h a ir t h e 1 b il li o n D o ll a r w h ic h

w a s s h e lv e d i n f a v o u r o f t h e 1 2 b il li o n C lu b L o a n .

Page 157 of 212

31 MAY 2019 – DAY 103
A D V PA U L J O S E P H P R E T O R I U S S C :

N o w t h a t w a s a lo a n r a i s e d

d o m e s ti c a lly, in S o u t h A f r ic a .
D R J O N AT H A N Z O H A R B L O O M : T h a t ’s c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

Fr o m m a s y n d ic a te o f l e n d e r s .

D R J O N AT H A N Z O H A R B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :

W e ’l l t a lk a b o u t t h a t in d u e

course.
D R J O N AT H A N Z O H A R B L O O M : Ye s .
A D V PA U L J O S E P H P R E TO R I U S S C : A l r i g h t y o u d e a l w i t h t h a t lo a n o n
10

page 14.

I f y o u c o u l d j u s t t e l l t h e C h a ir o f th o s e fa c t s b y w a y o f

background that appear on page 14.
D R J O N AT H A N Z O H A R B L O O M : C h a ir a s w e ’v e d is c u s s e d t h e 1 b il li o n
p o r t i o n o f t h e 2 . 5 b i ll io n U S D o ll a r C D B l o a n w a s s h e lv e d i n fa v o u r o f
t h e 1 2 b ill i o n s y n d ic a t e d C lu b L o a n .

W h a t is i m p o r t a n t ju s t t o n o te ,

w h ic h w e h a v e n ’t s p o k e n a b o u t y e t is t h e d u r a t io n o f t h a t l o a n , in o t h e r
w o r d s h o w lo n g w i ll i t b e ti ll i t g e ts p a i d o ff , w h i c h i s 1 5 y e a r s a n d th a t
it w a s c o n c l u d e d u s i n g a v a r i a b l e in t e r e s t r a te o r w h a t w e t e r m – i f I
c a n in tr o d u c e a n o t h e r t e r m C h a ir, th e f l o a t in g i n t e r e s t r a t e w h ic h is t h e
s a m e a s v a r ia b l e i n t e r e s t r a t e o n t h e m a jo r it y o f o u r lo a n s .
20

CHAIRPERSON:

Ye s s o m e w i t n e s s t o l d m e a b o u t a fl o a t in g in t e r e s t

r a te , I th in k t h e r e is a fl o a t in g a n d a f ix e d in t e r e s t r a t e .
D R J O N AT H A N Z O H A R B L O O M :

T h a t ’s c o r r e c t C h a ir, w e ’r e g o i n g to

t a lk a b o u t t h a t a lo t .
C H A I R E R S O N : O k a y, a l r i g h t , th a n k y o u .
A D V PA U L J O S E P H P R E TO R I U S S C :

We know that out there in the

Page 158 of 212

31 MAY 2019 – DAY 103
m a r k e t p l a c e i n te r e s t r a t e s fl u c t u a t e .
D R J O N AT H A N Z O H A R B L O O M : T h a t ’s c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : I n t e r e s t r a t e s a r e d e t e r m i n e d i n
v a r io u s w a y s , w e h a v e t h e r e p o r a t e w h ic h i s d e t e r m in e d b y th e
R e s e r v e B a n k b u t i t v a r i e s fr o m m o n t h t o m o n th a l m o s t .
D R J O N AT H A N Z O H A R B L O O M : T h a t ’s c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :

R ig h t b u t in a n y e v e n t i f y o u

e n t e r i n t o a n a g r e e m e n t w i t h a fl o a ti n g i n te r e s t r a te , y o u p a y a r a t e
t h a t i s u n d e t e r m i n e d , fl u c t u a t in g a n d u n p r e d ic t a b l e .
10

D R J O N AT H A N Z O H A R B L O O M : T h a t ’s c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E T O R I U S S C :

A n d y o u ’ v e t o l d t h e C h a ir t h a t ,

t h a t ’s s o m e ti m e s r i s k y.
D R J O N AT H A N Z O H A R B L O O M : T h a t ’s c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :

F o r th e b o r r o w e r a t le a s t .

D R J O N AT H A N Z O H A R B L O O M : T h a t ’s tr u e .
A D V PA U L J O S E P H P R E T O R I U S S C : O k a y w h a t h a p p e n e d o n t h e 1 2 t h
o f M a y 2 0 1 5 i n r e la t io n t o t h e C lu b L o a n ?
D R J O N ATH A N Z O H A R B L O O M : C h a ir o n t h e 1 2 t h o f M a y, J P M o r g a n
was named as the preferred bidder to lead, arrange and underwrite in
20

o th e r w o r d s w e c a n s e e th o s e – w e c a n t a k e t h o s e th r e e c o n c e p ts a s
o n e i f y o u li k e fo r n o w, t h e C l u b L o a n a n d t h e r e w a s a l e t t e r is s u e d a n d
s ig n e d b y M r A n o j S i n g h w h e r e h e i n d i c a te d t o J P M o r g a n t h a t t h e y
w o u ld b e t h e p r e f e r r e d b i d d e r f o r t h is w o r k .
A D V PA U L J O S E P H P R E T O R I U S S C : R i g h t , w e r e R e g i m e n ts i n v o lv e d
in s o m e w a y ?

Page 159 of 212

31 MAY 2019 – DAY 103
DR

J O N AT H A N

ZOHAR

BLOOM:

R e g i m e n ts

was

the

s u p p l ie r

d e v e l o p m e n t p a r t n e r o f J P M o r g a n a s i n d ic a t e d p r e v io u s ly a n d t h e y
w e r e p a r t o f th a t p r o c e s 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 w h a t h a p p e n e d t h e n o n t h e
– we go to page 15 on the 27th of August 2015?
D R J O N ATH A N Z O H A R B L O O M : T h a t i s w h e n Er ic W o o d w h o w a s t h e
C E O o f R e g i m e n ts a n d Mr P h e t o l o R a m o s e b u d i t h e Tr a n s n e t G r o u p
Tr e a s u r e r, th e y a g r e e d to c o n c l u d e th e 1 2 b il li o n C l u b L o a n a n d t h e r e
a r e f iv e p a r ti e s t h a t p a r tic i p a t e d i n t h i s s y n d ic a ti o n f o r t h a t l o a n .
10

A D V PA U L J O S E P H P R E TO R I U S S C : A s p a r ts o f t h e le n d e r ?
D R J O N AT H A N Z O H A R B L O O M :

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

A D V PA U L J O S E P H P R E TO R I U S S C : W h o w e r e t h e y ?
D R J O N AT H A N Z O H A R B L O O M : N e d b a n k th a t c o n t r i b u t e d 3 b ill i o n , t h e
B a n k o f C h i n a 3 b i ll io n , A b s a 3 b il li o n , O ld M u t u a l F i n a n c e 1 . 5 b i ll io n
a n d F u tu r e G r o w th 1 .5 b ill i o n .
A D V PA U L J O S E P H P R E TO R I U S S C : A n d t h e n w h a t h a p p e n e d o n t h e
1st of October 2015?
D R J O N ATH A N Z O H A R B L O O M :

T h e B o a r d C o m m i t t e e d e a l in g w i th

t h is p r o c e s s … ( in t e r v e n ti o n ) .
20

A D V PA U L J O S E P H P R E TO R I U S S C : T h e B A D C ?
D R J O N AT H A N Z O H A R B L O O M :

B A D C , a p p r o v e d th e m e m o r a n d u m

a p p r o v in g t h e r e p la c e m e n t o f J P M o r g a n w i t h Tr i ll ia n in r e s p e c t o f l e a d
a r r a n g in g a n d u n d e r w r i t in g s e r v ic e s fo r t h e l o a n .
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 n o w Tr i ll ia n c o m e o n t o th e
scene.

Page 160 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O H A R B L O O M : T h a t ’s c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

A m o n t h b e fo r e o r in t h e

p r e v i o u s m o n th , S e p te m b e r 2 0 1 5 , y o u d e a l w i t h t h i s i n t h e l a s t b u ll e t o f
the

next

page

but

l e t ’s

f a s t- f o r w a r d

there

for

the

m o m e n t … ( i n te r v e n t io n ) .
C H A I R P E R S O N : M r Pr e to r i u s y o u t a l k a b o u t t h e p r e v i o u s m o n th – o h
p r e v i o u s b e c a u s e w e h a v e …( i n 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 : S o 1 O c t o b e r J P M o r g a n m o v e s
o ff t h e s c e n e a n d Tr il li a n e n t e r t h e s c e n e .
10

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 : F o r t h e C l u b L o a n .
CHAIRPERSON: I was looking at 27 August…(intervention).
A D V PA U L J O S E P H P R E TO R I U S S C : Ye s s o r r y s o t h a t ’s o n 1 O c t o b e r.
CHAIRPERSON:

Ye s y o u a r e r ig h t .

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 s o m e th i n g h a p p e n e d t h a t i s
s ig n if ic a n t f o r o u r b ig p i c t u r e C h a ir.
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 :

A m o n t h b e fo r e o r in t h e

p r e v i o u s m o n th a n d t h a t is d e a l t w i t h i n t h e l a s t b u ll e t o n p a g e 1 6 .
20

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 :

A n d t h a t is c o n t a i n e d in t h e

volume 2(B) report, what happened?
D R J O N AT H A N Z O H A R B L O O M :

I n o r d e r f o r Tr i ll ia n t o p a r t ic i p a te i n

t h e – a s p a r t – in th e tr a n s a c t io n a n d a ls o t o b e c o m e a s e r v ic e
p r o v i d e r, S a l i m E s s a b e c a m e t h e c o n t r o ll in g s h a r e h o ld e r i n Tr i ll ia n i n

Page 161 of 212

31 MAY 2019 – DAY 103
S e p te m b e r 2 0 1 5 .
A D V PA U L J O S E P H P R E TO R I U S S C :

S o Tr i ll ia n e n t e r th e s c e n e i n

October 2015.
D R J O N AT H A N Z O H A R B L O O M : C o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

I n t h e p r e v i o u s m o n th S a l i m

E s s a a b o u t w h o m w e a r e h e r e , a s u b s t a n ti a l a m o u n t , i n d u e c o u r s e
b e c a m e t h e m a j o r s h a r e h o l d e r i n Tr i ll ia n ?
D R J O N AT H A N Z O H A R B L O O M : T h a t ’s c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E T O R I U S S C :
10

L e t ’s g o t h e n t o p a g e 1 6 i f w e

m a y, w h a t h a p p e n e d o n th e 1 7 t h o f S e p te m b e r 2 0 1 5 ?
DR

J O N ATH A N

ZOHAR

BLOOM:

T h is

was

then

prior

to

the…(intervention).
A D V PA U L J O S E P H P R E TO R I U S S C :

( i n d is ti n c t ) m u s t I p a u s e th e r e

or…
CHAIRPERSON:

M a y b e , I’ m j u s t – M r E s s a b e c o m i n g c o n t r o ll in g

s h a r e h o l d e r o f Tr il li a n h a p p e n s i n S e p t e m b e r a n d Tr i ll ia n r e p l a c e s J P
M o r g a n e a r l y i n O c t o b e r, n o th a t ’s w h a t I w a n t e d t o c o n n e 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 t h a t ’s c o r r e c t .
C H A I R P E R S O N : O k a y, a lr i g h t.
20

A D V PA U L J O S E P H P R E TO R I U S S C : T h e f ir s t b u ll e t o n p a g e 1 6 y o u
s a y w h a t h a p p e n e d o n th e 1 7 t h o f S e p te m b e r 2 0 1 5 , w h a t w a s t h a t?
D R J O N AT H A N Z O H A R B L O O M :

T h a t w a s w h e n t h e a c ti n g G C E , M r

G a m a s u b m i t te d a s i g n e d m e m o r a n d u m t o B A D C r e q u e s t in g t h e
a p p o i n t m e n t o f Tr il li a n a s t h e l e a d a r r a n g e r o f t h e C lu b L o a n th e r e b y
r e p l a c in g J P M o r g a n .

A c o u p le o f d a y s la t e r, o n t h e 2 2 n d o f

Page 162 of 212

31 MAY 2019 – DAY 103
S e p te m b e r … ( 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 b e fo r e y o u d o t h a t a n d y o u m u s t j u s t te ll m e
if t h i s i s s o m e t h i n g y o u c o m e t o d e a l w i t h b e c a u s e it ’s n o t r e a l ly – it
d o e s n ’t h a v e m u c h t o d o w i t h f in a n c e s .

That memorandum that Mr

G a m a s u b m i t t e d to th e B A D C C o m m i t t e e , r e q u e s ti n g t h e a p p o i n t m e n t o f
Tr i ll ia n t o r e p la c e J P M o r g a n , I ’ d b e in t e r e s t e d in th e r e a s o n s t h a t w e r e
g iv e n fo r t h a t c h a n g e . S o – b u t t h i s w i tn e s s m i g h t n o t h a v e f o r e c a s t o n
that.
A D V PA U L J O S E P H P R E T O R I U S S C : N o t e d c h a ir a n d it w il l b e i n t h e
10

c o m p r e h e n s iv e r e p o r t , I t a k e th a t p o in t C h a ir.
C H A I R P E R S O N : Ye s o k a y.
A D V PA U L J O S E P H P R E TO R I U S S C : I b e l ie v e t h a t , t h a t m e m o r a n d u m
is p a r t o f t h e 2 ( A ) r e p o r t b u t I u n d e r s t a n d t h a t w h e n o n e h a s a
s e q u e n c e o f e v e n ts a s h a s b e e n p r e s e n t e d o n e w a n t s th e d e ta il i n th a t
p r e s e n t a ti o n . I t d o e s n ’ t h e l p to h a v e t o g o to o t h e r b u n d l e s t o fi n d o u t
w h a t o n e w a n ts , s o I u n d e r s ta n d y o u r c o n c e r n C h a ir a n d w e w il l m e e t
that concern.
C H A I R P E R S O N : A n d s o m e t i m e s y o u h a v e d e a l t w i t h s o m e th i n g m a n y
m o n th s a g o i n a C o m m is s i o n s u c h a s th is a n d y o u c a n ’ t r e a lly

20

r e m e m b e r a n d n o w y o u w a n t t o c o n n e c t th e d o ts a s i t w e r e .
A D V PA U L J O S E P H P R E TO R I U S S C :

Ye s , w e ll C h a ir y o u o n ly h a v e to

d e a l w it h h u n d r e d s o f th o u s a n d s o f p a g e s a t t h e e n d …
CHAIRPERSON:

( L a u g h i n g ) a n d th a t ’s n o t h i n g .

A D V PA U L J O S E P H P R E T O R I U S S C :

We understand Chair I don’t

w a n t to m a k e li g h t o f i t b u t i t ’s a r e a l is s u e .

