Transnet agreements bypassed managers and ‘went straight to the board for approval’

Transnet Freight Rail. Picture: ANDRE KRITZINGER.
Transnet Freight Rail. Picture: ANDRE KRITZINGER.

Transnet acting group CEO Mohammed Mahomedy told the state-capture commission of inquiry on Wednesday that key role-players at the state-owned enterprise (SOE) and certain other companies acted against Transnet’s best interests.

Mahomedy made the statement in his affidavit to the commission‚ parts of which were read by advocate Phillip Mokoena who was leading evidence. Mahomedy was the group’s acting CFO  when he penned the affidavit.

“I understand that there was a system where a set of key role-players and Transnet executives‚ board members and certain companies acted in consult to the detriment of Transnet’s best interests‚” Mahomedy said.

He then described various transactions that flouted the company’s normal procurement processes. These transactions are now under the spotlight at Transnet.

“Certain transactions were approved through normal processes and some of the transactions did not go through the governance processes prescribed within Transnet. If we look at the Neotel transaction‚ there was an approved memorandum to appoint Neotel in October 2013‚” he said.

“In November‚ a memorandum was signed by [then CEO Brian Molefe] nullifying the decision of the people who approved the [previous] contract and replacing Neotel with P Systems. Then, in December‚ another memorandum approved the appointment of Neotel.”

Neotel secured a R4.9bn contract from Transnet to upgrade CCTV systems at the country’s ports without a competitive bidding process being finalised.

“If we look at the maintenance agreement with China South Rail ... As far as we have reviewed‚ we have not seen any evidence of it surfacing at any management committee meeting. It was presented directly to the board of directors and subsequently delivered to the minister’s office for approval‚” Mahomedy said.

The Chinese company allegedly paid about R5bn in kickbacks to companies linked to the Gupta family and in return received about R25bn in locomotive contracts, irregularly signed-off by Transnet.