Transnet Recoups R618m Amidst Broader Anti-Corruption Efforts

The South African state-owned enterprise, Transnet, has embarked on a vigilant crusade to rectify past financial misappropriations linked to state capture incidents. In a recent victory for accountability, Transnet has successfully retrieved R618 million from CRRC E-Loco Supply, a Chinese rail firm implicated in controversial dealings.

The refund represents a substantial 10% advance payment made by Transnet as part of the significant R6.18-billion maintenance contract awarded in 2016. CRRC E-Loco, created from the merger of China South Rail (CSR) and China North Rail (CNR), was tasked to maintain a fleet of locomotives, including the contentious 1064 locomotive package.

Enigmatic circumstances surrounded the initial payment to CRRC E-Loco, with reports that funds were transferred even before the ink had dried on the official contract. Although Transnet acknowledges that the payment followed a signed award letter, it remains tight-lipped on whether the contract's official signing preceded the transaction.

The retrieval of the R618-million prepayment did not necessitate the strenuous process of court filings, as CRRC E-Loco cooperated with the request. Ongoing negotiations could see further settlements, including the recovery of the VAT portion and discussions around the potential cancellation of the R6.18-billion maintenance agreement.

On a broader scale, Transnet is setting its sights on other locomotive providers – CRRC, Bombardier, and General Electric, as substantiated by Popo Molefe, Chairman of Transnet. Molefe elucidated the necessity for the suppliers to justify their entitlements, with Transnet resolute in offsetting undue enrichments from the total contract values.

However, the scope of questionable financial activities extends beyond locomotive dealings. Consulting giant McKinsey, alongside its South African partner Regiments Capital, epitomizes yet another facet of the malpractice Transnet is confronting. Between 2013 and 2017, these entities pocketed approximately R1.94 billion in consultancy fees. Investigations led by amaBhungane, however, suggest that a substantial share of these fees was allegedly pre-destined for the infamous Gupta family and their associate Salim Essa, under the guise of 'business development fees.'

Niven Pillay, former director of Regiments, had initially denied awareness of such underhand payments, only to later confess his cognizance and active participation dating back to 2012. As a consequence, legal demands have been served on Regiments to recuperate around R150 million in relation to a certain transaction with China Development Bank. Dialogue with Regiments and McKinsey remains ongoing as Transnet seeks recompense for the financial discrepancies.

Popo Molefe shared a gloomy recounting of the state he found Transnet in upon assuming his role in 2018. His depiction of a hijacked entity, exploited by state capturers for personal gain, underscores the gravity of the situation. Amid this backdrop, Transnet’s recent efforts to reclaim embezzled funds and re-establish probity signify a determined stride towards eradicating corruption.