Corrupt relationship’ leads to cancellation of TFR loco tender

The SA-US joint venture, Electro-Motive Sibanye, has failed in its court bid to stop Transnet from issuing a new tender to buy 100 locomotives – which the JV said it believed was replacing the R6.5-billion tender for 212 locomotives awarded to it 19-months ago. The joint venture is between Sibanye Trade & Services (STS) and Chicagobased Electro-Motive Diesel and Locomotive Company (EMD) – one of the leading international locomotive manufacturers, Transnet told the South Gauteng High Court that the tender for 100 locomotives was separate and distinct from the one to buy 212 locomotives. It cancelled the R6.5-bn tender, it added, because a “whistleblower” led it to believe there was a corrupt relationship between one of its officials and one of the directors of Electro-Motive Sibanye, the preferred bidder. The court was told that a forensic investigation by Ernst & Young, commissioned by Transnet, revealed a personal and business relationship between Percival Mosweu, the GM for capital programmes at Transnet Freight Rail (TFR), and Gustav Adams, a director of the Electro-Motive Sibanye joint venture. Mosweu, who chaired the rail subsidiary's adjudicating steering committee and sat on the acquisitions council, did not disclose his relationship with Adams during the tender review process Transnet also said it had made a mistake when rating the black economic empowerment (BEE) status of the joint venture. In a legal exchange it was revealed that an investigation had shown that an evaluation of the broad-based BEE (BBBEE) status had focused exclusively on STS and not on the joint venture. The result was that the bidder achieved a 100% score. "In this regard it needs to be borne in mind that STS only has a 30% interest (in Electro-Motive Sibanye) and if the score was adjusted accordingly, then your client would have scored less than it did in respect of the BBBEE criteria," the letter said. After hearing this, and extensive other evidence, the court rejected Electro-Motive Sibanye’s application for an interdict, and awarded costs against the applicant. Transnet welcomed the ruling, said spokesman John Dludlu, which cleared the way for the para-statal to close the tender for the acquisition of 100 locomotives as a matter of urgency this week, and press ahead with its locomotive fleet renewal programme. But although Transnet can go ahead with its loco buying, the issue is not finally resolved, with cases within this case, according to the judge. For example, the proceedings for final relief that the JV intends to institute, he said, “may potentially take a few years to complete”. To complete the current issue, however, business writer Slindile Khanyile has raised an interesting point. The journalist reported that the botched R6.5-bn tender for 212 locomotives might prevent Siyabonga Gama, CE of Transnet Freight Rail (TFR), from becoming the group CE of holding company Transnet. The state-owned transport utility is looking for a successor to Maria Ramos, who left last month to head financial services group Absa. Gama, who has worked at Transnet for 15 years and has also been CE of the National Ports Authority (NPA), is reportedly a front runner for the top job.