Zondo commission hears how Chinese company inflated prices at Transnet

CNR subsequently merged with the  Gupta linked-China South Rail.

Roberto Gonsalves, whose company was part of the CNR consortium after Transnet awarded the company the tender for 232 locomotives, appeared before the commission on Thursday.

The 232 locomotives were part of the 1064 former Transnet Engineer Francis Callard said the state-owned company needed from 2012 to improve its freight transportation. 

The rest of the locomotives were to be produced by China South Rail, Bombardier, and General Electric. 

Gonsalves said the agreement stated that CNR would produce the locomotives in Gauteng. However, they were later requested to move to Durban Bayhead. 

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The consortium charged Transnet a relocation fee of R9.7 million and an unknown company called Business Expansion Structured Products (BEX) was brought in by CNR to renegotiate the relocation price, increasing the price significantly.  

"The amount of R9.7 million which we had already received from the pricing for the locomotives had now ballooned to R647 million. What is ironic is that the amount is close to the R650 million the first BEX agreement referred to as an example for their fee," Gonsalves said.

He told the commission that he and other shareholders refused to sign BEX because the company had no records of trading and they had no idea how it calculated the price. 

Despite this, CNR went ahead with BEX and Transnet paid the fee. 

"I can't see any justification when we submitted a fixed final price that included an amount for the relocation of R9.7 million which we included in the final price of locomotives how we were entitled to anything more. Bear in mind, we are shareholders and we would love to get reimbursement but we just couldn't find a justification for it.”

Gonsalves said the matter was reported to the Hawks.