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ICM Files: Stanley Shane — The captured Transnet director

ICM Files: Stanley Shane — The captured Transnet director
Ra’eesa Pather
By Ra’eesa Pather
14 Mar 2023
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At the height of corruption at Transnet, a central figure played a critical role in helping the Guptas to loot the state-owned ports and freight railway agency. In his two-year stint at Transnet, Stanley Shane was seated in some of the most important positions within the company — and pushed through decisions that would impact Transnet and the workers who relied on its pension fund. He is one of the shadowy figures who facilitated the Guptas’ crooked enterprise. Yet despite this key role, Shane is living comfortably in the United Kingdom today and has never been investigated for his role in State Capture.

This is the second piece in a series on a company called Integrated Capital Management and its directors, who enabled and benefited from State Capture at Transnet, but have yet to be held to account. Read the first piece on the money flows here.


https://www.dailymaverick.co.za/article/2023-03-13-follow-the-money-the-directors-who-flushed-transnets-cash/

In late 2014, Public Enterprises Minister Lynne Brown made changes to the Transnet board. The embattled SOE had already been impacted by corruption, but some of its biggest losses were still to come.

Shane was one of the new directors Brown appointed to the Transnet board. He would become the chairperson of the Transnet Second Defined Benefit Fund (TSDBF) – a pension fund for Transnet workers – and the head of the dubious Transnet Board Acquisitions and Disposals Committee (BADC), which considered Transnet’s procurement deals. 

While holding these positions, Shane was also a director of a company called Integrated Capital Management (ICM), which the Zondo Commission found to have received at least R9.3-million in illicit funds through a money laundering scheme by corrupt contractors who benefited from irregular Transnet deals.

As far as we know, Shane’s conflict of interest in this transaction was never declared to Transnet, and the money ICM received was never paid back. 

In the first instalment of this series, we showed how these funds were then paid in transactions which reference companies that are connected to ICM’s directors.



We also revealed that Transnet suspiciously paid ICM R2.2-million for no apparent reason: ICM was never contracted to do work for Transnet. Transnet made the payments to ICM between 2015 and 2017, when Shane was a director on Transnet’s board and chairperson of the TSDBF and the BADC. 

During his tenure as Transnet director and trustee of the TSDBF, Shane was paid R1.7-million in director’s and trustee’s fees from the SOE.

Shane also chaired the BADC and TSDBF in a period when irregular contracts were awarded to companies linked to his associates in the Gupta network. The companies involved were German IT company, T-Systems, which was awarded a contract to supply IT data services to Transnet, and corrupt Gupta-linked firm Regiments, which executed a number of transactions that would put the pension fund at risk.

As a result of the evidence against Shane in these dubious contracts, the Zondo Commission recommended that law enforcement agencies investigate Shane and others for possible violations of important public finance and corruption laws, including the Public Finance Management Act (PFMA), the Prevention and Combatting of Corrupt Activities Act and the Prevention of Organised Crime Act (Poca). 

The Gupta connection


Shane is no stranger to the Gupta family’s stealthy network. In October 2014 – a few weeks shy of the date he joined Transnet’s board – he became a director at Antares Capital. Salim Essa, the Gupta-linked businessman, would later become a director at Antares in June 2015, when Shane was already chairman of the TSDBF and the BADC.

In the first part of this series, we revealed how Antares Capital is linked to payments from the bank account of ICM, shortly after R9.3-million was laundered to ICM as the proceeds of the corrupt Transnet relocation deal.

It doesn’t stop there: ICM was also instrumental in helping Essa to register BEX – the shelf company which funnelled Transnet money to ICM. 

Shane failed to disclose his interest in Antares and BEX to Transnet, and it remains unclear whether he notified Transnet that ICM would benefit from the relocation contract. The payments amount to a vital conflict of interest.



Shane’s connection to the Guptas, through Essa, is also evident in his role in Trillian. According to former Trillian Management Consultants chief executive, Bianca Goodson, Shane attended Trillian meetings and became involved in the operations of the company. 

