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Naming, shaming 7 big companies that SECRETLY shared Transnet billions with Gupta fronts

EDINBURGH — At least seven big companies helped Gupta entities grab huge slices of taxpayers’ funds through Transnet deals. This has been revealed by amaBhungane journalists sifting through the #GuptaLeaks emails, which come from the heart of the Gupta business empire. South African authorities have stood idle, it seems, as evidence washes into the public domain of corruption and financial irregularity on a grand scale. Anti-corruption authorities in the US, Germany and elsewhere where the rule of law is taken more seriously could easily have a feast on some of the biggest corporate brands. Business players who have been caught with their proverbial fingers in the cookie jar include multinationals SAP, McKinsey, T-Systems, Swiss-based Liebherr-International AG and China’s Shanghai Zhenhua Heavy Industries Limited. – Jackie Cameron

By Staff Writer

At least seven big companies have secretly paid millions of rands to Gupta offshore front companies, the amaBhungane investigative journalism unit has revealed.

It has become clear that Transnet, with its annual revenue of more than R60bn, was targeted as ground-zero for Gupta capture, says amaBhungane.

“The #GuptaLeaks have revealed that two more companies that won Transnet tenders paid tens of millions to Gupta offshore fronts.

President Jacob Zuma speaks while standing aboard a train as he attends the launch of a new trans Africa locomotive at the Transnet SOC Ltd. engineering site in Pretoria, South Africa, on Tuesday, April 4, 2017. Photographer: Waldo Swiegers/Bloomberg

“Bank and accounting records show that two heavy equipment manufacturers – Swiss-based Liebherr-International AG and China’s Shanghai Zhenhua Heavy Industries Limited – funnelled nearly R100m to the Guptas, as Transnet awarded them contracts to supply cranes to South African ports.”

There is no specific evidence of Transnet rigging the crane tenders to favour Liebherr and Shanghai Zhenhua, says amaBhungane.

“However, the payments to offshore Gupta fronts and contemporaneous contract awards trace a Transnet tender pattern that is now well known,” point out the journalists.

Liebherr and Shanghai Zhenhua bring to seven the number of large, mostly respected companies, known to have secretly paid Gupta fronts in connection with Transnet contracts.

The role of big companies like business software group SAP and management consultancy McKinsey & Company in South Africa’s worst financial scandal since the dawn of democracy in the early 1990s underscores the hand of big global businesses in corruption in Africa.

So far, the companies named and shamed in investigations into the Gupta state capture scandal – which includes the involvement of the family and associates of President Jacob Zuma – have remained fairly silent on the issue.

Here’s the list of the big companies that secretly shared money from Transnet deals with Gupta front companies:

1. SAP diverts R100m to Gupta front

A sign sits outside the SAP SE office in Budapest, Hungary. Photographer: Akos Stiller/Bloomberg

AmaBhungane and Scorpio has revealed that German software multinational SAP paid R100m to Gupta-linked CAD House. SAP’s international headquarters suspended four South African executives and announced it had hired US law firm Baker McKenzie to investigate.

2. China South Rail gives R1.6bn to Gupta front

AmaBhungane and Scorpio have exposed a R5.3bn kickback contract between China South Rail (CSR) and a Gupta company in Hong Kong, after CSR won contracts worth roughly $25-bn (R325bn) to supply Transnet with locomotives.

“The contract and other #GuptaLeaks accounting records describe how CSR initially paid JJ Trading and a related Dubai company $124m (more than R1.6bn) kickbacks for these contracts. The funds were passed on to Gupta companies.

“Recall that Shanghai Zhenhua also paid JJ Trading before the money flowed to the Guptas. In light of the CSR kickback documents, it is possible that similar agreements underlie Shanghai Zhenhua and Liebherr’s crane contracts,” says amaBhungane.

3. McKinsey diverts millions to Gupta fronts

AmaBhungane has revealed how global consultancy McKinsey won Transnet contracts that were gradually ceded to Regiments Capital and the Gupta-linked group Trillian – which scored Transnet contracts worth at least R484m. Regiments in turn paid R84m to the Gupta front Homix.

A recent investigation by Advocate Geoff Budlender exposed how McKinsey partnered with Trillian, in a “sham” contract to squeeze taxpayers’ funds out of Eskom.

4. Neotel in R2bn Transnet deal

In 2015, amaBhungane exposed how telecoms firm Neotel paid tens of millions of rands in “commissions” to Homix to clinch deals worth more than R2bn from Transnet.

5. T-Systems in questionable Transnet deals

Questions have also been raised about German IT company T-Systems’ contracts with Transnet and Eskom. T-Systems’ supplier development partner Sechaba Computer Services also paid Homix.

Former Transnet CEO Brian Molefe and CFO Anoj Singh were in charge through most of this. They moved together to Eskom in 2015, where more questionable Gupta deals have been publicly identified.

6. Shanghai Zhenhua paid milions to Gupta fronts

In September 2011, Transnet announced that Shanghai Zhenhua would build, deliver and commission seven tandem-lift ship-to-shore cranes for the container terminal at Durban harbour, notes amaBhungane.

“According to Transnet documents obtained by amaBhungane, it would pay Shanghai Zhenhua $92m (about R1.2-billion today) for the job. Three months later, money started to flow to the Guptas.

“Shanghai Zhenhua paid the first tranche of US$969 086 (R12.6m) that December. According to the Guptas’ accounting records, it went to a United Arab Emirates-registered company called JJ Trading.

“JJ Trading has also featured prominently in another Transnet kickback scheme. The #GuptaLeaks reveal China South Rail entered into a “consulting” agreement with JJ Trading, related to Transnet’s 2013 locomotive tender, and paid JJ Trading over US$107-m (R1.4-billion).”

According to amaBhungane: For every tranche of cash received from Shanghai Zhenhua, JJ Trading transferred exactly 4% to a person called “David”, sometimes as cash. The rest flowed to Gupta front companies in the UAE and South Africa

7. Liebherr-Africa paid millions to Gupta fronts

AmaBhungane’s investigation revealed that in March 2015, Burlington – a subsidiary of advisory firm Regiments Capital – signed a R5m contract with Liebherr-Africa to provide it with “market feasibility studies” in relation to the supply of cranes to Transnet.

“Liebherr made a R2m down payment to Burlington, which paid exactly 90% straight on to a Gupta front, Homix. At the time, Liebherr told amaBhungane that Homix was unknown to it.

“It is now clear that Liebherr’s R2m laundered to Homix was just the tip of the iceberg. The #GuptaLeaks reveal that the family received roughly $3.2m (R42m) from Liebherr over the course of a year and a half.

“Bank records show that in July 2013 Liebherr paid US$905 000 (R11.8m) to another of the Guptas’ UAE front companies, Accurate Investments,” says amaBhungane.

For more on the details of the money-laundering transactions, read: #GuptaLeaks: More multinationals ensnared in Transnet kickback web

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