Transnet, SIU settles with Liebherr amid continuing problems at the utility

Transnet and the Special Investigating Unit (SIU) have reached an agreement with Liebherr, the German-Swiss multinational heavy equipment maker, to pay R54m for irregularities in the award of two tenders in 2013 and 2014.

In a statement, the state-owned Transnet said the two tenders were for supplying cranes to Transnet. Liebherr had supplied all the cranes under the contracts, which are in use and would continue to be used by Transnet Port Terminals, Transnet said. "The SIU found that the decision to award the tenders was irregular. Transnet, the SIU, and Liebherr accordingly agreed that the decision to award the tenders should be reviewed and set aside," Transnet said.

According to Transnet, investigations also found that Liebherr had paid $3.2m (approximately R54m) to Accurate Investments Limited, a sales agent appointed by Liebherr, at the time the two tenders were awarded by Transnet. "As things stand, the SIU did not find evidence that the payments were corrupt or fraudulent. Nevertheless, as part of the settlement, Liebherr agreed to repay the total sum paid to Accurate Investments Limited to Transnet on a without prejudice basis," it said.

Transnet said the settlement agreement also provides for an audit of the supplier development obligations under the contracts. "Should the audit determine that Transnet suffered any losses, the settlement agreement provides a mechanism for the resolution of the matter," it said. The firm said it is envisaged that Transnet and the SIU, with the concurrence of Liebherr, will launch the review application this year in the High Court or the Special Tribunal.

Meanwhile, in a further development about Transnet resolving its state capture legacies, the utility said last week it had reached an impasse with the manufacturer of critical spare parts, China Railway Rolling Stock Corporation (CRRC E-Loco), following the company's unwillingness to engage with authorities in South Africa to normalise its operations in the country.

The two companies had been engaged in legal battles after Transnet stopped the supply of more than 1 000 locomotives from companies including CRRC, citing that some contracts were irregular, and unlawfully awarded by the previous board.

Meanwhile, the Minerals Council of South Africa last week also called for the resignation of two members of Transnet’s senior management, as it blamed them for Transnet's continuing operational woes, which last year cost mining groups about R50bn in mining revenue, due to delays and disruptions on rail and at ports.

The council, which speaks for mining industry companies and which had in December called for the executives to step down, has subsequently reached an agreement with the utility to work jointly on various initiatives to address the logistical issues. In its latest results released in December, Transnet warned it was battling a myriad of challenges including load-shedding, vandalism, fuel and cable theft, bottlenecks, and locomotive shortages.

Adding to its operational challenges were the floods in Kwa-Zulu Natal in April and a strike in October that led to the firm declaring a force majeure.