State capture inquiry to hear more on the undoing of Transnet

More testimony on how the abuse of power and neglect of fiduciary duty by former Transnet executives compromised the state-owned enterprise’s (SOE’s) governance systems will dominate when the Commission of Inquiry into State Capture resumes today.

Veteran procurement lawyer and Transnet executive manager for governance Peter Stephen Volmink is expected to give more details of how the SOE was compromised by former executives and board members who pushed through questionable transactions to benefit themselves, close friends and associates.

According to a Treasury report, which is among many documents the commission is using to investigate what led to the SOE’s near-collapse under the leadership of Brian Molefe, Siyabonga Gama and Anoj Singh, Volmink’s evidence is expected to shed more light on how Transnet officials:

•  Went out of their way to assist China South Rail (CSR) in its bid to appoint the company to supply 95 locomotives, which compromised the integrity of procurement processes, with Molefe communicating with CSR during the bidding.
• How Gama, group chief procurement officer Thamsanqa Jiyane, Molefe, the board’s acquisition and disposal committee and board members compromised the integrity of the procurement process and benefited CSR by changing the prescribed conditions after the bid had closed.
• How Molefe, Gama, Jiyane and board members’ actions exposed Transnet to potential litigation and reputational risk in the event that other tenderers had learnt of the irregular amendment of the evaluation criteria.
• The Transnet board approved confinement to CSR on January 24, 2014, before receiving a proposal from it.
• Molefe and Singh did not conduct a cost-benefit analysis when a decision was taken to change from 19E Mitsui locomotives to 21E CSR locomotives. According to the report, Transnet would have saved R1.2 billion if it had procured 100 locomotives from Mitsui at R3.188 billion, rather than from CSR at R4.4 billion.
• The report also found that the board failed to comply with the provisions of section 76(3) of the Companies Act relating to the standard of conduct expected of them.

The report reads: “CSR was irregularly appointed in that it should have been disqualified for receiving bid documents unlawfully.

“CSR submitted company registration certificates, a B-BBEE [broad-based black economic empowerment] certificate, tax clearance certificate and other relevant documents after the tender closed.”

Also raised was the role of then public enterprises minister Malusi Gigaba, who signed the agreement between Transnet and CSR, compromising the procurement process. T

he acquisition by Transnet of the 100-type and 1064-type locomotives will also come under the spotlight during Volmink’s testimony.

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