Transnet under fire

Transnet squandered billions of rands and broke a raft of regulations when it altered the terms of a deal to buy 1 064 new locomotives, an investigation by law firm Werksmans Attorneys found.

The state-owned company commissioned the probe in July last year after allegations surfaced that massive kickbacks were paid on the deal. Its board, which has since been replaced, said Werksmans didn’t uncover wrongdoing by any of its officials, an assertion the law firm disputed.

It states that Transnet’s board agreed in 2014 to pay R38.6 billion for the locomotives from China South Rail, China North Rail, General Electric and Bombadier, but the bill rose to R54.5 billion after the seven-year delivery period was accelerated.

Werksmans said it wasn’t provided with evidence that the National Treasury or public enterprises department approved the changes.

The report “identifies serious breaches of statues, regulations, corporate governance and unlawful conduct in relation to the transaction – involving billions of rands,” Werksmans said.

A report drafted by forensic accountant Harvey Wainer that accompanied Werksmans’ findings asserted that “materially misleading”, incorrect and inadequate information was provided to Transnet board members and that they and the company’s executives failed to properly consider the implications of the deal.

“Part of the increase of almost R16 billion over the originally approved cost appears inexplicable, unreasonable and excessive,” according to the audit report. “Various instances of suspicious conduct suggesting at the very least wasteful expenditure and/or a willful disregard for the interest of Transnet and a cavalier waste of vast sums of money were identified.”

Werksmans recommended a judicial inquiry conduct further investigations, that Transnet take steps to recover misspent funds and discipline those responsible and that the police’s Hawks investigative unit and National Intelligence Agency conduct their own probes. – Bloomberg