Senior official hid crucial papers
Ex-engineer denied access to key documents on ballooning prices as they were ‘confidential’
A SENIOR Transnet official hid crucial documents that showed how the cost of the deal to supply 1 064 locomotives ballooned to R54.5 billion, the commission of inquiry into state capture heard yesterday.
Former Transnet electrical engineer Francis Callard was part of a team investigating the increase in the costs of supplying diesel and electric locomotives to the troubled state-owned rail, port and pipeline company.
Callard said Transnet executive finance manager Yousuf Lamer, who was also part of the team conducting the financial analysis or price validation, refused to give him access to key documents because they were confidential.
“These were crucial spreadsheets, they appear to have the figures relevant to the prices and the information needed to come to this conclusion of how did we move from R38.6bn to the R49.55bn or the R54.5bn,” Callard testified.
Commission chairperson Deputy Chief Justice Raymond Zondo asked what justification Laher gave to Callard for saying he may not have the spreadsheets when he was also part of the team.
Callard responded: “I cannot recall what justification was given except that they were confidential. If there was another justification it escapes me.”
The March 2017 spreadsheets dealt with diesel and electric locomotives.
A few days later Transnet Freight Rail chief financial officer Nomfuyo Galeni gave Callard the spreadsheets.
Asked by evidence leader Mahlape Sello if he believed he was denied access to the spreadsheets to conceal what he subsequently established, Callard said that was his interpretation.
He said he gave former Transnet chief executive Siyabonga Gama a report on the increase in the price of the locomotives – but it was ignored.
Callard told the commission that early last year he was asked by Galeni and her Transnet colleague at the time, Garry Pita, to conduct a financial analysis or price validation on the 1 064 locomotives contract.
“In January 2018 I was approached by Galeni and Pita to assist in reconciling the R38.6bn, which was posited by the business case, to the R49.55bn, which excluded options and contingencies which was finally contracted for the 1 064 locomotives.”
He said the request followed the conclusion of the investigation by Werksmans Attorneys and Transnet wanted to formulate a response to it after the report was considered inconclusive.
According to Callard, the brief was two-fold – to show conclusively that forex hedging and escalation were included in the business case and, second, to reconcile the R38.6bn in the business case to the R49.55bn contract price at the time.
The task of showing that forex hedging and escalation were included in the business case was easily concluded, Callard said.
Callard also expressed his unhappiness with Transnet’s evaluation of the locomotives deal, saying it was flawed and demonstrated a pattern of events that favoured certain bidders and that it was not a mistake.
“The BAFO (best and final offer) price presented to the 1 064 locomotives steering committee was not a true reflection of the real costs of the locomotives,” he said.
Roberto Gonsalves, a minority shareholder in China North Rail South Africa – the black economic empowerment partner of the Chinese firm, started giving evidence on the decision by Transnet to relocate the manufacturing of 232 locomotives from Koedoespoort in Gauteng to Durban.
The move was expected to cost R9.7m but ballooned to R647m – and later to R719m – and was done under the guise of transferring skills to Transnet’s staff in Durban.