Audio recording exposes Transnet boss in Gupta tender

2018-06-17 10:01
Business mogul Robert Gumede, who owns Gijima Holdings, which was allegedly overlooked in favour of a Gupta-linked company. (File)

Business mogul Robert Gumede, who owns Gijima Holdings, which was allegedly overlooked in favour of a Gupta-linked company. (File)

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An audio recording of a Transnet tender subcommittee meeting reveals how a director of the state company showed apparent bias towards Gupta-linked German company T-Systems.

Stanley Shane, a director at Transnet and chairperson of the board’s acquisitions and disposals committee, told fellow committee members that he was inclined to keep T-Systems’ contract – contrary to recommendations from the bid evaluation and management committee.

Gijima Holdings, owned by business mogul Robert Gumede, had scored the highest points in technical and pricing, and deserved to be awarded the tender in terms of the Public Finance Management Act.

In the recording of the meeting, which took place on February 13 last year, Shane said: “I’m happier with the risk of getting sued by Gijima, who did not get a contract, than getting rid of the incumbent [T-Systems] that we helped to create. I think it’s suicide.”

The contract was held by government-owned IT company Arivia.kom until T-Systems bought the company in 2009. T-Systems ceded its contract, after buying Arivia.kom, to Zestilor, which was owned by Zeenat Osmany, the wife of Gupta associate Salim Essa. The cession agreement is one of a number of deals that Gupta-linked companies sealed over the past few years in order to cash in on multibillion-rand tenders at Transnet and Eskom.

The recording has emerged as Transnet is involved in a bitter court battle with T-Systems over the contract. This was after the parastatal’s chief executive, Siyabonga Gama, approached the courts to set aside the decision to award the contract to T-Systems and its partner, Sechaba, a Gupta company.

When the tender was awarded to T-Systems on February 22 2016, the acquisitions and disposals committee – which Shane chaired at the time – had defied Transnet’s management recommendation, as well as Treasury’s advice, not to do so.

T-Sytems has been offering the data service to Transnet at R500m a year over the past nine years, raking in more than R4.5bn in the process.

Treasury gave Transnet permission to extend T-Systems’ contract on a month-to-month basis on September 19 for a maximum of eight months, pending finalisation of the court case.

In the recording, Shane explains that he would not want to change the mainframe, data and IT supplier.

“I will tell you this, that if I was a senior executive in this organisation, I would be predisposed towards keeping the incumbent because I have got very big challenges here in terms of keeping my R65bn on track, keeping my governance in place with my bond holders, keeping the minister happy,” he said.

Shane continued: “My understanding at the time of putting this thing out to tender was that we wanted to keep T-Systems honest. That was actually the motivation … we putting this thing out to make sure that we were not paying T-Systems R2.5bn where we should be paying R1.5bn.”

His language sometimes gets stronger: “Our contract management in this place, excuse my French, is k*k. It is k*k. It is terrible.”

He continues: “They [T-Systems] are the disingenuous, dishonest, thieving outsource partner that is the incumbent [T-Systems] versus …”

Shane also questions Gijima for reducing its price by R400m in its final offer, but does not ask questions about T-Systems, whose offer was also reduced by R1bn – from R2.5bn to R1.5bn over five years.

Another subcommittee member from Transnet’s management, group chief information officer Makano Mosidi, questions Shane’s thinking and tries to explain that all risks identified in Gijima’s bid were addressed.

“What I did not know [chairperson], is that this tender was to test and keep T-Sytems,” says Mosidi in the recording.

“If I had known, then we would not have taken this energy to make sure that we get the right solution, a competent bidder … I actually thought it was time to refresh, to get new partners inside Transnet so that we can actually achieve the innovation that we would like to achieve.”

When contacted for comment about the recording, Shane said the decision to appoint T-Systems was made by the entire board, not the acquisitions and disposals committee or him.

“The board took into consideration a matrix of risks – including systems failure, which, in Transnet’s case, could lead to fatalities – and not just financial considerations, which would have been reflected in Treasury’s consideration. The decision of the board was therefore based on merit and significant risk analysis.”

However, in its court papers, Gijima blames Shane and former board chairperson Linda Mabaso of bias towards T-Systems for the unlawful awarding of the tender.

Thamsanqa Malinga, spokesperson for T-Systems, said some of the participants in the acquisitions and disposals committee meeting seemed determined that the contract should be awarded to Gijima.

“The question one must ask is: Why? These are all matters that will be fully ventilated at Transnet’s court process in due course,” Malinga said.

He said it was an “unreasonable conclusion” that Shane fought hard for T-Sytems.

Gijima refused to comment, but its chief operating officer, Maphum Nxumalo, had previously called on the police to investigate T-Systems.

Transnet spokesperson Molatwane Likhethe said Treasury had approved a contract variation of three months on the T-Systems contract.

Transnet, Treasury and Gijima are expected to file their papers in the Pretoria High Court tomorrow, and Shane’s utterances at the acquisitions and disposals committee meeting will feature prominently in the case.

Public Enterprises Minister Pravin Gordhan fired the Gupta-linked Transnet board after taking up his position in the department. The court battle is now left in the hands of the new board’s head, Popo Molefe.

Read more on:    transnet  |  corruption  |  governance

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