The mess that is Transnet should be split into 10 or 12 private businesses – Francois Nortje

Francois Nortje, director of Distribution Junxion at Port of Gauteng, joined Alec Hogg to discuss the recent cyber attack on Transnet. Nortje says he is not surprised because Transnet is a soft target for organised crimes, including cable and fuel theft. His advice is to break the organisation up into smaller private companies because employees in SOEs are not as protective of their businesses as private owners. “Break this thing up into 10 or 12 international or South African companies that take over a portion of Transnet, run it, and then later they can compete with each other. I can’t see any other way. It’s too big. It’s too unwell.” – Claire Badenhorst

Francois Nortje on Transnet’s balance sheet:

I couldn’t get it this morning on the website because – as I told you, I’ll have a look at it to just get the 100% correct figures – but their website is still off. But in about seven years, their debt has grown by more than 50% over and above inflation. Their turnover and their profit grew at inflation and their debt grew at 50% more than inflation. And there are questions about, is their profit real because it was a re-evaluation of assets and since their last financial statements, because their financial statements come out so late, the one for the end of March now has only come out in September. The port regulators reduced Transnet’s fees that they can charge on ports, so they’ll have a reduced profit. If they don’t revalue assets, their profits will be down. So it looks like, in a 10-year period, their debt will have increased fourfold compared to their profit.

On what’s really going on regarding the cyber attack:  

I can’t tell you; I don’t know. But what I can tell you is, I feel for Transnet when it comes to organised crime. Port of Gauteng has got a railway line for 2.2km next to it. On the night of 25 June going on 26 June, there was cable theft. [On] the night of 27 July going into the morning of the 28th, there was cable theft again. You go there to the land where the Port of Gauteng is going to be developed; you see Transnet security all the time. So they are there, now where were they that night when that happened? I drive down to Durban every now and then. Last year (end of August, beginning of September) I drove back and I came across where a petrol pipeline was breached. The fuel was just spewing out like mad, and I wondered what it could be. It was just before nine o’clock in the morning. When I got to Joburg, people got arrested on one of the neighbouring properties of Port of Gauteng – they stole crude oil out of the pipeline and there were four containers with the stuff stored in it and one fell over. It made a massive environmental spill, and I saw how it looks. They put a camp around it and it’s all these containers that take the contaminated soil. When I drove back to Durban, I looked there and that was set up there. So it was a fuel spillage that happened.

A few things concern me about that. I drove past there [at] nine o’clock in the morning. That must have happened in darkness; I don’t think anybody will try and breach the pipeline in daylight. So that thing had run for hours. Now everybody told me it’s not supposed to happen, but it happened. But now what’s concerning me, when I drove down three weeks ago to Durban, I saw at least seven sites that’s got these orange plastic fences around it and these skips with contaminated soil. So that tells me in the last few months, there have been seven breaches of that petrol pipeline between Ladysmith and Escort.

[The pipe is] underground. It’s about 40cm wide. Somehow they found the recipe to get into this, how they do it… Because I was told if you chip that pipeline open, your hand will be cut off by the pressure of the fuel coming out. I’ve been told that if the pipeline gets breached, the pressure drops; it will automatically switch off. I drove past there at nine o’clock in the morning and it was like a high-pressure water pipe that burst. Now, that just shows me that the organised crime guys found the recipe to get [into] that.

Coming back to the cable theft, the one guard reported to me 700m, the other one said 3.5km. To steal 700m of overhead cable is not an amateur job. It’s not an oke with a bakkie. I don’t know how you do it and it just seems that Transnet is a soft target, that their security looks away. That’s what I’ve heard. They do a distraction – the security goes one way, then they do this. But it also can’t be a five-minute job. So I just get the impression they are too big and too soft, and they’re a soft target and they [are] being attacked from everywhere. Malware, petrol, [and] cables.

On a possible solution for Transnet’s problems:

My personal opinion – and I know the ideological guys that believe in the SOEs are not going to like it – Transnet should be broken up into at least 10 or 12 different companies. It’s not because I’m anti-SOEs, but the [private company] guys have got skin in the game. The Port of Gauteng came on the organised crime attack about five weeks ago where the shack mafia initiated a mass invasion on the land. Three thousand people came to peg stands on Port of Gauteng’s rail park. I rushed up from Ballito, I got the best security, I got to court immediately, I got the top advocate, we got the court order, [and] I made 60 phone calls on that Saturday. We were under threat. I spent 12 hours a day there for two weeks preventing it from happening because it’s my land and I know what it took to deal with organised crime there.

Who in Transnet that’s an employer with no skin in the game will put that effort in to stand up against organised crime? The SOEs deliver, in theory, a very development state model, but it’s been first hollowed out by corruption [and] now it’s being attacked by organised crime. Its DNA actually makes it [a] soft target for criminals, for corruption, for organised crime. Rather get the development model a subsidy to the poor or whatever in a different way and break this thing up into 10 or 12 international or South African companies that take over a portion of Transnet, run it, and then later they can compete with each other. I can’t see any other way. It’s too big. It’s too unwell. What I went through to protect my land from mass invasion and basically being stolen, I don’t think that an employee without skin in the game has got the guts in his bones to do what I had to do.

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