Gupta ally used ‘fake Nene letter’ for loan
The deal was linked to funding of Transnet’s multibillion-rand locomotive procurement
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Gupta-linked business associates wrote and peddled a letter in the name of former finance minister Nhlanhla Nene — who has called it a "fake/fabrication" — relating to the funding of Transnet’s multibillion-rand locomotive procurement.
The letter was found among hundreds of thousands of leaked Gupta e-mails. Written in Nene’s name, it was addressed to China Development Bank board chairman Hu Huaibang, in January 2015.
In June 2015, Transnet’s CEO Siyabonga Gama, who was then acting CEO, announced at a World Economic Forum media conference that the bank had agreed to provide Transnet with a R30bn loan facility.
The facility was close to the amount paid to Chinese companies that won the greater part of the tender, China South Rail and North China Rail.
The e-mail’s metadata show that the letter was actually written by Tewodros Gebreselasie, a senior economic adviser with Regiments Capital.
Regiments is an investment company that was involved in the now controversial Transnet locomotive procurement project, which was worth more than R50bn.
The Guptas are reported to have received more than R5bn in alleged kickbacks from China South Rail, which was awarded the bulk of the contract.
In response to queries, Nene said the letter was "clearly a fake/fabrication and could not have come from my office".
He was baffled how this letter had ended up in the in-tray of Gupta associates, Nene said.
"It’s worrisome. I do not understand it. It says a great deal about confidentiality, especially between the department and state-owned entities.
Read the full letter that Gupta-linked business associates wrote and peddled in the name of former finance minister Nhlanhla Nene:
"It’s worrying as it could implicate [one] as a minister of finance. This is completely unacceptable and the [Treasury] department must apply its mind to this," Nene said.
Gebreselasie, according to the e-mails, then sent the letter to former Transnet chief financial officer, Anoj Singh — now Eskom chief financial officer — on January 20 2015 and copied it to former Regiments director Eric Wood.
Wood had instructed Gebreselasie to write the letter.
The letter ended with Gupta-owned Sahara computers CE Ashu Chawla. Neither Essa nor Chawla responded to requests for comment.
On Monday, Wood said he had acted in the best interests of Transnet, Regiments’ client at the time. Singh had requested him to draft the letter, he said. "It would always be in my interest to get the best deal for the client. Any letters that would have been written to the bank would have been to extract the very best deal, whether it be to lengthen the term of the loan or to reduce the interest rate.
"I would use any influence in my power.… If you put Nene behind this, and say we need a better deal, his name carries clout," he said.
Wood was at pains to emphasise that the letter Gebreselasie wrote and sent to Singh was merely a draft. "It was not signed by anybody. It was supposed to be there as proposed wording as what we would have wanted the minister to send off to the bank to assist us in the negotiations."
The negotiations between the bank and Transnet, which Regiments was involved in, had taken nearly a year to complete, Wood said.
Singh said he did not know which letter was being referred to. "I do not recall this letter.
"There are a number of letters that I would have looked at and there are a number of things I would have done."
Asked if he had requested the letter to lobby the bank to support the project, Singh said: "I was the chief financial officer, what do you expect me to be doing, if not lobbying for financial support from a number of agencies?"
Regiments acted as "transaction advisers" for Transnet, "so they probably would have drafted the letter", Singh said.
"I don’t remember ever dispatching a letter to the minister of finance, requesting any sort of advice or assistance on this matter. If it was, we would have sent a letter to the minister of finance through our chairman requesting his assistance.
"We wouldn’t have signed the letter on his behalf. That would be fraud."
Singh said as far as he could remember, he had not provided Transnet’s board with any letter drafted by Regiments to expedite the financing of the locomotives. "I would have never done that. I have asked CDB [China Development Bank] to come back to me. They still need to come back to me in writing, but they don’t seem to have such a letter on record."
Regiments executive chairman, Litha Nyhonyha, confirmed that the letter was written on Wood’s instructions.
"It appears that the letter was written at the behest of our then client, Transnet.
"We are not privy to its background and rationale. It is not the policy of Regiments to write letters on behalf of ministers," he said.
The letter speaks about promoting China-Africa relations and improving price competitiveness of development funding from China.
"It was in the spirit of this co-operation that Transnet decided to award the bulk of its major locomotive acquisition programme to Chinese suppliers [China North Railways and China South Railways]," it reads. "We would therefore like to urge CDB to reconsider the pricing of this strategic funding transaction as well as other potential funding transactions with South African state-owned companies, like Eskom …"
Nene said what baffled him was how and why this letter
had ended up in the in-tray of Gupta associates."Its worrisome. I do not understand it. It says a great deal about confidentiality especially between the department and state owned entities."