Transnet was subjected to deliberate obstruction of due diligence procedures by the very executives that were supposed to have protected the parastatal from tender irregularities, the Commission of Inquiry into State Capture heard from senior council (SC) last week. On the first day of leading evidence to the commission chaired by Judge Raymond Zondo, Mahlapa Sello SC spent more than three hours summarising the evidence of completed investigations and additional forensic inquiries still under way. Part of the reason why it took so long just to index evidence against various former executives was Sello’s painstaking and precise submission consisting of 19 reports in total, many of which served to support one another in its findings. In many instances the so-called overlapping of reports was necessitated because of the perceived subverting influence that two former CEOs, Brian Molefe and Siyabonga Gama, as well as Anoj Singh and Thamsanqa Jiyane, respectively then chief financial and chief procurement officer, had on attempts to conceal information from forensic
investigations into the stateowned company (SOC). In total the reports came from leading law firms Werksmans and MNS, Fundudzi Forensic Services, and the Public Affairs Research Institute of SA. Seen together, it creates a layered effect of what appears to be corroborated evidence and corroboration-inprogress as Sello proceeded to build a strong case against Molefe, Gama, Singh and Jiyane. In the case of one of the law firms, Sello pointed out that an earlier report “was subject to limitations and must be considered inconclusive because Werksmans was frustrated at every turn. “It did not enjoy any cooperation from the board and management of Transnet at the time and was denied access to information.” In comparison, the blackowned law firm MNS “had better access to the relevant information”. What it found, particularly in relation to three different transactions involving the purchase of locomotives, clearly showed the extent to which Transnet had been railroaded by erstwhile executives into state-capture transactions. Reading from a ring
binder listing countless incidents of corrupt contracts, Sello told Judge Zondo of an instance where the purchase of 100 locomotives, in addition to the well-known transaction of 1064 locomotives, had been increased by R600 000 to R3.8 billion and then suddenly to R4.4 billion. The evidence would show, Sello said, that Molefe, Gama and Singh were all complicit in justifying the increase. Molefe himself, she stressed, had prepared a memorandum for Transnet’s board with the explicit intent to push the vastly inflated transaction through. Sello said MNS “found no justifiable reason for such a cost escalation and subsequently stated that Gama, Singh, Molefe and Jiyane failed in their fiduciary duties in the purchase of these locomotives”. It was just one of many such cases where the executives apparently worked together to pay millions if not billions more. This conflated transaction was picked up by Werksmans, MNS as well as Fundudzi. In respect of the latter, Sello said the forensics company had found that Molefe and Singh “failed to do a cost-benefit analysis that showed the same locomotives could have been bought cheaper from Japan’s Mitsui Corporation at R3.1 billion. “It could have saved
Transnet R1.2 billion.” Instead Molefe used his position to persuade the board that the contract should be awarded to a company called CSR at a cost of R4.4 billion. At one stage of her exhaustive exposition, Zondo asked Sello how the former executives seemed to find it so easy to get past Transnet’s processes and procedures. Sello, however, referred to earlier evidence that in many respects transactions had been pushed through on what was known as “confinement”, a contractual term used in extraordinary circumstances. Yet during their separate inquiries, Werksmans and MNS had found that the use of confinement applied where urgency and specialised skills were important aspects of a crucial purchase, but in its investigations found
“no justifiable reason for adhering to confinement methodology”. It created the impression, Sello explained, that confinement was used as an excuse to fast-track inflated tenders. The ease with which money was siphoned out of Transnet also led to R1.5 billion being milked out of the SOC between 2012 and 2016 for “out-of-pocket expenses”. This was despite the fact, said Sello, that “no supporting documentation had been submitted” for unforeseen expenses. At the time of going to press it seemed that Transnet’s turn at the Zondo commission, initially anticipated to take about two weeks, would last well in excess of that period.
Cost-benefit analysis could have saved Transnet R1.2 billion. – Mahlapa Sello
