Chinese hands in Gupta loco deal rip-off
Publish date: 01 June 2020
Issue Number: 875
Diary: IBA Legalbrief Africa
Category: State capture
The involvement of Chinese players in the great rip-off of SA taxpayers to the huge benefit of the Guptas is revealed in the latest investigation by amaBhungane. In two forensically-detailed reports the Chinese hand in kickback contracts worth R9bn paid or pledged to the Guptas and their associates is revealed. The pages of a sheaf of paper detailing offshore banking data tell the story of how Transnet’s ambitious plan a decade ago to renew its locomotive fleet was repurposed to extract loot systematically and on an unprecedented scale. Eight kickback agreements, most made public for the first time, and an analysis of the bank data show that by late 2016, Gupta front companies had received at least R3.7bn, two fifths of the promised R9bn. After 2016, notes amaBhungane, the bank data goes dark. The kickbacks were paid by two locomotive manufacturers now merged to form CRRC Corporation, the Beijing-based conglomerate that boasts of being the world’s largest supplier of rail equipment. But the money came from ordinary South Africans via Transnet. It followed a simple formula: whatever Transnet paid the CRRC companies, they paid the Guptas a cut of, usually 21%. The Gupta-CRRC heist spans distinct Transnet orders for 95, 100, 359 and 232 locomotives, plus relocation and maintenance add-ons, with an aggregate value of about R42bn – what amaBhungane describes as a twisted monument to the extent of their capture of the rail utility and the collusion of its executives, board members and politicians. The kickback agreements reveal the complicity of CRRC officials at the highest level. This, suggests the report, does China no favours as it battles to establish itself as a champion of the developing world and to overcome the perception its firms bribe more readily than their Western counterparts. CRRC and the Guptas have greeted the revelations with silence. CRRC is listed in Hong Kong and Shanghai but the Chinese state is its controlling shareholder, notes the report.
