Bombardier rail deal in South Africa warrants RCMP probe, professor says
Secret deal was brokered by Bombardier to pay $5M to a South African middleman
Bombardier's role in a $3-billion train contract in South Africa has prompted a call for an RCMP investigation from a corporate governance professor.
CBC News reported yesterday that the Canadian transportation giant signed a secret agreement in 2010 that would see $5 million go to a South African middleman, Peter-Paul Ngwenya, who describes himself as an "influential individual in political circles."
That revelation follows reports in the South African media in 2012 that Bombardier paid $35 million to another middle-man based in Tunisia, hiring him as its agent to help the company win the train contract.
"I think there is a role for the RCMP to be looking at documents that could suggest inappropriate payments, to put it mildly, or potential bribery to put it more emphatically," says professor Richard Leblanc, who teaches corporate governance at York and Harvard universities and also advises boards of directors and government regulators on integrity issues.
South Africa's Public Protector, the official government watchdog tasked with investigating complaints against government agencies or officials, is looking into the train deal, CBC News revealed Wednesday.
"I agree with the [Public Protector] that there are irregularities in this procurement procedure," adds Leblanc. "For a company of Bombardier's stature this should not be happening."
Bombardier is one of five partners in a consortium that began constructing what's called the Gautrain in 2006. The 80-kilometre rapid transit rail line in the northern end of the country links Johannesburg and Pretoria with South Africa's biggest airport.
Construction was completed in 2012 and an expansion is now being studied.
The former premier of the region where the train was built said he has no idea why Bombardier would want to pay anything to an agent in South Africa.
"If indeed they paid an agent, I would call it money wasted," Sam Shilowa told CBC News. He was in office when the contract was awarded. "It would not have had an impact."
But he said that if investigators discover bribes were paid, those responsible should be held accountable.
"If anybody was to say, money from Bombardier, whether through an agent or directly, went to any of the provincial ministers or any of the people who were involved in the bid, then I would be interested, and I would really call that such people be prosecuted."
Bombardier told CBC News it will co-operate with the Public Protector investigation. The company also says it is common practice to hire agents in foreign countries.
It adds that it can't comment on the deal with Ngwenya because it's the subject of a court battle.
"Bombardier enforces a strict code of conduct. We have robust internal and external processes, standards, and procedures," the company said in a statement. "We do not condone making any payments to win contracts. Such initiatives are totally against our ethics and we condemn any such behaviour."
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