Transnet arrests 7 years after the crime: better late than never
Seven years after Trillian boss and Regiment’s shareholder Eric Wood received an e-mail** from ‘Gupta fixer’ and sole director of Albatime, Kuben Moodley, to outline a deal that cost South African taxpayers a whopping R189.2 million, the pair will today appear in the Palm Ridge court alongside former Transnet executives Brian Molefe (former CEO) and Anoj Singh (former CFO). Molefe and Singh were arrested this morning together with former Regiments executive director, Niven Pillay, and former Regiments CEO, Litha Nyhonyha.
The suspects will be joining Moodley, Wood, Transnet’s former acting CFO Garry Pita and former treasurer Phetolo Ramosebudi as well as Trillian co-founder Daniel Roy in the dock on charges of fraud and corruption relating to Transnet’s procurement of 1 064 freight locomotives.
OUTA welcomes the arrests and says Molefe and Singh has a lot to account for when it comes to the billions South Africa lost as a result of state capture. “They were not only involved in state capture at Transnet, but also later at Eskom, the state’s crippled power utility. We are also happy to see that OUTA’s referrals and submissions on state capture to the law-enforcement agencies contributes to the arrest of state capturers,” said OUTA’s CEO, Wayne Duvenage.
Rudie Heyneke, OUTA’s state capture expert, explains the deal that landed Molefe and Singh in court today.
“In order to purchase the locomotives, Transnet secured a $2.5 billion loan facility from the China Development Bank, the so-called CDB loan.” The 2015 loan, of which $1.5 billion was drawn down, formed part of the financing for the purchase of the locomotives, of which some were purchased from the China state-owned CRRC locomotive manufacturer.
The balance of $1 billion was financed through a so-called “club loan” in South Africa. JP Morgan was replaced by Trillian as the lead arranger and for that an additional R93m was paid by Transnet to Trillian. “The original accused (Gama, Pita, Ramosebudi, Wood, Moodley and Roy) appeared previously for irregularities on this transaction. The NPA has now also charged Molefe, Singh, Pillay and Nyhonyha for irregularities regarding the CDB loan.”
In August 2020 OUTA submitted a detailed Section 27 referral to the Investigating Directorate on how the Transnet Executives ignored the advice of the former Transnet Treasurer, Eveline Makgatho, that a loan from the China Development Bank would be too expensive and that financing for the acquisition of locomotives from the Chinese OEM’s can be financed at lower rates and fees.
Makgatho also warned Molefe and Singh that the CDB loan as it stood could be classified as a PFMA violation.
OUTA tracked the money flows and gave this information to the Investigating Directorate in the form of a lengthy affidavit with annexures. OUTA’s affidavit, written by Heyneke, was a detailed report and evidence on the planning, negotiation phase, conclusion, the commissions that were paid and how they money siphoned off was laundered. It also outlined suspected criminal acts relating to this loan, involving Transnet officials and Gupta associates who arranged this loan at higher than market-rate interest rates, taking a pay-off of R189.240 million for themselves as “success” fee.
“Our submission was based on documents including some retrieved from the #GuptaLeaks, from various datasets submitted to OUTA, whistleblower reports, Transnet-related documents submitted to the Commission of Inquiry into State Capture, and the Companies and Intellectual Property Commission database,” says Heyneke. The affidavit explained how payments were taken for “facilitating” the CDB loan, with people with no business with Transnet receiving funds through an established and sophisticated money laundering network.
OUTA’s submission had recommended prosecuting at least 17 people, including all nine now arrested, as well as Atul Gupta, his wife Chetali (both were directors of Sahara computers at the time, with Sahara receiving kickbacks from Kuben’s company Albatime) and Salim Essa who received R20m and were involved with the planning and execution of the kickbacks.
OUTA's statement on our submission to the NPA in August 2020, which included noting the intervention of Jacob Zuma in securing the CDB loan, is here.
Heyneke’s affidavit from August 2020 is here, however we have not made the annexures public.
Here's the invoice for R93.48 million which Trillian Asset Management submitted to Transnet on 18 November 2015, as "lead arranger" of the R12 billion Club loan facility for Transnet: invoice.
The invoice from Albatime to Regiments for R141m “success fee” on the CDB loan is here
Read more on Kuben Moodley’s role in state capture here.
On 16 June 2015, Kuben Moodley wrote to Eric Wood:
"Eric, I went through our contract last night and the following was agreed, as per splits:
50/5, 40/4,5, 30/3,5, 20/2,5 and 5/1 percent to Albatime. So as per agreement, Albatime should receive 3 percent of 166.
Eric Wood replied:
Accept, a deal is a deal
Email between Moodley and Wood is here
In December 2014 former President Zuma led a South African delegation of 17 ministers and about 300 business executives on an official state visit to the People's Republic of China. Brian Molefe accompanied the former president on this state visit and in a media statement dated 4 December 2014, Transnet announced that a historic Memorandum of Understanding was signed with the Chinese locomotive manufacturer CRS, to facilitate trade between China and South Africa. (Also see photograph attached)
The significance of this visit and the role that former President Zuma played in the financing received by Transnet from CDB will be discussed below.
Although there were cheaper funding options available for Transnet to fund the acquisition of the Chinese manufactured locomotives (as stated by Ms Makgatho), Brian Molefe, Anoj Singh and Eric Wood did everything in their power and were determined to obtain funding specifically from CDB.
Singh also reminded an CDB official Mr Guan Lian that Transnet had alternative options, but because of Transnet's commitment to the Chinese and South African governments and the BRICS leaders, Transnet remained steadfast in fulfilling its commitments. Singh made it clear that the meeting between former President Zuma and the Chairman of CDB addressed the cost of funding from CDB and paved the way for renegotiations. He mentioned that Transnet's GCE, Brain Molefe was also present at that meeting.
On 17 April 2015, former minister of Public Enterprises Lynne Brown announced that Brian Molefe was seconded to Eskom with immediate effect. The signing of the mandate letter provided by CDB with their exorbitant fee structure would be Molefe's last act as the Group Chief Executive of Transnet.
Notwithstanding the agreement between Transnet and CDB only being concluded and signed on 4 June 2015, Regiments already delivered an invoice (Inv No: TRXFR00001) to Transnet on 3 June 2015, for a success contingency fee on their work towards the CDB loan, totalling R189,2 million, including VAT.
On 12 June 2015 Transnet issued a remittance to Regiments that shows payment in the amount of R189,2 million.
On 22 June 2015, a payment was made from Regiments to Albatime in the amount of R5,677,200.00. This payment is exactly 3% of the R189,240,000.00 received from Transnet and confirmed the “splits” between Kuben Moodley and Eric Wood (see the email attached to the statement and mentioned above).
Further investigations into this payment from Transnet to Regiments shows that another R141,9 million was paid to Albatime and ultimately ended up in the bank accounts of several Gupta and Essa related companies.
CAUGHT ON CAMERA IN CHINA:
Eric Wood, Anoj Singh, Phetolo Ramosebudi with two other representatives of JP Morgan and Regiments while in China negotiating the CDB loan. Picture is here (Source: The Gupta Leaks)
Comment by Rudie Hyneke is here
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