Transnet brass clash over ‘nonexistent’ meeting
● The suspension of Transnet CEO Siyabonga Gama hinges on the existence of a disputed board meeting that allegedly took a decision to split the R50bn contract for new locomotives.
Gama and Transnet board chair Popo Molefe had a heated exchange this week about the meeting — with Molefe questioning that it happened.
The confirmation of the meeting is crucial for Gama to prove his innocence in the splitting of the locomotives contract — which resulted in the total cost of the contract ballooning by R9bn.
Gama was one of three Transnet executives who were handed notices of suspension for their role in the procurement of 1,064 locomotives to the tune of R49.9bn. Their suspension was based on the reports of three investigations that have been handed to the board.
They were given until tomorrow to motivate why they should not be suspended.
Gama wrote to Molefe informing him that he was not the one who approved the decision to split the contract, and that such approval was granted by the Transnet board at a meeting on February 26 2014.
But Molefe wrote back on Thursday accusing Gama of lying about the meeting having taken place, as no records exist to prove it did.
“It has come to my attention that there are neither records nor minutes which confirm the existence of a board meeting that took place on 26 February 2014.
“Your allegations about a nonexistent board meeting raise serious concern and reasonable apprehension that your continued presence at Transnet may lead to the tampering of Transnet records to interfere
with the current investigations.”
On Friday, Gama hit back at Molefe, telling him he took offence at being accused of lying. He also attached minutes of the alleged board meeting.
“Your inference that I am inventing meetings is far-fetched and disrespectful to me. I acted in good faith as a director in Transnet to advise the board on a potential risk and I did not choose to withhold crucial information which is critical in deciding the way forward.
“Instead of your utterances … where you accuse me of tampering with Transnet records, you may consider extending an apology to me.”
Gama further said that Molefe’s assertion that his remaining at Transnet would interfere with the investigations was baseless because, “as I indicated before, these investigations were in fact initiated by me”.
According to “the minutes” of the 2014 disputed meeting that Gama supplied Molefe with, the “final locomotives cost” was R38.6bn and the trains were meant to be delivered over three years.
However, the minutes also reveal that “including hedging and escalations”, the costs were expected to rise to R52bn, which was also subject to change pending “potential discount negotiations”.
The meeting was said to have started at 9.12am. Gama joined three minutes later before being excused along with chief advanced manufacturing officer Thamsanqa Jiyane and executive manager of finance Yousuf Laher. The meeting went on until 12.15pm.
Gama and Molefe attended a meeting with parliament’s standing committee on public accounts at Transnet’s headquarters in Johannesburg on Friday at which MPs demanded an explanation as to why Transnet was spending billions on private audit firms to help it with internal auditing.
Transnet closed its internal audit unit in 2005 because its staff at the time did not have the capacity, Gama told the meeting. The company now employs only 10 auditors to “co-ordinate” the work being done by private firms.
When the current auditors were appointed in 2013, Transnet said the contract would cost R1.3bn over five years. The contract was awarded to auditors KPMG, SekelaXabiso and Nkonki Inc.
But Friday’s meeting revealed that Transnet had paid R8.2bn for internal auditing services since 2006.
MPs lashed out at the company for spending more than the allocated R300m a year with “no returns” on the expenditure.
Committee members took turns tearing into the Transnet board and executive management.
EFF MP Veronica Mente said Transnet’s decision to outsource its internal auditing mandate was “compromising” and tantamount to stripping the state of its power of “full control” over public companies, adding that the “financial bleeding” at the entity was an inside job.
Gama told the oversight committee that Transnet ceased to have a fully functional and independent internal audit department. Since then, the parastatal had decided to bring in external auditors.
A group of 10 Transnet auditors “co-ordinated” the process.
Gama said the decision was arrived at because the internal auditing department had “experienced problems” as it had a staff of 120 people.
Transnet internal auditing committee chairperson Ramasela Ganda said outsourcing the mandate did not bear fruit as Transnet’s financial books looked good afterwards, only to be in the red when it was time for external audits.
Molefe declined to comment and Gama was unavailable.