Transnet disbands scandal-plagued acquisition and disposal committee

Transnet has disbanded its scandal-plagued Acquisition and Disposal Committee, saying company directors should not be involved in acquisitions, according to a new letter by the state-owned enterprise's chair Popo Molefe.

Molefe was named as the new chair of the embattled rail, port and pipeline SOE in May 2018.   

In a letter to staff, which was shared by a source, Molefe gave a broad overview of how the new board had been tackling corruption. Molefe on Friday confirmed to Fin24 that he had sent out a letter to staff regarding the decision to disband the committee after a recent shareholders meeting. 

“Transnet has, for the past three years, been faced with a number or serious allegations of corruption, maladministration and mismanagement of procurement processes. The seriousness of these allegations cannot and must not be ignored," stated the letter.

Molefe said in the letter one of the steps taken since the new board was appointed was to do away with the committee, which approved all the submissions related to the procurement of 1 064 locomotives - before final approval by the board. The acquisition of the locomotives has been plagued by allegations of corruption and cost escalations, many of which emerged from the #GuptaLeaks

The committee was previously headed by Iqbal Sharma.

Fin24 reported earlier that a report by Mncedisi Ndlovu & Sedumedi (MNS) Attorneys alleged that Sharma had a conflict of interest in the approval procedure for the locomotive tender

The report further recommended that Transnet lay criminal charges against Sharma and report him as a "delinquent director" under the Companies Act. The report claims that Sharma failed to declare his business interests and business relationships with Salim Essa, who is often referred to in the media as a "Gupta lieutenant".

Investigations 

Molefe said in the letter that Transnet was being investigated by the Special Investigations Unit (SIU) and the Hawks, and would likely feature in the Zondo Commission of Inquiry into State Capture. 

Molefe said the Transnet Board had received two reports around cost escalations in the contentious contract for the 1 064 locomotives. 

“At hand, is the much talked about 1 064 Locomotive contract, where Transnet was accused of mismanaging the supply chain management process contract resulting in.....procurement increasing from approximately R38bn to R54bn,” he wrote.  

“The Board of Directors received detailed presentations on both the Werksmans Report and the preliminary report by MNS Attorneys on their investigations of the procurement of the 1 064 locomotives.”

Molefe said both reports recommended disciplinary action be taken against executives involved in the transactions, that “former executives” be criminally charged and that funds be recovered. 

He did not give the names of any executives. 

“None of us at Transnet should tolerate corruption of any sort. Rotten elements, if they exist, must be relentlessly exposed. However, we will not rush legal matters and end up having to withdraw some of our decisions because we acted in haste and did not follow processes,” said Molefe.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

ZAR/USD
17.00
(-0.09)
ZAR/GBP
21.24
(-0.12)
ZAR/EUR
19.14
(-0.13)
ZAR/AUD
11.81
(-0.13)
ZAR/JPY
0.16
(-0.20)
Gold
1774.74
(+0.03)
Silver
18.05
(+0.01)
Platinum
808.00
(+0.25)
Brent Crude
42.78
(-0.79)
Palladium
1914.01
(+0.62)
All Share
54521.90
(-0.17)
Top 40
50179.89
(-0.26)
Financial 15
10150.02
(-0.64)
Industrial 25
76554.73
(+0.52)
Resource 10
50138.02
(-1.24)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 1597 votes
I am taking a hit, but should be able to recover in the next year
23% - 2089 votes
My finances have been devastated
35% - 3145 votes
It's still too early to know what the full effect will be
25% - 2269 votes
Vote