OUTA has focused on investigating the kickbacks which Transnet paid the Guptas and their cronies through these contracts to produce locomotives, and tracking the money flows showing where this money went. Transnet's 1064 locomotives project was initially supposed to cost R38.6 billion but ultimately increased to R54.5 billion. We believe as much as R9 billion was looted through backhanders paid on these contracts and that the price was increased to accommodate this.

The contracts involved kickbacks paid by Transnet through the Chinese locomotive manufacturers and then laundered by Gupta-lieutenant Salim Essa through his Hong Kong based businesses Tequesta and Regiments Asia. OUTA also looked at the role of the banks, particularly HSBC.

CSR and CNR, the two companies which merged to form CRRC, paid kickbacks to Essa and co to secure their contracts with Transnet.

The hard evidence OUTA obtained from the #GuptaLeaks and from whistleblowers confirmed payments of US$284 million (worth about R3.6 billion at the time, increased to about R4.97 billion by August 2020) to Essa and the Guptas, through the CRRC businesses. These were only the payments made through Hong Kong businesses.

OUTA also found evidence in several contracts where kickbacks of 19% to 21% were agreed on between the Chinese locomotive manufacturers and Essa. Using this percentage and the contract values, OUTA calculates that a total of R9 billion (at August 2020 values) was likely paid in kickbacks by CSR and CNR through their contracts from 2012 to 2014 on Transnet's projects on the 1064 locomotives, the 100 locomotives and the 95 locomotives.

Evidence was produced on about 160 recipients of the original Transnet funds. The majority of the money ended up in companies registered in Hong Kong and China, but funds were also transferred to Angola, the United Arab Emirates, Turkey and India.  Some of the money was used towards the wedding of Ajay Gupta’s son in Istanbul in April 2016.

OUTA is now looking into the finance deals for the Transnet locomotive acquisitions. Evidence obtained show the involvement of Regiments Capital in its role as lead arrangers for the loans and implementing consultants. Trillian Asset management and several foreign and local banks were also involved in these transactions. The interest rate swap transactions between Transnet, the Transnet Second Defined Benefit Fund and Nedbank forms part of this investigation. OUTA found that a similar modus operandi to that used by Essa in Hong Kong was applied these funds, some of them ending up in Hong Kong and other countries.

In May 2019, OUTA made a submission to the State Capture Commission on the Transnet locomotive contracts.

In June 2019, OUTA made a submission to the National Prosecuting Authority (NPA) on the Transnet locomotive contracts.

This submission was made in terms of section 27 of the NPA Act, which allows the reporting on information on specified offences such as organised crime directly to the NPA investigating director through an affidavit.

In October 2019, OUTA made a second submission to the NPA. This focussed on the money flows in these contracts. This included the kickbacks paid by the Chinese locomotive manufacturers and the laundering of these funds by companies based in Hong Kong and run by Gupta lieutenant Salim Essa (Tequesta and Regiments Asia). The role of HSBC bank was highlighted and evidence was produced on about 160 recipients of the original Transnet funds.

After the referrals, OUTA had several meetings with the NPA on this matter.

The matter is currently under investigation by the NPA. OUTA has offered further assistance if it is needed.

During 2019 and 2020, OUTA also provided assistance to reputable international law enforcement agencies on this matter.

OUTA is currently compiling an affidavit on Transnet's finance deals for the locomotive contracts, to submit to the NPA. 

On 4 August 2020, OUTA wrote to the chairman of the board of CRRC, the Chinese state-owned company formed from the amalgamation of the original Chinese locomotive manufacturers. This letter calls on this Chinese SOE to be accountable for its role in these corrupt transactions between Transnet and the Guptas.

The decision by OUTA to write and publish the letter to the executives of CRRC came after it was established that nobody is doing anything to hold this Chinese SOE to account for its role in the corrupt transactions involving Salim Essa and the Guptas. CSR and CNR, the two companies who merged to form CRRC paid kickbacks to Essa and co to secure their contracts with Transnet.

The hard evidence OUTA obtained confirmed payments of R3.6 billion to Essa and the Guptas, through the CRRC businesses.

OUTA also found evidence in several contracts where kickbacks of 19% to 21% were agreed on between the Chinese locomotive manufacturers and Essa. Using this percentage and the contract values, this indicates a total of R9 billion was paid in kickbacks by CSR and CNR through their contracts on Transnet's projects on the locomotive acquisitions from China.

It is therefore urgently important that the South African law enforcement agencies should investigate these transactions which had their origin with the Chinese government-owned locomotive manufacturers.

The letter to CRRC also serves as a warning to this locomotive manufacturers' clients worldwide to be alert and to scrutinise their transactions with CRRC, which is the world's largest supplier of rail transit equipment.  South Africa cannot afford these kinds of corrupt deals with foreign countries and even less so when transacting with other government-owned companies.

A copy of the letter was sent to President Cyril Ramaphosa, to bring to his attention the corrupt dealings between the South African and Chinese state-owned entities.

A copy of the letter is here in Mandarin and here in English.