Former director tries to oust new Transnet board
Former Transnet director Seth Radebe has filed an urgent application to challenge his dismissal by Public Enterprises Minister Pravin Gordhan and to seek the removal of the new Transnet board that Gordhan appointed.
Radebe also wants the High Court in Pretoria to declare that Gordhan’s conduct in firing him amounted to “unfair discrimination” and was “unlawful, invalid and unconstitutional”.
The minister slammed Radebe’s Transnet board in May for its lack of action against individuals implicated in alleged multibillion-rand state capture corruption at the parastatal.
In an affidavit before the high court, Radebe said that he had been appointed in December 2017 and “the allegations of impropriety occurred before my tenure and appointment to the board of Transnet”.
The heart of the dispute between Gordhan and the axed Transnet board concerned its handling of a December 2017 Werksmans Attorneys report on allegations of corruption in the procurement of 1,064 diesel and electric locomotives from four manufacturers, he said.
Radebe maintained that the report had made it clear that further investigation into the alleged corruption involved in these deals was required. He maintained that only 15 of the “more than 120” staff involved in procurement at Transnet were actually interviewed by Werksmans and said the firm “failed to adequately identify all persons involved” in that process.
According to Radebe, Werksmans “could not interview” certain “material and key persons” — including former Eskom chief financial officer Anoj Singh and Gupta family lieutenant Salim Essa — when it conducted the procurement investigation.
He said the firm itself acknowledged that its report was “incomplete”.
This, he maintained, is why he and the former Transnet board decided to appoint another audit firm to do a further forensic investigation into the procurement of the 1,064 locomotives, a decision he said had been made in good faith.
That is not, however, how Gordhan sees it. He accused the former Transnet board in May of covering up the contents of the Werksmans report and failing to take warranted action.
“The Werksmans report mentions three individuals who should have been summarily suspended and investigated. The board deliberately did not do that,” Gordhan told Parliament.
In his affidavit, Radebe claimed that when Gordhan met the former Transnet board in April, he accused them of “being party to what he described as state capture and of not taking action against” Transnet chief financial officer Garry Pita.
“I understood the minister to imply that the board was involved in corruption.”
Radebe said he was “concerned” when Gordhan instructed the board to suspend Pita, who reportedly signed off on invoices authorising Transnet to pay R74m to Gupta-linked company Trillian Capital Partners for work done between February and June 2016. He maintains the minister should not have done so “based on unsubstantiated media reports”.
Pita resigned the following day. According to Radebe, Gordhan then “demanded” that the board suspend Transnet CEO Siyabonga Gama, an instruction that he says “mortified” him, as he believed it was unlawful as there was “no prima facie evidence of wrongdoing against Mr Gama”. Gordhan subsequently fired Radebe.
The Department of Public Enterprises told Business Day on Monday night that Gordhan would respond to Radebe’s claims in court.
HE MAINTAINED THAT ONLY 15 OF THE STAFF INVOLVED IN PROCUREMENT WERE INTERVIEWED
Port and freight-rail operator Transnet squandered billions of rand and broke a raft of regulations when it altered the terms of a deal to buy 1,064 new locomotives, an investigation by Werksmans Attorneys found.
The state-owned company commissioned the probe in July 2017 after allegations surfaced that enormous kickbacks were paid on the deal.
Its board, which has since been replaced, said Werksmans did not uncover wrongdoing by any of its officials, an assertion that the law firm disputed.
The report dated December 7 read that Transnet’s board had agreed in 2014 to pay R38.6bn for the locomotives from China South Rail, China North Rail, General Electric and Bombardier, but the bill rose to R54.5bn after the seven-year delivery period was accelerated. Werksmans said it had not been provided with any evidence that the Treasury or Department of Public Enterprises approved the changes and these were not rationally explained.
The report “identifies serious breaches of statutes, regulations, corporate governance and unlawful conduct in relation to the transaction — involving billions of rand”, Werksmans said.
A report drafted by forensic accountant Harvey Wainer that accompanied Werksmans’s findings asserted that “materially misleading”, incorrect and inadequate information had been provided to Transnet board members and that they and the company’s executives failed to consider the implications of the deal properly.
“Part of the increase of almost R16bn over the estimated and originally approved total estimated cost appears inexplicable, unreasonable and excessive,” the audit report reads.
“Various instances of suspicious conduct suggesting at the very least wasteful expenditure and/or a wilful disregard for the interest of Transnet and a cavalier waste of vast sums of money were identified.”
Werksmans recommended that a judicial inquiry conduct further investigations, that Transnet take immediate steps to recover misspent funds and discipline those responsible and that the Hawks and the National Intelligence Agency conduct their own probes.
While Transnet provided some requested documentation to Werksmans, it did not volunteer information, which could have implied that evidence was “deliberately withheld or sanitised”, the firm said. It was unable to interview key witnesses, including Anoj Singh, Transnet’s former chief financial officer, Niven Reddy from Regiments Capital, which provided financial advice on the deal, and Salim Essa, who owned a company alleged to have received kickbacks from a supplier.
A R100m fee paid to Regiments in 2014 appeared to be unjustifiable and raised concerns about whether Singh and former Transnet CEO Brian Molefe had conducted themselves properly in approving it, Werksmans said.
The DA said it would lay criminal charges against Siyabonga Gama, who replaced Molefe as CEO in 2015, Molefe and another former Transnet official, because the Werksmans report indicated they might have breached the Public Finance Management Act.
Singh, Molefe, Reddy, Essa, Gama and Regiments have all denied wrongdoing.
Transnet chairman Popo Molefe said the previous board had ordered a further investigation by another law firm because it was apparently dissatisfied with some aspects of the Werksmans report.
“The second report has been handed to me and I am yet to go through it with the directors and apply ourselves before making any decisions,” Molefe said.
The board would “act appropriately”.