How corruption landed Transnet with expensive $1.5 billion loan from China

The Guptas managed to siphon off over R100 million from the loan China gave South Africa to bankroll the controversial R32.5-billion deal Transnet entered to buy 591 Chinese locomotives in March 2014, according to the Daily Maverick.

This was part of Transnet’s deal to buy 1,064 locomotives from four international manufacturers. The trains were reported at the time to be too tall for South Africa’s railways.

According to the Daily Maverick’s report, the China Development Bank had agreed to provide $2.5 billion in finance for the deal, but Transnet were reluctant because the deal was in dollars and with the depreciation of the rand factored it was too expensive.

However it had powerful backers, including Regiments Capital.

IOL reports that Regiments Capital is currently being sued by the Transnet Second Defined Benefit Fund, over R230 million that it allegedly unlawfully paid Trillian, Albatime and other companies.

At the time this deal with the CDB was being negotiated, Trillian’s majority shareholder was Salim Essa, a close ally of the Guptas according to Times LIVE.

In February the Sunday Times reported that Regiments had to shut its doors, as it was barred from working with South African parastatals due to its links to the Guptas. This meant that it lost between R200 million and R300 million in group revenue.

Back to the Daily Maverick’s report – Nene wasn’t terribly keen on this loan because it was too expensive, but in 2015 things changed at Transnet, Mathane Makgatho resigned as head of Transnet’s treasury. She reportedly told staff that she was leaving with her integrity intact.

Her departure opened the way for Phetolo Ramosebudi, who was much more open to the loan. According to the OCCRP, Ramosebudi’s brother was a Regiments trader who moved over to Trillian.

Before the month was out then CEO Brian Molefe contacted the CDB and said Transnet was open to renegotiating the loan.

According to News24 Molefe was deeply implicated in the State Capture report. Apparently between August 2015 and March 2016 cellphone records showed between him and the eldest of the Gupta brothers, Ajay.

Apart from giving us the #SaxonwoldShebeen, Molefe is also noted for resigning in tears from his position as Eskom CEO, and then later arguing that he hadn’t actually resigned.

Anyway the CDB weren’t willing to give better terms, but Transnet agreed to rather get a $1.5 billion loan instead.

With the loan signed, Regiments charged a R166 million fee for their role in it. The bulk of this went to Albatime, who then paid the Gupta family’s Sahara computers R124.5 million.

Last year Eskom entered into a loan from the CDP for about R33 million. EWN reports that DA leader Mmusi Maimane has threatened to enter into litigation against President Cyril Ramaphosa if he doesn’t divulge what the terms were.

Last week the Lusaka Times reported that talks were underway in Zambia, where a Chinese company was in talks to take over Zesco – their power utility – due to just how much money Zambia owed China.

Zambia has since refuted the reports according to Xinhau, China’s official state run news wire.

My Take

With all the revelations coming out about state capture, I am left with the following: corruption doesn’t just happen once and the implications can go further than expected.

Now the reports on China taking over Zambian assets may not be true according to Zambia’s government, but they are possible.

And what what is possible in Zambia is possible here. The Chinese are not lending us money out of the goodness of their hearts, they are doing business and I for one respect that.

They aren’t going to hold our hands and make sure we don’t stuff up, if push comes to shove and they have to start seizing assets they will.

So when we have corruption on this scale, where we enter into loans which we know are too expensive basically so that some corrupt figures can get a nice payday – it is a threat to our sovereignty.

China, quite rightly, doesn’t care about us. It is going to want its money with interest.

  • Picture courtesy of Solomon203 via Wikipedia. Okay it isn’t our Transnet, but it is too perfect not to use.
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