JOHANNESBURG – Transnet has embarked on a programme to recover excess funds paid to original equipment manufacturers (OEMs) and transactional advisers in the ill-fated tender to acquire 1 064 locomotives during fired chief executive Siyabonga Gama’s tenure.
Transnet board chairperson Popo Molefe yesterday told Business Report in an interview that the recovery formed part of the clean-up campaign to recoup monies paid when the transaction grew from the original estimate of R45 billion to R54bn.
Molefe said among the targeted companies was Regiments Capital, a firm suspected of leading the fleecing of the utility.
He said he hoped the appointment of acting chief executive Tau Morwe on Monday would lead the utility into “getting to the cream” of the funds paid above the realistic amount.
“We will soon have a workshop with our lawyers to look at the various options open to us, what remedial actions we have to take in respect of losses by the business and what legal processes need to be undertaken,” he said.
Molefe acknowledged that the OEM contracts could not be cut willy-nilly because of legal contractual obligations but added that Transnet was looking to recover the funds in addition to implementing recommendations of the various forensic findings on implicated executives.
He said only General Electric delivered the full quota of 232 diesel locomotives while others, including China South Rail, delivered 190 of 369 locomotives, Bombardier Transport 27 out of 240, while China North Rail delivered 21 of 233 diesel units expected.
Molefe blamed Transnet’s previous management for flouting procedure by sending manufacturers to work from locations that neither had adequate facilities nor a skills base to produce the required locomotives over the stipulated delivery period.
He said that going forward Transnet would commit itself to realistic amounts set out initially and not the inflated amounts.
“There are also issues of local content, the requirements of the Department of Trade and Industry (DTI) and South African Bureau of Standards (SABS) which were not met,” he said.
Last month, Transnet fired Gama following a protracted process which included a legal wrangle with the board in a clean-up exercise that saw the utility suspending two other executives.
Molefe said Morwe’s immediate mandate would be the appointment of capable personnel to focus on the recovery of funds and implementation of recommendations of forensic investigations, including those of Werksman Attorneys and others who have looked into the matter.
“Until now we couldn’t rely on management to clean up, there was reluctance from that quarter,” said Molefe. “He (Morwe) will have to do so, he will have to create the mechanisms, appoint people to clean up and generate value on the 1 064 locomotives we are buying.”
He said since the delivery schedule was compressed in the corrupt process, Transnet would also look at expanding the scope to the original intention of the utility.
Siya Biniza, finance and operations director at Political Economy Southern Africa said the issues being uncovered at Transnet were similar to those that were dragged into the open at Eskom.
Biniza said directors and board members should be held personally responsible for financial losses.
“We need to recover the losses in terms of monies being irregularly spent as a result of escalating costs and fruitless procurement without any goods being delivered,” Biniza said. “We need to recover that from the people found guilty. We need to work around the legislation so that it enables the government to do that.”