GET PREMIUM

House of cards: Transnet, entangled in Gupta web, suspends officials

JOHANNESBURG — State-owned rail company Transnet is at the centre of some of the biggest corrupt corruption scandals that South Africa has ever seen. And finally, fate is catching up with it as its auditors have had no choice but to report a series of irregularities to South Africa’s auditors’ watchdog. What’s becoming increasingly clear day-by-day is that the Guptas, in particular, have used third party companies to siphon off millions upon millions of rands from Transnet. And this web has already, to date, entangled the likes of SAP, Neotel and McKinsey. Again, auditors and law firms finding irregularities in deals done with Gupta companies that are as far afield as Hong Kong. The house of cards is tumbling and the Zuptas are going to find it increasingly harder to escape scandal this time. – Gareth van Zyl

By Matthew le Cordeur, with Yolandi Groenewald, Fin24

Cape Town – Transnet said on Wednesday that it has suspended senior officials, taken legal action and instituted disciplinary actions after its external auditors, SizweNtsalubaGobodo, reported irregularities to the Independent Regulatory Boards of Auditors (IRBA) as part of the year-end financial audit.

“The reportable irregularities relate to non-compliance and non-adherence to stipulated internal procurement processes and requirements of law in procurement contracts entered into between Transnet and various service providers by a number of senior officials,” Transnet treasury compliance manager Bruce Gotha said in a statement on Wednesday.

Railway workers walk across train tracks past a locomotive operated by Transnet SOC Ltd. at the company’s rail depot in Ermelo, South Africa, on Monday, March 10, 2014. Photographer: Dean Hutton/Bloomberg

“The irregularities are no longer taking place,” said Gotha.

“The affected senior officials have been suspended, legal action has been taken where appropriate, and disciplinary actions are underway,” he said, without naming the officials.

“Transnet is no longer using the affected suppliers and all payments have been put on hold until finalisation of the legal investigation, where monies will be recovered, including interest and legal costs.”

“In terms of the Audit Profession Act, the board of Transnet had 30 days to make representation to the external auditors of steps taken to mitigate the risks identified,” said Gotha.

Read also: Named & shamed: 10 Eskom, Transnet, Denel directors hired to help Zupta. #GuptaLeaks

“After which the external auditors were then required to report back to IRBA to confirm if no reportable irregularities are taking place; or the suspected reportable irregularities are no longer taking place and that adequate steps have been taken to the prevention or recovery of any loss as a result thereof, if relevant, or the reportable irregularities are continuing.”

Gotha said there have not been any significant movements on the prices of its instruments and the spread on the Transnet bonds are stable.

Werksmans conducting probe into allegations into separate matter

Last week, Transnet group CEO Siyabonga Gama said the company hired an external legal firm to probe allegations of corruption at the state-owned enterprise. This is not related to the above irregularities.

Siyabonga Gama, Transnet CEO

Gama said Werksmans would be working with Transnet auditors and report back to the company’s stakeholders once the investigation was complete.

The investigation will focus on the Gupta-linked Tequesta Group situated in Hong Kong, which allegedly raked in R5.5bn in kickbacks over three years, among other allegations.

amaBhungane found a contract that stipulated Tequesta would earn a 21% cut of every deal made by Hong Kong-based CSR, a subsidiary of China South Rail (CSR). That amounted to about R5.3bn since 2014. Gupta lieutenant Salim Essa was the sole director of Tequesta, also a Hong Kong company.

Gama said the investigation’s scope would include whether one of Transnet’s suppliers had a party agreement with Tequesta, and if Transnet followed its own procurement processes. Also included in the probe is whether Transnet was indeed overcharged, and concerns around financing.

Source: http://www.fin24.com/Companies/Industrial/transnet-suspends-officials-takes-legal-action-amid-corruption-probe-20170712

For a deeper understanding of the world of money and greater financial control, upgrade to BizNews Premium.