- Anoj Singh said a 2014 Transnet board meeting discussed locomotive cost increases and there were no objections.
- Singh said while Transnet expected to pay up, the expectation was that the price would not be "excessive".
- Singh would not tell the commission why his legal advisors told him not to participate in a South African Institute of Chartered Accountants probe that led to him being stripped of his CA status.
Transnet's board had detailed meetings regarding the state-owned company's ill-fated procurement of locomotives with Regiments Capital as transaction advisors, so they could not claim ignorance of the ballooning cost, the Zondo Commission heard on Thursday.
Former Transnet chief financial officer Anoj Singh also told the commission that no board member could claim he worked in secret to have Regiments brought on board to work on the deal.
The Gupta-linked firm worked on several Transnet contracts – notably, the tender for 1 064 locomotives for which the cost ballooned from R39 billion to R54 billion, with the escalation blamed on the omission of hedging costs.
Former Transnet Freight Rail executive manager Yousef Laher told the commission in October that he and his team were told to continue with the evaluation without including the escalation costs.
But Singh said a 2014 meeting of the Transnet board discussed the increase in price for the locomotives deal, and none of the board members indicated that they disagreed or believed they had been misled.
He said they were aware of the relevant cost increases and the reasons provided for these.
"The contract value of the locomotive at that time was R52 billion. So, the escalation was disclosed to the board way before we concluded the contract. The reasons for the escalations were also disclosed to the acquisition and disposal committee at the time," said Singh.
Evidence leader Advocate Anton Myburgh also questioned Singh about other contributing factors to the ballooning cost, namely the minimum rate of return (hurdle rate), the batch price, cost escalation and contingencies, which made up half of the R16 billion increase.
"The allegation of the manipulation of the hurdle rate to justify the project was an issue where he asked if it was an MPV-positive deal with a hurdle rate of 18.5%. The approved business cases shows that there were sensitivities regarding the hurdle rate and the operating efficiencies," Singh said.
He said that the Transnet board also approved the splitting of arrangements for the electric and diesel locomotives and that this was allowed for by procurement guidelines structures internally at the entity.
This saved the company money, he said.
"Splitting the award actually went on to save Transnet some R660 million. So, from that perspective, it’s just a matter of consequence that the R2.7 billion was a consequence of the decisions made at that time," he responded.
Singh said while Transnet expected to pay something for the locomotives, the expectation was that the price would not be "excessive".
Relationship with Regiments
Myburgh asked Singh about the circumstances surrounding meetings he was said to have had with Regiments Capital leaders including Niven Pillay and Eric Wood before they were brought in as transaction advisors for Transnet in their procurement of electric and diesel locomotives in 2014.
Singh said he met the executives "through the transaction advisory work".
"My first interaction with Mr Pillay would have come from the introduction by McKinsey as their supply development partner.
"Prior to that, I don't think I have had any interaction with Regiments, Mr Wood or Mr Pillay," replied Singh.
Stripping by SAICA
Singh was also questioned about an investigation into his conduct by the South African Institute of Chartered Accountants (SAICA), which found him to be "dishonest" and "negligent" of his duties as a chartered accountant at Transnet and stripped him of his status.
Earlier during the hearing, Myburgh asked Singh why he did not participate in the SAICA probe into his conduct, to which he replied that he was advised by his lawyers not to participate.
Myburgh asked Singh why his legal advisors advised against him participating in the process, but Singh’s lawyer Anneline van der Heever took exception to this line of questioning.
Zondo struck her objection and Singh told the commission that he did not wish to disclose the reasons behind the legal advice that he was given.