Brian Molefe’s Transnet locomotives graft case postponed again – What to know

The high-profile Transnet locomotives fraud and corruption case involving former Transnet CEO Brian Molefe has been postponed once again.

Molefe and his co-accused appeared briefly in the dock at the Johannesburg High Court on Friday, 11 October, on charges of the contravention of the Public Finance Management Act (PFMA) and fraud.

Their charges, which include fraud, corruption, and money laundering, stem from the locomotives transaction advisory tender awarded to the McKinsey-led consortium in 2012, resulting in the procurement of 1 064 locomotives valued at more than R54 billion.

Transnet corruption case: Who are Brian Molefe’s co-accused?

The co-accused of the parastatal’s ex-boss include former Transnet group CFO Anoj Singh; former acting CFO Garry Pita; former treasurer Phetolo Ramosebudi; former Transnet CEO Siyabonga Gama; the CEO of the defunct Trillian Capital Partners and Regiments Capital shareholder Eric Wood; alleged “Gupta fixer” and sole director of Albatime, Kuben Moodley; as well as former Regiments Capital director Nevin Pillay and former Regiments Capital CEO Litha Nyhonyha.

Former McKinsey director Vikas Sagar stands accused in his personal and representative capacity, while employee Goitseone Mangope is accused as the current representative of the company.

With the companies added into the mix, the number of those accused of the R398.4 million corruption at the parastatal stands at 18.

Why has the case been postponed?

National Prosecuting Authority’s (NPA) Investigating Directorate Against Corruption (IDAC) spokesperson Henry Mamothame said the matter has been postponed to 31 January 2025 for the state to provide further particulars to the accused.

In May this year, the state demanded that Advocate Shaun Abrahams, representing Molefe in the matter, should recuse himself as he was the National Prosecuting Authority (NPA) boss when a strategy was put in place for prosecuting the matter.

MK party MPs: Molefe and Gama

Despite the corruption case hanging over Molefe and Gama’s heads, the former Transnet executives have been sworn in as members of parliament (MPs) of Jacob Zuma’s uMkhonto weSizwe (MK) party in August this year.

Molefe at helm at Transnet during time of alleged corruption

The state claims that the alleged corruption occurred at the parastatal while Molefe was at the helm from 2011 to 2015.

Gupta-linked Regiments Capital was irregularly brought into the contract for the procirement of the locomotives and benefited from Transnet’s irregular appointment, increasing the contract’s value and scope to more than R305 million. 

Their services included sourcing loans amounting to $2.5 billion, equivalent to R30 billion at the time, on behalf of Transnet.

Additionally, the accused also face charges related to the R93.4 million payment to Trillian Asset Management – another Gupta-affiliated entity – in 2015.

Transnet locomotives corruption case – What to know

The Organisation Undoing Tax Abuse’s (Outa) state capture expert, Rudie Heyneke, explained the nuts and bolts of the deal that landed Molefe and his co-accused in court. 

• In order to purchase the locomotives, Transnet secured a $2.5 billion loan facility from the China Development Bank, the so-called CDB loan.
• The 2015 loan, of which $1.5 billion was drawn down, formed part of the financing for the purchase of the locomotives, of which some were purchased from the China state-owned CRRC locomotive manufacturer.
• The balance of $1 billion was financed through a so-called “club loan” in South Africa. 
• JP Morgan was replaced by Trillian as the lead arranger and for that an additional R93m was paid by Transnet to Trillian. 

Molefe and Singh ‘ignored’ advice of treasurer

“In August 2020, Outa submitted a detailed Section 27 referral to the Investigating Directorate on how the Transnet executives ignored the advice of the former Transnet treasurer, Eveline Makgatho, that a loan from the China Development Bank [CDB] would be too expensive and that financing for the acquisition of locomotives from the Chinese OEM’s can be financed at lower rates and fees,” Heyneke said. 

Makgatho reportedly also warned Molefe and Singh that the CDB loan as it stood could be classified as a PFMA violation. 

Money flows in Transnet locomotives deal tracked

Outa tracked the money flows and submitted this information to the NPA’s IDAC in the form of an affidavit with annexures.

The affidavit also outlined suspected criminal acts relating to this loan, involving Transnet officials and Gupta associates who arranged this loan at higher than market-rate interest rates, allegedly taking a pay-off of R189.24 million for themselves as “success” fee. 

“Our submission was based on documents, including some retrieved from the #GuptaLeaks, from various datasets submitted to Outa, whistleblower reports, Transnet-related documents submitted to the Commission of Inquiry into State Capture, and the Companies and Intellectual Property Commission database,” Heyneke revealed.

“The affidavit explained how payments were taken for “facilitating” the CDB loan, with people with no business with Transnet receiving funds through an established and sophisticated money laundering network.”

Molefe off the hook for ‘Eskom capture’

Molefe has also been accused of having aided an alleged capture of Eskom by the Gupta family during the reign of former president Jacob Zuma.

According to Corruption Watch, he was central to the booting out of Glencore-owned Optimum Coal Mine in favour of Gupta-owned Tegeta.

In June this year, Corruption Watch however filed a notice of withdrawal of their offensive against Molefe to be declared a delinquent director for the alleged wrongdoings he committed during his time at the helm of the national power utility.