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Explainer: How Chinese company saw local train builder losing millions


According to a new report, a Chinese company scored billions in dubious tenders

These came in the form of contracts to build hundreds of trains for Transnet

However, the Chinese company used an empowerment partner as a front to comply with BBBEE initiatives

A new report sheds light on how a Chinese company scored billions of Rands' worth of tenders by using a BBBEE partner as a front. In total, the company CRRC E-Loco Supply received R25 billion in tenders from Transnet to build hundreds of trains. Additionally, one of these tenders led to substantial kickbacks for several companies with links to the Guptas.

CRRC E-Loco Supply is the South African branch of CRRC Corporation Limited, which is owned by the Chinese state, has gathered. It is alleged that CRRC E-Loco Supply(formerly known as China South Rail) used its partnership with the local Matsete Basadi Consortium (MBC) in order to secure lucrative tenders. As a result, much of these funds were used to line CRRC E-Loco's pockets rather than to empower local businesses. Consequently, the Broad-Based Black Economic Empowerment Commission has recommended that all contracts with CRRC E-Loco be cancelled.

The commission has released a damning report against CRRC E-Loco. In the report, the commission undermined the B-BBEE Act, according to News 24.

The Act is aimed at fostering black participation in the economy, but this was abused in order to enrich the Chinese company.

"CRRC E-Loco Supply as a joint venture falls short of meeting the requirement of black ownership," the report reads. "The critical components of ownership […] were severely restricted and economic interest did not accrue to MBC in line with its 30% shareholding, indicating a fronting practice."



Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER

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