CSR favoured over other bidders in Transnet locomotive tender, inquiry hears

The state capture inquiry has heard details of how Transnet executives favoured a Chinese company and actively assisted it to become the winning bidder in a locomotive tender.

Tshiamo Sedumedi, a director at MNS Attorneys, explained in detail how his law firm was appointed by the previous Transnet board to investigate a string of suspicious contracts that were awarded by Transnet over the years. Sedumedi explained that their investigation primarily focused on the tender to procure 1064 locomotives.

The investigation then expanded to include the procurement of 95 and 100 locomotives. He said the investigation also expanded to include the Transnet Durban relocation project. These tenders have previously been mentioned at the inquiry by various witnesses. Sedumedi’s job was to fill in the gaps in relation to tenders and what MNS found during its investigations.

Sedumedi focused first on Transnet procurement of 100 locomotives. The SOE had issued a tender in 2011 and called for bidders. MNS found that from the very beginning Chinese railway manufacturer China South Rail (CSR) received preferential treatment. He demonstrated this finding by explaining a series of emails between former Transnet group chief executive Brian Molefe and a representative from CSR.

The email appeared to be thanking Molefe for a previous meeting, but it also asked to him help CSR gain access to Transnet facilities, that they create a working relationship and that Molefe organise a local partnership for CSR. Sedumedi said this provides strength to the argument that Transnet favoured CSR. He said it also showed that Molefe played along with CSR and did not push back on these requests.

“There were two persons that were responsible for the tender processes and questions had to be directed to. CSR seems to have had a direct line to GCE (Molefe). The GCE (Molefe) in his response doesn’t say sorry we are in procurement and please refer your queries to the people responsible for the RFP. Molefe responded that he will send the requests to Siyabonga Gama.”

“This confirms the view that CSR seemed to have benefited from this relationship. It creates the impression that CSR was favoured over other bidders. In the bidding space, fairness is key, you cannot as an organisation be seen to be favouring a particular entity,” said Sedumedi.

Sedumedi also told the commission that MNS found that the Transnet board evaluating committee for the locomotive tender had amended the requirements in order for CSR to be considered in the tender process even though the company had no BBEE partnership at the time. The inquiry continues.