Goodson’s testimony to Parliament’s portfolio committee on public enterprises is supported by similar testimony made by whistle-blower Mosilo Mothepu, the former CEO of Trillian Financial Advisory, to the same committee.

ICM provided significant support to Trillian in its early days, helping to establish the Trillian group of companies. Shane was a director at ICM and Transnet during this time.

“I can confirm that Shane was operationally involved in management decisions, strategy compilation and dispute resolution within TCP [Trillian Capital Partners],” Goodson told Parliament. “In all my engagements with Essa, Shane attended.”

He would later receive a report from Clive Angel – his colleague at ICM who was involved in Trillian’s operations – which proposed work Trillian would undertake for Transnet. At the time, Shane was a Transnet director, and his involvement in providing feedback on a Trillian proposal without the Transnet board shows a significant conflict of interest. 

Mothepu told a 2018 investigation commissioned by National Treasury that Angel had sent the proposal to Shane and to Transnet Engineering chief executive Thamsanqa Jiyane.

“Mothepu indicated that the proposal sent to Jiyane was also sent to Stanley Shane (“Shane”) for review and at the time, he was the Chairman of the BADC,” the investigative report reads.

Evidence presented to the Zondo Commission suggests that Shane was also instrumental in pushing Transnet to sign off on contracts with Gupta-linked companies. He became a key part of the engine that kept the Gupta gravy train rolling.

Risking the pension fund cash


The Transnet Second Defined Benefit Fund (TSDBF) is important. Thousands of former Transnet employees rely on the fund to support their families. Despite the need of the fund to support vulnerable people, it became a key site of capture at the SOE while Shane was its chairperson.

Between December 2015 and April 2016, Transnet acquired the services of Gupta-linked firm Regiments to execute four tranches of interest rate swap transactions. The transactions were needless and bogus, ultimately enriching Regiments, its director Eric Wood, and the Gupta family. 

An interest rate swap meant that a portion of Transnet’s debt to a lender was “swapped” from a fluctuating interest rate to a fixed interest rate. To execute the swap, a third party takes on the risk of the fluctuating rate of interest on the loan, while Transnet is responsible for paying a higher, but fixed, interest rate.

In the first two interest rate swap tranches, Transnet made significant losses, while Nedbank – the third party – fattened its pockets to the tune of R780-million.

Regiments also greedily raked in excessive fees for facilitating the swaps, with Transnet’s own treasury sidelined from a deal it would usually facilitate.

On 30 March 2016 and 4 April 2016, Regiments facilitated the final two tranches of interest rate swaps for Transnet. This time – absurdly – the Transnet Second Defined Benefit Fund was the counterparty responsible for paying the fluctuating interest rate.

As the Zondo Commission said: “This transaction was extraordinary because Transnet was in effect betting against its own pension fund in the hedging market. An interest rate swap always involves one party winning and one party losing.” 

The commission found that the pension fund benefited from the swap, while Transnet suffered further losses. However, the swap led the pension fund to sack Regiments in September 2016 after it emerged that the company had “allocated itself” a gluttonous R228-million in fees for the interest rate swaps.

Shane’s powerful position on the pension fund board did not escape the scrutiny of the Zondo Commission, which found that:

“… there is evidence suggesting strongly that the appointment of Mr Shane as Chairperson of the TSDBF was orchestrated by Mr Essa specifically to ensure that the Trustees of the TSDBF appointed Regiments Fund Managers (Pty) Ltd, a wholly owned subsidiary of Regiments, to manage a R9-billion portfolio of TSDBF for the benefit of Mr Essa and the Gupta family.”

In a court affidavit, Regiments director Niven Pillay suggested that Shane had authorised the interest rate swaps during a phone call. Shane denied this in a responding affidavit, saying it was the board of the fund who had final approval. He conceded, however, that he had told Pillay he was “in favour” of the swaps if they would benefit the fund, and if the fees due to Regiments would be “market related”. 

