Geoffrey York in South Africa
Government to investigate Bombardier deal
Parliamentary committee will probe purchase of 1,000 locomotives from four firms, including the Montreal-based train maker
South Africa’s Parliament is planning to investigate a controversial locomotive deal that provided $1.2-billion (U.S.) in revenue for Bombardier Inc.
A parliamentary committee will probe a state-owned freight company, Transnet, and its decision to purchase more than 1,000 locomotives from four companies, including Bombardier, in 2014.
South Africa’s government wants the investigation to focus on whether the suppliers provided the local content that they had promised, but opposition MPs plan to expand the probe to include the question of whether the price was inflated by corruption.
The Canadian government’s export agency, Export Development Canada (EDC), supplied $450-million in financing for Bombardier’s share of the locomotive deal.
A spokesman for EDC said the agency is monitoring the South African developments.
“Our understanding at this time is that EDC is not relevant to the committee’s work,” spokesman Phil Taylor told The Globe and Mail.
“However, we are monitoring the current developments and working with our team in South Africa to better understand the context of this still-evolving situation.”
A spokesman for Bombardier, contacted by The Globe, had not responded by Friday afternoon.
South African media reports, citing leaked e-mails, have alleged that Tequesta Group, a company with links to the Gupta family – close allies of President Jacob Zuma’s family – received about $320-million in “consulting” fees from a Chinese rail manufacturer that supplied 359 locomotives for the Transnet purchase in 2014.
Bombardier was awarded a contract for 240 locomotives as part of the same announcement.
The parliamentary inquiry is expected to probe all of the estimated $4.6-billion in contracts for a total of 1,064 locomotives in the 2014 announcement, including the Chinese contract and the Bombardier contract.
“The Democratic Alliance [DA] will fight hard to ensure that the veil of secrecy around these contracts is finally lifted and those that have stolen money are held accountable,” DA parliamentarian Dean Macpherson said in a statement on Friday.
“We know that state-owned enterprises like Transnet have become ground zero for the Guptas to rob and loot South Africa of its resources,” said Mr. Macpherson, the DA critic for trade and industry.
“It simply cannot be that Transnet is allowed to get away with protecting one family at the expense of good governance and fighting corruption. That’s why only a committee inquiry can finally get to the bottom of this mess.”
An earlier investigation by the Public Protector, the South African ombudsman, uncovered a close relationship between the Gupta family and Brian Molefe, the man who was Transnet’s chief executive officer at the time of the locomotive contracts in 2014.
Transnet announced in July that it had hired a law firm, Werksmans Attorneys, to investigate the allegations of corruption and inflated prices in the 2014 locomotive purchase decision.
But a parliamentary inquiry would be more transparent and would allow a greater role for opposition MPs to ask questions. It could also force witnesses to appear before the committee.
The Globe revealed last month that Bombardier had sold a $52million luxury corporate jet to a company owned by the Guptas, with EDC providing $41-million in financing for the deal. The jet deal was approved in December, 2014.
The relationship between the Guptas and Mr. Zuma has been at the heart of alleged corruption scandals that have rocked South Africa for the past several years.
Reports and investigations have said that the Guptas are so influential that they even controlled the appointment of some of Mr. Zuma’s cabinet ministers.
The Guptas are alleged to have stacked the top levels of Transnet and other state-owned companies to ensure that their businesses are able to get a lucrative slice of their contracts.
Export Development Canada supplied $450-million (U.S.) in financing for Bombardier’s share of the locomotive deal with South African state-owned freight company Transnet. A spokesman for EDC says the federal agency is monitoring developments.