Brown orders Transnet to report alleged wrongdoing, despite 'inconclusive' report

Johannesburg - Minister of Public Enterprises Lynne Brown has instructed Transnet to report alleged irregularities identified in an investigative report to law enforcement authorities, even though the state-owned enterprise labelled it incomplete and inconclusive.

The report by Werksmans investigated alleged wrongdoing in the R54bn procurement process of 1 064 locomotives from four original equipment suppliers in 2014, including General Electric, Bombardier Transport, China South Rail and China North Rail.

Brown said power utility Eskom has been down "this road of commissioning investigations, only to claim they are indecisive or incomplete".

“It is an unsustainable strategy which adds to the weight of suspicion and negative sentiment about the company,” she said. “Transnet must act on the Werksmans report."

Werksmans was commissioned by Transnet in 2017 to investigate media allegations that alleged locomotive deals inside Transnet had involved kickbacks that could be traced back to the controversial Gupta family.

But last week the state enterprise declared that "at this stage" there was no need for disciplinary processes or suspensions of any of its officials.

The Transnet board had resolved that the report compiled by Werksmans was incomplete and inconclusive, based on the terms of reference provided to it.

Werksmans queries 'surprising' absolution

But Werksmans questioned Transnet’s absolution of officials, saying the board’s resolution to absolve the officials involved in wasteful and irregular expenditure was surprising.  

It queried the board’s “attempt to absolve anyone of wrongdoing”, when its report concluded among other recommendations that Transnet should institute appropriate disciplinary action against those individuals identified in the report.

Werksmans also stated that law enforcement agencies should be brought in to investigate the matters identified in the report.  

Brown welcomed the board's decision to refer matters pertaining to the procurement process to the judicial commission of inquiry into state capture, but said it could not abrogate its responsibility to restore public and investor confidence in the company.

“Overseeing the institution of investigations and disciplinary processes against allegedly errant staff members was the responsibility of the board,” Brown said.

She also highlighted her comments to Parliament's standing committee on public accounts in January that if boards and executives of state-owned companies prove unable to do what's necessary to restore company credibility, their rotation is inevitable.

Transnet, in contrast to the Werksmans statement, said the firm specifically alluded to the limitations of the report in its final document.  

"The board has further resolved that there are no concrete grounds provided in the report to effect any disciplinary processes or suspensions of any officials, at this stage, owing to the inconclusive nature of the report," Transnet said in statement.

The board moved that an independent forensic auditor be commissioned immediately to finalise the outstanding terms of reference in line with the investigation report.

It backed the Werksmans recommendation that certain matters in the report be referred to the judicial commission of inquiry into state capture, headed by Deputy Chief Justice Raymond Zondo.

It would fully cooperate with the judicial commission of inquiry as well as with all South African law enforcement agencies, Transnet stated.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER
Brent Crude
All Share
Top 40
Financial 15
Industrial 25
Resource 10
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Yes. We need the money.
11% - 847 votes
It depends on how the funds are used.
74% - 5638 votes
No. We should have gotten the loan elsewhere.
15% - 1125 votes