Former Transnet strategy manger, Francis Callard, has testified that he tried to warn the state-owned freight rail and port group that it could not absorb the more than 300 new locomotives per year expected under an "accelerated" version of a multi-billion rand tender. But he says his warnings went unheeded, and Transnet now has too many locomotives.
The engineer was on Thursday testifying at the second day of the disciplinary hearing of the group's former CFO, Anoj Singh, which is being conducted by the SA Institute of Chartered Accountants. Singh, who has pleaded not guilty to the 18 charges he is facing related to his conduct at Transnet and Eskom, was not present for a second day.
Callard’s testimony relates to cost overruns in a tender for 1 046 new locomotives signed during Singh’s time as CFO. The hearing previously heard that Singh chaired the committee which prepared a memorandum to process of the contract.
Callard told the hearing that the companies that were manufacturing the locomotives “asked for an accelerated delivery of 300 locomotives per year against the 180 per of year of the business plan”. He said at the time he told the company’s then-CEO, Siyabonga Gama, that Transnet could not afford to adsorb 300 engines per year. According to Callard, however, his report fell on deaf ears.
He added that there was an also a request for an “aggressive delivery” of these locomotives by Transnet, motivated by Singh’s assertion that the company would save R10bn.
On Thursday he said that while the company could theoretically have some on cost escalation and hedging, he could not say how Singh arrived at the figure of R10bn.
But the aggressive schedule would have major repercussions later on. Transnet was at the time experiencing a fall in the volume of goods it was transporting. But it was also locked into buying the new locomotives.
"[...] This shortfall occurred without the benefit of a flexible contract procurement strategy that allowed locomotive purchase to be accelerated or throttled back without undue penalties. It is a reality at the moment that the locomotive performance in [Transnet Freight Rail] is worse now than it was before the start of this business case”, he said.
“We’ve got too many locomotives… they’re not being utilised because their performance is so low".
Singh was appointed acting CFO of Transnet in 2009 and made permanent in 2012. In 2015 he went to Eskom, where he was later placed on special leave in 2017 and then suspended. He resigned from the power utility a year later.
He has previously denied being involved in corrupt activities or having personal links to the infamous Gupta family.