How senior execs were empowered to blow billions at Transnet

Under the stewardship of Transnet CEO Brian Molefe and later Siyabonga Gama, individuals had the authority to sign off on contracts of up to a billion rands without going through a tender adjudication committee, the Commission of Inquiry into State Capture heard on Thursday.

This, according to Transnet’s executive manager for governance Peter Volmink, led to the state-owned enterprise (SOE) being made into “a cash cow” by preferred suppliers with links to the top management.

Giving testimony before Deputy Chief Justice Raymond Zondo, Volmink described the wide powers given to individuals to authorise high value tenders at Transnet as “an aberration”.

“In terms of previous Transnet policies, the adjudication process could be carried out by individuals like the chief operating officer for large tenders from R50 million to R1 billion.

“I have no doubt in my mind that the policies gave open discretion and powers to individuals rather than the bid adjudication council.

“The awarding of tenders was delegated to individuals who themselves constituted adjudication councils.

“In the past, tenders were issued to the market without regard for the oversight function of procurement structures that existed.

“Pressure from above referred to bullying of subordinates by senior executives who brought undue pressure on those carrying out the procurement function to do things that were wrong – which should be a dismissible offence.

“Spectacular breaches of the law” were prevalent at executive and board level, he added. These included the confinement of tenders, which means contracts do not go on open tender.

Volmink said: “There was something like eight confinement contracts going to one consulting company, McKinsey.

“It becomes even more problematic when you dealt with confidential confinements only overseen at the level of group chief executive. It raises a red flag when the same supplier repeatedly wins tenders.”

Among some of the irregularities and flouting of tender policies, Volmink cited:

• A case of conflict of interest in the awarding of an IT contract to T-Systems SA (Pty) Ltd – a subsidiary of DataCo, which was awarded a tender to conduct due diligence on Transnet IT.
• Molefe’s abuse of authority in rescinding in 2013 a decision taken by acting Transnet group CEO Charla Pillay to award a tender to Neotel. Molefe gave the contract to T-Systems.

Volmink is expected to wrap up his testimony on Friday.

– brians@citizen.co.za

For more news your way, download The Citizen’s app for iOS and Android.