Parliamentary inquiry into Transnet Chinese locomotive deal gains momentum

24 October 2017

The Democratic Alliance (DA) welcomes the adoption of a document by the Portfolio Committee on Trade and Industry outlining the scope and focus of the planned inquiry into the local procurement component of the Chinese sourced Transnet locomotives.

The inquiry follows shocking revelations that China South Rail (CSR) used a Gupta front company, Tequesta Group Ltd, for ‘advisory services’ to help secure a deal to supply 359 of the 1064 locomotives tendered for by Transnet.

Details of the deal indicate that, for each R50 million spent by Transnet on the locomotives, R10 million was paid to Tequesta as an ‘advisory fee’. It is also clear, through “Gupta-Leak emails”, that the family may have scored nearly R6 billion worth of ‘fees’ without a single locomotive being built in South Africa. Incredibly, there we no penalty clauses for failure to meet local procurement requirements.

This seems highly suspicious and an attempt to allow CSR to abscond from their local content requirements as required by government policy.

The Transnet locomotive deal has all the hall marks of the infamous ‘Arms Deal’ which saw South Africa spend billions, with little benefit to South African manufactures as was required.

In truth, the CSR contract is one example of the monumental rip off for South African taxpayers by seemingly unethical corporations. The DA believes this type of failure to implement localisation is severely hindering our manufacturing sector and preventing it from growing, therefore affecting overall economic growth.

Parliament has been presented with an opportunity to get at the bottom of why State-Owned Entities and Government Departments allowed hundreds of billions to be spent while local content requirements were ignored every step of the way.

Make no mistake, the DA will ensure that the spot light of accountability is shone brightly on what potentially could be termed ’The Great South African Rip Off’. We want manufactures to benefit from government spending but this can only happen if hold governments’ feet to the fire and ensure they support local business.

Issued by Dean Macpherson, DA Shadow Minister of Trade and Industry, 24 October 2017