JOHANNESBURG — Brian Molefe and Anoj Singh are increasingly becoming the two chief suspects in state capture, as the pair stand accused of giving the green light to billions of rands in questionable expenditure on trains during their time at Transnet. This is according to a leaked Werksmans Attorneys’ report which highlights the sheer extent of blatant looting at Transnet. It’s unsurprising then that a pall of corruption allegations have also followed Molefe and Singh thereafter during their time at Eskom. What’s clear is that as time passes and more state capture shenanigans are outed in the daylight sun, these two individuals in particular increasingly have more serious questions to answer. – Gareth van Zyl
(Bloomberg) — Transnet SOC Ltd., South Africa’s port and freight-rail operator, squandered billions of rand and broke a raft of regulations when it altered the terms of a deal to buy 1,064 new locomotives, an investigation by law firm Werksmans Attorneys found.
The state-owned company commissioned the probe in July last year after allegations surfaced that massive kickbacks were paid on the deal. The accusations were contained in a trove of more than 1 million electronic documents and were published by local investigative journalists. Its board — which has since been replaced — said Werksmans didn’t uncover wrongdoing by any of its officials, an assertion the law firm disputed. A copy of the Werksmans’ report dated Dec. 7 was seen by Bloomberg.
It states that Transnet’s board agreed in 2014 to pay a total of 38.6 billion rand ($3 billion) for the locomotives from China South Rail, China North Rail, General Electric Co. and Bombadier Inc., but the bill rose to 54.5 billion rand after the seven-year delivery period was accelerated. Werksmans said it wasn’t provided with any evidence that the National Treasury or Department of Public Enterprises approved the changes, and these weren’t rationally explained.
The report “identifies serious breaches of statutes, regulations, corporate governance and unlawful conduct in relation to the transaction — involving billions of rand,” Werksmans said. The Daily Maverick, a South African news website, reported on Werksmans’s findings earlier.
A report drafted by Harvey Wainer that accompanied Werksmans’s findings asserted that “materially misleading,” incorrect and inadequate information was provided to Transnet board members, and that they and the company’s executives failed to properly consider the implications of the deal.
“Part of the increase of almost 16 billion rand over the estimated and originally approved total estimated cost appears inexplicable, unreasonable and excessive,” according to the audit report. “Various instances of suspicious conduct suggesting at the very least wasteful expenditure and or a willful disregard for the interest of Transnet and a cavalier waste of vast sums of money were identified.”
Werksmans recommended that a judicial inquiry conduct further investigations, that Transnet take immediate steps to recover misspent funds and discipline those responsible and that the police’s Hawks investigative unit and the National Intelligence Agency conduct their own probes.
While Transnet provided some requested documentation to Werksmans, it didn’t volunteer information, which may have implied that evidence was “deliberately withheld or sanitized,” the firm said. It was unable to interview key witnesses including Anoj Singh, Transnet’s former chief financial officer, Niven Reddy from Regiments Capital, which provided financial advice on the deal, and Salim Essa, who owned a company alleged to have received kickbacks from a supplier.
A 100 million-rand fee paid to Regiments in 2014 appeared to be unjustifiable, and raised concerns about whether Singh and former Transnet Chief Executive Office Brian Molefe had conducted themselves properly in approving it, Werksmans said. Siyabonga Gama replaced Molefe as CEO in 2015.
Singh, Molefe, Reddy, Essa and Regiments have all denied wrongdoing.
Transnet’s board has been replaced since Cyril Ramaphosa took over as president in February from Jacob Zuma, whose almost nine-year tender was marred by scandal and whose allies have been accused of stealing billions of rand from state companies. A judicial commission of inquiry, headed by Deputy Chief Justice Raymond Zondo, is investigating the alleged looting.
Popo Molefe, Transnet’s new chairman, said the company’s old board had ordered a further investigation by another law firm because they were apparently unsatisfied with some aspects of the Werksmans report.
“The second report has been handed to me and I am yet to go through it with the directors and apply ourselves before making any decisions,” Molefe said by phone Thursday. “All I can say right now is that the board of directors is getting all the facts and will at the appropriate time act appropriately.”