‘Brian Molefe paved way for rail deal’

Former Transnet CEO Brian Molefe allegedly paved the way for a state capture-linked Chinese locomotive manufacturer to score multibillion-rand contracts from the state-owned company.

This is according to MNS Attorneys’ Tshiamo Sedumedi, who told the state capture inquiry on Tuesday how the firm’s investigation into procurement irregularities at Transnet pointed directly to Molefe.

MNS Attorneys was appointed by Transnet’s new board in 2018 to investigate various contracts under the tenure of Molefe – and his successor, Siyabonga Gama.

These included Transnet’s controversial purchase of 1,064 locomotives, the appointment of advisers and consultants and their influence on the company, and the procurement of locomotives from China South Rail (CSR).

Sedumedi’s testimony focused mostly on the procurement of 95 electric locomotives from China South Rail.

“CSR seems to have enjoyed some special relationship with Transnet and that has happened both prior to the issue of the request for proposal itself and through the procurement process [for the locomotives],” he told the commission.

Sedumedi referenced emails between Molefe and China South Rail’s Wang Pan, which indicate that they met in December 2011 and discussed the contract before it was advertised.

In another set of e-mails a month later, Pan thanks Molefe for giving his company the opportunity to tender and asks Molefe for his support in setting up a “discussion of cooperation” and arranging a meeting with Transnet’s technical group to discuss the specifications of the trains.

“It creates a reasonable apprehension and perception that CSR might have been favoured over other bidders.”

This was before China South Rail was contracted for the job.

The commission heard earlier from Transnet’s acting CEO, Mohammed Mahomedy, who said Transnet flouted the Public Finance Management Act when awarding the R2.7bn contract to China South Rail.

China South Rail failed the first stage of the tender process as Transnet required companies to have a Broad-Based Black Economic Empowerment (B-BBEE) certificate.

The company scored 57%, three less than the minimum requirement to advance to the next stage in the bid process.

However, an alternative evaluation structure was created which removed the B-BBEE requirement and allowed China South Rail to move on and eventually land the deal.

The Guptas are alleged to have secured billions in kickbacks from China South Rail for contracts awarded to it.

Sedumedi’s testimony continues.