The North Gauteng High Court in Pretoria has dismissed a bid by the local unit of the Chinese Railway Rolling Stock Corporation (CRRC) to have the SA Revenue Service (Sars) return money taken from its accounts.

Sars found that CRRC E-Loco overstated the price of its locomotives sold to Transnet as part of its involvement in state capture, and that the company has a tax debt of more than R3.6-billion. Its parent company is the world's biggest train maker, which is partly-owned by the Chinese government,

The State Capture Inquiry report found that CRRC businesses paid billions in kickbacks to Gupta companies to ensure that Transnet buy 1 064 of its locomotives.

In June last year, a senior Sars official instructed China Construction Bank to transfer R635.3 million from an account belonging to the local CRRC unit to Sars. Standard Bank was ordered to pay R101 000 from CRRC’s account.

CRRC appealed to the high court to overturn this instruction.

In its case, Sars contended it was entitled to instruct third parties to pay over the money because it was dealing with a "dishonest taxpayer", given the evidence of "large scale corruption" committed by the Chinese company in its dealings with Transnet.

But CRRC said the claims of corruption against it was part of a "well-orchestrated and unlawful campaign by a group of organs of state to place pressure on the applicant to reach a settlement with Transnet". 

Transnet and the Special Investigating Unit have launched legal proceedings against CRRC over the 1 064 locomotives, and secured an interim order which froze R4.2 billion in bank accounts linked to CRRC.

Meanwhile, the Chinese company has refused to provide Transnet with specialised spares for Transnet's locomotives. This is adding to South Africa's rail woes.

Sars also contended that there was a risk that CRRC would move the money once the company's bank accounts were unfrozen.

On Monday, Judge Norman Davis found that there was little doubt that Sars had been entitled to issue the third-party notices and recover the money from CRRC.

He dismissed CRRC’s application, with costs.