Transnet in CEO quandary

2009-09-05 11:39

SIYABONGA Gama, the chief executive of Transnet Freight Rail, was

suspended this week after a forensic investigation into the granting of two

contracts recommended further investigation.

His suspension has attracted Cabinet opprobrium, with Justice

Minister Jeff Radebe entering the fray on Gama’s side while President Jacob

Zuma’s spokesman, Vusi Mona, has also claimed that Gama is a victim of a racial


The Public Finance Management Act sets stringent procurement rules

for parastatals and an independent probe recommended the Transnet board

investigate how Gama approved a R19-million contract for security and a second

for the purchase of locomotives worth R100 million.

Gama disputes this.

The recommendation was confirmed by a second opinion sourced from

Bowman Gilfillan attorneys, which represent Transnet.

The probe showed no conflicts of interest nor corruption but does

suggest that Gama allegedly exceeded his level of authorisation on the security

contract and did not accede to a board requirement on the locomotive


The security deal to protect against copper theft was granted by

“confined contract” (without open tendering) to GNS Security, a company in which

the communications minister, Siphiwe Nyanda, owns a stake.

Gama can approve contracts of up to R10 million, but this deal was

valued at R19 million.

The locomotives tender came off the rails because of capacity

problems for the winning bidder. Delays went on for several months while a board

requirement that design alterations to the “like new” locomotives be done by

Transnet Rail Engine company were not done.

Electro Motive Sibanye, to whom Gama gave the contract, eventually

lost the R800-million tender and is still fighting Transnet in court.

Gama has linked his suspension to his possible appointment as group

chief executive of Transnet, a position vacant since the end of February when

Maria Ramos quit.

Cabinet wants to give him the job, but Transnet sources say that

Gama did not make the cut of potential ­candidates that are now sitting with

Public Enterprises Minister Barbara Hogan. The minister is in a quandary since

she will have to make the appointment from the list given to her by the board’s

nomination committee.

If she toes the party line and appoints Gama she will face a

governance crisis with the board.

A source in Parliament says Hogan is coming under pressure from

lawmakers to move on the appointment of the Transnet chief executive and

reconstitute the board, whose term expired in July.

A new board is seen as the platform from which to appoint a new

Transnet head.

While Gama believes he is the front-runner, reports suggest that

the board’s preferred candidate is Sipho Maseko of BP.

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