Chinese locomotives supplier CRRC E-Loco Supply (CRRC), which had tenders worth R25bn with Transnet, lost a legal bid to have a preservation order on its bank accounts lifted.
CRRC, a subsidiary of China’s giant CRRC Zhuzhou Locomotive, initiated an appeal in the Johannesburg high court in March 2023 to overturn the Special Tribunal’s 2021 preservation order on the bank accounts of CRRC withholding R4.1bn.
The lock on the bank accounts was granted pending an application for forfeiture of the funds as Transnet and the Special Investigating Unit (SIU) alleged the tenders won by CRRC were unlawful.
The money would be paid back to Transnet once a court granted the forfeiture order.
Transnet had three locomotive supply agreements with CRRC 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 SIU and Transnet alleged CRRC’s parent company paid R1.4bn in kickbacks to companies, Regiment Asia and Tequesta, linked to Salim Essa, who was implicated in state capture, to win the tenders.
Why this legal battle matters
- Anti-corruption: R4.1bn in CRRC-linked funds frozen, boosting accountability in state contracts.
- Rail impact: 120 locomotives remain idle without spare parts, straining Transnet’s freight system.
- Legal precedent: Appeal struck from the roll, reinforcing courts’ power to protect state assets.
Essa is linked to corruption accused Iqbal Sharma, who was the chair of Transnet’s bid acquisitions and disposal committee for tenders. CRRC denied the allegations and wanted the tribunal to strike out the state’s case on that matter, but failed.
It turned to the High Court to appeal against the dismissal of its cases by the tribunal. CRRC, in its application, argued the tribunal did not have legal powers to grant a preservation and forfeiture orders.
CRRC bungled its own case on Wednesday, which was before three judges: Moleboheng Mdalana-Mayisela, Brad Wanless and Sandisiwe Mfenyana.
The company was a no-show in court after previous attorneys withdrew from the case.
Advocate Mabasa Sibanda, representing Transnet and SIU, argued for the appeal be struck from the roll with costs.
“We are in a position where we had set down this appeal and pursue the matter in absence of the appellant. This puts the court in somewhat unusual terrain because it is not usual that an appellant is not in court or does not participate in their appeal,” said Mabanda.
“The proper order would be to struck the matter with costs.”
The court struck the appeal off the roll and ordered CRRC to pay the SIU and Transnet’s legal costs.
“It is declared that the appeal has lapsed, the application for condonation for reinstatement of the appeal is refused and the appeal is struck from the roll,” said Mdalana-Mayisela.
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