Page 163 of 212

31 MAY 2019 – DAY 103
CHAIRPERSON: Thank you.
A D V PA U L J O S E P H P R E TO R I U S S C : S o y o u w e r e a t t h e f ir s t b u l le t o n
p a g e 1 6 d e s c r ib in g t h e s e q u e n c e o f e v e n t s .
D R J O N AT H A N Z O R A H B L O O M :

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

So then on the 22

S e p te m b e r o f th a t y e a r 2 0 1 5 t h e r e c o m m e n d a ti o n t o r e p l a c e J P
M o r g a n w i th Tr i lli a n w a s s u b m it t e d to t h e G C E a n d th e a p p o i n t m e n t a s
in d i c a t e d o n th e p r e v io u s s li d e w a s a p p r o v e d B A D A C o n th e 1 O c t o b e r
2015.

O n t h e 1 8 N o v e m b e r o f t h a t y e a r t h e c lu b lo a n fa c i li ty w a s

s ig n e d b y Mr D a n i e l R o y o f Tr il li a n , M r S G a m a w a s th e a c ti n g G C E a t
10

t h e ti m e a n d M r G a r r y P i t a w h o w a s t h e a c ti n g G C F O a t th e ti m e .
A D V PA U L J O S E P H P R E TO R I U S S C :

N o w th is i s t h e a g r e e m e n t

b e t w e e n Tr a n s n e t a n d Tr i ll ia n i t i s n o t t h e a c t u a l l o a n i t s e l f?
D R J O N AT H A N Z O R A H B L O O M :

I u n d e r s ta n d th a t – I a m n o t a

h u n d r e d p e r c e n t s u r e o n t h a t it e m C h a ir I j u s t n e e d t o c h e c k .
A D V PA U L J O S E P H P R E TO R I U S S C : N o w e ll w e k n o w f r o m y o u r l a te r
e v i d e n c e t h a t t h e l o a d w a s a c t u a l ly s ig n e d o n t h e 2 3 N o v e m b e r.
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C : 2 0 1 5 b u t w e g e t ti n g th e r e .
D R J O N AT H A N Z O R A H B L O O M : Ye s .
20

A D V PA U L J O S E P H P R E T O R I U S S C :

R i g h t b e c a u s e th a t d a t e is

i m p o r t a n t w h e n c o m p a r e d w i th t h e e v e n t s t h a t o c c u r r e d i n D e c e m b e r
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
CHAIRPERSON: So…
A D V PA U L J O S E P H P R E TO R I U S S C : L e t u s n o t g o t h e r e y e t .
C H A I R P E R S O N : S o t h a t fo u r t h b u l le t p o in t o n p a g e 1 6 is th e r e f e r e n c e

Page 164 of 212

31 MAY 2019 – DAY 103
t o lo a n – to c lu b l o a n fa c i li ty a g r e e m e n t t h e n c o r r e c t . Fr o m w h a t y o u
h a v e j u s t c l a r i f ie d in – I a m g e t t in g t h e i m p r e s s i o n t h a t – f r o m t h e
c la r i fi c a t io n y o u h a v e g iv e n to Mr Pr e t o r i u s to h is q u e s ti o n I a m g e t ti n g
the impression that that agreement was the mandate being given by
Tr a n s n e t t o Tr il li a n t o s a y o u r r e la t io n s h ip a n d t h i s is w h a t y o u w il l d o
f o r u s a n d t h i s is w h a t w e w i ll p a y.

Th a t is w h a t t h a t a g r e e m e n t w a s

about and not about the actual loan.
D R J O N AT H A N Z O R A H B L O O M : 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 I a m j u s t s a y in g I a m n o t s u r e w h e t h e r c a ll in g i t
10

a c l u b lo a n f a c il i ty a g r e e m e n t i s c o r r e c t b u t m a y b e th a t i t is I m u s t j u s t
– b u t y o u s a y i t i s t h e a u t h o r is a ti o n – i s t h e ir a p p o i n t m e n t t o p e r f o r m
t h is jo b .
D R J O N AT H A N Z O R A H B L O O M : 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.
A D V PA U L J O S E P H

P R E TO R I U S

SC:

I n r e l a ti o n t o

the

loan

concluded…
C H A I R P E R S O N : I n r e l a ti o n t o th e c lu b l o a n f a c il i ty.
A D V PA U L J O S E P H P R E TO R I U S S C : A f e w d a y s l a te r. I t m a y b e t h a t
t h a t i s a c t u a l ly th e ti t le o f t h e a g r e e m e n t b u t w e w il l c h e c k .
20

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 T O R I U S S C : A n d p e r h a p s i n b r a c k e ts i n t h e
r e p o r t w e w il l
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 :

D e s c r i b e i t s o th a t t h e r e i s n o

c o n fu s i o n .

Page 165 of 212

31 MAY 2019 – DAY 103
C H A I R P E R S O N : J a n o t h a t is fi n e .
A D V PA U L J O S E P H P R E TO R I U S S C : A lr i g h t a n d t h e n i n th e l a s t b u l le t
y o u s a y w h a t y o u h a v e a lr e a d y t o ld t h e C h a ir t h a t a m o n t h a n d t w o
m o n th s p r i o r t o th e s e e v e n ts M r S a l i m E s s a e n t e r s t h e s c e n e t h r o u g h
Tr i a l li a n ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

R ig h t le t u s m o v e t o p a g e 1 7

w h e r e y o u c o m m e n t o n th e fe e s c h a r g e d b y Tr il li a n .
D R J O N AT H A N Z O R A H B L O O M : S o C h a i r i n N o v e m b e r.
10

A D V PA U L J O S E P H P R E TO R I U S S C :

N o w l e t u s ju s t

D R J O N AT H A N Z O R A H B L O O M : S o r r y.
A D V PA U L J O S E P H P R E T O R I U S S C :

E s ta b lis h t h i s .

Tr i lli a n i s

a p p o i n t e d in t e r m s o f a n a g r e e m e n t d a t e d 1 8 N o v e m b e r 2 0 1 5 .
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

W e k n o w t h a t a n d y o u w il l te ll

t h e C h a ir in d u e c o u r s e i n a d i ff e r e n t c o n t e x t th a t t h e l o a n f o r w h ic h i t
w a s a p p o i n t e d w a s e n te r e d i n to d a y s la t e r ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : I n f a c t a f e w d a y s la t e r ?
20

D R J O N AT H A N Z O R A H B L O O M : Ye s .
A D V PA U L J O S E P H P R E TO R I U S S C : F iv e d a y s l a te r.
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E T O R I U S S C : A n d g iv e n th a t i ts a p p o in t m e n t is
fi n a l is e d c o n tr a c t u a ll y o n 1 8 N o v e m b e r 2 0 1 5 w h a t h a p p e n e d i n t h a t
very same month?

Page 166 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M :

C h a ir Tr il li a n f o r t h e w o r k t h a t t h e y

p u r p o r t e d t o h a v e d o n e i s s u e d a n i n v o ic e to Tr a n s n e t fo r a f i g u r e o f
R 9 3 m i ll io n i n c l u s i v e o f VAT w h ic h th e y a s I s a i d p u r p o r t e d t o h a v e
r e n d e r e d a s l e a d a r r a n g e r f o r t h e c lu b l o a n .

A n d I w o u l d li k e to j u s t

c la r i fy e v e n if t h e y d id n o t d o t h e w o r k w h ic h I – I w il l fu r t h e r t a lk t o a
b i t l a t e r C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : Al r i g h t s o le t u s j u s t lo o k a t t h e
ti m e s e q u e n c e b e c a u s e t h a t is i n s tr u c ti v e i n i ts e l f q u i t e a p a r t fr o m
a n y th in g e ls e .
10

D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :

I t i s a p p o i n t e d in N o v e m b e r.

C H A I R P E R S O N : 1 8 N o v e m b e r.
A D V PA U L J O S E P H P R E TO R I U S S C : O n t h e 1 8 t h .
CHAIRPERSON: Ja.
A D V PA U L J O S E P H P R E TO R I U S S C : R ig h t.
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E T O R I U S S C :

T h e a g r e e m e n t is e n t e r e d i n t o

o n t h e 2 3 r d t h e a c t u a l l o a n a g r e e m e n t f o r w h i c h it is a p p o in t e d t o
a d v ic e .
20

D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : A n d a r r a n g e .
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :

R ig h t f iv e d a y s l a t e r.

I n th e

s a m e m o n t h it is s u e s a n in v o ic e f o r R 9 3 m il li o n fo r b e in g t h e l e a d
a r r a n g e r fo r t h a t l o a n .

Page 167 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C : J u s t h a v i n g r e g a r d to t h e d a te s
a n d i n y o u r o p i n i o n is i t l ik e l y o r p r o b a b le th a t t h e y a c tu a lly d i d a n y
work?
D R J O N AT H A N Z O R A H B L O O M : N o C h a ir.
C H A I R P E R S O N : Yo u h a v e – o n 1 8 N o v e m b e r 2 0 1 6 Tr ill i a n is a p p o i n te d
A D V PA U L J O S E P H P R E TO R I U S S C : 2 0 1 5 C h a ir.
CHAIRPERSON: Hm.
A D V PA U L J O S E P H P R E TO R I U S S C : 2 0 1 5 .
10

CHAIRPERSON:

J a 1 8 N o v e m b e r 2 0 1 5 Tr il li a n i s a p p o i n t e d th e n y o u

m e n ti o n e d 2 3 S e p te m b e r I a m tr y i n g t o l o o k f o r th a t .
A D V PA U L J O S E P H P R E T O R I U S S C : N o 2 3 – s o I a m s o r r y C h a ir 2 3
N o v e m b e r.
CHAIRPERSON: November?
A D V PA U L J O S E P H P R E TO R I U S S C : Th e s a m e m o n th , fi v e d a y s l a t e r.
CHAIRPERSON: 23 November yes .
A D V PA U L J O S E P H P R E TO R I U S S C :

Th a t lo a n f o r w h ic h i t is

a p p o i n t e d t o a r r a n g e a n d a d v i s e is a c tu a l l y e n t e r e d i n to .
C H A I R P E R S O N : I a m l o o k in g fo r t h a t 2 3 N o v e m b e r.
20

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 i ll n o t fi n d i t y e t C h a ir.
C H A I R P E R S O N : O h . O h o k a y.
A D V PA U L J O S E P H P R E T O R I U S S C :

I t is y e t to c o m e i n a d i ff e r e n t

c o n te x t .
C H A I R P E R S O N : O h o k a y s o b u t 2 3 N o v e m b e r i s w h e n t h e y is s u e th e i r
in v o ic e ?

Page 168 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M : I a m u n s u r e a b o u t …
CHAIRPERSON: Or when the payment happens?
D R J O N AT H A N Z O R A H B L O O M : I a m u n s u r e a b o u t t h e d a te C h a ir b u t
it h a p p e n e d in N o v e m b e r s h o u l d i t – I a m a s s u m i n g i t w o u ld h a v e b e e n
around that time.
CHAIRPERSON:

Ye s o k a y.

N o w a r e y o u t h e n s a y in g l o o k i n g a t t h e

w o r k t h a t a n e n t it y p e r f o r m i n g t h e k in d o f f u n c t i o n o r d o i n g th e k i n d o f
w o r k th a t i t w a s a p p o i n te d to d o a n d t h e a m o u n t s i n v o l v e d a n d s o o n it
c o u l d n o t h a v e d o n e w o r k to ju s ti fy t h a t – th e k i n d o f a m o u n t t h a t t h e y
10

is s u e d a n in v o ic e fo r ?
D R J O N AT H A N Z O R A H B L O O M : 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 : T h a t is w h a t y o u a r e s a y i n g ?
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a i r.
C H A I R P E R S O N : T h a t – t h e k i n d o f w o r k t h a t w o u l d h a v e b e e n i n v o lv e d
in d o in g w h a t i t w a s a p p o i n te d t o d o to j u s ti fy a n a m o u n t s u c h a s – w a s
it R 9 3 m ill i o n ?

I n y o u r e x p e r ie n c e w o u ld h a v e e n ta il e d – w o u l d h a v e

t a k e n o v e r h o w lo n g i n t e r m s o f – o b v io u s ly c o u ld v a r y fr o m o n e
tr a n s a c ti o n t o a n o th e r
D R J O N AT H A N Z O R A H B L O O M : C h a i r …
20

C H A I R P E R S O N : B u t g e n e r a l ly s p e a k i n g
D R J O N AT H A N Z O R A H B L O O M :

C h a ir it w o u l d h a v e b e e n m o n th s

b e c a u s e i f y o u r e c a ll .
CHAIRPERSON: Hm
D R J O N AT H A N Z O R A H B L O O M : T h i s w a s a s y n d ic a te d l o a n .
C H A I R P E R S O N : Ye s .

Page 169 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M : A n d t h e r e w e r e fiv e p a r t ie s .
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M : In v o lv e d .
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M :

S o y o u w o u l d n e e d to e n te r i n t o

a g r e e m e n ts , lo a n a g r e e m e n ts w il l a l l t h o s e p a r ti e s n e g o t i a t e w i th a ll
t h o s e p a r ti e s .
C H A I R P E R S O N : Ye s , y e s .
DR
10

J O N AT H A N

ZORAH

BLOOM:

Etcetera,

etcetera

and

loan

n e g o ti a ti o n s
C H A I R P E R S O N : Ye s .
D R J O N ATH A N Z O R A H B L O O M :

Is n o t a – i s n o t a n o v e r n i g h t

process.
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M : It t a k e s t i m e a n d a n u m b e r i te r a ti o n s
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M :

And so on.