In addition, the Zondo Commission found there was a “clear conflict of interest” in Regiments managing funds for the TSDBF while executing the interest rate swaps on behalf of Transnet. It meant that the Gupta firm was acting for both the original party to the agreement as well as the counterparty – the TSDBF. Shane and the board of the TSDBF, as well as the Transnet board, should have recognised this conflict of interest in their decision-making.

Nonetheless, Regiments pocketed R228-million in “fees” from the TSDBF interest rate swaps. In an investigative report which dealt with the swaps, law firm Mncedisi Ndlovu and Sedumedi Attorneys found that Regiments’ fees were “well above market norms” and were “highly irregular and unwarranted”.

The Zondo Commission recommended that Shane – along with members of the Transnet board and Eric Wood – be investigated by law enforcement agencies on potential charges of corruption, fraud or racketeering, as well as for potential violations of the PFMA.

While Wood and others are now in the dock, Shane appears to have escaped scrutiny. His actions, however, risked the funds of almost 47,000 Transnet pensioners.

The pensioners who waited for justice


The Transnet pension fund beneficiaries have suffered the brunt of the social cost of corruption at the SOE. In 2019, the fund’s former principal officer, Petrus Maritz, said that 46,955 people relied on the fund for income. Those beneficiaries include 126 children of former Transnet employees. The payouts these beneficiaries receive are not substantial: an average of R2,683.17 was paid to beneficiaries each month as of 2019. Yet, for many of those beneficiaries, there is no other source of income. 

“Most of the Fund’s beneficiaries are entirely dependent on their pensions to survive,” Maritz said. 

Maritz made the statements in an affidavit submitted to the South Gauteng High Court to oppose Eric Wood’s attempt to block a settlement agreement for the repayment of funds owed to the TSDBF from Regiments and its principals. The attempt at a settlement agreement came after the TSDBF sued Regiments Fund Managers for the public money it pocketed. 

Wood is the former Regiments director who became director of Trillian. He is one of the key architects of State Capture who was arrested and charged in relation to corruption at Transnet. Maritz said the settlement agreement would allow the fund to pay four months’ worth of bonus pensions to its beneficiaries who have been victims of State Capture crimes.

“For elderly people accustomed to living on less than R3,000 per month, the value of four months’ bonus pensions speaks for itself,” Maritz said in his affidavit.

Wood has been accused of illicitly funnelling more than R500-million from the fund to enrich himself and the Gupta network. His attempt to block the settlement agreement delayed thousands of struggling pensioners being paid what they were owed. 

The TSDBF also launched a court action for the sequestration of Wood’s insolvent estate in 2021. In November 2022, the South Gauteng High Court ordered the provisional sequestration of Wood’s estate. Maritz, who had fought to recuperate the funds stolen from the TSDBF, died one week before the court made its order. 

Shane was an integral part of the Gupta machine that helped Regiments and Wood gain access to the fund’s coffers. At the time when Regiments pocketed more than R200-million in “fees” from the fund, Shane was its chairperson. Despite this, Shane was barely a feature in the cases related to the Regiments fees, and he was never cited as a respondent. 

German authorities, however, have shown interest in another corner of Transnet’s operations: the company’s Board Acquisitions and Disposals Committee (BADC), where Shane wielded power as its chairperson. 

Corrupting the system to a T


In November 2015, Transnet began a tender process to procure IT data services. The tender was advertised after German tech giant, T-Systems, had already been caught in Transnet’s crosshairs for failure to deliver on a previous contract. T-Systems controversially ceded that contract to Zestilor, a company owned by Salim Essa’s wife, Zeenat Osmany. It was then that media reports emerged of T-Systems’ possible links to the Guptas through Zestilor. 

Under Shane’s leadership, the Transnet BADC would ignore procurement protocol to enter into an unjust and corrupt contract with T-Systems for the IT data services. The process was wracked with flaws, as outlined in the Zondo Commission report. The most egregious was that due process was flouted to favour one particular bidder.

At the end of the process, two bidders remained: T-Systems and Gijima, a South African black-owned company. The companies submitted their final offers in mid-2016. Despite Gijima offering a lower price and obtaining a higher score, T-Systems was awarded the contract.

