Transnet Hires Law Firm Werksmans to Help With Corruption Probe

  • Investigation to look at locomotive pricing, processes
  • Port, freight-rail operator reported 2.8 billion-rand profit

South African port and freight-rail operator Transnet SOC Ltd. has hired Werksmans Attorneys to help its board probe allegations of corruption linked to a 2014 program to buy more than 1,000 locomotives.

The investigation will include a review of whether the state-owned company was overcharged for locomotives, whether the firm followed its own procedures and examine comparable pricing, Chief Executive Officer Siyabonga Gama told reporters Monday. The process will take about three months, he said.

The amaBhungane Centre for Investigative Journalism and Scorpio, the Daily Maverick news website’s investigative unit, reported last month that the Gupta family, who are friends with President Jacob Zuma and in business with his son, entered into 5.3 billion rand ($402 million) of kickback agreements with a unit of China South Rail, which was selected to supply 359 of Transnet’s 1,064 new locomotives. The story cited leaked emails. Bloomberg hasn’t been able to independently verify the information and a spokesman for the Guptas didn’t respond to questions at the time.

The report formed part of a broader series of stories based on the emails leaked to local news media, as well as reports by the country’s main church organization and a team of eight academics placing Zuma and the Guptas at the center of an orchestrated effort to raid state assets.

Read: ‘Gupta Leaks’ Emails to Show Family’s South Africa Influence

The bidders that won the locomotive orders, which also included General Electric Co. and Canada’s Bombardier Inc., offered the lowest prices, Gama said in an interview after presenting Transnet’s annual financial results. The Johannesburg-based company wouldn’t be privy to any agreements between its suppliers and third parties, he said.

“But because there’s been these ongoing allegations, as soon as the board saw this they said ‘let’s probe it, let’s see if our processes are correct,’" Gama said.

Transnet reported a six-fold increase in annual profit to 2.8 billion rand and said rail volumes gained 2.3 percent from a year earlier, boosted by a rise in general freight activity.

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