S o fr o m a t i m i n g

p e r s p e c t iv e th e s e j u s t d o n o t a d d .
C H A I R P E R S O N : Ye s . Is i t p o s s i b l e th a t t h e w o r k h a d b e e n d o n e b y J
20

P Morgan?
D R J O N AT H A N Z O R A H B L O O M : C h a i r I c a n n o t a n s w e r.
C H A I R P E R S O N : Yo u c a n n o t a n s w e r.
D R J O N AT H A N Z O R A H B L O O M :

If the work was done was J P

Morgan.
C H A I R P E R S O N : O r m a y b e w o u ld t h e p o s it io n b e t h a t i f t h e r e w a s a n y

Page 170 of 212

31 MAY 2019 – DAY 103
w o r k th a t h a d b e e n d o n e a lr e a d y it w o u l d h a v e b e e n d o n e b y s o m e b o d y
e ls e
D R J O N AT H A N Z O R A H B L O O M : 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 : T h a t is a s f a r a s y o u c a n ta k e t h a t ?
D R J O N AT H A N Z O R A H B L O O M : Ye s b y R e g i m e n ts .
CHAIRPERSON: Ja by Regiments.
D R J O N AT H A N Z O R A H B L O O M : Ye s .
C H A I R P E R S O N : J a o k a y.
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 n o t o n ly c a n y o u e x p r e s s a n
10

o p i n i o n I u n d e r s t a n d D o c to r B l o o m b y r e fe r e n c e t o t h e ti m e p e r i o d s a n d
it w o u l d s e e m t h a t t h a t w o u l d a c c o r d w i th c o m m o n s e n s e a n d a t le a s t t o
C h a ir ’s l e g a l e x p e r ie n c e a n d m y o w n l e g a l e x p e r i e n c e a n d t h e l e g a l
t e a m s l e g a l e x p e r i e n c e b u t y o u a c tu a l ly lo o k e d a t t h e d o c u m e n t a t i o n ?
D R J O N AT H A N Z O R A H B L O O M : Ye s .
A D V PA U L J O S E P H P R E TO R I U S S C :

It is n o t a s i f y o u m a k i n g y o u r

c o n c l u s i o n s j u s t b a s e d o n th e ti m i n g ?
D R J O N AT H A N Z O R A H B L O O M : N o t a t a l l C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

So what do you say in the

s e c o n d b u l le t b y w a y o f s u m m a r y h a v i n g e x a m i n e d th e d o c u m e n t a ti o n ?
20

D R J O N ATH A N Z O R A H B L O O M : W e ll t h a t t h e a p p o in t m e n t o f Tr i ll ia n
w a s ir r e g u l a r th a t is t h e f ir s t p o in t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

Why do you say that just in

summary?
D R J O N AT H A N Z O R A H B L O O M :

B e c a u s e Tr i lli a n w e r e n o t t h e p a r ty

t h a t d i d th e w o r k i n th is – g iv e n t h e ti m e f r a m e s a n d e v e r y t h i n g li k e

Page 171 of 212

31 MAY 2019 – DAY 103
t h a t t h e y w e r e n o t t h e p a r ty t h a t c o u l d – th a t d i d t h e w o r k i t w a s
R e g i m e n t s t h a t d id t h e w o r k .
A D V PA U L J O S E P H P R E TO R I U S S C : A lr i g h t t h a t i s y o u r s e c o n d p o i n t .
D R J O N AT H A N Z O R A H B L O O M :

Correct.

A n d t h a t is w h y it is

ir r e g u l a r. I n o th e r w o r d s t h e y w e r e i n v o ic i n g f o r w o r k t h a t th e y d i d n o t
do.
A D V PA U L J O S E P H P R E TO R I U S S C : A n d t h a t h a d a lr e a d y b e e n d o n e
you say?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t b y R e g i m e n t s i n t h a t c o n te x t
10

a n d th a t is w h y Tr il li a n c o u ld n o t h a v e d o n e t h e w o r k th a t t h e y c h a r g e d
f o r.
A D V PA U L J O S E P H P R E TO R I U S S C : A n d t h is i s a ll p a r t o f th e r e p o r t
2A am I right?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
CHAIRPERSON:

So – so when you talk about work that had been

p e r f o r m e d b y R e g i m e n ts y o u – y o u – a r e y o u s a y in g y o u lo o k a t t h e –
y o u l o o k e d a t t h e d o c u m e n t a ti o n a n d l o o k e d a t w h a t e v e r e l s e y o u
n e e d e d to l o o k a t i n o r d e r to f o r m a n o p i n i o n a n d y o u a r e a b l e t o s a y
t h a t t h a t w o r k w a s a c t u a l ly d o n e o r m u s t h a v e b e e n d o n e b y R e g i m e n t s .
20

I n o t h e r w o r d s is i t a s i t u a t i o n w h e r e y o u s a y lo o k i t is R e g i m e n ts w h o
d i d i t o r is i t t h e s i t u a t io n w h e r e y o u s a y i t m u s t h a v e b e e n d o n e b y
R e g i m e n t s b e c a u s e th e w o r k w a s d o n e b u t w e k n o w th a t R e g i m e n ts
was there?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir. W h a t – i f o n e t a k e s –
lo o k s a t t h e s i tu a ti o n fr o m w h e n t h e d e a l w a s s ig n e d i n o t h e r w o r d s o n

Page 172 of 212

31 MAY 2019 – DAY 103
t h e – t h a t A d v o c a te P r e t o r iu s w a s r e f e r r i n g t o t h e 2 3 N o v e m b e r fo r t h e
c lu b l o a n a ll t h e w o r k t h a t p r e c e d e d t h a t w o u l d h a v e b e e n d o n e
b e c a u s e th e c o n t r a c t s a n d t h e l o a n a g r e e m e n t s e tc e t e r a w o u l d h a v e
been in place.
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M : S o s o m e b o d y w o u l d h a v e – s o m e b o d y
must have done something.
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M : B u t i t c o u l d n o t h a v e b e e n Tr i ll ia n .
10

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 :

Yo u m a k e – y o u d r a w a

c o n c l u s i o n in t h e l a s t b u ll e t o n p a g e 1 7 w h a t i s t h a t?

T h is i s y o u r

opinion.
D R J O N AT H A N Z O R A H B L O O M :

N o w C h a ir t h e R 9 3 m i lli o n i n v o ic e

t h a t w a s s u b m i t t e d to Tr a n s n e t b y Tr i l li a n p u r p o r te d ly a s p a r t o f
tr a n s a c ti o n

advisory

services

was

–

was

–

appears

fr a u d u le n t ,

ir r e g u l a r, u n ju s t i fi e d .
CHAIRPERSON: Hm.
D R J O N AT H A N Z O R A H B L O O M : A n d n o t w i t h s t a n d i n g w a s – t h e w o r k
20

t h a t w a s p a i d – o r t h e m o n e y t h a t w a s p a i d to Tr i ll ia n f o r n o t d o i n g th e
w o r k a n d t h e y f u r th e r fl o u t e d S e c t i o n 8 .3 o f th e Pr o c e d u r e s a n d
P r o c u r e m e n t M a n u a l a s w e h a v e d is c u s s e d b e f o r e .
A D V PA U L J O S E P H P R E TO R I U S S C : R e m i n d u s .
D R J O N AT H A N Z O R A H B L O O M :

W h i c h is t h e n e c e s s i t y to u s e

s p e c i a lis t u n i ts w i th in Tr a n s n e t w i th t h e n e c e s s a r y c a p a c it y a n d s k i ll

Page 173 of 212

31 MAY 2019 – DAY 103
a n d t h is is – r e m e m b e r w e a r e ta lk in g a b o u t a l o a n h e r e s o i t w o u ld
h a v e b e e n p a r t o f th e d e b t r a is i n g d e p a r t m e n t s o t h a t w a s t h e – t h a t
w a s a v a il a b l e th a t s k il l w a s a v a i la b le t o u s e .
ADV

PA U L

JOSEPH

P R E TO R I U S

SC:

Wa s

th e r e

a n y th in g

e x tr a o r d in a r y o r e x c e p t io n a l a b o u t t h is c l u b lo a n t h a t w o u l d h a v e
r e q u ir e d t h e a p p o in t m e n t o f a h ig h ly s p e c i a l is e d e x t e r n a l a d v is o r ?
D R J O N AT H A N Z O R A H B L O O M : N o C h a ir n o t i n m y o p i n io n .
CHAIRPERSON: Hm.
A D V PA U L J O S E P H P R E TO R I U S S C :
10

T h a t l e a v i n g a s i d e w h e th e r

Tr i ll ia n w a s a c t u a l ly th a t .
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
CHAIRPERSON:

B u t – a n d w e w il l n e e d t o – t o k n o w y o u k n o w

compared

team

to

a

that

you

s a id

Tr a n s n e t

had

w h ic h

in t e r n a t io n a l ly r e s p e c t e d fr o m w h a t I u n d e r s t o o d y o u to s a y.

was

So one

c o u l d c o m p a r e t o s a y w h a t w a s w r o n g w i t h u s in g in t e r n a l p e o p le ? W a s
t h e r e a n y t h in g s p e c i a l i n te r ms o f t h e s k i l ls a n d e x p e r tis e fr o m Tr i ll ia n
and Regiments and so on?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : A lr i g h t . L e t u s m o v e o n t h e n t o
20

a n e w to p i c a n d h e r e w e a r e g o i n g to ta lk o f r is k m a n a g e m e n t a n d y o u r
o p i n i o n a n d r e g a r d t o h o w t h e r is k s t h a t y o u h a v e t o ld t h e C h a ir e x i s te d
in r e la t io n t o t h e s e l o a n s w e r e m a n a g e d a n d w h a t f i n a n c ia l d e v i c e s o r
fi n a n c i a l in s tr u m e n ts w e r e u s e d to a d d r e s s th is r is k ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

Bu t as the Chair says we have

Page 174 of 212

31 MAY 2019 – DAY 103
g o t t o t a k e a s te p b a c k a n d e x p l a i n w h a t h e d g i n g d e r iv a tiv e s r is k
m a n a g e m e n t is a l l a b o u t ?
CHAIRPERSON:

A n d I a m g o in g t o ju s t a s k o n e q u e s t io n r e l a t i n g t o

w h a t y o u – w e h a v e f i n is h e d . I n y o u r in v o lv e m e n t w i t h N M S t o a s s is t
t h e m w i t h t h e f in a n c i a l a s p e c ts o f t h e s e tr a n s a c ti o n s y o u h a v e n o t h a v e
y o u – y o u h a v e n o t h a d t h e c h a n c e t o s o t o s p e a k c o n f r o n t Tr ill i a n a n d
w h o e v e r t o s a y h o w d o y o u j u s t if y th is a n d h e a r w h a t th e y h a v e to s a y
a n d y o u a r e a b le t o s a y th is i s w h a t t h e y s a id a n d ju s t m a y b e I c a n
u n d e r s t a n d w h e r e th e y a r e c o m in g fr o m b u t t h is w a s w r o n g , t h is w a s
10

n o t ju s t i fi e d o r w h a t e v e r th e y s a y j u s t d o e s n o t m a k e s e n s e .
D R J O N AT H A N Z O R A H B L O O M :

C h a i r I h a v e h a d n o e n g a g e m e n ts

w i t h a n y o f t h e p a r t ie s .
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M : E x c e p t f o r M r R a m o s b u d i b u t t h i s w a s
w h e n I s t a r t e d t h e p r o c e s s i n S e p t e m b e r a s I in d ic a t e d p r e v i o u s ly.

It

w a s a n i n i ti a l d i s c u s s io n to tr y a n d g e t a n u n d e r s ta n d i n g o f h o w t h i n g s
fi t w i t h i n th e tr e a s u r y b u t a l s o in t e r m s o f c e r t a i n – o f th e tr a n s a c ti o n s
b u t t h a t w a s o n l y o n e e n g a g e m e n t a n d t h e r e w a s n o f u r t h e r.
CHAIRPERSON: Okay thank you.
20

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 a t w i ll b e o u r t a s k C h a ir.
I w o u l d li k e t o h e e d t h e r e q u e s t o f t h e C h a ir t h a t b e f o r e w e s t a r t
d e a li n g w i t h t h e s e s p e c i a l is t t e r m s w e a c t u a ll y e x p l a i n t h e m . S o i f w e
m a y j u s t d e a l f o r t h e m o m e n t w i th t h e s e c o n d b u ll e t o n p a g e 1 9 .
Right?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .

Page 175 of 212

31 MAY 2019 – DAY 103
A D V PA U L J O S E P H P R E TO R I U S S C :

I n r e s p e c t o f th e C h i n a

D e v e l o p m e n t B a n k l o a n t h e 1 .5 b il li o n d o ll a r a n d t h e c lu b l o a n t h e R 1 2
m il li o n c l u b l o a n , s y n d ic a te d c l u b l o a n r a is e d d o m e s t ic a l ly r i g h t . T h e r e
a r e c e r ta in r is k s th a t th e b o r r o w e r u n d e r g o e s .

Yo u l e n d i n g o r y o u

b o r r o w in g r a th e r h u g e a m o u n ts o f m o n e y – b il li o n s r ig h t .
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
ADV

PA U L

JOSEPH

P R E TO R I U S

SC:

And

because

of

the

c ir c u m s ta n c e s w h ic h p r e v a il w h e n y o u e n te r in t o th a t l o a n a n d th e
f u t u r e c ir c u m s ta n c e s t h a t m i g h t p r e v a il d u r i n g th e c o u r s e o f t h e l o a n
10

y o u h a v e r is k s . J u s t s u m m a r i s e p l e a s e f o r t h e C h a ir w h a t th o s e r is k s
are?
DR

J O N ATH A N

ZORAH

BLOOM:

C h a ir

in

th e

context

of

the

tr a n s a c ti o n t h e r e w e r e t h r e e r is k s t h a t w e r e a d d r e s s e d o r t h a t w e r e –
were mitigated.

T h e f ir s t o n e h a d t o d o w i t h t h e e x c h a n g e r a t e . I n

o th e r w o r d s t h e b o r r o w i n g o f th e – t h e U S d o ll a r f u n d in g fr o m C h in a
a n d c o n v e r ti n g t h a t i n t o S o u t h A f r ic a n R a n d s a n d t h e n r e p a y i n g t h e m i n
U S d o ll a r s t h a t r e la t e d t o th e C D B l o a n .
A D V PA U L J O S E P H P R E T O R I U S S C : R i g h t y o u b o r r o w in g m o n e y f r o m
C h i n a – C h in a D e v e l o p m e n t B a n k .
20

D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E T O R I U S S C :

Yo u b o r r o w in g th e m o n e y i n

d o ll a r s . Yo u b r in g i n g i t to S o u t h A f r ic a c o n v e r ti n g i t t o r a n d , c o r r e c t ?
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a i r.
A D V PA U L J O S E P H P R E TO R I U S S C :

When you repay you take your

r a n d s a n d y o u c o n v e r t t h e m t o d o ll a r s s o t h e e x c h a n g e r a t e s b o t h o n

Page 176 of 212

31 MAY 2019 – DAY 103
t h e r e c e i p t a n d r e p a y m e n t o f t h e m o n ie s ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E T O R I U S S C : A n d t h e r is k t h a t y o u h a v e t o l d
t h e C h a ir a b o u t is th e fl u c t u a t in g i n t e r e s t r a te s ?
D R J O N AT H A N Z O R A H B L O O M :

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

Yo u w a n t t o tr y a n d

r e m o v e th e r is k b y – b y u s i n g t h e in s t r u m e n t.
A D V PA U L J O S E P H P R E TO R I U S S C : Yo u ta k e o u t in s u r a n c e .
D R J O N AT H A N Z O R A H B L O O M : Yo u t a k e o u t i n s u r a n c e c o r r e c t .
A D V PA U L J O S E P H P R E T O R I U S S C :
10

F o r t h e m o m e n t. W e w i ll d i tc h

t h a t a n a l o g y s o o n . F o r th e m o m e n t i t is g o o d e n o u g h .
D R J O N AT H A N Z O R A H B L O O M : O k a y.
A D V PA U L J O S E P H P R E TO R I U S S C : Th e s e c o n d o n e ?
D R J O N AT H A N Z O R A H B L O O M :

