In 2012, Transnet's board approved a Market Demand Strategy (MDS) — a massive capital expenditure programme to modernise South Africa's freight rail infrastructure. The centrepiece was the procurement of 1,064 new locomotives: 599 electric locomotives and 465 diesel locomotives. The procurement was divided among four original equipment manufacturers: China South Rail (CSR, now CRRC) for 359 electric locomotives, China North Rail (CNR, now CRRC) for 232 electric locomotives, Bombardier Transportation for 240 diesel locomotives, and General Electric (GE) Transportation for 233 diesel locomotives.
The original cost estimate was approximately R38 billion. By the time contracts were finalised in 2014-2015, the price had ballooned to approximately R54 billion — an increase of roughly R16 billion that the Zondo Commission found had no legitimate justification.
The price inflation was achieved through several mechanisms. First, the tender evaluation process was manipulated: evaluation criteria were adjusted during the process to favour certain bidders, and the Transnet Board Acquisition Council (BAC) overrode the recommendations of the Bid Evaluation Committee (BEC) on multiple occasions. Second, OEMs were required to partner with local companies for "supplier development" — these partners were overwhelmingly Gupta-linked entities that performed little or no substantive work but extracted billions in fees. Third, Regiments Capital (and later Trillian Capital Partners) received hundreds of millions in advisory fees from Transnet, often for work that was unnecessary, duplicative, or never performed.
The Zondo Commission (Part 4, Volume 2) found that the locomotive procurement was fundamentally corrupted. Kickbacks from the OEMs flowed through Gupta-linked intermediary structures to benefit the Gupta family and their associates. The #GuptaLeaks — leaked emails from the Gupta family's servers published by amaBhungane and Scorpio in June 2017 — provided contemporaneous documentary evidence of the kickback mechanisms, including direct communications between Gupta associates, OEM representatives, and Transnet executives about payment structures.
The key enablers were Transnet Group CEO Brian Molefe, Group CFO Anoj Singh, and board member Iqbal Sharma. Molefe and Singh subsequently moved to Eskom, where they replicated the same patterns. The money ultimately flowed to Gupta family accounts in Dubai, Salim Essa's entities, Iqbal Sharma's companies, and was used for political purposes.
In 2017, former Trillian CEO Bianca Goodson released a detailed whistleblower statement through PPLAAF describing how Trillian extracted fees from Transnet and Eskom for work that was either not performed or had no legitimate basis. McKinsey entered into a partnership with Trillian despite Trillian performing little work — effectively legitimising the fee extraction. McKinsey was paid approximately R1 billion combined by Transnet and Eskom and subsequently agreed to repay R650 million.
The consequences for Transnet have been catastrophic. Rail freight volumes declined from 226 million tonnes in 2015 to approximately 150 million tonnes by 2023. The overpriced locomotives delivered under the contract had quality and maintenance issues, with many not operational. Network infrastructure deteriorated. The collapse of rail freight capacity forced South Africa's mining and agricultural sectors onto road networks, increasing damage, transport costs, and road fatalities.
In September 2022, the NPA arrested Brian Molefe, Anoj Singh, Iqbal Sharma, and others on charges of fraud, corruption, and money laundering. The Guptas were arrested in Dubai in June 2022 with extradition proceedings ongoing. Salim Essa fled and has an Interpol red notice. Siyabonga Gama died in August 2023 before trial. The Werksmans Attorneys forensic investigation (2019) confirmed the corruption findings. The criminal case remains ongoing.