Transnet is in the process of recovering billions lost by its directors and companies which benefited from irregularly awarded contracts, Chairperson Popo Molefe said.
Molefe was delivering his testimony before Justice Raymond Zondo's State Capture Inquiry on Tuesday.
He was asked by evidence leader Paul Pretorius what steps the board is taking to take corrective action against executives who had been implicated. "We have begun a process of recovering monies we have identified ... ," Molefe told the commission.
So far China South Rail has paid back R618 million to Transnet. A total of R700m, inclusive of VAT, was paid in advance to the company, before Transnet had received locomotives from it. The VAT mount is to be recovered from SARS, Molefe added.
A similar process of recovery is being followed with other service providers, he said. The monies lost run into the billions, this includes the R8.1bn in irregular expenditure reported in the 2018 annual report. Of this amount R7.2bn has already left the country and R1.8bn is within the country, Molefe said. Transnet is working with law enforcement agencies such as the Hawks and other central banks including the SA Reserve Banks to recover monies as they have the capabilities to track funds outside SA's borders, Molefe explained.
As far as it can, Transnet has endeavoured to negotiate and reach agreements with implicated parties to pay back the money they owe the state ports, rail and pipeline company as litigation could possibly exhaust the assets of implicated parties leaving them without any resources to payback the company, Molefe explained.
Civil actions have been instituted against Gupta-linked companies too, R189m is being sought from Regiments Capital and R145m is being sought from Trillian. Molefe said that there has been a pattern of service providers being paid by Transnet before any work has been done.
"People come and say they would do work for you – before anything is agreed on, Transnet would start paying them. That is the kind of horror show we are talking about," Molefe said.
Individuals from which Transnet is recovering monies include executives who had not exercised their fiduciary duties and had caused the organisation to lose money, Molefe explained.
These executives include former CEO Siyabonga Gama – from whom Transnet is trying to recover R323m, former CEO Brian Molefe - from which R79m is being sought, former CFO Anoj Singh – from which R303m is being sought, former CFO Garry Pita - from whom R335m is being sought, former Treasurer Phetolo Ramosebudi – from whom R282m is being sought and former group supply chain officer Edward Thomas - from whom R11m is being sought.
Of the executives which resigned without completing disciplinary proceedings following their suspensions their pensions have been frozen until matters have been settled, Molefe assured.
Verge of collapse
Molefe also explained to the commission that Transnet was an important component to ensure the functioning of the South African economy. "Transnet is equated to the heart and lungs of the body. A vital organ that makes the economy function," he said.
A dysfunctional Transnet would lead to a dysfunctional economy, he told the commission. When the new board took over in 2018, Transnet had been on the "verge of collapse".
"It was just a matter of time before Transnet became Eskom. Not that we like where Eskom is, it is in serious trouble and because of that the country is in trouble," Molefe said.
"The consequences to the economy would be disastrous if Transport collapses," he said. The need for the board to clean up and clear out corruption and rebuild the organisation without delay cannot be over-emphasised, he added.
Molefe assured the commission that Transnet is a good business, able to make profits – even though it is not performing at its best ability.
The commission resumes at 09:00 on Thursday.