The Special Investigating Unit (SIU) and Transnet have been granted a preservation order to freeze R4.2bn held in bank accounts linked to a locomotive supplier which it believes are the proceeds of unlawful activity.

Three tenders were awarded to CRRC E-Loco Supply (CRRC), a Chinese company, between 2011 and 2014 to supply Transnet with locomotives.

The SIU said on Tuesday the unit and Transnet had been granted the preservation order by the Special Tribunal to freeze R4.2bn in bank accounts linked to CRRC pending an application for the final forfeiture thereof.

The SIU believes the funds are the proceeds of unlawful activity and should be forfeited to the state.

The entities approached the tribunal after an investigation and interventions by the SA Reserve Bank (SARB) and the SA Revenue Service (Sars), which suspected the company paid kickbacks disguised as business development services agreements.

The agreements were suspected to be linked to allegations of state capture or maladministration and irregularities to influence where Transnet awarded the tenders.

“No evidence exists to suggest the payments envisaged in the business development services agreements were for services rendered and the said payments are linked to the award of contracts and payments made by Transnet,” the SIU said.

The preservation order began with blocking orders by the SARB. Then Sars obtained a preservation order in the high court, pending assessment of CRRC’s tax obligations and payments. 

“CRRC was awarded three contracts by Transnet to supply it with locomotives between 2011 and 2014 in respect of 95, 100 and 359 locomotives for a combined sum of approximately R25.4bn. Based on the findings in investigations conducted by Transnet and the SIU, the SIU and Transnet have also instituted a review application in the high court which is ongoing,” said the SIU.

“The preservation order, which was handed down on Aug. 31, interdicts, restrains and prohibits CRRC from dealing in any manner with the funds along with any and all interest that may be accruing to such funds, held by three banks in the [country], and interdicts the said banks also from releasing the said funds, except for potential authorised releases in respect of the funds to the SARB, Sars and SIU based on the execution of their respective mandates.

“The freezing order shall continue to operate in respect of any funds remaining in the accounts after the SARB blocking orders and/or the Sars tax assessments have been discharged and deducted.”

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