Ina Opperman
Business Journalist
4 minute read
9 Feb 2021
2:39 pm

Nedbank rejects claims it had corrupt relationship with Regiments Capital

Ina Opperman

Nedbank has stated that its internal and external reviews confirmed that the bank at no time acted unlawfully in its dealings with Regiments or its clients.

Regiments allegedly promoted the Nedbank products to its public sector clients, such as the City of Johannesburg, City of Tshwane and Acsa while it was supposed to offer impartial advice.

The ‘commission’ Regiments received was part of the Nedbank charges and Regiments clients often did not know about it, amaBhungane wrote.

According to amaBhungane, this all started in 2009 when Nedbank and Regiments signed a ‘highly confidential’ agreement called Introduction of Derivative Transactions, that indicated that Nedbank would pay Regiments a fee for bringing it new business and that Regiments would disclose the fee to its clients. The report says Regiments did not disclose this.

In its response, Nedbank said in a statement it has noted the article and that the matter has been extensively covered in the media over several years and more recently at the Commission of Inquiry into State Capture.

“The Nedbank board and management commissioned detailed internal and independent external reviews of the transactions and these reviews found no evidence of any collusion or corruption by Nedbank.”

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The bank said while it values the importance of objective investigative journalism, the selective allegations and narrative in the article are, unfortunately, in Nedbank’s opinion, based on assumptions that fail to properly consider the legal framework involved and the applicable contractual and legal obligations of the various parties, as well as the technical aspects of the transactions.

Nedbank states that its internal and external reviews confirmed that Nedbank at no time acted unlawfully in its dealings with Regiments and the affected counter parties or Regiments’ clients and that it strongly refutes the inference made in the article that it was complicit in any alleged scheme by Regiments to defraud its clients or extract undue benefit from them.

“Our corporate and investment banking clients are sophisticated entities. We correctly rely on the legislative framework regulating the banking and financial services sector, as well as the financial conduct of public entities.

“In addition, we rely on their directors, office bearers and financial control structures to manage their own internal affairs and ensure that their governance responsibilities are adhered to. Given the fact that Nedbank was not an adviser to the affected Regiments’ clients regarding these transactions, Nedbank was not and is not in a position to challenge the commercial objectives of these clients,” the bank said in the statement.

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Nedbank confirmed that the agreement for the Introduction of Derivatives Transactions was concluded on 25 May 2009 between Nedbank Capital as it was called then and Regiments Capital on the express premise that Regiments would disclose to its clients that it would receive a fee from Nedbank Capital, which would be included in the pricing agreed between Nedbank Capital and the client and that Regiments confirmed that it was not acting as Nedbank Capital’s agent.

“There was nothing unlawful or unusual about the agreement which Nedbank had entered into, on the understanding that Regiments would adhere to its terms, coupled with its obligations as a registered Financial Services Provider (‘FSP’).”

Nedbank said Regiments was obliged to comply with the Financial Advisory and Intermediary Services Act and General Code of Conduct for FSPs, which required Regiments to disclose its fees to its clients to avoid conflict of interest. If Regiments failed to do so, Nedbank cannot be held accountable and also not for improper or unlawful conduct Regiments engaged in.

“The bank was not aware at the time of any associated unlawful or corrupt conduct by Regiments and denies that it was complicit in any such unlawful or corrupt conduct that may have been perpetrated by Regiments and others.”

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Nedbank says it had no information at the time of the transactions to indicate that the internal governance process of certain companies, or certain key role players, had been compromised to the extent that has subsequently become apparent through investigative journalism and processes like the Commission of Inquiry into State Capture.

“Had Nedbank been aware of the compromises in these companies, with the benefit of hindsight, we would likely have taken different actions. Nedbank’s activities are conducted ethically and transparently for the benefit of our clients and stakeholders. All Nedbank’s client relationships are subject to the Financial Intelligence Centre Act, governance and regulatory reporting requirements, to which we strictly adhere.”

Nedbank emphasised that it has a zero tolerance for corruption and expects all its stakeholders, including its clients, service providers and staff, to conduct themselves ethically and with integrity and that it supports cooperates with the relevant authorities and commissions.

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