Deutsche Telekom linked to Gupta scandal

The German media is reporting that the Public Prosecutor’s office in Frankfurt is investigating allegations against T-Systems, a subsidiary of the partly state-owned Deutsche Telekom, in connection with Gupta-linked state capture allegations. If the allegations are substantiated, it will be the second time a company partly owned by foreign government has found itself caught up in state capture in SA after Chinese Railway Rolling Stock Corporation was found by the SA Revenue Service to have overstated the price of its locomotives sold to Transnet. According to Welt am Sonntag, the Frankfurt prosecutor’s office confirmed that it is conducting an investigation into T-Systems following a criminal complaint made by Paul Holden, co-head of Shadow World Investigations, which made detailed submissions to the Zondo Commission. The Daily Maverick reports that the announcement of the investigation will be a major embarrassment not only to T-Systems, which always claimed it was co-operating with the state-capture investigation, but also the German Government, which is part-owner of T-System’s parent, Deutsche Telekom. T-Systems said it did not yet have any knowledge of the investigations, and that it did not tolerate violations of the law. The company said it had co-operated with the state capture investigators, and that ‘certain business relationships have been terminated and reversed and that the subsidiary in SA was sold in 2020’.

Cast Products SA, an engineering company that is majority-owned by the Industrial Development Corporation, was forced out of a share of Transnet’s R54bn tender after the specifications were tailored to benefit a Gupta-linked entity. The Sunday Times reports that now almost 10 years later the company is in business rescue. A Cast Products spokesperson stated last week that it had invested money to position itself to benefit from the Transnet capital investment programme, though came away empty-handed. The spokesperson provided no details of the investment only describing it as a ‘small part’ of its overall operations. They added that the company, ‘has been experiencing severe financial problems over the past four years and has been unprofitable for a very long time’. However, a company insider stated that Cast Products had invested millions into a new plant with the expectation of winning a share of the contracts. Despite the investment, it lost after the specifications of the contract were tailored to suit Gupta-linked company VR Laser.