The second one has to do with the

p o s s i b il it y o r th e p r o b a b i li ty t h a t th e r e c o u l d b e d e fa u lt o f in t e r e s t
p a y m e n t s th a t a r e a t t r i b u t a b l e t o th e b o r r o w e r th a t i s c a l l e d – C h a ir
t h a t i s c a ll e d c r e d i t r i s k .
A D V PA U L J O S E P H P R E TO R I U S S C : T h a t is w h e r e i t is a t tr i b u t a b l e t o
Tr a n s n e t?
D R J O N AT H A N Z O R A H B L O O M :
20

T h a t is a t tr i b u t a b l e to Tr a n s n e t

c o r r e c t C h a ir. A n d a s A d v o c a t e Pr e to r i u s a ls o i n d ic a t e d p r e v i o u s l y t h is
p a r t ic u l a r i n s tr u m e n t t h a t w a s u s e d h e r e h a d a c o n ti n g e n t c o m p o n e n t
a n d th a t m e a n t t h a t t h e r e w a s a f u r t h e r r i s k m i ti g a ti o n t h a t h a d t o d e a l
w i t h p o te n ti a l c ir c u m s t a n c e s t h a t a r e b e y o n d t h e c o n tr o l o f Tr a n s n e t fo r
e x a m p l e c e r t a i n e c o n o m ic e v e n t s a s w e s a i d d o w n g r a d in g a n d th o s e
ty p e s o f e v e n ts t h a t c o u l d – th a t c o u l d c a u s e i n t e r e s t r a te s to i n c r e a s e

Page 177 of 212

31 MAY 2019 – DAY 103
s ig n if ic a n tly a n d c o u ld p l a c e li q u i d i ty p r e s s u r e o n t h e b o r r o w e r. S o i t
is – th is is a m e c h a n is m t o tr y a n d c o v e r t h a t . T h is is a – th a t t y p e o f
in s t r u m e n t i s a v e r y d i ffic u lt i n s tr u m e n t t o u n d e r s t a n d a n d w e w il l s e e
la t e r C h a ir t h a t t h a t i n s t r u m e n t w a s a c t u a l ly Tr a n s n e t w o u l d n o t h a v e
h a d t h e a b il i ty o r t h e c a p a c i t y a n d t h e s k i l l to b e a b l e t o d o t h a t . T h a t
is w h y J P M o r g a n w e r e i n v o l v e d w i th th a t p a r ti c u l a r in s tr u m e n t b u t w e
w i ll s e e t h a t l a te r. A n d t h e l a s t o n e C h a i r h a s t o d o w i th t h e in t e r e s t
r a te m o v e m e n ts a n d t h is w a s o n ly a p p l ic a b le t o t h e 1 2 b i ll io n c l u b lo a n .
S o it is i m p o r ta n t to u n d e r s t a n d t h a t t h e r e w e r e n o i n te r e s t r a t e r i s k
10

m i ti g a ti o n t h a t w a s c o n s i d e r e d f o r t h e – o r fo r t h e C D B lo a n b u t t h a t
w o u ld h a v e b e e n – t h a t w a s c o v e r e d i n t h e e x c h a n g e r a t e a s w e ll .
CHAIRPERSON:

S o t h e f lu c tu a ti n g e x c h a n g e r a te t h a t is s o m e t h in g

t h a t th e b o r r o w e r w o u ld b e c o n c e r n e d a b o u t?
D R J O N AT H A N Z O R A H B L O O M : 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 : B u t t h e le n d e r w o u l d n o t b e c o n c e r n e d a b o u t in s o f a r
a s th e – t h e r e p a y m e n ts w o u ld b e i n t h e l e n d e r ’s c u r r e n c y ?
D R J O N AT H A N Z O R A H B L O O M : 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 a n d t h e n i n t e r m s o f th e c r e d i t r is k I g u e s s t h a t
w o u ld b e – w o u l d t h a t b e t h e l e n d e r s c o n c e r n a s w e l l a s th e b o r r o w e r s
20

concern?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
C H A I R P E R S O N : T h e b o r r o w e r s c o n c e r n f r o m t h e p o in t o f v i e w w h a t i f I
e n d u p n o t b e i n g a b l e to h o n o u r th e a g r e e m e n t .
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a ir t h a t c o u ld a ls o – it h a s g o t
– t h e r e is a f li p s id e i f y o u l ik e t o th a t .

Page 178 of 212

31 MAY 2019 – DAY 103
CHAIRPERSON: Ja.
D R J O N AT H A N Z O R A H B L O O M : A n d th a t c o u l d m e a n t h a t th is w a s a
r e q u ir e m e n t
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M : By t h e l e n d e r.
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M :

B e c a u s e th a t p r o t e c t s b y – b y

in tr o d u c i n g t h i s i n s tr u m e n t
C H A I R P E R S O N : Ye s .
10

D R J O N AT H A N Z O R A H B L O O M : Yo u w o u l d b e p r o t e c t in g th e l e n d e r.
C H A I R P E R S O N : J a th e – s o I g u e s s t h e m o r e i m p o r t a n tl y is t h e l e n d e r
t h a t n e e d s p r o te c ti o n b u t I g u e s s t h e b o r r o w e r a l s o d o e s n o t w a n t t o b e
in t h a t s i tu a ti o n w h e r e t h e y c a n n o t h o n o u r.
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
C H A I R P E R S O N : T h e ir a g r e e m e n t s .
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
C H A I R P E R S O N : A n d t h e n – a n d t h e n t h e th ir d o n e i s fi n a n c i a l c o s t s
a ls o t h e b o r r o w e r s c o n c e r n ?
D R J O N ATH A N Z O R A H B L O O M :

20

Th is i s s p e c if ic a l ly th e b o r r o w e r s

c o n c e r n 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 .
A D V PA U L J O S E P H P R E TO R I U S S C : S o l e t u s l e a v e p a g e 2 0 f o r th e
m o m e n t a n d g o t o p a g e 2 1 . I n e x p la in i n g t h e t e r m i n o l o g y w e a r e g o i n g
t o c o n c e n t r a t e o n f ir s t ly t h e c l u b l o a n , t h e R 1 2 m i ll io n d o m e s t ic c lu b
lo a n .

Page 179 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a i r.
A D V PA U L J O S E P H P R E TO R I U S S C : A n d t h e r i s k t h a t is a d d r e s s e d i n
t h is d i a g r a m a n d i n y o u r f u r th e r e v i d e n c e is th e r i s k o f f lu c tu a ti n g
in t e r e s t r a t e s .
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : A lr ig h t . S o le t u s s t a r t – C h a ir
o n p a g e 2 1 w it h th e r i g h t h a n d d ia g r a m .

O k a y.

There you have a

le n d e r t h a t is th e c lu b .
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
10

A D V PA U L J O S E P H P R E TO R I U S S C :

And you have the borrower at

t h e b o t t o m o f t h e p a g e Tr a n s n e t , c o r r e c t ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is r i g h t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : A n d y o u h a v e t h e c o n t e n t o f th e
lo a n . W e w i ll le a r n a s a m a t t e r o f fa c t b e c a u s e w e a r e o n ly w a n t i n g t o
u n d e r s t a n d t e r m i n o l o g y w h ic h y o u a r e g o in g t o n o w u s e f r e q u e n tl y i n
y o u r e v i d e n c e . F o r i ll u s tr a ti v e p u r p o s e s b u t w e k n o w t h a t a t th e e n d o f
N o v e m b e r 2 0 1 5 Tr a n s n e t e n t e r s in t o a lo a n a g r e e m e n t w i t h t h e
s y n d i c a t e to b o r r o w R 1 2 b i ll i o n o n a fl o a t i n g i n te r e s t r a t e , c o r r e c t ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
20

A D V PA U L J O S E P H P R E T O R I U S S C : W h a t is th e r is k a tt a c h e d t o th a t
ty p e o f a g r e e m e n t ?
D R J O N AT H A N Z O R A H B L O O M : W e ll t h e r is k l ie s m o r e w i t h t h e – w i t h
t h e b o r r o w e r b e c a u s e th e i n t e r e s t r a t e s d e p e n d i n g o n t h e e n v ir o n m e n t
w i t h i n w h ic h o n e is f u n c ti o n i n g , t h e e c o n o m y e tc e te r a m a y r e s u l t i n
in t e r e s t r a t e s i n c r e a s i n g s i g n i fi c a n tl y p l a c in g f u r t h e r li q u i d i ty p r e s s u r e

Page 180 of 212

31 MAY 2019 – DAY 103
o n t h e b o r r o w e r s o e n t e r i n g i n to a fl o a ti n g r a t e o r a v a r i a b l e r a te
r e g i m e w o u l d b e – w o u ld – t h a t w o u l d b e t h e r is k t h a t w o u l d b e
a s s o c i a t e d t h e r e w i th .
A D V PA U L J O S E P H P R E TO R I U S S C : S o if Tr a n s n e t a t t h e b o r r o w e r –
a s t h e b o r r o w e r s a y s l o o k I h a v e n o w b o r r o w e d R 1 2 b il li o n o n a f lo a ti n g
in t e r e s t r a t e I h a v e n o i d e a w e l l r e s e a r c h i n s t i tu t e s c a n a d v is e b u t
n e v e r w i t h c e r t a i n ty.

I h a v e n o i d e a w i t h a n y c e r t a i n ty w h a t t h a t

in t e r e s t r a t e i s g o i n g t o d o a n d I th e r e fo r e a m a t r is k .
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
10

A D V PA U L J O S E P H P R E TO R I U S S C :

S o w h a t d o e s it t h e n d e c i d e t o

do?
D R J O N AT H A N Z O R A H B L O O M :

W e ll t h e n i t c a n e n te r i n to a r is k

m i ti g a ti o n m e a s u r e w h i c h i s c a ll e d a n in t e r e s t r a t e s w o p w h i c h i s t h e
le f t p o r t io n o f t h e f ig u r e .
A D V PA U L J O S E P H P R E TO R I U S S C : A lr i g h t b u t b e fo r e w e g o t h e r e le t
u s j u s t e x p l a i n a t e r m . L e t u s le a v e d e r iv a ti v e s o u t o f o u r t e r m i n o l o g y.
D R J O N AT H A N Z O R A H B L O O M : J a .
A D V PA U L J O S E P H P R E TO R I U S S C :

At least for the moment.

Tr a n s n e t s a y s I w a n t t o f in d a w a y u s i n g fi n a n c i a l i n s ti t u ti o n s t o d e a l
20

w i t h th is r is k . I w a n t t o m i ti g a te t h e r i s k o r I w a n t t o e n s u r e a g a i n s t th e
r is k a n d I u s e t h a t t e r m v e r y b r o a d ly a n d s o o n w e w i ll n o t u s e i t
a n y m o r e . I w a n t to h e d g e my r is k .
D R J O N AT H A N Z O R A H B L O O M :

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

A D V PA U L J O S E P H P R E TO R I U S S C : S o w h a t d o e s h e d g e m e a n ?
D R J O N AT H A N Z O R A H B L O O M : H e d g e m e a n s – v e r y, v e r y s i m p ly p u t

Page 181 of 212

31 MAY 2019 – DAY 103
C h a ir h e d g e m e a n s t h a t y o u t a k in g t h e r i s k a w a y o r y o u r e m o v i n g t h e
r is k fr o m a p o t e n t ia l n e g a t iv e s it u a ti o n b u t i n o r d e r to d o t h a t w e w il l
g e t t o t h a t i t c o s ts m o n e y.
CHAIRPERSON:

Ye s i t m e a n s y o u a r e g u a r a n t e e in g a g a in s t th e r is k

a l m o s t? Yo u a r e p r o t e c ti n g s o m e b o d y a g a i n s t th e r i s k ?
D R J O N AT H A N Z O R A H B L O O M : 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 : B u t w h e th e r i t i s g u a r a n t e e i n g o n s o m e t h i n g l e s s th a n
t h a t w e w i ll g e t t o h e a r i n d u e c o u r s e ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
10

C H A I R P E R S O N : O k a y a lr i g h t .
A D V PA U L J O S E P H P R E TO R I U S S C :

S o l e t u s ju s t d e a l w i t h o n e

is s u e t h a t I th i n k is i m p o r t a n t to d e a l w i th b e c a u s e i t b e c o m e s
i m p o r t a n t l a te r. Yo u c a n n e v e r g u a r a n t e e th e in t e r e s t r a te in t h e r i g h t
h a n d b o x u n l e s s y o u e n t e r i n to a fix e d r a t e a g r e e m e n t.
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : N o w t h e d e c i s i o n o f w h e t h e r to
e n t e r i n to a f ix e d in t e r e s t r a t e a g r e e m e n t o r a fl o a ti n g in t e r e s t r a t e
a g r e e m e n t is s o m e t h i n g y o u a r e g o i n g to d e a l w i th in d u e c o u r s e .
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t . T h a t is c o r r e c t C h a ir.
20

A D V PA U L J O S E P H P R E TO R I U S S C :

But anyway what happens here

is t h a t Tr a n s n e t d e c i d e t o e n te r i n t o a f lo a ti n g in t e r e s t r a t e l o a n – R 1 2
b i ll io n – a l o t o f m o n e y, r i g h t?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :

It cannot ever guarantee what

t h e i n te r e s t r a te s a r e g o i n g t o b e i t i s a t r i s k . S o w h a t i t d o e s i t s a y s I

Page 182 of 212

31 MAY 2019 – DAY 103
w a n t to p r o te c t m y s e lf a g a i n s t t h e c o n s e q u e n c e s o f w h a t I h a v e d o n e .
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : A lr i g h t . S o w h il s t y o u c a n n e v e r
g u a r a n te e a n i n t e r e s t r a te w h a t y o u c a n d o i s s a y i f t h i n g s d o n o t t u r n
o u t w e l l f o r m e I c a n a t l e a s t p u t i n p l a c e a n o t h e r fi n a n c i a l a r r a n g e m e n t
s e p a r a t e f r o m t h is t o m i ti g a t e th e a d v e r s e c ir c u m s ta n c e s o f t h e
d e c is i o n I m a d e t o e n t e r i n to a fl o a t in g r is k – f lo a ti n g r a t e a r r a n g e m e n t .
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E T O R I U S S C :
10

A lr ig h t s o w h a t is i m p o r ta n t

b e c a u s e w e t a l k a b o u t s w o p s ? R i g h t y o u ta lk a b o u t s w o p s . N o ti n g is
s w o p p e d . T h a t o r i g i n a l a g r e e m e n t o n t h e r ig h t h a n d s i d e r e m a i n s t h e
same.
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E T O R I U S S C :

T h r o u g h o u t y o u r o b li g a t i o n to

p a y a fl o a ti n g i n t e r e s t r a te r e m a in s .
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C : S o w h e n w e t a l k a b o u t s w o p s w e
a r e t a l k i n g a b o u t s o m e t h i n g e n tir e l y d i ff e r e n t fr o m t h a t w o r d m i g h t
in d i c a t e ?
20

D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E T O R I U S S C : O k a y. R i g h t s o l e t u s g o t o t h e
le f t h a n d …
CHAIRPERSON:

W e l l w il l t h a t s til l – is th a t s ti ll a n e la b o r a ti o n o n

h e d g i n g b e c a u s e I ju s t w a n t t o …
A D V PA U L J O S E P H P R E TO R I U S S C : A lr i g h t s o …

Page 183 of 212

31 MAY 2019 – DAY 103
C H A I R P E R S O N : F i n a lis e o n h e d g in g .
A D V PA U L J O S E P H P R E TO R I U S S C :

Alr i g h t .

