Ge­of­frey York in South Africa

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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.

JENS SCH­NEI­DER

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.

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