An almost year-long investigation by audit firm PwC has confirmed that one of Transnet’s largest divisions used “mafia-style investigations” to “dig up dirt” on their own employees, even resorting to threats and intimidation against those who raised questions about multimillion-rand deals.
The damning findings against Transnet Freight Rail (TFR) are contained in PwC’s draft report, which was delivered to the Transnet board in May.
The executive summary, of which City Press has obtained a copy, makes serious findings against TFR’s former legal head, Kenneth Diedricks, as well as the company’s forensics team that reported to him.
The findings include:
. Irregular monitoring of emails and irregular “planting of evidence”;
. Use of threats and intimidation in TFR meetings;
. Diedricks potentially leaked confidential TFR information to third parties to help them position themselves for upcoming Transnet tenders; and
. Diedricks received payments from a company that benefited from a R25 million settlement from TFR that he signed off on.
PwC was brought in to investigate last year after a confidential dossier from anonymous “TFR senior and executive managers” was sent to then Transnet CEO Brian Molefe.
Titled A cry for help, the dossier describes TFR as being in the grip of an “unholy war” waged against Diedricks’ enemies using Transnet’s resources.
“Once a target is identified, the forensic team is unleashed on that individual with a mission of digging some dirt on them, which will then be used to lead a smear campaign and to formulate trumped-up charges,” the insiders claimed.
Since last year, three more dossiers were handed to Molefe and Public Enterprises Minister Lynne Brown, who has instructed Transnet’s board to investigate the matter.
How legal head allegedly leaked secrets
Although PwC’s draft report concluded that some allegations contained in the dossiers were baseless, it did find “prima facie evidence” to support a number of allegations against Diedricks.
One of the most serious is that he used his position to access confidential TFR documents, including designs of rails and sleepers, parts lists and sensitive Transnet agreements.
The dossiers’ authors allege that Diedricks forwarded this information to his wife’s beauty salon email address, from where it was forwarded to companies who wanted to compete for TFR tenders.
“Transnet intellectual property has effectively been sold to private companies who either already benefited or are still benefiting or are being prepared and given an upper hand and stand to benefit,” a document in the March dossier alleges.
PwC’s draft report confirmed that Diedricks sent “TFR work-related emails to his wife’s private email address” and also noted with concern that meetings were held with “persons not employed by TFR” during which the “1064 tender” – Transnet’s R50 billion tender for locomotives – was discussed, along with potential business opportunities before the tender was awarded.
The PwC draft report adds: “Diedricks was requested to provide additional information in order for the parties to position themselves for tenders coming up in 2015. It thus appears that Mr Diedricks was potentially leaking TFR confidential information.”
Polyzomba and the R300 000
PwC’s draft report found that Diedricks signed off on a questionable R25 million settlement to Polyzomba Rail Contractors, a company contracted by TFR to provide track maintenance. The report also found that Diedricks began receiving payments from Polyzomba soon after.
When Polyzomba’s contract ended in 2011, it demanded an additional R25 million on top of the R43 million it had already received.
PwC’s draft report found that despite Transnet’s own technical team opposing any settlement, Diedricks authorised the extra payment. In addition, the report found that the settlement was signed “shortly prior to [Diedricks] undertaking private work for Polyzomba”, which he did not disclose to his bosses.
PwC also flagged a “questionable deposit” of R300 000 paid on a R3.3 million house Diedricks bought in 2013. The deposit was made by the contract manager at Polyzomba directly into the transferring attorney’s account, although the proof of payment was forwarded to Diedricks’ wife, Yvette.
PwC’s draft report says Diedricks claimed this was payment for undisclosed work he performed for the Polyzomba contract manager.
The ex-wife factor
PwC auditors appear to have found some of their evidence – including that of the R300 000 deposit on his house – after reviewing emails Diedricks exchanged with his now ex-wife.
In an email on July 19 2014, Yvette Diedricks allegedly threatens to expose her husband, saying: “I will go to the Law Society, I will make [sic] hard drives to the DA, I will have them investigate the deposit to our house.”
Yvette declined to comment, saying she feared for her life and had received three threatening phone calls after City Press first approached her.
The dossiers’ authors alleged that anyone who raised questions about the Polyzomba deal then became targets.
Harry Lekalakala, former senior manager in charge of legal affairs and who is named in PwC’s draft report, resigned from TFR in May 2014 after what he called “a sustained and unjustified attack” by Diedricks after he began examining the Polyzomba settlement.
“There’s no doubt in my mind that it’s traceable to Polyzomba,” Lekalakala alleged. “I felt like they were really out to look for something to possibly neutralise me after the discovery of this Polyzomba [matter].”
Nonosi Manamela, until recently an executive manager in TFR’s legal department, was also identified by PwC’s draft report as an employee who was targeted for investigation after querying other questionable deals.
“When I was sitting at the acquisition council, there were transactions that were directed to certain bidders despite the fact that they did not comply,” Manamela told City Press.
“As a governance person and legal person, I had to protect the organisation. At times I was reprimanded for saying certain things.”
PwC’s draft report confirmed Manamela was victimised after raising questions about certain deals, but also found they were both undertaking private work without permission from TFR. The two deny that TFR was unaware of it.
What Diedricks says
Diedricks, who resigned last year citing personal reasons, initially agreed to an interview, saying he believed he was targeted after exposing TFR employees involved in allegedly corrupt deals at TFR involving R500 million. He claims that after he took action against them, his life was threatened and TFR was forced to provide him with bodyguards.
Later, Diedricks said he would only answer questions once the PwC report had been finalised, adding that City Press was “treading on thin ice”.
He threatened to sue City Press for defamation if the findings of the draft PwC report were published.
Asked for comment on the findings of PwC’s draft report, Transnet confirmed the investigation was ongoing, but added that “it is against our human resources management policy to provide commentary or act on ongoing investigations”.
Transnet general manager of corporate affairs Mboniso Sigonyela said: “Transnet takes all allegations of governance breaches seriously. These, depending on their gravity, complexity and sensitivity, are referred to an independent service provider for investigation.
“In terms of our governance policies and processes, the company acts on the findings, conclusions and recommendations of the independent service provider.”
Polyzomba declined to comment.
In a letter written in May, Brown assured the dossiers’ authors that she viewed their allegations in a “very serious light” and had instructed the Transnet board to handle the investigation “at board level”.
Her spokesperson, Colin Cruywagen, said: “The minister has requested the board to investigate certain allegations. These investigations must have clear time frames. The board will also brief the minister on the progress regarding the investigations.”