Subscribe
Login
Sunday Times STLive By STEPHAN HOFSTATTER, MZILIKAZI WA AFRIKA and JANA MARAIS, 2011-02-19

Duduzane, Gupta and new Telkom boss in China deal

President Jacob Zuma's son, Duduzane, and business tycoon Rajesh Gupta are directors and shareholders in a deal with China Railway Construction Corporation that places them at the forefront to cash in on the government's R550-billion rail infrastructure programme.

Newly installed Telkom chairman Lazarus Zim's Afripalm Horizons announced the deal in August with one of China's biggest construction concerns when he accompanied the president on a state visit to China.

Menzi Mbatha, a director of Afripalm Horizons, confirmed on Friday that the shareholding had been finalised and that Gupta's and Zuma jnr's company, Mabengele Investments, "would all have shares " .

Mbatha declined to specify the stake each shareholder would own, saying the company expected to announce details next month.

The deal was announced on August 24 and, two days later, according to information in the Companies and Intellectual Property Registration Office, Zuma jnr and Gupta were installed as directors of Afripalm Horizons.

South Africa's rapid-rail infrastructure programme was announced by Minister of Transport Sbu Ndebele late last year for high-speed links between Johannesburg and Durban, Cape Town and Musina.

The network will cost an estimated R500-billion, while replacing about 8000 coaches - as part of the government's planned recapitalisation of rolling stock - will add at least another R50-billion to the price tag.

This dwarfs the total projected cost of R47-billion for the controversial arms deal.

According to the Financial Mail, the cost calculation for construction of the Gautrain was R24-billion for every 100km of railway line. A network of over 2200km would therefore cost a minimum of R500-billion.

In June, the department is expected to convene an investor conference. Another link, along the accident-prone Moloto corridor in Gauteng, is also being considered.

The Chinese deal comes on the back of the controversial R9-billion empowerment deal with steel giant ArcelorMittal, in which the Gupta brothers and Zuma jnr hold lucrative stakes. As part of the empowerment deal, entities linked to the Guptas will acquire at least a R3.2-billion chunk.

Mbatha scoffed at suggestions that the president's son was included because it would add leverage when bidding for projects partly funded by the state. "The bulk of our work is with the private sector," he said.

Zim did not reply to questions put to him. Rajesh Gupta and Zuma jnr would also not comment. "The Gupta family will not participate any further in your publication's intentions to slander and malign either members of the Gupta family or its business associates," said spokesman Gary Naidoo.

The Gupta brothers are also reportedly close to former PIC boss Brian Molefe, who was this week appointed to head Transnet, where he will have some influence over government's railway infrastructure spending.

  • hofstatters@sundaytimes.co.za; mzilikazi@sundaytimes.co.za