BnP Capital tried to score a cancellation fee from SAA by lying, inquiry hears | Fin24
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BnP Capital tried to score a cancellation fee from SAA by lying, inquiry hears

Jun 14 2019 18:17
Lameez Omarjee, Fin24

A transaction advisor to SAA - BnP Capital - tried to score a cancellation fee of R49.9m by making false representations of costs incurred, the state capture inquiry heard.

Appearing before the inquiry on Friday, Pieter van der Merwe, a director of a funder Grissag AG shared how his company became involved in the R15bn loan for the airline back in 2015.

Grissag AG is an international company that provides funding for projects in Africa. But in order to fund projects in SA a local entity was established. The funder required Financial Service Provider (FSP) credentials and had to meet BBBEE requirements to stand in the running for funding SAA.

A partnership with BnP Capital was struck – as Grissag would rely on BnP's FSP certificate and BBBEE credentials. Previously attempts for Grissag to score a contract with SAA through partnerships had failed, the inquiry heard.

According to its agreement with BnP Capital, which at the time was serving as a transaction adviser to SAA, Grissag would be paid 1% by SAA for each drawdown amount of the loan.

This 1% drawdown was split equally between Grissag and BnP Capital. So for example if SAA paid Grissag R150m, then of this value R75m would be paid to BnP Capital, Van der Merwe explained.

However, Van der Merwe later explained that he learnt in media reports that BnP Capital was to be paid R256m by SAA for sourcing Grissag as a funder to the airline. That was over and above the arrangement Grissag had with BnP Capital.

"I was totally unaware of that (the R256m fee). I only read it in media. It came as a shock," Van der Merwe said. He added that BnP Capital did not "find" Grissag, as it was known as a funder in the market.

In June 2016, SAA had terminated its contract with BnP Capital as a transaction adviser, Fin24 reported previously.

BnP Capital then tried to charge SAA a cancellation fee of R49.9m.

In letters addressed to SAA, BnP Capital had tried to justify the cancellation fee by claiming Grissag had incurred costs in the transaction.

Van der Merwe, who had never seen the letters until the commission's investigators had presented them to him said that the claims BnP Capital made were untrue. He added that there had been no arrangement of a cancellation fee between Grissag and BnP Capital either.

"There was no intention of Grissag to seek financial relief from BnP Capital," he said. The representations in the letters were "completely false," he said.

The inquiry resumes on Tuesday.

bnp capital  |  saa  |  state capture inquiry


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