McKinsey is named 152 times in Zondo report on corrupt locomotive deal

Based the second report of the State Capture Inquiry it is clear that Transnet’s deals to buy locomotives in the past decade were rotten to the core.

The report describes in great detail, how the rail company paid R60 billion for deals that unfairly favoured a Chinese manufacturer, while kickbacks worth billions went to Gupta-connected companies.

In the interim, the inquiry is scathing about the involvement of US consultancy giant McKinsey – an advisor on the biggest locomotive deal – which is named 152 times in the report!

The report found that former Transnet CEO Brian Molefe, former CFO Anoj Singh, the Gupta lieutenant Salim Essa and the Trillian and Regiments boss Eric Wood should face multiple police investigations and possible corruption and racketeering charges in terms of the Prevention of Organised Crime Act.

Zondo says former public enterprises minister Malusi Gigaba’s testimony should not be believed and Molefe’s denials are not credible. The Transnet stream of inquiry covered the period between 2009 and 2018. The report finds that the commission established capture at the transport utility, around the purchase of three sets of locomotives bought in packs of 95, 100 and 1,064. 

The commission found billions of rands in kickbacks were paid from China to Essa’s and Gupta-linked companies. Essa’s company Tequesta, for instance, was found to have received R2.8-billion, while the report found that Transnet’s expansion of its manganese ore line was tainted by corruption.  

The evidence provides reasonable grounds to suspect corruption in that Mr Essa and Mr Singh attempted to make the award of the tender conditional on Hatch’s appointment of their preferred supplier development partners. 

Molefe and Singh used their executive power to increase total cost estimates, confine contracts to their preferred bidders, increase the scope of dodgy contracts and override local content and BEE requirements. Molefe, the commission said, should be investigated and possibly prosecuted in terms of the Public Finance Management Act for a R3-billion advance payment illegally made to CSR.

Zondo recommends the police should investigate cash payments made to Molefe and Singh at the Three Rivers Lodge in Vereeniging in July 2014. The report also recommended that the R17-million severance payment approved for former acting Transnet CEO Siyabonga Gama be reclaimed from the then Transnet board. The Transnet negotiating team should face possible corruption charges in connection with the 1,064 locomotive deal for not acting in the transport company’s best interests.

It seems, however, that everybody is missing the “elephant in the room” . That is the fact that the ANC cannot survive without the proceeds of these obvious crimes filtering back to them via their front people. Now that the money is drying up they are unable to pay salaries and are in hock to SARS for unpaid PAYE deductions et al. The ANC must be held responsible for the mess they have got the country into, or better, the sooner they are voted out the sooner the brooms and handcuffs can come out without fear or favour.

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