- Regiments found itself in the ID’s crosshairs following allegations of fraud, corruption and money laundering stemming from when Regiments was Transnet’s advisor.
- The ID believed that Regiments' frozen assets were the proceeds of crime and that it had obtained contacts unlawfully from the state-owned company.
- Judge Maletsatsi Mahalelo ruled against the ID. Her ruling hinged on the ID not disclosing material information about Regiments.
The Investigating Directorate has lost its court bid to have its R1.6 billion asset freeze on fund managers Regiments Capital made final after failing to disclose material information about the company.
In 2019, the ID obtained a court order granting it an interim restraint order to freeze Regiments assets and R600 million in cash, following its suspicion that the company had conspired with other role payers to “loot” the state-owned rail, port and pipeline company Transnet.
The ID is part of the National Prosecuting Authority and deals with high-level fraud and corruption.
Regiments found itself in the ID’s crosshairs following allegations of fraud, corruption and money laundering stemming from when Regiments was Transnet’s advisor and provided investment services to the Transnet Second Defined Benefit Fund (TSDBF) on the acquisition of 1 094 locomotives in 2010 to 2019.
The ID believed that Regiments’ frozen assets were the proceeds of crime and that it had obtained contacts unlawfully from Transnet.
The urgent interim application at the Johannesburg High Court to freeze the assets was done 'ex parte', which means Regiments had not been made aware of the ID’s intentions, on the basis that the fund manager would have moved its assets away from the ID’s reach.
A day after ID was granted its interim application, Regiments had paid TSDBF a settlement of about R639 million, following the fund suing the company for R848 million for criminal offices against it. This means that a separate initial asset freeze relating to company’s issue with TSDBF fell away, and the ID had approached the court two days before that happened to ensure that Regiments assets would remain frozen.
The ID then went to the South Gauteng High Court to have the interim order made final, but on Monday, Judge Maletsatsi Mahalelo ruled against the ID. Her ruling hinged on the ID not disclosing certain information about Regiments.
Regiments had argued that the ID failed to disclose information relating to the settlement agreement between Regiments and Transnet, how the agreement was implemented and the cooperation of the company’s executives, including Litha Nyhonyha, owner; executive chair of Regiments, Niven Pillay; and Trillian CEO Eric Wood, who was once a director at the company.
The fund manager also argued that the ID had not informed the court in its application for the interim order in November 2019, and that Regiments had an initial asset freeze against it granted in September. If the ID had disclosed that, then it would have been clear that Regiments was part of "multiple proceedings" and would use its liquid assets in the form of shares and cash to pay its creditors.
However, not disclosing that information resulted in the court granting the order of restraint, which went against the September order, making it impossible for the company to pay its creditors as required.
The other non-disclosure related to the ID not informing the court, in its application for the interim restraint, that Regiments had reached a settlement agreement with TSDBF, which would have influenced the court’s decision.
Mahalelo found that the non-disclosure was "material", saying that facts that are not disclosed in an ex parte application lead to court orders being erroneously granted.
She then discharged the provisional order and the application to make it final with costs.
Sindisiwe Twala, ID spokesperson said, "We are still studying the judgment and will consider our options."