Less attention paid to profitability of Transnet’s controversial locomotive contract, Zondo hears
The witness says that in the memo handed to the board, there seemed to have been an over-emphasis on the estimated total costs over the profits.
Expert witness Alister Chabi on Wednesday told the commission of inquiry into state capture that the memorandum handed to the Transnet board in 2014 for it to approve an increase of just over R15 billion in the tender to acquire 1,064 locomotives overemphasised the estimated total cost (ETC) of the project “over the profits”.
“There seemed to have been an over-emphasis on the ETC over the profits,” Chabi told the commission, adding that the board might have wanted to look beyond the ETC, which made up 20% of the total project.
The Transnet board resolved on May 23, 2014, to approve the increase of the cost of the tender from R38.6 billion to R54 billion.
Chabi told the commission that the 1064 locomotives were expected to be delivered to Transnet over a period of seven years, starting from April 2013.
Fin24 previously reported that according to a report co-authored by Chabi, along with Robert Oketch of Mncedisi Ndlovu & Sedumedi (MNS) Attorneys, it would be reasonable to come to the conclusion that former Transnet CFO Anoj Singh and former CEO Brian Molefe had either given the board inadequate information about the tender, had not properly thought through the deal, “or had intended to provide material that is misleading/ incorrect; and/or inadequate information to the Transnet board”.
It was reported that the report recommended that the two and members of the board’s acquisitions and disposal committee and capital investment committee should be personally held liable for this.
Chabi’s testimony at the commission is expected to continue after the lunch adjournment.
(Compiled by Makhosandile Zulu)
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