The amaBhungane centre for investigative journalism has brought new evidence to light indicating that the Guptas made around R122 million from a loan of R1.5 billion that the Chinese Development Bank (CDB) gave Transnet for the purchase of new locomotives.
Transnet declined the initial offer from CDB of a loan of R2.5 billion.
It is alleged that after pressure from CDB backers including Regiments Capital, Transnet’s financial advisors, with links to the controversial Gupta family and after Phetolo Ramosebudi, a new treasurer close to Regiments Capital, was appointed to the state-owned rail company, the deal was signed – albeit at a reduced rate.
It was then that those looking after the Gupta’s interests stepped in, piggybacking on the deal to the tune of R122 million in “success fees”.
Whether or not CDB had knowledge of how the Gupta’s benefited from the deal is unclear. According to Fin24 the bank has refused to answer questions on state capture.
It has been reported that the R166 million “success fee” paid to Regiments ended up in bank accounts belonging to Gupta-owned Sahara Computers, allegedly through bogus IT contracts for services never provided.
The CDB loan allowed Transnet to buy 1064 Chinese locomotives in a deal widely considered to be controversial and which allegedly involved kickbacks from China South Rail (CSR).
Finance minister Nhlanhla Nene, who was also in the position at the time, apparently put the breaks on the deal.
After the initial loan was rejected for being too pricey, Regiments requested that Nene “urge CDB to re-consider the pricing of this strategic funding transaction” in the “spirit of partnership and cooperation envisioned by the leaders of our Great Nations.”
Nene, however, responded that it was “imperative that we allow the consultative process to be concluded and if at some point there is a need for a government to government discussion I am confident that such a discussion will be initiated”.
This could have spelt the end for the deal, but when treasurer Mathane Makgatho resigned after over a decade at Transnet, reportedly saying: “I arrived here with integrity, and I will leave with my integrity intact,” her replacement Phetolo Ramosebudi, who is associated with Regiments, moved quickly to reopen the negotiations that led to the deal being signed.
The new evidence shows how the Guptas benefited from each stage of Transnet’s procurement process, including the controversial alleged kickbacks from CSR.
As well as Regiments and the Guptas alleged looting of Transnet, there is the issue of the loan itself provided by CDB, which is reportedly massively overpriced and will take until 2030 to repay.
This has led to some opposition politicians questioning President Cyril Ramaphosa’s willingness to continue accepting Chinese loans. CDB recently offered to bail out Eskom to the tune of R2.5 billion.