H e d g in g b r o a d ly

s p e a k i n g a s I u n d e r s ta n d i t is w h a t y o u h a v e d e s c r ib e d a s t h e a c t o f
u s i n g fi n a n c i a l i n s tr u m e n ts t o d e a l w i t h y o u r r i s k ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

M o r e p a r ti c u la r ly to p r o t e c t

y o u r s e l f a g a i n s t t h e c o n s e q u e n c e s o f y o u h a v i n g e n t e r e d i n t o a r is k y
a r r a n g e m e n t?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
10

A D V PA U L J O S E P H P R E TO R I U S S C : R ig h t. S o h e d g i n g is t h e b r o a d
t e r m u s e d t o d e s c r i b e t h e ta k i n g o u t o f fi n a n c i a l in s u r a n c e a s i t w e r e ?
CHAIRPERSON:

I d o n o t k n o w w h y I a m a s s o c i a ti n g t h e w o r d

“ h e d g i n g ” w i t h li k e f e n c i n g o ff .
D R J O N AT H A N Z O R A H B L O O M : C h a i r t h a t …
C H A I R P E R S O N : F e n c in g o ff m a y b e in t h a t w a y in t h i s c o n te x t m a y b e i t
is f e n c in g o ff t h e r is k .

I am not sure but I do not know why I am

a s s o c i a t i n g it w i t h th a t .
D R J O N AT H A N Z O R A H B L O O M :

C h a ir th a t is n o t – th a t is a c tu a l ly a

v e r y g o o d a n a lo g y.
20

CHAIRPERSON: Hm.
D R J O N AT H A N Z O R A H B L O O M :

B e c a u s e t h a t is e s s e n ti a l ly fr o m t h e

b o r r o w e r ’s s i d e w h a t y o u w a n t to d o …
CHAIRPERSON: Hm.
D R J O N AT H A N Z O R A H B L O O M : Yo u w a n t to p r o te c t y o u r s e l f s o l e t m e
t a k e th is m o n e y a n d e n te r i n t o a n a r r a n g e m e n t t h a t is g o in g t o t a k e a n y

Page 184 of 212

31 MAY 2019 – DAY 103
r is k o u t o f o u t .
CHAIRPERSON: Hm.
D R J O N AT H A N Z O R A H B L O O M :

So if I wanted to almost seclude

m y s e l f i n a s e n s e if I c a n u s e t h a t …
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M : As a n e x a m p l e .
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M :

T h e n I a m g o in g t o p u t a h e d g e

around me.
10

C H A I R P E R S O N : Ye s , y e s .
D R J O N AT H A N Z O R A H B L O O M : If I c a n …
C H A I R P E R S O N : O k a y, th a n k y o u .
D R J O N AT H A N Z O R A H B L O O M : R e la t e t o y o u o n t h a t C h a ir.
CHAIRPERSON: Thank you.
D R J O N AT H A N Z O R A H B L O O M : T h a n k y o u C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

S o i f th e h e d g e p r o t e c ts .

A

fi n a n c i a l in s tr u m e n t c a l l e d a h e d g e w o u ld a ls o p r o t e c t ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
C H A I R P E R S O N : Ye s .
20

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 a s w a p is o n e e x a m p l e o f a
hedge?
D R J O N AT H A N Z O R A H B L O O M : T h a t is r i g h t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

S w a p is o n e w a y i n w h i c h y o u

can hedge your risk?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .

Page 185 of 212

31 MAY 2019 – DAY 103
A D V PA U L J O S E P H P R E TO R I U S S C : O r p r o t e c t y o u r s e l f a g a in s t r is k ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

Right.

Th e q u e s t io n a r is e s o f

c o u r s e w h ic h w e d e a l w i t h l a te r is w h y t h is r i s k s h o u l d h a v e a r i s e n in
t h e fi r s t p la c e .
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
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 w e w il l c o m e t h e r e a n d t h a t
is i n f a c t a c e n tr a l p a r t o f y o u r e v i d e n c e ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
10

A D V PA U L J O S E P H P R E TO R I U S S C : In f a c t t h e q u e s ti o n a r i s e s i f y o u
a r e n o w g o in g t o s p e n d a l o t o f m o n e y h e d g in g y o u r fl o a t i n g i n t e r e s t
r a te r is k w h y d i d y o u e n t e r in t o a f lo a ti n g a g r e e m e n t i n th e fir s t p la c e ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :

B e c a u s e C h a ir y o u w il l le a r n

t h a t m e r e w e e k s a f t e r e n t e r in g in t o a fl o a ti n g i n te r e s t r a t e lo a n o f 1 2
b i ll io n Tr a n s n e t c o m m i ts i ts e l f t o t h e s p e n d i n g o f h u n d r e d s o f m i ll io n s
o f R a n d t o p u t i ts e l f in t h e p o s i ti o n i t w o u ld h a v e b e e n i n a w o r s e
p o s i ti o n b u t o n a f ix e d r a t e b a s is .
CHAIRPERSON:
20

Ye s a n d o f c o u r s e I h e a r d e v i d e n c e - I d o n o t k n o w

w h e t h e r i t w a s t w o w e e k s b a c k - a b o u t a s it u a ti o n w h e r e - I t h i n k i t w a s
Tr a n s n e t a n d I c a n n o t r e m e m b e r if it w a s th is tr a n s a c t io n b e c a u s e
t h e r e h a s b e e n a n o v e r la p o f e v i d e n c e – w h e r e t h e i n i ti a l a r r a n g e m e n t
w a s fl o a t i n g i n t e r e s t b u t t h e n s o m e b o d y c a m e fr o m Tr a n s n e t a t s o m e
s t a g e a n d s a id n o i t m u s t b e c h a n g e d t o a fi x r a t e …
A D V PA U L J O S E P H P R E TO R I U S S C : C o r r e c t .

Page 186 of 212

31 MAY 2019 – DAY 103
CHAIRPERSON:

B u t i n th a t c o n te x t t h e w i t n e s s w a s – w a s c r i ti c is i n g

t h e i n tr o d u c t io n o f a fi x e d r a te a n d I th i n k in d i c a t in g t h a t in t h e c o n t e x t
o f t h a t e v i d e n c e t h a t i n tr o d u c in g a fi x e d r a te w a s g o i n g t o p u t Tr a n s n e t
in a w o r s e o ff p o s i 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 : W e l l …
C H A I R P E R S O N : B u t I w i ll – I w il l h e a r a n d w e w i ll tr y …
A D V PA U L J O S E P H P R E TO R I U S S C : W e l l y o u w i ll h e a r C h a ir …
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
10

SC:

That

this

insurance

p o l ic y

arrangement …
CHAIRPERSON: Hm.
A D V PA U L J O S E P H P R E TO R I U S S C :

Th i s h e d g i n g a r r a n g e m e n t in a

form of a swap …
CHAIRPERSON: Ja.
A D V PA U L J O S E P H P R E TO R I U S S C :

Wa s r e a l ly v e r y h a r m f u l t o

Tr a n s n e t .
C H A I R P E R S O N : To Tr a n s n e t 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 l o s t a l o t o f m o n e y b u t t h a t …
C H A I R P E R S O N : Ye s .
20

A D V PA U L J O S E P H P R E TO R I U S S C :

W e a r e g e t t in g t h e r e in d u e

course.
CHAIRPERSON:

Ja.

I t h in k y o u – y o u w i ll j u s t – t h e l e g a l t e a m w i ll

ju s t h a v e to – m e m b e r s w il l h a v e t o li a is e w i th o n e a n o th e r to s e e w h o
w a s l e a d in g a w it n e s s w h o w a s d e a li n g w i t h t h a t …
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 w e w ill g e t t h e r e C h a ir.

Page 187 of 212

31 MAY 2019 – DAY 103
C H A I R P E R S O N : To s e e t h a t i t w a s n o t t h e s a m e t h in g .
A D V PA U L J O S E P H P R E TO R I U S S C : W e w i ll g e t t h e r e .
CHAIRPERSON: Ja.
A D V PA U L J O S E P H P R E TO R I U S S C : A t t h e m o m e n t w e a r e j u s t a t th e
le v e l o f p r i n c ip l e .
CHAIRPERSON: Ja.
A D V PA U L J O S E P H P R E TO R I U S

SC:

O k a y.

Yo u

w a n te d

to

say

something.
D R J O N AT H A N Z O R A H B L O O M : N o I th in k C h a ir …
10

A D V PA U L J O S E P H P R E TO R I U S S C : D o n o t c o n fu s e u s p l e a s e .
D R J O N AT H A N Z O R A H B L O O M :

N o , I w i ll – I w ill n o t C h a ir.

I think

the – I think you are referring to Mr Mahom edy …
C H A I R P E R S O N : It c o u l d b e . I j u s t c a n n o t r e m e m b e r.
D R J O N AT H A N Z O R A H B L O O M : O f Tr a n s n e t …
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 :
D R J O N AT H A N Z O R A H B L O O M :

I t h in k I a m – m y t e s t i m o n y is g o i n g

to unpack …
C H A I R P E R S O N : Ye s .
20

D R J O N AT H A N Z O R A H B L O O M : A lo t m o r e - th e f ig u r e s a n d n u m b e r s
that he …
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M : R e f e r r e d t o a n d w i th c e r t a i n u p d a t e s
a s w e ll .
C H A I R P E R S O N : O k a y, o k a y th a n k y o u .

Page 188 of 212

31 MAY 2019 – DAY 103
A D V PA U L J O S E P H P R E TO R I U S S C :

So at the moment we are just

d e s c r ib i n g th e h e d g i n g in s t r u m e n t . T h e f a c t t h a t i t t u r n e d o u t t o b e a
p o o r i n s tr u m e n t w h i c h c a u s e d e v e n m o r e l o s s t o Tr a n s n e t . W e w il l d e a l
with in due course.
CHAIRPERSON: Ja.
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 fo r t h e m o m e n t C h a i r w e

h a v e h e d g in g a s t h e u t il is a ti o n o f a fi n a n c i a l i n s tr u m e n t i n o r d e r t o
m i ti g a te a g a in s t y o u r r is k .
C H A I R P E R S O N : A n d a s w a p b e in g a f o r m o f h e d g i n g ?
10

A D V PA U L J O S E P H P R E TO R I U S S C : A s w a p i s a f o r m o f h e d g i n g .
CHAIRPERSON: Hm.
A D V PA U L J O S E P H P R E TO R I U S S C :

And we are now going to

d e s c r ib e w h a t a s w a p is .
CHAIRPERSON: Ja.
A D V PA U L J O S E P H P R E TO R I U S S C :

S o w h e n o n e h e d g e s – a n d in

t h is c a s e e n te r s in t o a s w a p a r r a n g e m e n t o n e d o e s n o t s w a p a n y t h i n g
w i t h t h e o r i g i n a l l e n d e r. Yo u r o b li g a ti o n s r e m a i n fi x e d ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :
20

One can put a wall around that

r ig h t h a n d b o x . T h a t s t a y s t h e s a m e ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

S o t h e l e n d e r c o n s o r ti u m a r e

s i tt i n g h a p p i ly i n t h e ir o ffic e s in S a n d t o n k n o w in g th a t t h e y a r e g o in g to
g e t t h e ir r e tu r n - w h a t e v e r th e i n te r e s t r a t e m i g h t b e ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.

Page 189 of 212

31 MAY 2019 – DAY 103
A D V PA U L J O S E P H P R E TO R I U S S C : A n d y o u r e m a i n li a b l e to p a y i t ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
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 w h a t …
C H A I R P E R S O N : I a m s o r r y b u t t h e y m a y - t h e id e a t h a t th e r e s h o u l d
b e h e d g in g m a y c o m e fr o m t h e m o r n o t r e a lly – f r o m t h e l e n d e r ?
D R J O N AT H A N Z O R A H B L O O M : N o C h a ir.
C H A I R P E R S O N : B e c a u s e t h e y w a n t s o m e c e r t a i n ty th a t …
D R J O N AT H A N Z O R A H B L O O M : N o t n e c e s s a r il y.
CHAIRPERSON: No.
10

D R J O N AT H A N Z O R A H B L O O M : I t h i n k i t i s – i t h a s g o t to d o w i t h – i t
h a s g o t t o d o w i t h th e a b il i ty o f t h e b o r r o w e r to m e e t h is o b li g a ti o n s .
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M : S o in – a n d a ls o t o r e m o v e r i s k w h i c h
g iv e s t h e m c e r t a i n – t h e n g iv e s f u r t h e r c e r t a i n ty i n th e …
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M :

In the context.

S o i t – it i s n o t

n e c e s s a r i ly t h a t i t w o u l d c o m e fr o m t h e l e n d e r a s a – a s a r e q u ir e m e n t
…
C H A I R P E R S O N : Ye s .
20

D R J O N AT H A N Z O R A H B L O O M :

B u t i f - i f y o u t a k e a v ie w o r i f

Tr a n s n e t w e r e t a k i n g a v ie w o n – o n i n te r e s t r a t e s th e n t h a t w o u ld b e
a n i m p o r ta n t c o n s i d e r a t io n …
CHAIRPERSON: Ja.
D R J O N AT H A N Z O R A H B L O O M :

I n t h e d e c is i o n to e i t h e r fi x o r t o

e n t e r i n t o a fl o a ti n g a g r e e m e n t .

Page 190 of 212

31 MAY 2019 – DAY 103
C H A I R P E R S O N : Ye s . W e l l w h a t I w a s th in k i n g a n d I d o n o t k n o w i f i t
h a s a n y t h i n g t o d o w it h th e e x a m p l e o f a n i n s u r a n c e th a t Mr P r e t o r iu s
h a s b e e n o r u s e d e a r l ie r.

W h a t I a m t h i n k i n g is th a t - y o u k n o w – a

b a n k m i g h t in s is t th a t y o u m u s t t a k e i n s u r a n c e w h e n y o u b u y a c a r a n d
t h e y h e l p y o u t o b u y a c a r. Yo u m u s t t a k e i n s u r a n c e a n d y o u c a n n o t
s t a r t d r iv i n g i t u n t il y o u h a v e ta k e n i n s u r a n c e . Th e y j u s t w a n t t o m a k e
s u r e t h a t i f s o m e t h i n g h a p p e n s t h e n t h e y w ill b e c o v e r e d .

