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Popo to expose Transnet

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strengthened resolvePopo MolefePHOTO: jaco marais
strengthened resolvePopo MolefePHOTO: jaco marais

Transnet comes before the state capture commission tomorrow as board chairperson Popo Molefe is scheduled to take the stand, followed by brand-new acting group chief executive Mohammed Mahomedy and governance executive Peter Volmink.

It has been a bleak two weeks for the state-owned logistics company which had to replace its acting chief executive, Tau Morwe, late last week after Molefe received word that Morwe was implicated in alleged flouting of procurement procedures in Volmink’s statement.

In his statement, Volmink states that Morwe motivated that Neotel be given a R4.9 billion contract to upgrade the CCTV systems at the country’s ports, without a competitive bidding process.

This could only be done under rigid conditions, including unforeseeable emergencies and compatibility with existing systems. Morwe was the chief executive of the Transnet National Ports Authority in February 2015, the time the contract was awarded.

Read:Transnet in hot water over R4.2bn tender

Volmink states that all the factors cited in Morwe’s memo to justify urgency “were entirely forseeable”, but that the compatibility argument had some merit none the less.

Transnet’s board became aware of Volmink’s revelations on Thursday last week. Volmink is scheduled to testify on Tuesday, before Morwe, who was scheduled to testify from Thursday.

Late last week, the board had to approach Public Enterprises Minister Pravin Gordhan to revoke the permission he had already granted them to extend Morwe’s contract.

“The board had already recommended to the minister to extend his contract but after Volmink’s submission, the board decided Morwe could not represent Transnet,” said a source close to Transnet.

Mahomedy, the former acting group chief financial officer, was appointed to fill Morwe’s acting position this week, and will represent Transnet at the commission from Thursday.

Morwe did not respond to requests for comment made by calls and SMSes to his cellphone, and messages sent through a close associate.

Molefe is set to take the stand tomorrow to provide details about the extent of state capture at Transnet.

This, he says in his statement City Press has seen, is motivated by his belief that “the Freedom Charter most definitely does not state that the wealth of the country shall be shared by a small handful of thieves and crooks... What we found when we came into office was nothing less than a horror show,” he says.

He also charges that Transnet was looted with the cooperation of the previous board, appointed by then public enterprises minister Malusi Gigaba. He identifies former group chief executives Brian Molefe and Siyabonga Gama, and former chief financial officer Anoj Singh, as the “primary architects and implementers of state capture at Transnet”.

Molefe says the state capture agenda at Transnet was pursued by firing or neutralising “employees who did not support their agenda” and “enforced reprisals in respect of whistle-blowers and any other persons who attempted to speak out”.

“We were confronted with the reality that some of the key architects of the broad state capture project had effectively turned Transnet into their piggy bank by exploiting procurement as an avenue for unlawfully diverting funds by procuring at inflated prices or in paying for advisory services where no services had been rendered,” he says.

Molefe states that while Transnet is pursuing civil claims against several implicated officials, it has frozen the pensions of those who have left, including Gama, whom it is suing for R324 million, and former group treasurer Phetolo Ramosebudi, from whom it is claiming R283 million.

He also states that Transnet received a R618 million refund from China South Rail (CSR), which got the biggest slice of the R54-billion tender for 1 064 locomotives, which was “paid unjustifiably ... relating to a maintenance agreement for the new locomotives”.

Mahomedy’s statement, which City Press has also seen, sheds further light on this deal after it was cancelled in October 2017.

“Surprisingly, nothing was done to claim back the R618 million that was paid to CSR as an advance payment, despite Transnet not having received any goods or services related to this contract,” Mahomedy states.

“To date, Transnet continues to pursue the repayment of the VAT portion of the transaction amounting to R86 million, as well as the interest due to Transnet.”

In his statement, Molefe also states that after instituting two claims totalling R268.5 million against Gupta-linked Regiments capital for “unjustified overpayments”, “Regiments has tendered an amount that we consider reasonable but has not been accepted as parties are negotiating the fine print”.

Molefe also says in his statement that their “work is by no means done”.

“Every day we seem to uncover new layers of corruption and discover new networks that have been put in place to siphon money out of Transnet and its suppliers,” he states.

“We are also seeing evidence that corrupt networks are fighting back or preparing to fight back. But what this has done is to strengthen our resolve.”

City Press has learnt that the fightback involves disgruntled former and current employees facing investigations who are sending anonymous complaints to Gordhan, alleging that the board ignored several allegations against Morwe.

It also includes efforts to have Mncedisi Ndlovu & Sedumedi Attorneys removed as Transnet’s investigators after they uncovered further corruption.

In his submission, Volmink states that the former executive and board were responsible for “the bulk of the R8.2 billion in irregular expenditure that Transnet recently incurred”, as well as “all of the transactions that lie at the heart of the state capture allegations at Transnet”.

“It seems as if a parallel universe exists within Transnet. On the one hand there is a highly ordered system with clear controls and procurement rules in place. However, these seem to be applied more readily to relatively lower-value transactions,” he states.

“On the other hand there appears to be an alternative system, where decisions are made with less regard to applicable procurement rules.

“This alternative system seems to apply to high-value transactions within the board or exco’s delegation.”

He says procurement officials were bullied by senior executives and complied out of fear for their jobs. Those who stuck to the rules were charged with insubordination, he said.

Another company that looms large in Mahomedy’s statement is T-Systems, from which Transnet was paying “for 2 200 computers when only 1 100 computers were employed”, and a further 450 computers that were never used. Transnet’s forensic team couldn’t find these computers because no tracking software had been installed on them.

Volmink also reveals how multinational advisory firm McKinsey was handed four contracts totalling R619 million in just four days in 2014, without going to competitive tender. The company also started working for Transnet before the procurement process was concluded.

Molefe declined to comment before he appeared before the commission, which he was considering doing. He also said he was going to defend Transnet’s R72.2 million civil claim against him. Singh declined to comment. Gama could not be reached for comment.

Transnet spokesperson Molatwane Likhethe said: “Transnet is pleading with all the media houses, particularly City Press, to give it an opportunity to make its representation before the Zondo commission without pre-empting any of the submission before this legal and respected platform.”

No comment from the commission was forthcoming. 


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