Cosatu investment arm ‘benefited from Transnet’s tainted locomotives deal’
Cadiz Corporate Solutions executive Roberto Gonsalves tells state capture inquiry how the CNR Consortium was paid millions in relocation costs
Cosatu’s investment arm, Kopano Ke Matla got a share from a fraudulent R657m windfall that Transnet paid to China North Rail (CNR) consortium to manufacture some locomotives for the utility.
Kopano Ke Matla, Makana Investment Corporation and Linotando Investment each held a 20% stake at CNR Consortium, while Global Railway Africa and Cadiz Corporate Solutions each held 10%, Azon Rail 13.33% and 6.67% for Mmpumelelo Julius Nobande.
Cadiz Corporate Solutions executive Roberto Gonsalves, testifying before the commission of inquiry into state capture on Thursday, explained how the consortium was paid millions in relocation costs, which it was not entitled to, by Transnet.
The consortium had entered into an agreement with Transnet on March 17 2014, for the supply of 232 of the 465 diesel locomotives, at a contract price of R42m per locomotive. The total cost added up to R9.7bn.
Transnet paid the consortium R657.18m in relocation costs, according to a report by Fundudzi Forensic Services, which was commissioned by the Treasury to investigate various allegations at Transnet and Eskom.
Gonsalves confirmed the consortium had absolutely nothing to relocate.
The report also found that Bombadier, which had been awarded a contract to manufacture the remainder (233) of the diesel locomotives, was paid R618.46m in relocation costs.
Gonsalves told the commission, chaired by deputy chief justice Raymond Zondo, that their preference was to manufacture the locomotives at Pretoria’s industrial area of Koedoespoort.
Led in his evidence by advocate Phillip Mokoena, Gonsalves stated that about 10 days before the consortium submitted its final tender documents, a request from Transnet came through that the project be moved from Pretoria to Durban.
“We changed our prices accordingly, which added up to R9.7bn, in our final documents,” he stated. “There was nothing to relocate when we were told that the delivery point must be changed from Pretoria to Durban,” said Gonsalves.
“In my opinion, I don’t think we were entitled to the relocation costs. It’s not like there was this big crane that needed to be moved [to Durban],” he told Business Day on the sidelines of the commission.
The Treasury report identified axed Transnet group CEO Siyabonga Gama as the official who signed the variation order for the relocation of Bombardier and CNR Consortium, and it stated that the R1.2bn in relocation costs was paid from the contingency fees.
As of March 19 2018, Transnet had paid CNR Consortium R2.1bn, representing 21.47% of the total contract price, while the consortium had only delivered 21 locomotives of the 232 allocated.
The consortium was paid an advance payment of R1.5bn, representing 15% of the total contract price as per the locomotives supply agreement.
When asked for a comment on Thursday, Cosatu general secretary Bheki Ntshalintshali said Kopano Ke Matla and the labour federation were two separate entities.
“Kopano Ke Matla has its own board and a trust. We wouldn’t know its day to day operations or whether the consortium received the money illegally or not,” he said.
In 2012, City Press reported how Kopano Ke Matla benefited from the Gauteng Freeway Improvement Project, which introduced e-tolls, through its 3% shareholding of Raubex.
Raubex received R800m from the project, the paper reported, adding that Kopano Ke Matla would have received R24m as a result.
Cosatu has been calling for a total ban of e-tolls for a number of years.