So I was

w o n d e r i n g w h e t h e r a l e n d e r i n th is c a s e m ig h t b e i n t e r e s t e d t h a t y o u –
y o u a s t h e b o r r o w e r is i t ta k e a s w a p – a s w a p o r d o s o m e h e d g i n g . S o
10

– b e c a u s e t h e y w a n t t o b e d o u b l e s u r e t h a t t h e y w il l b e fi n e o r n o t
r e a l ly ?
D R J O N AT H A N Z O R A H B L O O M :

N o C h a ir.

N o y o u a r e a b s o l u te ly

r ig h t .
CHAIRPERSON: Hm.
D R J O N AT H A N Z O R A H B L O O M : In t h is p a r ti c u la r c o n t e x t …
CHAIRPERSON: Hm.
D R J O N AT H A N Z O R A H B L O O M : I t w o u l d m e a n t h a t t h e l e n d e r w o u l d –
w o u ld c o v e r h i s r is k …
CHAIRPERSON: Hm.
20

D R J O N AT H A N Z O R A H B L O O M :

W i t h r is k i n t h e i n te r e s t r a t e t h a t i s

charged.
CHAIRPERSON: Hm.
D R J O N AT H A N Z O R A H B L O O M : S o a h ig h e r in t e r e s t r a t e w o u l d m e a n
I p e r c e iv e m o r e r is k …
CHAIRPERSON: Hm.

Page 191 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M :

I n th e p e r s o n w h o is b o r r o w i n g t h is

m o n e y fr o m m e .
CHAIRPERSON: Hm.
D R J O N AT H A N Z O R A H B L O O M : T h e – th e c o n v e r s e o f th a t …
CHAIRPERSON: Hm.
D R J O N AT H A N Z O R A H B L O O M :

I s th e - w h e r e th e b o r r o w e r s a y s

lis t e n b u t I a m a l i t tl e u n c o m f o r t a b l e w i th w h a t p o t e n t i a ll y c o u l d h a p p e n
g o i n g f o r w a r d i n t h e n e x t y e a r o r t w o o r w h a te v e r t h e c a s e m a y b e …
CHAIRPERSON: Hm.
10

D R J O N AT H A N Z O R A H B L O O M :

And that I need to do something

about that to protect my cash resources.
CHAIRPERSON: Hm.
D R J O N AT H A N Z O R A H B L O O M :

I t is a – i t is v e r y m u c h a c a s h fl o w

a n d a c a s h f lo w i s s u e .
C H A I R P E R S O N : A r r a n g e m e n t?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
CHAIRPERSON: Ja, okay thank you.
A D V PA U L J O S E P H P R E TO R I U S S C : A n d I d o n o t w a n t t o s ta y o n th e
p o i n t f o r t o o l o n g o r d w e l l o n i t b u t y o u h a v e a lr e a d y t o l d th e C h a i r t h a t
20

a l e n d e r m a y r e q u ir e a b o r r o w e r to m i t i g a te t h e r is k o f a d o w n t u r n i n
t h e e c o n o m y fo r e x a m p le ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

S o t h a t i s a n e x c e p t io n t o t h e

r u l e th a t y o u h a v e j u s t p u t o u t ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is p o s s ib l e .

Page 192 of 212

31 MAY 2019 – DAY 103
A D V PA U L J O S E P H P R E TO R I U S S C : Ye s , a lr i g h t . S o le t u s g e t b a c k
t o t h e b o x o n t h e le f t h a n d s i d e i f w e c a n .

W e n o w h a v e Tr a n s n e t

s a y in g I w a n t t o fi n d s o m e o n e w h o I c a n d e a l w i t h t o m i ti g a te m y r i s k o f
h a v i n g e n te r e d i n to a fl o a t i n g r a t e l o a n o f …
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :

R 1 2 b i lli o n a n d t h o s e p a r t ie s

Tr a n s n e t o n th e o n e h a n d a n d th e p a r ty t h a t Tr a n s n e t w ill d e a l w i t h a r e
c a l l e d c o u n t e r p a r ti e s ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
10

A D V PA U L J O S E P H P R E TO R I U S S C :

I n t h e – in t h e t e r m i n o l o g y

g e n e r a l ly a p p l ic a b l e …
D R J O N AT H A N Z O R A H B L O O M : T h a t is r i g h t .
A D V PA U L J O S E P H P R E TO R I U S S C : I n t h e c ir c u m s t a n c e .
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a i r.
A D V PA U L J O S E P H P R E TO R I U S S C :

A n d t h e n t h e t e r m is u s e d

e ls e w h e r e b u t h e r e t h a t is w h a t t h e te r m i s …
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C : F o r b o t h p a r t ie s ?
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a i r.
20

A D V PA U L J O S E P H P R E TO R I U S S C :

A n d w e k n o w t h a t in t h i s c a s e

N e d b a n k w a s t h e c o u n t e r p a r ty ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :

A n d Tr a n s n e t w a s t h e p a r t y

s e e k i n g a s s is t a n c e o r s e e k in g in s u r a n c e o r s e e k i n g to e n te r i n to a
s w a p a r r a n g e m e n t to m i ti g a te it s r i s k ?

Page 193 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

R i g h t.

S o e x p la i n t o t h e C h a ir

Tr a n s n e t s a y s o o p s I a m a t r is k . I n e e d h e lp . C o r r e c t ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :

I t g o e s to N e d b a n k a n d s a y s I

w a n t u s to e n t e r i n t o a n a r r a n g e m e n t c a ll e d a s w a p ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

W h ic h w il l p r o t e c t m e fr o m t h e

r is k t h a t I h a v e e n t e r e d in t o .
10

D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C : I w a n t y o u – N e d b a n k – t o in s u r e
my risk.
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : H o w i s t h a t a c h ie v e d ?
D R J O N AT H A N Z O R A H B L O O M : C h a ir th e r e is n o r m a lly – l e t u s – l e t
us look at …
A D V PA U L J O S E P H P R E TO R I U S S C : S o r r y – m a y I p a u s e ?
D R J O N AT H A N Z O R A H B L O O M : Ye s o f c o u r s e .
A D V PA U L J O S E P H P R E TO R I U S S C :

20

If o n e w a s t o e x t e n d – t h is is

w h e r e t h e in s u r a n c e a n a lo g y f a i ls , r ig h t . I f I w a s t o i n s u r e a g a in s t a n y
r is k f o r e x a m p le m y c a r b e i n g s t o l e n I w o u ld p a y a p r e m i u m d e t e r m i n e d
by actuaries and determined by the insurance company and if the event
o c c u r r e d I w o u l d b e c o m p e n s a t e d f o r t h e l o s s o f my c a r ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : Th a t is n o t h o w i t w o r k s h e r e ?

Page 194 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M : N o .
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.
D R J O N AT H A N Z O R A H B L O O M : T h e r e is – t h e r e is a s e c o n d l e g t o i t .
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.

Let us deal with that

s e c o n d le g .
D R J O N AT H A N Z O R A H B L O O M :

O k a y.

C h a ir

when

the

two

c o u n t e r p a r ti e s c o m e t o g e t h e r a n d s ta r t d is c u s s in g t h e w h o l e o r t h e
p o t e n t i a l o f e n t e r i n g i n to a s w a p a r r a n g e m e n t t h e n t h e y w o u l d –
b e c a u s e w e a r e d e a li n g w i t h i n te r e s t r a t e s a n d w e a r e g o in g t o b e
10

d e a li n g w i th t h a t a lo t t h r o u g h t h e te s ti m o n y I w o u ld lik e t o u s e t h a t a s
t h e a n a lo g y. I n o t h e r w o r d s b o t h p a r t ie s w o u l d h a v e d i ffe r e n t o r s h o u l d
h a v e d i ff e r e n t v i e w s o n i n te r e s t r a te s . T h e o n e is s a y in g i n te r e s t r a t e s
a r e g o i n g to g o u p . T h e o th e r o n e is s a y i n g i n t e r e s t r a te s w i ll g o d o w n
o r w il l s t a y – o r w i ll s t a y m o r e o r l e s s s t a b l e . S o y o u h a v e t o h a v e t h e
t w o o p p o s i n g v i e w s t o e n t e r i n to s u c h a tr a n s a c ti o n .

Now when it

c o m e s t o th e …
A D V PA U L J O S E P H P R E TO R I U S S C : S o r r y m a y I in t e r r u p t y o u h e r e ?
D R J O N AT H A N Z O R A H B L O O M : Ye s .
A D V PA U L J O S E P H P R E TO R I U S S C : W h e n Tr a n s n e t g o e s t o N e d b a n k
20

a n d s a y s p l e a s e I w a n t t o e n te r i n to a s w a p a r r a n g e m e n t t o p r o te c t m e
a g a in s t t h e r is k b e c a u s e I a m s c a r e d th a t t h e y a r e g o in g to g o v e r y
h i g h a n d I a m n o t g o i n g t o b e a b le t o p a y, r ig h t .
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C : Tr a n s n e t w a n ts a s i t u a t io n t h a t i t
w a n ts t o p a y a f ix e d r a t e ?

Page 195 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : S o h a v i n g e n t e r e d in t o a f lo a ti n g
in t e r e s t r a t e a g r e e m e n t i t is n o w g o i n g t o p a y a lo t o f m o n e y u l t i m a te ly
a s w e w il l l e a r n to a c h i e v e a s it u a ti o n w h e r e i t is g o i n g i n e ff e c t w h e n
a l l t h e b o o k s a r e b a l a n c e d p a y a f ix e d r a t e ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

S o w h a t is a s w a p p e d i s t h e

c a s h fl o w a r is in g o u t o f a fl o a ti n g i n t e r e s t r a te w i t h a f ix e d r a t e . N o w
that maybe going too fast.
10

S o y o u h a v e g o t t o u n p a c k t h a t s l o w ly

please.
D R J O N AT H A N Z O R A H B L O O M : O k a y. S o C h a ir …
CHAIRPERSON: But – but before you do that …
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a i r.
CHAIRPERSON: A swap arrangement would be between the borrower
a n d - l ik e t h e b a n k - o r w h o w o u l d i t b e b e t w e e n ?

Yo u w e r e s a y in g

e a r l ie r o n w h e n t h e t w o p a r ti e s d i s c u s s t h a t is t h e b o r r o w e r a n d w h o ?
D R J O N AT H A N Z O R A H B L O O M : A n d a p a r ty a fi n a n c i a l i n s t i tu t io n .
C H A I R P E R S O N : A - a t h ir d p a r ty ?
D R J O N AT H A N Z O R A H B L O O M : A t h ir d p a r ty.
20

C H A I R P E R S O N : J a , o k a y.
D R J O N AT H A N Z O R A H B L O O M : T h a t w o u l d b e in t e r e s t e d i n b e c o m i n g
a part of a swap agreement.
CHAIRPERSON:

Okay

and

u s u a ll y

that

w o u ld

in s t i tu t io n ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.

Page 196 of 212

be

a

fi n a n c i a l

31 MAY 2019 – DAY 103
C H A I R P E R S O N : O k a y.
A D V PA U L J O S E P H P R E TO R I U S S C : Th e p o i n t th a t th e C h a ir r a is e s is
f o r o u r p u r p o s e s a v e r y i m p o r t a n t p o in t b e c a u s e i f y o u lo o k a t t h e l e f t
h a n d s i d e o f t h e d i a g r a m – t h e le f t h a n d b o x .

C o u n t e r p a r t y Tr a n s n e t

a n d c o u n t e r p a r ty N e d b a n k e n te r i n to a n a r r a n g e m e n t c o m p le t e l y
s e p a r a t e fr o m t h e s t a t ic a r r a n g e m e n t o n th e r i g h t h a n d s id e – t h e l o a n .
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

N e d b a n k a s c o u n te r p a r ty t o t h e

s w a p a r r a n g e m e n t h a s n o t h i n g t o d o w i th th e c o n s o r t i u m o f l e n d e r s in
10

t h e r ig h t h a n d b o x . It is a n e n t ir e ly s e p a r a t e t h i r d p a r ty ?
D R J O N AT H A N Z O R A H B L O O M :

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

In

t h is

p a r t ic u l a r in s t a n c e th e y w e r e a l s o p a r t o f t h e le n d i n g .
A D V PA U L J O S E P H P R E TO R I U S S C : Ye s b u t …
D R J O N AT H A N Z O R A H B L O O M : ( In t e r v e n e s ) .
A D V PA U L J O S E P H P R E TO R I U S S C :

N o ti o n a ll y – a n d I a m s o r r y t o

u s e t h a t w o r d b e c a u s e I a m n o w u s i n g i t in t h e c o r r e c t s e n s e –
n o t io n a l ly th e y a r e s e p a r a t e .
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C : C o r r e c t ?
20

D R J O N AT H A N Z O R A H B L O O M : T h a t is r i g h t .
A D V PA U L J O S E P H P R E TO R I U S S C :

A n d th e tr a n s a c ti o n i n th e r ig h t

h a n d b o x r e m a in s i n ta c t ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : N o t h i n g is s w a p p e d i n o r o u t .
D R J O N AT H A N Z O R A H B L O O M : N o .

Page 197 of 212

31 MAY 2019 – DAY 103
A D V PA U L J O S E P H P R E TO R I U S S C :

Correct?

In t h e le f t h a n d b o x

h o w e v e r i t i s a n e n t ir e ly s e p a r a te f i n a n c i a l a r r a n g e m e n t w i th e n tir e ly
d i ff e r e n t f in a n c ia l o b li g a ti o n s th a t a r e n o t d e p e n d e n t i n a n y w a y o n t h e
fi n a n c i a l o b li g a t io n s i n t h e o r i g i n a l l o a n a g r e e m e n t in t h e r i g h t h a n d
box?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
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. S o w e a r e d e a li n g w i t h a
s e p a r a t e a r r a n g e m e n t w i th n o t s e p a r a t e p a r ti e s b u t Tr a n s n e t w i th a
d i ff e r e n t h a t o n . I t is n o w p r o te c t i n g i ts e l f a g a in s t r is k ?
10

D R J O N AT H A N Z O R A H B L O O M : T h a t is r i g h t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

A n d a c o u n t e r p a r t y w h o is

e n t e r in g i n t o a n a r r a n g e m e n t t o d e a l w i t h Tr a n s n e t i n t h a t a i m ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C : A n d th e a i m in t h is c a s e i n s w a p
a r r a n g e m e n t w h ic h w a s a h e d g i n g i n s tr u m e n t w o u l d b e f o r Tr a n s n e t to
b e i n a p o s i t io n w h e r e i t k n o w s a n d h a s c e r t a i n ty a b o u t th e i n t e r e s t
r a te i t w il l p a y. I n o th e r w o r d s
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :
20

I n o t h e r w o r d s a k i n t o a fix e d

in t e r e s t r a t e ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

A l r ig h t .

