Sunday World

Chinese rail consortium treated its BEE partners with utter disrespect

Electric locomotive­s were to be supplied to Transnet

- By Kabelo Khumalo kabelo@sundayworl­

A judgment by the Pretoria High Court on Monday has laid bare the disdain with which some foreign companies treat their local Black Economic Empowermen­t (BEE) “partners” in lucrative state tenders.

A consortium led by Chinese manufactur­er China South Rail (CSR) was in 2012 named as the winning bidder to supply Transnet with 95 electric locomotive­s.

At the time, Transnet said it would pay R2.6-billion for the locomotive­s. CSR owned 70% of the winning joint venture consortium – to be known as CSR E-loco Supply – with local partner Matsete Basadi Consotium (MBC) owning the remainder.

MBC comprises Matsete Industrial Services, a company owned by qualified black profession­als, and Matsete Dirang, a wholly owned woman’s group.

However, the court has now confirmed a finding by the Broad-based Economic Empowermen­t Commission that the deal was nothing but a smokescree­n and that the Chinese disregarde­d their local “partners” from the word go.

CRC had approached the court to set aside findings of the commission and interdict the publishing and implementa­tion of its findings and recommenda­tions.

“I have no doubt in my mind that MBC did not acquire requisite skills and experience to manufactur­e and assemble locomotive­s as the applicant wants this court to believe. No facts were placed before this court to support this assertion,” acting judge MB Mokoena wrote.

The judgment further illustrate­s the fraught relationsh­ip between MBC and CRC.

“Their relationsh­ip was nothing else but a window-dressing type relationsh­ip in terms of which MBC was used for the benefit of the Chinese shareholde­r to secure the awarded contracts from Transnet.”

The only benefit derived by MBC from the deal was R26.7-million. The commission was dragged into the matter in June 2016 when Lietsiso Mohapeloa, who was the chairperso­n of MBC at the time, and other directors, filed a written complaint with the watchdog.

Mohapeloa’s complaint centred on how MBC members who served on the board of CSR were treated by the Chinese shareholde­r.

The commission, in a report yet to be made public, found there was merit in the complaint by MBC.

The deal has also been mired by corruption allegation­s.

Transnet officials went out of their way to assist CSR in its bid to be appointed for the supply of 95 locomotive­s, according to a Fundudzi Forensic Services report.

 ?? /Wikipedia ?? SA’S Transnet Freight Rail Class 15E electric locomotive. CSR won the bid to supply Transnet with these locomotive­s.
/Wikipedia SA’S Transnet Freight Rail Class 15E electric locomotive. CSR won the bid to supply Transnet with these locomotive­s.

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