In South African law, the Preferential Procurement Policy Framework Act states that the highest-scoring bidder must be awarded the tender, unless there are certain conditions met that justify preference for a competitor. The Zondo Commission, however, found that there were no satisfactory conditions that justified the decision to contract with the lesser-scoring German company. Shane, according to the commission, lobbied hard for Transnet to choose T-Systems. 

On 13 February 2017, the BADC met to discuss the tender award. The Zondo Commission, referencing the meeting minutes, stated that most board members were in favour of awarding the tender to T-Systems. The commission noted that the “interventions by Mr Shane in particular were troubling”. 

“His tone was generally condescending and derogatory. He seemed mostly concerned about not attracting adverse publicity for himself in the media. He was apprehensive that people in his community would regard him as a ‘crook’,” the commission said. 

It added: “His pre-disposition favouring T-Systems was plainly evident, improperly motivated by irrelevant extraneous factors and demonstrated a failure to appreciate his fiduciary duty…”

When Transnet awarded the contract to T-Systems, Gijima wrote a complaint on the process to the SOE, which was referred to National Treasury. The Treasury concluded its investigation in July 2017 and found that Transnet must award the tender to Gijima. 

On September 2017, the Transnet board withdrew its decision to award the tender to T-Systems. Transnet approached the North Gauteng High Court in 2018 seeking a declaration for its contract with T-Systems to be set aside and a direction that it should instead contract with Gijima. High Court Judge Raylene Keightley granted an order to that effect in December 2018. A few months earlier, in May 2018, Transnet dissolved the BADC.

In the high court order, Judge Keightley remarked on Shane’s conduct in the BADC meeting of February 2017, saying: “One is left wondering whether the [BADC] was not being driven by extraneous considerations” in its decision to award T-Systems. 

The Zondo Commission also scrutinised Shane’s actions, as well as the conduct of other BADC members who participated in the meeting. The commission found that Shane and another BADC member, Zainul Nagdee, have “links to the Gupta enterprise” and that there may be a convincing case that they violated the PFMA. 

“There is a prima facie case that in seeking to favour T-Systems, they did not act with fidelity, honesty, integrity and in the best interests of Transnet,” the commission found. It also stated that their behaviour warranted an investigation into possible contraventions of Poca for racketeering activities.

South African law enforcement agencies have taken scant notice of Shane in their efforts to seek accountability for State Capture crimes at Transnet.

German authorities, however, are reportedly investigating T-Systems’ culpability in corruption at Transnet, which may lead them to look closer at Shane’s alleged misconduct.

Time to face the dock


Shane currently lives in London with his family. He’s listed as a director of two companies in the UK, according to Companies House, the company records-keeper in the country. They are Inspre Investments, an investment advisory company based in the swanky Mayfair suburb, and Sweet Stay Holdings, a luxury accommodation rental brokerage. 

One of Shane’s co-directors at Sweet Stay Holdings, Emanuel Arbib, was also a non-executive director at Antares Capital – the company where Shane and Essa are still listed as directors and which is linked to funds laundered by BEX from Transnet to ICM. Arbib told Open Secrets he had no knowledge of the transactions.

Shane did not respond to detailed questions from Open Secrets at the time of publishing.

In our previous article in this series, we showed that Shane was also linked to payments totalling R399,300 made by ICM from money it had received from Transnet via BEX. Yet, so far, he has not faced any pressure to account for his links to this money or to appear before investigators to explain his role in State Capture crimes.

Shane did not appear at the Zondo Commission and seems to have filed no documents to counter claims made against him at the commission.

Instead, despite the strong recommendations made against him at the commission, he has slipped quietly away, enjoying his home and businesses in the UK.

It’s long past time for the Hawks and NPA to bring him back to South Africa, and prosecute him. DM

Shane wasn’t the only ICM director implicated in corruption and State Capture. His co-conspirators, Marc Chipkin and Clive Angel, were the shadowy men in suits, wheeling and dealing for the State Capture enterprise. Our final article in this series is all about the company that brought Trillian to life: ICM. 

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