Transnet has won its urgent legal bid to stop Chinese locomotives supplier CRRC E-Loco Supply (CRRC) from selling or disposing of spare parts that could bring to service 120 grounded locomotives.
Whether the company should hand over the parts for 120 locomotives to work is still in limbo until the main application by Transnet from 2022 is resolved.
Transnet signed three locomotive supply agreements with CRRC, a subsidiary of China’s giant CRRC Zhuzhou Locomotive, to supply 554 electric locomotives in 2012-14.
The contracts were for 95 locomotives worth R2.7bn, 100 locomotives for R4.4bn and 359 locomotives worth R18bn.
The delivery of the 359 locomotives was interrupted when the Special Investigating Unit (SIU) started investigations in 2019 into alleged corruption in Transnet’s acquisition of 1,068 locomotives from four private companies, including CRRC.
The SIU probe soured relations between CRRC and Transnet.
When the tenders were approved corruption accused Brian Molefe was at the helm of Transnet.
Transnet alleges in court papers CRRC paid kickbacks to the companies Regiments and Tequesta, owned by controversial businessman Salim Essa, to secure the contract.
Essa is linked to the Gupta family that is accused of looting government coffers using their connection to senior politicians during president Jacob Zuma’s tenure.
CRRC also got into trouble with the SA Revenue Service (Sars), which issued a detention order against the company in 2020 and restricted the company’s operations in two warehouses in Pretoria.
Sars earlier this month lifted the detention order against the company. This meant CRRC could move and sell its equipment if it wanted to.
Transnet approached the court on an urgent basis, asking it to prevent CRRC from selling the equipment it needs for inactive locomotives.
“A large number of the locomotives delivered by CRRC under 95 and 100 locomotive supply agreements had become inactive,” Transnet court papers read.
Since August 2022, 120 locomotives supplied by CRRC had become inactive and Transnet lacked spares to fix these as CRRC refused to supply it.
Legal obligation
Transnet argued in court that CRRC, in the three separate contracts, had a legal obligation to supply spares to maintain the locomotives. The company disputed this, arguing the spares supply condition was only a factor in the supply for 359 locomotives that was halted.
“To make matters worse CRRC blocked Transnet from purchasing CRRC compressor kits directly from Baoding, a Chinese entity that manufactures compressor kits,” Transnet court papers read.
Interventions by Transnet, including efforts by former public enterprises minister Pravin Gordhan, to get CRRC to supply the parts, failed.
Transnet legal representative Lebo Mokwena on Tuesday told judge Cornelius van der Westhuizen Sars’ move to lift the detention order put the state-owned entity in a vulnerable position as CRRC could sell or destroy the spares.
The CRRC was not represented in court.
The court issued an order to interdict CRRC from selling, disposing of, or relocating all the spares parts in their warehouse.
CRRC was ordered to pay Transnet’s legal costs.
In the main application lodged in 2022 Transnet wants the court to compel the company to supply it with spares, arguing it should fulfil its contractual obligations for 195 locomotives and not the ones under investigation by the SIU.
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