A locomotive tender that saw Transnet lose billions of rand was allegedly crafted and tweaked by executives to unfairly benefit a Chinese state company that paid the Guptas and their associates kickbacks.
The tender was part of Transnet's controversial procurement of 1,064 locomotives, the cost of which ballooned by more than R15bn — from R38.1bn to R54bn.
The contracts entered into in 2014 are at the centre of the arrests this week of four former Transnet executives — Anoj Singh, Brian Molefe, Siyabonga Gama and Thamsanqa Jiyane — on charges of fraud, corruption, money laundering and contravening the Public Finance Management Act (PFMA).
The tender went to a Chinese state-owned manufacturer and was found to have been issued without proper processes or due diligence.
While details of wrongdoing emerged around 2021 at the commission of inquiry into state capture, the NPA this week placed Singh and Molefe at the heart of ensuring that the contracts went to China South Rail (CSR).
The two are accused of unlawfully amending the conditions in a bid document for the acquisition of 95 locomotives to give CSR an unfair advantage in 2011. A second, bigger deal, for 240 locomotives, was awarded to CSR's sister company, China North Rail (CNR) in 2014.
The two Chinese state companies merged to form the China Railway Rolling Stock Corporation (CRRC) in 2013, becoming the world's largest rolling stock manufacturer.
The approval of CNR's appointment was grossly negligent and not in compliance with the PFMA, according to the charge sheet.
The four former executives face 18 counts of fraud, contravening the PFMA, corruption and contravention of the Companies Act linked to the awarding of the two locomotives contracts.
Singh, Gama and Molefe are also charged in a separate R400m fraud and corruption case in the high court in Johannesburg related to a consultancy service contract for the deal.
The accused are alleged to have accepted bribes from members of the Gupta family or their associates in return for flouting rules in awarding the locomotives contracts.
The accused are alleged to have accepted bribes from members of the Gupta family or their associates in return for flouting rules in awarding the locomotives contracts.
The charges relate to Transnet’s strategic plans in 2011 to expand and modernise the country’s port, rail and pipeline infrastructure, including moving freight from road to rail.
The accused allegedly flouted the tender process by irregularly appointing CSR, which did not meet the criteria needed to provide the initial 95 locomotives because it was not registered in South Africa.
NPA's Investigating Directorate Against Crime (Idac) spokesperson Henry Mamothame said other due processes were not followed and a bid costed “at a little over R3.2bn was inflated and allegedly exceeded its contract value by over R231m, resulting in a payment of over R3.4bn”.
Singh, who allegedly ensured the Chinese state company was not disqualified for the locomotives tender, is accused of accepting bribes from the Gupta family at least six times between January 2014 and April 2015.
At the state capture commission in 2021 it emerged that for a period of 36 months at Transnet Singh did not use any of his salary. As a result, the balance in the account stood at R19m as he left the company in July 2015 to start his new job as Eskom CFO. Singh claimed he used his savings to finance his needs over the three-year period.
Molefe is accused of accepting bribes from the three Gupta brothers and their associates between July 2011 and September 2012 at Saxonwold and Sahara Computers in Johannesburg.
Former public protector Thuli Madonsela placed Molefe in Saxonwold 19 times in just one month in November 2015 in her state capture report of 2016.
Jiyane is accused of accepting “gratification of undisclosed amounts of cash ... given to him by Ajay Gupta, Atul Gupta and Rajesh Gupta” in or near the Maslow Hotel in Johannesburg around November 2016.
Gama is accused of accepting cash from Gupta associate Salim Essa at Melrose Apartments in Johannesburg in June 2017 to “improperly influence the transaction for the procurement of 1,064 locomotives”. He is also accused of accepting cash from the Gupta brothers at their infamous Saxonwold compound between May 2012 and December 2017.
Evidence before the state capture commission by Shadow World Investigations showed that more than R6bn in kickbacks was traced from CSR and CNR to Gupta-linked companies outside South Africa.
The former executives were this week granted bail of R50,000 each and the case was postponed to October 6. All the accused indicated that they intended to plead not guilty.
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