‘Justify R20m payment’
DEPUTY Chief Justice Raymond Zondo has ordered former Transnet group chief executive officer Brian Molefe to provide him with proof that a payment of R20 million to former communications minister Siphiwe Nyanda over a disputed security contract was justified.
Molefe is now expected to visit Transnet’s archives and retrieve the memorandum he claimed empowered him to make the payment to Nyanda after his security company had lodged a civil claim against Transnet but the parties had settled the matter out of court.
The settlement, however, outraged Justice Zondo and he described it as shocking and a waste of taxpayers’ money.
Justice Zondo’s outrage came after Molefe admitted the R20m fee was not a settlement sanctioned by a court of law.
He told the commission the dispute between Transnet and the former minister’s security company Abalozi happened when they lodged civil lawsuits against each other.
According to evidence, Molefe said Transnet had filed papers suing Abalozi for making monetary claims for work not performed before his arrival at the freight agency.
Abalozi also lodged a counter application and was suing Transport for R95m loss of income for its former directors and founder members.
Molefe said Nyanda then escalated the dispute to his office which prompted him to demand answers from his head of security General Muziwendoda Toka.
“The officials had claimed that Abalozi did not do any work which warranted them to be paid.
“When I questioned General Toka about it he denied the officials’ claims. General Toka showed me time sheets that were right. I was convinced that Abalozi had done the work.
“I did not ask for statements. General Toka showed me fields of proof of work done,” Molefe said.
The parties, the commission heard, agreed on an out-of-court settlement.
Detailing the contents of the settlement, the commission heard that Abalozi initially demanded a fee of R40m for restitution and compensation. The security company added an additional R20m for loss of revenue on October 6, 2014 but Molefe settled for R20m.
Both the evidence leader advocate
Anton Myburgh and Justice Zondo described the fee paid to Nyanda as a “give away”.
Justice Zondo was visibly angry that the settlement was not the outcome of court proceedings. He was also particularly angry that Abalozi had also made claims on behalf of their founder directors. Justice Zondo also expressed anger that both parties had withdrawn litigation against each other but Transnet agreed to pay R20m as a settlement.
“It is shocking. In all the years I've been in legal practice I have never seen a settlement agreement like this. Normally each party pays for their own legal costs. Or one party pays for a certain part of the costs. Generally, these amounts never exceed R1m,” Justice Zondo said.
In reply, Molefe insinuated that his decision might have been prompted by a memorandum drafted by Transnet to justify the payment.
He is expected to produce that memorandum during his next appearance, the date to be determined by his counsel and the commission’s legal team.