Probe into Transnet rot unfair — Molefe
• Former CEO says he can explain what actually happened if given time
Brian Molefe has lashed out at Treasury-appointed investigators for what he claims are procedural irregularities in their probe into the rot at Transnet and Eskom under his watch.
He claims he will be able to “explain what actually happened” if he were given sufficient time to peruse underlying documents for deals he authorised that appear to have enriched the Guptas.
Instead, he received a draft investigation report on July 27, without the more than 60 annexures it cited, and was asked to respond to it by August 13. “They were supposed to have contacted me timeously, given me an opportunity to go through all the documents and allegations, and to respond properly,” he said on Friday.
“This whole thing is, I think, procedurally unfair. It’s not being done by the book.”
The former Transnet and Eskom CEO has been implicated in wrongdoing by several probes including the Treasuryled one that found evidence that Molefe and other officials had manipulated Transnet procurement processes to favour China South Rail (CSR) in awarding it three contracts worth R25bn between 2012 and 2014.
Documents contained in the Gupta leaks show that CSR paid alleged kickbacks worth R5.3bn to Gupta-linked companies in the United Arab Emirates and Hong Kong to secure the contracts. The documents include a spreadsheet detailing the kickbacks due for each contract, amounts paid and a consultancy agreement to pay Gupta lieutenant Salim Essa an “advisory fee” of R3bn.
The Treasury appointed Fundudzi Forensic Services in February to investigate the rail
deals, several suspect coal contracts Eskom awarded to Gupta-owned mining company Tegeta and irregular payments worth billions of rand made to consultancies Regiments, Trillian and McKinsey.
The draft report claims that Molefe and other senior Transnet officials bent over backwards to ensure CSR won the lucrative rail contracts at hugely inflated prices.
This included allowing CSR to bid for a 95-locomotive deal after the Chinese company was initially disqualified for failing to meet black empowerment criteria, and Transnet paying R509m more than it should have for another contract for 100 locomotives without informing the Treasury.
The draft report also found Molefe and other officials had irregularly raised the price paid to four rail firms for 1,064 locomotives by almost R16bn from R38.6bn to R54.4bn without board and ministerial approval. This included paying R18bn to CSR for 359 electric locomotives — R6bn more than planned.
The report cites documents that show the price tag of R38.6bn for the original business case had factored in R6.7bn for contingencies, price escalations and forex fluctuations. However, the contracts Molefe signed included a “contingency fee” of R4.9bn, described as an “overstatement”, and overstated hedging costs of R1.1bn on advance payments of R11.8bn.
“The prices of locomotives seem to have been inflated given the fact that locomotive supply agreements are firm and fixed contracts in rand terms,” the report says. It also found Transnet had failed to impose penalties for the late delivery of locomotives, as stipulated in their contracts. Penalties CSR should have paid, but did not, amounted to R190m.
Molefe said he could only respond to the questions posed by Fundudzi after he had perused the documents he had requested. He asked for 33 annexures on the 95-locomotive deal with CSR.
He will also be requesting Transnet audit and legal assurance reports obtained “at every single stage of each of the transactions. Subsequent to that there was an external audit, and nothing was found wrong with the transactions. And now suddenly there are things that are wrong.”
Treasury spokesman Jabulani Sikhakhane said on Saturday that Molefe had raised these matters in a letter he had sent to the office of the chief procurement officer at the Treasury.
“Treasury will respond to his letter,” Sikhakhane said. Fundudzi’s final report was due at the end of August. The boards of Transnet and Eskom, “being the accounting authorities”, would be responsible for implementing its recommendations, he said.
Asked if the Treasury would consider trying to recoup funds from officials found negligent or who had enriched themselves, Sikhakhane said it was “also the responsibility of the accounting authorities to recoup the losses and/or lay criminal charges”.