Picture: Simphiwe Mbokazi/African News Agency (ANA) Archives

Johannesburg - A Gupta-linked company was unjustifiably enriched by almost R80 million by state-owned freight and rail transport company Transnet, the commission of inquiry into state capture heard on Monday.

Mahlape Sello, a member of the commission’s legal team, said R194.2m, including VAT, was paid to Regiments Capital.

”This payment led to Regiments being unjustifiably enriched to the value of at least R79.2m …  and as a consequence Transnet being impoverished,” she said.

Regiments Capital scored the lucrative contract from Transnet and received the payments from the state-owned entity, which was shared between its directors, Gupta associate Salim Essa and businessman Kuben Moodley.

Regiments' directors Niven Pillay and Litha Nyhonyha have since been restricted from using the company’s accounts by the South Gauteng High Court.

Sello said criminal cases have been opened and summonses issued to Transnet employees suspected of wrongdoing to recoup monies lost to the entity.

She said Transnet had also issued summons against Regiments and Trillion who were the company’s transaction advisors for the procurement of locomotives.

The commission headed by Deputy Chief Justice Raymond Zondo is schedule to hear the evidence of Transnet chairperson Popo Molefe and go through documents detailing corruption at the state-owned entity including contracts awarded to Gupta-linked entities.

The contracts include the multi-billion rand contract to deliver nearly 1 100 locomotives awarded to China South Rail by Transnet that increased from R38 billion to R54bn.

The commission heard that various investigations have been launched into Transnet, according to the head of the commission’s legal team Paul Pretorius.

The probes include the biggest multi-project pipeline in the world that was projected to cost R12.7bn but increased to R30.4bn.

Pretorius said 13 witnesses were expected to detail fraud and corruption within Transnet which has been the subject of various forensic investigations conducted by Mncedisi Ndlovu and Sedumedi Attorneys and Fundudzi Forensic Services.

”One of the most important aspects of the investigations to date and in future will be the question of oversight both ministerial and parliamentary,” Pretorius said.

Pretorius added that there was evidence of systematic weakening of the structures at Transnet and centralisation of power which the legal team will demonstrate.

Regiments Capital was brought into the deal by McKinsey as its supplier development partner.

The commission had previously heard that millions of rands were paid by Transnet to integrated investment banking and advisory firm Regiments Capital.

Earlier this year, Standard Bank’s former general counsel Ian Sinton told Justice Zondo that Regiments Capital received payments of about R210m from Transnet.

Essa initially nominated Chivita Trading to receive the money but later put forward letterbox company Homix. Chivita was paid over R80m in a few months in 2014 while Homix got about R95m from Regiments Capital. Over two days in April 2014 R40m was paid to Chivita and another R5m the following month.

Molefe is expected to start testifying on Tuesday.

Political Bureau