As the proceedings of Zondo Commission into State Capture continues, the taxpayer is reminded of how untrustworthy and greedy parastatal professionals went to town with public funds. This time, the enquiry is subject to the testimony of Yousuf Laher, a Transnet freight and rail manager. Laher it seems, readily escalated costs on 100 locomotives purchased from China South Rail (CSR) in 2014. The original cost was R3,8bn and later fixed to R4bn. The locomotive deal was suspect in that CSR received the tender documents to bid from Transnet. While other companies bought and applied for the tender, CSR was given preferential treatment. Former public enterprises minister Malusi Gigaba signed off on the deal while ex-Transnet chief financial officer Anoj Singh gave justifications to the Transnet board on why it should be approved at an additional rate – Bernice Maune.
By Bernice Maune
Fingers are being pointed with little accountability at the Zondo Commission which is currently underway in Braamfontein, Johannesburg.
At the centre of the Transnet locomotive saga is the question of who approved the order to add R1,2bn for the purchase of 100 locomotives. According to Francis Callard, who was the electrical engineer on the project, Yousuf Laher, a senior manager prepared the costing and justified why the price per locomotive had increased from R41m to R44m post the agreement.
Laher is also accused of sending correspondence consisting of memorandums to the divisions which were handling the deal. Callard also claims Laher worked closely with then CFO Anoj Singh to pull the hood over the board’s eyes in finalising the locomotive deal and ensuring Transnet coughed up R1bn more.
Transnet purchased a further 1064 locomotives, also at an increased cost from R38bn to R54bn. Callard testified at the commission last year and said he had advised Transnet it was not necessary to procure so many locomotives as the SOE had capacity for 300.
The Japanese Yen was used to price the locomotives, further putting Transnet at a disadvantage of procuring locomotives at a price favourable to CSR.
As it happens: Mr Laher says he had raised a concern of the high cost of the locomotives directly with the bidders during the negotiation session, he says he also raised a concern about the incorrect exchange rates used by the bidder. https://t.co/HVPymoeUL0#StateCaptureInquiry
— State Capture Commission (@StateCaptureCom) October 22, 2020
Meanwhile Laher, who has concluded his testimony, denies that he was responsible for having the escalated costs approved. He has put the blame solely at the door of Singh, telling Judge Ray Zondo that he had to follow orders or risk insubordination. He said he was told by Singh to update the teams working on the costing models and also took orders from the steering committee which included former Transnet CEO Siyabonga Gama.
Laher says during the negotiations, the Chairperson pitched a price at R38.5million. He says CSR requested R49 million and refused to come down, he says he never agreed to accept CSR's price offers, and never had the delegation to agree to any pricing#StateCaptureInquiry
— State Capture Commission (@StateCaptureCom) October 22, 2020
“I would not have approved the price, I didn’t have delegation. It was approved by the steering committee. So, I cannot be responsible for something I cannot approve.”
“Mr Singh told me to contact Mr Callard and request that he update the net value number,” said Laher.
“I don’t understand why he asked me because I had another job and I wasn’t working in his office. Mr Singh was very senior, I was two levels below him and I had to respect his views. If I continued, it would have been insubordination. I don’t know if you know, but he was awarded CFO of the Year in South Africa.”
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Laher said he didn’t challenge his bosses on the phenomenal increase even though he didn’t agree with the rise in costs.
“Singh said they were affordable and that Transnet had the funding to afford those advance payments, and the advance payments were agreed to as part of the package deal by the steering commitment,” he added.
Brian Molefe
The former CEO of Transnet communicated with CSR ahead of them bidding and being awarded the contract. Molefe’s actions are part of an investigation by the Hawks and a damning report by the National Treasury. The report says Molefe sent the documentation and sensitive information to the Gupta family and their associates.
Molefe has also been implicated by Laher as signing off on the price of R44m per locomotive.
Laher says subsequently, a day or two later, Mr Singh told them that the Group Chief Executive, Brian Molefe has agreed upon the payment terms and a price of R44million and that the lawyers must draft the contract accordingly.#StateCaptureInquiry
— State Capture Commission (@StateCaptureCom) October 22, 2020
Malusi Gigaba
According to the report by National Treasury, Gigaba acted as a witness between Transnet and CSR. He blurred the lines of his authority as government shareholder by advising Transnet to purchase 1064 more locomotivesfrom the China North Rail company.
Watch the full testimony of Yousuf Laher below:
