Special Tribunal orders former Transnet bigwig to pay back R26,4 million

Former Transnet bigwig Herbert Msagala has been ordered to pay back millions of rands he’s been found to have scored from a local engineering consultancy he channelled various dodgy contracts to while working for the parastatal.

The order was handed down in the Special Tribunal on Tuesday and comes on the back of a civil claim brought by Transnet and the Special Investigating Unit (SIU) to disgorge the funds. At trial they argued a Centurion-based firm called IGS Consulting Engineers had received some R160 million worth of tenders from Transnet during Msagala’s tenure as Chief Group Executive for Capital Projects and that he, in turn, had received R26.4 million from IGS.

The contracts were awarded to IGS under Transnet’s New Multi Product Project (NMPP), which involved the construction of a 715 km multi-product pipeline from Durban to Heidelberg.

In handing down the order, Judge Lebogang Modiba found Transnet and the SIU had established on a balance of probabilities “that Msagala did in fact receive secret profits amounting to R26, 423,028.77” and ordered him – together with IGS and its sole shareholder and director Sipho Sithole – to pay back the money.

“The timing of many of the payments Msagala received from IGS coincided with the timing of IGS having received payments from Transnet,” she found further. “Msagala received the said amount without any requisite disclosures to Transnet. Therefore, the amount constitutes secret profits, giving rise to Transnet’s right to disgorge the profits”.

Msagala was axed last year, following an SIU-led lifestyle audit which revealed he was living excessively beyond his remuneration at Transnet and that the source of his additional income was IGS and Sithole. Which resulted in him being charged with various acts of misconduct. And last November the Special Tribunal declared several assets belonging to Msagala – including four houses in Gauteng and the Free State, two farms and a fleet of 35 vehicles – forfeited to the state.

The current proceedings were instituted last August and culminated in a hearing in May. While they initially defended the case, though, neither Msagala nor his wife or daughter – Loretta and Bonolo Msagala, who were also cited as respondents in the application – participated in the hearing.

This following the withdrawal of their previous lawyers at the last minute, prompting Msagala to ask for a postponement, which was refused after which he and his family staged a walk-out. Neither IGS nor Sithole chose to participate in proceedings at all meanwhile. The hearing proceeded by default as a result.

Transnet and the SIU have welcomed the outcome.

In a joint statement, they described it as “a key step in ensuring accountability and consequence management for executives who may have been involved in criminal activity while employed at Transnet”.

“This is a continuation of implementation of the SIU investigations outcomes and consequence management to recover financial losses suffered by State institutions including State Owned Entities (SOEs) like Transnet,” Head of the SIU, advocate Andy Mothibi said.