So you tell us then

p l e a s e h o w t h i s d e a l i s s tr u c tu r e d a n d h o w i t w o r k s .
D R J O N AT H A N Z O R A H B L O O M :

S o C h a ir b e c a u s e t h e r e a r e t w o

p a r t i e s th e o n e – t h e o n e i s t o p a y – b e c a u s e Tr a n s n e t w a n ts t o e n te r

Page 198 of 212

31 MAY 2019 – DAY 103
in t o th e fi x e d r a te i n o t h e r w o r d s o r a s s u m e a f ix e d r a t e o n t h e - i n th is
p a r t ic u l a r c o n te x t.

T h e y w o u ld p a y th e fi x e d – t h e in t e r e s t u s i n g t h e

fi x e d r a te t o t h e c o u n t e r p a r ty N e d b a n k .
CHAIRPERSON:
A D V PA U L J O S E P H P R E TO R I U S S C : S o r r y – y o u s a id t h e y w o u l d p a y
t h e in t e r e s t .

Yo u m u s t b e c a r e f u l h e r e .

They are not paying the

in t e r e s t t h a t a r i s e s fr o m t h e a g r e e m e n t b e t w e e n th e l e n d e r a n d t h e
b o r r o w e r i n th e r ig h t h a n d b o x .
D R J O N AT H A N Z O R A H B L O O M : T h e y a r e p a y i n g t h e f ix e d r a t e .
10

A D V PA U L J O S E P H P R E TO R I U S S C : Th e y a r e p a y in g a f ix e d r a t e .
D R J O N AT H A N Z O R A H B L O O M : A f ix e d r a te .
A D V PA U L J O S E P H P R E TO R I U S S C : N o t t h e fi x e d r a te .
D R J O N AT H A N Z O R A H B L O O M : J a .
A D V PA U L J O S E P H P R E TO R I U S S C : Th e fix e d r a t e b e l o n g s …
D R J O N AT H A N Z O R A H B L O O M : In t h is c o n t e x t .
A D V PA U L J O S E P H P R E TO R I U S S C :

N o , w e ll – t h e y a r e p a y in g a

fi x e d r a te n e g o ti a te d b e t w e e n N e d b a n k a n d Tr a n s n e t ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :
20

They are paying an amount

e q u iv a l e n t t o a fi x e d r a te ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is r i g h t .
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 l e t u s n o t g e t i n t o th a t

detail.
D R J O N AT H A N Z O R A H B L O O M :
same.

A n d C h a ir N e d b a n k w o u l d d o th e

I n t h is p a r t ic u l a r c a s e t h e y w o u l d b e p a y in g th e fl o a ti n g r a t e .

Page 199 of 212

31 MAY 2019 – DAY 103
S o – s o th e y – t h e y w o u l d h a v e t h e v i e w t h a t i n te r e s t r a t e s w o u ld
r e m a in s t a b l e o r m i g h t i n c r e a s e s l ig h tl y o r w h a t e v e r th e c a s e m a y b e .
S o t h a t w o u l d a s I – a s I i n d i c a t e d p r e v i o u s ly t h e y h a v e t o h a v e
o p p o s in g v i e w s in w h a t – h o w in t e r e s t r a te s w o u l d m o v e b u t w h a t is
i m p o r t a n t t o u n d e r s ta n d i t s a y s t h e r e p a y s th e fl o a t i n g r a te a n d – a n d
Tr a n s n e t p a y s th e f ix e d r a t e . T h e – t h e y d o n o t l i te r a lly p a y t h e r a te s
t o e a c h o t h e r. Th e y w o u ld – th e y w o u l d – b e c a u s e t h e r e is a – w e a r e
t a lk in g a b o u t a n a m o u n t .

T h e o n e – y o u w o u ld c a lc u la t e th e a m o u n t

u s i n g t h e fl o a ti n g r a te a n d y o u w o u l d c a l c u l a t e t h e a m o u n t u s i n g th e
10

fi x e d r a te a n d y o u w o u l d s u b s t r a t e th e fr o m e a c h o t h e r a n d d e p e n d i n g
o n h o w t h e m o v e – t h e in t e r e s t r a te s h a v e m o v e d o n ly th e n e t p o r t i o n –
t h e n e t p a r t o f th a t a m o u n t – w o u ld b e p a i d t o e i th e r o r o n e o f t h e –
e i t h e r o f th e p a r t ie s . D o e s t h a t m a k e s e n s e ?
C H A I R P E R S O N : W e l l l e t u s g o b a c k t o th e r o l e p la y e r s .
D R J O N AT H A N Z O R A H B L O O M : O k a y.
C H A I R P E R S O N : Yo u h a v e Tr a n s n e t w a n t i n g t o b o r r o w R 1 2 b il li o n a n d
t h e n y o u h a v e a c o n s o r t i u m t h a t is p r e p a r e d t o l e n d R 1 2 b i ll io n t o
Tr a n s n e t?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.

20

CHAIRPERSON:

O k a y.

T h e y e n te r i n t o a n a g r e e m e n t i n t e r m s o f

w h ic h t h e i n t e r e s t r a te th a t Tr a n s n e t w il l p a y w i ll b e a f lo a ti n g in t e r e s t
r a te . Is th a t r i g h t?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
CHAIRPERSON:

Ye s .

N o w Tr a n s n e t b e c o m e s c o n c e r n e d a b o u t t h e –

t h e fl u c t u a t i o n o f t h e i n te r e s t r a t e . Is t h a t r ig h t ?

Page 200 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M : 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 w a n ts t o p r o t e c t i ts e lf a g a in s t t h a t ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
CHAIRPERSON:

T h a t i s w h e r e th e h e d g i n g c o m e s in a n d th e s w a p

c o m i n g in a s w e ll a s f o r m o f h e d g i n g ?
D R J O N AT H A N Z O R A H B L O O M : 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 : N o w n o r m a l ly w o u l d t h e l e n d e r i n t h e m a i n a g r e e m e n t
– i f w e c a n c a l l i t t h a t r e la t in g to R 1 2 b il li o n – th e l e n d e r i n t h a t
tr a n s a c ti o n w o u ld n o t b e t h e o n e t h a t t a k e s p a r t i n t h e s w a p
10

a r r a n g e m e n t o r w o u ld i t?
D R J O N AT H A N Z O R A H B L O O M : C h a i r t h a t …
CHAIRPERSON:

In o th e r w o r d s i f I a m g e t t in g th e 1 2 m i ll io n – R 1 2

b i ll io n f r o m y o u a n d t h e r e i s a f l u c tu a ti n g in t e r e s t r a t e t h a t w e h a v e
a g r e e d a n d n o w I w a n t to p r o t e c t m y s e l f a g a in s t t h e fl u c t u a t io n o f th e
fl o a ti n g in t e r e s t . I n e e d s o m e b o d y e l s e t o t a lk t o o r c a n i t a ls o b e y o u ?
D R J O N AT H A N Z O R A H B L O O M : It c a n b e th e s a m e C h a ir.
C H A I R P E R S O N : S o r r y.
D R J O N AT H A N Z O R A H B L O O M : It c a n b e th e s a m e .
C H A I R P E R S O N : It c a n b e t h e s a m e ?
20

D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
C H A I R P E R S O N : B u t w h a t is th e n o r m ?
D R J O N AT H A N Z O R A H B L O O M : N o t h e r e i s n o n o r m i n t h a t r e g a r d .
C H A I R P E R S O N : T h e r e is n o n o r m , j a .
D R J O N AT H A N Z O R A H B L O O M : It d e p e n d s o n t h e tr a n s a c ti o n …
C H A I R P E R S O N : Ye s .

Page 201 of 212

31 MAY 2019 – DAY 103
D R J O N AT H A N Z O R A H B L O O M :

And

it

depends

on

th e

p a r t ie s

in v o lv e d .
C H A I R P E R S O N : S o i n o t h e r w o r d s I c a n – y o u c a n s a y t o m e w e ll w e
a r e a g r e e i n g o n a fl o a t i n g r a t e – f l o a t in g i n te r e s t r a t e i n r e g a r d t o th is
R 1 2 b i lli o n b u t s h o u ld y o u w a n t a s w a p w e c a n ta lk a b o u t t h a t b u t t h a t
w o u ld b e a s e p a r a t e t r a n s a c t io n .
D R J O N AT H A N Z O R A H B L O O M : 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 : Is t h a t r i g h t ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
10

A D V PA U L J O S E P H P R E TO R I U S S C :

It i s i m p o r t a n t C h a ir i n a n

e n t ir e ly s e p a r a t e tr a n s a c t i o n .
D R J O N AT H A N Z O R A H B L O O M : Ye s .
C H A I R P E R S O N : Ye s a n e n tir e ly s e p a r a t e tr a n s a c ti o n . S o i n t h is c a s e
y o u h a v e p o i n te d o u t t h a t N e d b a n k w a s – w a s a m e m b e r o f th e
c o n s o r ti u m …
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
C H A I R P E R S O N : T h a t w a s l e n d in g Tr a n s n e t t h e R 1 2 b il li o n …
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
C H A I R P E R S O N : B u t i t w a s a ls o a p a r ty t h a t w a s d e a l i n g w i t h Tr a n s n e t
20

with regard to concluding a swap arrangem ent?
D R J O N AT H A N Z O R A H B L O O M : 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 .
A D V PA U L J O S E P H P R E TO R I U S S C :

A lr ig h t .

S o ju s t to s u m m a r is e .

I n th e r i g h t h a n d b o x o f t h is d i a g r a m o n p a g e 2 1 Tr a n s n e t h a s b o r r o w e d
R 1 2 b i ll io n a t a fl o a ti n g i n t e r e s t r a t e .

T h o s e o b li g a t io n s r e m a i n f ix e d

Page 202 of 212

31 MAY 2019 – DAY 103
f o r t h e d u r a ti o n o f th e l o a n ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C : Tr a n s n e t s i ts d o w n h o w e v e r a n d
t h i n k s a b o u t w h a t i t h a s d o n e a n d s a y s b u t I t h in k i n t e r e s t r a te s m a y g o
t h r o u g h th e r o o f . Th e y m a y g o t o s u c h a h ig h le v e l t h a t i t is g o i n g t o
p u t u s i n fi n a n c i a l d i ff ic u l ty. C o r r e c t?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :

S o it s a y s I n e e d to f in d

s o m e o n e – a c o u n t e r p a r t y – in t h i s c a s e Tr a n s n e t t o e n te r i n to a
10

fi n a n c i a l a r r a n g e m e n t t o h e d g e m y r is k . C o r r e c t ?
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S

SC:

It

th e n

s i ts

down

with

a

c o u n t e r p a r ty N e d b a n k . N o w N e d b a n k o n t h e o th e r h a n d ( i n t e r v e n e s ) .
C H A I R P E R S O N : O k a y. S o r r y M r Pr e t o r i u s . I ju s t w a n t t o m a k e s u r e I
f o ll o w. I d o n o t k n o w w h e t h e r y o u m a d e a m i s ta k e o r I m i s u n d e r s ta n d
t h e w a y y o u – y o u p u t it .

I t w a s a s if a c o n c e r n w o u l d a r is e fr o m

Nedbank.
A D V PA U L J O S E P H P R E TO R I U S S C : Th e n I w a s w r o n g .
C H A I R P E R S O N : I t h o u g h t i t w o u l d a r is e fr o m Tr a n s n e t ?
20

A D V PA U L J O S E P H P R E TO R I U S S C : Ye s . Tr a n s n e t s i ts d o w n …
C H A I R P E R S O N : Ye s , y e s .
A D V PA U L J O S E P H P R E TO R I U S S C : A n d s a y s – d i d I s a y N e d b a n k ?
C H A I R P E R S O N : O k a y.
A D V PA U L J O S E P H P R E TO R I U S S C :

L a t e Fr i d a y a f t e r n o o n .

e a s i ly h a v e s a id …

Page 203 of 212

I could

31 MAY 2019 – DAY 103
CHAIRPERSON:

W e ll I m a y h a v e m is u n d e r s t o o d b u t t h a t is h o w I – I

understood.
A D V PA U L J O S E P H P R E TO R I U S S C : Al r i g h t . W e ll le t u s – l e t u s n o t
a r g u e th a t p o in t ( in t e r v e n e s ) .
C H A I R P E R S O N : J a , o k a y a l r i g h t . S o th e c o n c e r n fr o m t h e b o r r o w e r ?
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 e b o r r o w e r s a y s l o o k I

have entered …
CHAIRPERSON: Ja.
A D V PA U L J O S E P H P R E TO R I U S S C : I h a v e - n o w I a m t h i n k in g a b o u t
10

it . I h a v e e n t e r e d i n t o a l o a n a r r a n g e m e n t w i t h a fl o a t i n g in t e r e s t r a t e .
W h a t i f i n te r e s t r a t e s g o t h r o u g h t h e r o o f ? I b e t t e r p r o te c t m y s e l f . S o
it g o e s t o c o u n te r p a r ty N e d b a n k a n d m o v e s i n t o a d is c r e e t s e p a r a t e
tr a n s a c ti o n u s in g a s w a p a s a h e d g in g i n s t r u m e n t.
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 :

Right and it says to – Nedbank

o n t h e o t h e r h a n d s a y y o u r f e a r m a y n o t b e s o r e a l. I w i ll i n s u r e y o u ,
r ig h t ?
D R J O AT H A N Z O R A H B L O O M : T h a t is c o r r e c t .
A D V PA U L J O S E P H P R E TO R I U S S C :
20

I w i ll le t y o u p a y m e th e

e q u iv a l e n t o f a fi x e d r a te a n d I w il l p a y y o u f l o a t in g r a te .
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

Right.

