Business Day

Gordhan defends axing move

• Public enterprise­s minister tells court Transnet board failed to act against corruption and had to be removed

- Karyn Maughan

Public enterprise­s minister Pravin Gordhan insisted in court on Monday that his decision to fire the Transnet board was driven by its failure to act against corrupt and reckless activities related to state capture.

But former board member and head of the Transnet audit committee, Seth Radebe, argued that Gordhan’s decision to axe him after he had been in his position for just four months was irrational, illegal and motivated by “unfair discrimina­tion”.

This, Radebe’s lawyers told the Pretoria high court, was because Gordhan chose not to fire a white board member, Arlana Kinley, who had been appointed at the same time as Radebe. Kinley later resigned.

Radebe has filed an urgent applicatio­n to challenge his dismissal by Gordhan and to seek the removal of the new Transnet board appointed by Gordhan.

At the heart of the case is Transnet’s R50bn acquisitio­n of 1,064 locomotive­s which, according to the leaked Gupta e-mails, allegedly resulted in Gupta-linked companies receiving many billions of rand in kickbacks.

Gordhan’s lawyer Nazeer Cassim said the minister, after a “thorough investigat­ion”, concluded that Radebe was “no good … for the Transnet board. He can’t be the chairman of the audit committee.”

Cassim said any suggestion that Gordhan’s decision to fire the Transnet board was driven by racism was “rubbish”.

“There is nothing here that shows minister Gordhan is a racist. With great respect, that’s just rubbish, for want of a better word,” Cassim told the court.

Radebe’s case is the first court challenge over the removal of the board of a stateowned enterprise, allegedly for failing to take action in response to evidence of state capture.

The outcome of the legal challenge to the Transnet board’s removal has implicatio­ns far beyond Radebe’s case.

Radebe’s legal team, which includes advocates Dali Mpofu and Tembeka Ngcukaitob­i, argued that the way in which he was removed had deeply damaging implicatio­ns for his profession­al reputation. This was because there was now a perception that Radebe was somehow connected to state capture.

Gordhan has denied accusing Radebe of involvemen­t in state capture. Instead, Cassim argued that the minister was deeply concerned that Radebe and his board had failed to take any disciplina­ry action against three senior officials heavily implicated by an investigat­ion by the attorneys, Werksmans.

Gordhan said evidence contained in the Werksmans report made it clear there were grounds for further investigat­ion of several former and current Transnet officials in relation to the 1,064 locomotive­s deals.

“The Werksmans report was delivered to Transnet on December 7 2017,” Cassim told the court.

“Despite not being complete, legally speaking, the report still found that the procuremen­t process was cloaked in corrupt and reckless activity. It contained certain recommenda­tions, including establishi­ng a judicial inquiry, institutin­g disciplina­ry proceeding­s against [and suspending] those employees involved with the tender and mentioned in the report, seeking to recover misappropr­iated funds and reporting the illegal conduct to the Hawks for potential prosecutio­n,” he said.

“The audit committee of Transnet, which [Radebe] chaired, neverthele­ss regarded the report as ‘inconclusi­ve’, an opinion the board adopted, and did not implement all of its recommenda­tions, including the taking of disciplina­ry action against those employees implicated therein.

“It chose instead to appoint another firm of attorneys [and not forensic investigat­ors as initially envisaged] to conduct a further investigat­ion at additional cost and causing further delay,” said Cassim.

He argued that this further investigat­ion by MSN Attorneys, which cost R27m, was essentiall­y a “rehash” of the Werksmans report.

According to Radebe, however, Werksmans “could not interview” certain “material and key persons” when they conducted their procuremen­t investigat­ion – including former Transnet CFO Anoj Singh and Gupta family lieutenant Salim Essa. He said the company itself acknowledg­ed that its report was “incomplete”.

This, Radebe maintained, is why he and the former Transnet board decided to appoint another audit firm to do further forensic investigat­ions into the procuremen­t of the 1,064 locomotive­s – a decision he said was made in good faith.

Ngcukaitob­i on Monday urged judge Hans Fabricius to take note of how Radebe and Transnet had taken action in response to the Werksmans report, which included trying to identify “which employees were responsibl­e” for alleged state capture malfeasanc­e.

According to Radebe, there were not just three employees involved in the locomotive transactio­n “but 130”.

Fabricius will hand down judgment on September 25.

 ?? /Freddy Mavunda ?? Clean sweep: Public enterprise­s minister Pravin Gordhan appeared in the Pretoria high court to defend his decision to fire the Transnet board and auditing chair Seth Radebe, who he says ignored recommenda­tions to deal with alleged corruption.
/Freddy Mavunda Clean sweep: Public enterprise­s minister Pravin Gordhan appeared in the Pretoria high court to defend his decision to fire the Transnet board and auditing chair Seth Radebe, who he says ignored recommenda­tions to deal with alleged corruption.

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