Transnet reviews thousands of contracts in clean-up

The clean-up at Transnet continues, with the state-owned enterprise serving legal papers on its current and former staff and consulting companies to recoup billions of rand paid out in irregular expenditure. The state-owned freight rail and logistics company was also reviewing thousands of contracts entered into by the old regime, whose members have since been axed, suspended or resigned.

Transnet board chairperson Dr Popo Molefe said they had so far calculated R1.3 billion that the parastatal had lost to what he described as recklessness. “That's what we have calculated. This includes money given to advisers such as Trillian and Regiments,” said Molefe yesterday. So far they had recovered about R618 million of R700 million that was paid to one of the consultants. Molefe said Transnet’s interim group chief financial officer, Mahommed Mahomedy, was in negotiations with affected parties to recoup the rest of the money.

He said Transnet had summonsed employees that included Thamsanqa Jiyane, the chief officer of advanced manufacturing of Transnet Engineering, and Lindiwe Mdletshe, the senior manager of strategic sourcing for Transnet Freight Rail. The two executives were implicated in the controversial 1064 locomotives tenders, which rocketed to more than R54 billion. Molefe said legal papers were also served on former group chief executives Brian Molefe and Siyabonga Gama.

He said Transnet was also demanding its money from former chief financial officers Anoj Singh and Garry Pita, as well as Gupta-linked Regiments Capital and former Transnet treasurer Phetolo Ramosebudi, who Molefe described as being at the heart of all shady transactions. Ramosebudi resigned in October after the board served him with a notice of suspension. Other suspended executives are Transnet Property chief executive Thabo Lebelo and group supply chain officer Edward Thomas.

Molefe said all those on suspension were due to appear before a disciplinary hearing next week and stressed that those who had resigned were not off the hook. “I must say that in light of sustained investigations and pressure for people to make full disclosures, I’m sure they will be talking to Transnet,” said Molefe. On the appointment of a permanent group chief executive, Molefe said Tau Morwe would continue acting in this position for some time. “We have to stabilise the organisation (first). You want to bring a new chief executive when a solid team is in place,” he said.

“We want to clean up first.” Molefe said they would make a recommendation for Morwe’s stay, which expires in April, to be extended. “When we throw problems at him he addresses those with his management team and that's exactly what we want.” Meanwhile, Mahomedy noted that while Transnet was faced with significant challenges, the company realised a 3.5 percent revenue growth in the third quarter of 2018. “In the coming years, the pressure will remain, but we remain confident that Transnet is a robust business and we will continually focus on costs and bringing efficiencies where required,” said Mahomedy.

He said Transnet would spend a significant amount of time going through a pile of contracts, which he estimated to be in the thousands, that the company had entered into during the past few years. “The reality is that once that exercise is completed, the R8.1 billion reported in irregular expenditure last year, that number could be significantly higher.” SA Institute of Race Relations chief economist Ian Cruickshanks said the clean-up was commendable.

“That's got to be desirable and will eventually lead to a greater level of efficiency. Finally, we may find Transnet taking back the huge volumes of business they lost to road transport,” he said. Cruickshanks said rooting out corruption at state-owned enterprises should be made a priority. “I think it's what we should be striving for in all areas of government (and) the private sector.”