S o i f in t e r e s t r a te s g o

t h r o u g h t h e r o o f a ll y o u h a v e t o p a y m e i s t h e fi x e d r a te .
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

I w i ll p a y y o u t h e fl o a t i n g r a t e

Page 204 of 212

31 MAY 2019 – DAY 103
a n d th e n y o u c a n p a y y o u r le n d e r.
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
A D V PA U L J O S E P H P R E TO R I U S S C :

S o N e d b a n k a ls o t a k e s a r is k

n o w i n t h is h e d g i n g ?
D R J O N AT H A N Z O R A H B L O O M : Ye s C h a i r t h e y d o i f – i f t h e – t h e r a t e
– t h e fl o a t i n g r a t e s ta r t s t o in c r e a s e t h e n i t is t o t h e b e n e fi t o f Tr a n s n e t
b e c a u s e r e m e m b e r t h e y s a i d th e y – t h e y w o r k e d o n a c e r t a i n fl o a ti n g
r a te . S o i f t h a t – i f f lo a ti n g r a t e s s ta r t t o e d g e o ff o r r a te s s t a r t t o e d g e
u p t h e n – t h e n t h a t w o u l d b e t o th e b e n e f i t o f t h e – o f t h e p a r t y t h a t is
10

p a y i n g t h e f ix e d r a t e .
A D V PA U L J O S E P H P R E TO R I U S S C : R i g h t. S o l e t u s ju s t t a lk a b o u t
t h e in s u r a n c e p o lic y – t h e h e d g i n g – t h e s w a p – f o r t h e m o m e n t .
CHAIRPERSON:

B u t b e f o r e y o u d o t h a t Mr P r e t o r iu s p le a s e d o n o t

f o r g e t t h e p o i n t y o u w a n t e d to p u t . I j u s t w a n t to fo ll o w t h is c o r r e c t ly.
Yo u – y o u e m p h a s i s e d a t s o m e s ta g e e a r li e r t h a t f o r a s w a p
a r r a n g e m e n t i t is i m p o r t a n t t h a t th e t w o p a r t i e s s h o u l d h a v e d i ff e r e n t
v ie w s a s t o w h a t is lik e l y t o h a p p e n w i t h r e g a r d t o i n te r e s t r a t e s ?
D R J O N AT H A N Z O R A H B L O O M : T h a t is c o r r e c t C h a ir.
CHAIRPERSON:
20

And the more we talk about it the more I begin to

u n d e r s t a n d w h y it is n e c e s s a r y t o h a v e t h a t b u t y o u w i ll t a lk m o r e a b o u t
that in due course but a swap arrangement would not be necessary –
w o u ld i t – f o r a b o r r o w e r w h o b e f o r e e n t e r in g i n to t h e m a in a g r e e m e n t
w o u ld h a v e d o n e h i s o r h e r h o m e w o r k p r o p e r l y. Is t h a t r ig h t ?
D R J O N AT H A N Z O R A H B L O O M : 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 : I f y o u d o y o u r h o m e w o r k p r o p e r ly i n t e r m s o f w h a t i s

Page 205 of 212

31 MAY 2019 – DAY 103
lik e l y t o h a p p e n i n t h e i n t e r e s t r a t e s in th e y e a r s to c o m e a n d y o u a r e
c o n fi d e n t o f t h e a s s e s s m e n t y o u h a v e m a d e .

Yo u w o u ld c h o o s e

w h e t h e r y o u g o f o r t h e f lo a ti n g in t e r e s t r a te o r t h e f ix e d r a t e a n d y o u
w o u ld t h e n s a y b e c a u s e I a m c o m f o r ta b le I d o n o t n e e d t h a t – a s w a p
a r r a n g e m e n t. Is t h a t r ig h t ?
D R J O N AT H A N Z O R A H B L O O M : C h a i r t h a t …
C H A I R P E R S O N : G e n e r a l ly s p e a k i n g ?
D R J O N AT H A N Z O R A H B L O O M :

A b s o l u t e ly r ig h t a n d th a t is a c t u a l ly

…
10

C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M :

A f u n d a m e n ta l p a r t o f t h e t e s t i m o n y

…
C H A I R P E R S O N : Ye s , y e s .
D R J O N AT H A N Z O R A H B L O O M : T h a t w e w i ll g e t t o .
CHAIRPERSON:

B e c a u s e w h e n y o u g o t o – i n t h is c a s e – w h e n

Tr a n s n e t h a v in g c o n c l u d e d it s a g r e e m e n t w i t h t h e c o n s o r t iu m f o r t h e
lo a n o f R 1 2 b i ll io n w h e n i t g o e s t o N e d b a n k i t t h e n e n t e r s i n t o a f ix e d
term kind of rate.
D R J O N AT H A N Z O R A H B L O O M : C o r r e c t .
20

C H A I R P E R S O N : W h ic h i t c o u l d …
A D V PA U L J O S E P H P R E TO R I U S S C : A t h u g e c o s ts .
CHAIRPERSON:

J a a t – a t w h a te v e r c o s t w h i c h i t c o u l d h a v e d o n e

w i t h – w i t h th e c o n s o r ti u m ?
A D V PA U L J O S E P H P R E TO R I U S S C : Ye s .
D R J O N AT H A N Z O R A H B L O O M :

Th a t is c o r r e c t C h a ir a n d a s I s a i d

Page 206 of 212

31 MAY 2019 – DAY 103
t h a t w o u ld b e – th a t i s g o i n g t o b e a fu n d a m e n ta l p a r t o f - o f h o w …
C H A I R P E R S O N : O f y o u r e v id e n c e ?
D R J O N AT H A N Z O R A H B L O O M : O f t h e e v id e n c e a n d th e ti m e li n e .
C H A I R P E R S O N : Ye s .
D R J O N AT H A N Z O R A H B L O O M : T h a t w e a r e t a l k i n g a b o u t .
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 PA U L J O S E P H P R E TO R I U S S C : C h a ir it i s 4 o ’ c l o c k a n d I d o n o t
know what your arrangement are (intervenes).
CHAIRPERSON: Oh, yes we did not talk.
10

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 I ju s t w h a t to h i g h l ig h t t w o

is s u 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 : I f I m a y a t th is s t a g e ?
C H A I R P E R S O N : Ye s . I w i ll – I w i ll a l lo w y o u …
A D V PA U L J O S E P H P R E TO R I U S S C : Yo u h a v e r a is e d a v e r y i m p o r t a n t
point …
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 :

W h ic h i s f u n d a m e n ta l t o t h e

e v i d e n c e t o c o m e th a t w i t h i n d a y s o f e n t e r i n g in t o t h i s fl o a ti n g r a te
20

a g r e e m e n t Tr a n s n e t is e n te r i n g i n to t h e s w a p a r r a n g e m e n t o n t h e b a s is
o f a fi x e d r a t e . T h e s e c o n d p o i n t is t h e fi x e d r a t e i n t h e s w a p is m u c h
h i g h e r th a n t h e fi x e d r a t e i t w o u ld h a v e e n te r e d in t o o n a m a r k e t l o a n
a n d th e a d d e d p o in t i s t h e o n ly p a r t y b e n e fi t ti n g h e r e - t h e o n ly p a r t ie s
t o b e n e f i t f r o m t h is a r r a n g e m e n t a r e t h e s e r v ic e p r o v i d e r s w h o a r e
a r r a n g in g th e s e s w a p s .

Page 207 of 212

31 MAY 2019 – DAY 103
C H A I R P E R S O N : A n d n o t Tr a n s n e t ?
A D V PA U L J O S E P H P R E TO R I U S S C : N o t Tr a n s n e t .
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 : I t i s a ll a t th e c o s t o f Tr a n s n e t .
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 :

S o C h a ir t h e q u e s ti o n a r is e s i s

w h y w a s it d o n e i n b y th is w a y. B y w h o m w a s i t d o n e f o r w h o s e b e n e f i t
a n d t h o s e a r e t h e q u e s t i o n s t h a t a r is e i n t h i s t e s ti m o n y a n d h o p e f u lly
w i ll b e a n s w e r e d i n fu ll b y t h e e n d o f t h e …
10

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 :

T h e Tr a n s n e t t e s ti m o n y a s

w h o le .
C H A I R P E R S O N : Ye s . N o , n o th a n k y o u . W e d id n o t t a lk a b o u t w h e n
w e w il l e n d t o d a y b u t w e n o r m a l ly e n d a t f o u r u n le s s w e h a v e m a d e
o th e r a r r a n g e m e n ts . To d a y w e a r e g o i n g t o e n d a t f o u r b u t w e a r e n o t
d o n e w i th D r B l o o m . S o w e w il l h a v e t o c o n t in u e o n M o n d a y. Is t h a t i n
order? I know there is a witness for …
A D V PA U L J O S E P H P R E TO R I U S S C : M o n d a y w e h a v e a w i tn e s s …
C H A I R P E R S O N : Ye s .
20

A D V PA U L J O S E P H P R E TO R I U S S C : W h o m u s t b e c a l l e d o n M o n d a y.
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 :

S o i t w il l h a v e to b e f it t e d i n

a ft e r th a t a n d I w ill d is c u s s i t w it h y o u C h a ir h a v in g d is c u s s e d i t w i th
t h e le g a l t e a m s p l a n n e r s .
CHAIRPERSON:

Ye s .

L e t m e – le t m e ju s t s a y I d o n o t k n o w w h a t

Page 208 of 212

31 MAY 2019 – DAY 103
y o u r p la n s a r e . W h a t I h a d i n m in d b a s e d o n th e u n d e r s t a n d in g th a t a t
s o m e s t a g e y o u m a y h a v e th o u g h t th a t D r B l o o m ’s e v i d e n c e w o u l d t a k e
o n e d a y.

I w a s t h i n k in g t h a t d e p e n d in g o n h o w m u c h m o r e ti m e w e

n e e d w it h h i m it w o u ld b e g o o d i f w e d id n o t b r e a k t h e e v i d e n c e b u t I
d o n o t k n o w t h e o t h e r w i t n e s s w h e t h e r h e is g o in g t o b e h e r e fo r a f e w
days or he would have to leave.
A D V PA U L J O S E P H P R E TO R I U S S C : T h e p la n n i n g i s r ig i d a r o u n d t h a t
I a m a fr a id g i v e n th e tr a v e l a r r a n g e m e n ts …
CHAIRPERSON: Hm.
10

A D V PA U L J O S E P H P R E TO R I U S S C : H e a lt h a n d p l a n n in g …
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 m a y b e …
C H A I R P E R S O N : B e c a u s e I w a s t h i n k in g f r o m m y s i d e – I d o n o t k n o w
– I w a s t h i n k in g i f w e n e e d e d f o r e x a m p l e a n o t h e r t w o h o u r s o r th r e e
hours or how much more …
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 …
C H A I R P E R S O N : W h a t d o y o u th in k ?
A D V PA U L J O S E P H P R E TO R I U S S C : A l m o s t a d a y.
CHAIRPERSON: Almost a day?

20

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 ir.
CHAIRPERSON:

O h , o k a y.

N o t h a t – t h a t is fi n e .

I t is j u s t t h a t i t

w o u ld – i t i s a p i ty if w e a r e g o i n g t o h a v e a l o n g b r e a k .
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 : Th is k in d o f t e c h n ic a l e v i d e n c e o n c e y o u a r e i n t o i t –
it w o u l d b e b e t t e r t o g o o n a n d f i n is h b u t th e r e a r e t h i n g s t h a t w e

Page 209 of 212

31 MAY 2019 – DAY 103
c a n n o t d is t u r b i n t e r m s o f
A D V PA U L J O S E P H P R E TO R I U S S C : C o r r e c t .
C H A I R P E R S O N : N e x t w e e k ’s a r r a n g e m e n t s .
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 a n d w e w il l w h e n w e

r e s u m e r e v ie w th is p a r t ic u l a r p o i n t
CHAIRPERSON: Ja.
A D V PA U L J O S E P H P R E TO R I U S S C :

W e w i ll m a k e s u r e th a t w e

understand …
C H A I R P E R S O N : Ye s .
10

A D V PA U L J O S E P H P R E TO R I U S S C : T h e t e r m i n o l o g y t o a l lo w u s t h e n
to …
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 : R e f e r to t h e s e c o n c e p t 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 : A s w e d o f r e q u e n tl y.
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 e c a u s e t h e s e – th is s w a p

arrangement …
CHAIRPERSON: Hm.
20

A D V PA U L J O S E P H P R E TO R I U S S C : H m .
C H A I R P E R S O N : Is f u n d a m e n t a l ?
A D V PA U L J O S E P H P R E TO R I U S S C : I s f u n d a m e n ta l t o …
C H A I R P E R S O N : To h is e v id e n c e .
A D V PA U L J O S E P H P R E TO R I U S S C :

A p o i n t t h a t t h e w i t n e s s w il l

make.

Page 210 of 212

31 MAY 2019 – DAY 103
C H A I R P E R S O N : J a . L e t u s l o o k e a r l y n e x t w e e k i n t e r m s o f fi x i n g t h e
date when Dr Bloom would come back …
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 : A s s o o n a s p o s s ib le .
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 ir.
C H A I R P E R S O N : It s h o u l d …
A D V PA U L J O S E P H P R E TO R I U S S C : I t w i ll b e n e x t w e e k .
C H A I R P E R S O N : J a . I t s h o u ld
A D V PA U L J O S E P H P R E TO R I U S S C : G iv e n a v a i l a b il i ty.
10

C H A I R P E R S O N : O h , it – i t c a n b e s o m e ti m e n e x t w e e k ?
A D V PA U L J O S E P H P R E TO R I U S S C : Ye s . Ye s , C h a ir.
C H A I R P E R S O N : O h , ja t h a t – t h a t w o u l d b e v e r y h e l p f u l .
A D V PA U L J O S E P H P R E TO R I U S S C : Ye s it w o u ld .
CHAIRPERSON:

T h a t w o u ld b e v e r y h e l p f u l , ja .

O k a y. Th e n w e a r e

g o i n g t o a d j o u r n n o w u n t il M o n d a y. M r P r e to r i u s y o u – I k n o w y o u a r e
n o t l e a d in g t h e e v i d e n c e o f t h e w i tn e s s o n M o n d a y b u t d o y o u – d o y o u
k n o w w h e t h e r h e is l ik e l y t o f i n is h i n o n e d a y o r s h o u l d w e s ta r t e a r li e r
than normal?
A D V PA U L J O S E P H P R E TO R I U S S C : H m .
20

C H A I R P E R S O N : Yo u d o n o t h a v e a n y i d e a ?
A D V PA U L J O S E P H P R E TO R I U S

SC:

Ye s

two

days

have

been

a l lo c a t e d t o th e w i t n e s s . 1 0 o ’ c l o c k w o u l d b e in o r d e r.
C H A I R P E R S O N : O k a y, a lr ig h t . W e - w e w i ll a d j o u r n th e n fo r n o w a n d
w e w il l s t a r t a t 1 0 o ’ c lo c k o n M o n d a y. D r B l o o m t h a n k y o u v e r y m u c h
b u t y o u w il l s t il l c o m e b a c k t o c o n ti n u e w it h – w i th y o u r e v id e n c e .

Page 211 of 212

31 MAY 2019 – DAY 103
H o p e fu ll y i t c a n b e s o m e t i m e n e x t w e e k b e f o r e o n e f o r g e ts t h e – t h e
p a r t t h a t y o u h a v e g iv e n to d a y.
D R J O N AT H A N Z O R A H B L O O M : T h a n k y o u C h a ir.
CHAIRPERSON: Thank very much.
D R J O N AT H A N Z O R A H B L O O M : P le a s u r e .
C H A I R P E R S O N : W e w il l th e n a d j o u r n .
R E G I S T R A R : Al l r i s e .
I N Q U I R Y A D J O U R N S TO 3 J U N E 2 0 1 9

10

Page 212 of 212