TFR fraud case complicates rate decisions

Transnet Freight Rail (TFR) executive Bheka Xaba has been suspended for more than a year as a criminal case of fraud and corruption against him is investigated. “This is not new,” a source told FTW following a recent article in a Sunday newspaper that Xaba had appeared in the Pretoria Commercial Crimes court on charges of fraud and corruption. TFR, however, is remaining mum on the suspension of Xaba, who was widely regarded as one of the parastatal’s up and coming top executives. TFR spokesman, Sandile Simelane, acknowledged the suspension of Xaba to FTW and said a disciplinary process was currently under way but he would not elaborate on the case saying it was sub judice and he was therefore not at liberty to discuss any details. “I can also confirm that TFR is pursuing fraud and corruption charges against the suspended employee,” he said. Xaba, an executive manager who has had an illustrious career with TFR, quickly working his way up the ranks, brief ly appeared in the Pretoria Commercial Crimes court two weeks ago after criminal charges were filed against him. It is not known if this was his first appearance. FTW has established the investigation against him was launched as far back as 2013. He was placed on suspension in December of that year. “This entire case has had some massive implications for industry because TFR has changed in its entirety the way it was operating around pricing. No more can one manager make a decision,” said a source. “They have put a governance process in place where all rate requests are referred to a pricing committee that adjudicates the matter and ultimately makes the decision. Motivations are requested from customers as to why the rate is being requested. They have put several control mechanisms in place as well that will ensure something like this does not happen again,” said the source. And while this has been welcomed by industry it also does, however, have an adverse affect as pricing discussions with TFR now take months. “A legitimate customer with a legitimate pricing request will now not get a quick answer as the controls are so intensive it takes months.” In a volatile local and global market this becomes very difficult. “Industry, more often than not, needs an immediate answer. Companies have to be agile to be able to adapt to the volatility of the market.” The issue around Xaba is extremely sensitive with many running scared, said the source. “Within TFR people are not willing to commit to a pricing decision. They shy away from such discussions and just don’t want to be involved in anything involving price,” he said. Various newspapers reported that the case involving Xaba involved the alleged loss of nearly R500 million in revenue for TFR. The allegations are that Xaba abused his position to reduce prices for big clients of the freight and rail parastatal in exchange for financial favours that allegedly included paid holidays and luxury vehicles. These rates are alleged to have been far below marketrelated. TFR has said it cannot and will not comment on any of this and Xaba, who is still an employee, is also not allowed to speak about it. One source told FTW that Xaba was, however, not just sitting back and was fighting the allegations against him. He is believed to have a top legal team on board.