The probe is looking at previous reports that millions of dollars in success fees were paid as part of the contract, as well as new revelations, uncovered by CBC News, that a secret deal was brokered by Bombardier to pay $5 million to a South African middleman, Peter-Paul Ngwenya, who describes himself as an "influential individual in political circles."
"There's something totally disproportionate about that kind of payment," says Paul Hoffman, a lawyer with the independent Institute for Accountability in Southern Africa.
"You don't just throw around commissions to people who are not entitled to commissions, because it undermines the cost-effectiveness of the deal, and it leads to bribery and corruption — the kind that this deal appears to reek of."
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 finished in 2012 and an extension is currently being studied.
South Africa's Office of the Public Protector told CBC News it received a complaint about how cost overruns were handled by political decision makers, and Public Protector Thuli Madonsela now says she's scrutinizing the entire deal.
"There were allegations of political interference," Madonsela said in an interview at her office in Pretoria. "However, whenever there are allegations of political interference, we look at whether there was any alleged or suspected gratification, what you would call bribery in your country."
Bombardier declined to be interviewed, but did send a statement saying it hasn't been informed about the Office of the Public Protector investigation.
"Should we be invited to collaborate with the public protector's investigation, we will fully collaborate," the company says. "Bombardier has always maintained and will continue to maintain the highest standards of ethical behaviour in all of our business operations worldwide."
Documents obtained by CBC News show Bombardier drafted and signed a secret deal in 2010 that would see one of two middlemen based in Africa paid $5 million after he threatened to go public with information that "might harm [Bombardier's] reputation."
Peter-Paul Ngwenya, speaking in detail for the first time about the deal, says Bombardier has failed to pay him more than $6 million for his help in winning the contract for the rail project in South Africa. He claims the money was supposed to flow through a second Tunisia-based middleman, Youssef Zarrouk. South Africa media has reported that Zarrouk received $35 million in so-called success fees from Bombardier.
"It's a company of cheats," Ngwenya told CBC News in an interview at his Johannesburg estate, referring to Bombardier. "That's the only way I can describe it. It's a company that's run by hooligans, by crooks, people who won't honour their written word."
Bombardier says it owes Ngwenya nothing.
"As we have stated several times before, Bombardier has never had any agreement for services with Mr. Ngwenya," the company said in its statement to CBC News. "Bombardier therefore continues to view his claims against Bombardier as baseless and without any merit whatsoever."
CBC News has obtained letters from 2009 that show Ngwenya wrote to Bombardier making threats and demanding to be paid.
"I do not need to point out to you that it is this tendency of not honouring commitments that led to the STINK around the BAE Systems on the South African Arms Deal contract," Ngwenya wrote Bombardier in a private letter, a reference to a controversial 1990s arms deal involving British defence company BAE Systems.
That deal has been rife with allegations of corruption and bribery.
"We would not want to be held responsible for anything that might harm your company's reputation or any future opportunities it may identify in this part of the world," added Ngwenya in the letter.
"I said you better please settle this thing of mine because I'm not going to take this lying down," Ngwenya told CBC News. "This [deal] might be interpreted in another way — that is, we are also involved in similar activities that BAE was accused of."
Bombardier denies Ngwenya allegations
Letters show Bombardier initially rebuffed Ngwenya's threats to "harm [its] reputation" calling them "false allegations," and showed no willingness to pay him or get involved.
"Your reference to BAE and your threats in relation to Bombardier's reputation are highly offensive and completely without merit," wrote Peter Albexon, then Bombardier's vice-president of sales and business development.
"Bombardier maintains the highest standards of ethical behaviour worldwide," he added. He also claimed that Ngwenya had "no contract of any nature with Bombardier."
In a phone conversation last fall with CBC News, Bombardier's head of communications for Africa went even further — denying anyone from Bombardier had ever met with Ngwenya.
"We never had a contract with him," Sandy Roth said. "We've never had any dealings with him. To our knowledge it was [Tunisian agent Youssef] Zarrouk that actually hired him. We never had a direct contact with him, no."
Yet, a year after Ngwenya threatened to go public with his allegations, he says he met with a vice-president from the Canadian company and Zarrouk in a hotel in London, England.
At that meeting, a deal drafted by Bombardier's lawyers, was signed by all of the parties. CBC news has obtained a copy of that secret deal.
The documents maintain Bombardier had no direct contract with Ngwenya on the Gautrain deal, but it says "in order to settle this dispute expeditiously" it agreed to transfer an undisclosed amount of money to its agent in North Africa who in turn was to pay Ngwenya $5.3-million US.
The deal contains a "confidentiality" clause that says the terms "shall remain private and confidential and disclosure may not be made to any third party under any circumstance."
However, in follow-up correspondence, Ngwenya claims, once again, he wasn't paid and remains unpaid to this day.
"Bombardier never undertook nor agreed to pay any sums to Mr. Ngwenya," Bombardier says in its statement to CBC News. "As the agreement you refer to is the subject of court proceedings in South Africa, which are still before the court, Bombardier cannot comment further on this matter."
The new revelations follow a series of stories published by South Africa's M&G Centre for Investigative Journalism in 2012. It was the first to report Bombardier hired the controversial agent, Youssef Zarrouk, from Tunisia and agreed to pay him $35-million if the train contract could be won.
He, in turn, had a contract with a Ngwenya, the Mail and Guardian reported.
CBC News has obtained an earlier version of the contract between Bombardier and Zarrouk as well as the contract Ngwenya signed with Zarrouk. Both are shorter than 10-pages and contain almost no detail about the work they are supposed to perform for the millions they were promised.
Experts say, generally speaking, contacts that lack details raise concerns about possible corruption and bribery.
"That's definitely a red flag that we would look at," says Peter Dent, previously a fraud and corruption investigator with the World Bank and now with Deloitte in Toronto.
Dent says, if a company is going to hire an agent, they want to document in great detail what that agent is going to do in order to protect themselves from possible corruption allegations.
"That's what we call a thin-file syndrome," he adds. "Where the thinner the file on the contract, you know, the less documentation, then the riskier that contract is."
In this case, there is no evidence any bribes were actually paid, and all of the parties involved deny any were paid.
"It is common business practice in many industries for companies to hire representatives and agents in countries in which they wish to develop business," Bombardier said in its statement.
"Bombardier enforces a strict code of conduct. We have robust internal and external processes, standards and procedures. As we said at the time, we do not condone making
any payments to win contracts. Such initiatives are totally against our ethics and we condemn any such behaviour."
But Ngwenya says all of these side-deals and millions changing hands could appear suspicious.
"Look, obviously, I know nothing about trains and I'm not an engineer and all this," he says. "And some people might sit back and say seven million is a lot of money — what is it that he did.
"And because of who I am and who I'm associated with, it is easy to draw a conclusion that the money that this thing, the money that I received, I used it to bribe people."
Yet Ngwenya claims he never paid any bribes. "No one from Bombardier ever asked me to do anything untoward."
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