Transnet’s locomotive deal unpacked at Zondo commission

Transnet’s locomotive deal unpacked at Zondo commission

Transnet's Acting Manager: Governance, Risk and Compliance Helen Walsh is pictured at the Commission of Inquiry into State Capture in Johannesburg, 10 July 2019. Picture: Refilwe Modise

The Gupta family is alleged to have secured billions of rands in kickbacks after the deals were awarded.

After having paid billions in questionable transactions, some of which related to the acquisition of locomotives – state-owned enterprise (SOE) Transnet still owes several millions to service providers, the Commission of Inquiry into State Capture heard yesterday.

In her testimony before Deputy Chief Justice Raymond Zondo, the SOE’s acting governance, risk and compliance manager, Helen Walsh, revealed that Transnet paid a staggering R42.5 billion on acquiring 1,259 new locomotives, meant to upgrade the SOE’s ageing locomotives fleet. This was R3.9 billion more than was originally budgeted for.

But more worrying is that Transnet still owes money to service providers.

According to Walsh, while Transnet was bound to honour payments to external companies, these have not yet been quantified.

Breaking down the Transnet purchase of locomotives, Walsh said the SOE had contracts for 95 locomotives, another for 100 and the third for 1,064, which boosted the spend to over R40 billion over the past five years.

These went to the purchasing of trains, transaction advisory services and relocation costs of suppliers – benefitting Gupta-linked companies.

Under Brian Molefe and Siyabonga Gama’s leadership, Transnet is said to have disregarded policies and laws like the Public Finance Management Act, and inflated costs when awarding the multibillion-rand contracts to build and deliver 95 and 100 locomotives to China South Rail (CSR) and China North Rail (CNR).

The Gupta family is alleged to have secured billions of rands in kickbacks after the deals were awarded.

In terms of the breakdown of transactions relating to locomotive purchases, Transnet paid:

  • R306 million in the 2013 financial year;
  • R13 million in 2014; R1.9 billion in 2015;
  • R786 million in 2016;
  • R239 million in 2017;
  • R156 million in 2018 and R2 million in 2019 – totalling an amount of R3.4 billion.
  • R3bn to CSR in 2015;
  • R1.9bn in 2016;
  • R58m in 2017;
  • R152m in 2018, and R4m in 2019.

The total spend on CSR for the deal was about R5.1 billion.

Transnet contracted four suppliers in its procurement of 1,064 locomotives. They were General Electric, CSR, CNR and Bombardier.

brians@citizen.co.za

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