Image: Transnet chief executive Siyabonga Gama. Picture: Simphiwe Mbokazi

INTERNATIONAL - Futuregrowth Asset Management, A South African specialist fixed-income money manager, said it did not tell Transnet to remove chief executive Siyabonga Gama after the state-owned rail and ports operator said auditors could not give its 2018 financial results a clean bill of health.

“The Futuregrowth team has had continuing engagements as a lender to Transnet over many months,” Chief Investment Officer Andrew Canter said in an emailed statement late Monday.

“Those discussions have focused on governance policies, practices and reporting, as well as the terms of existing loan agreements. At no time, in any forum, has Futuregrowth requested, required or proposed that any individual or groups of people should be dismissed or replaced at Transnet.”

Canter commented in response to a Bloomberg report that cited two people familiar with the situation as saying Futuregrowth was among creditors who reacted to Transnet securing only a qualified audit by pushing for management changes.

The people asked not to be named because they aren’t authorized to speak publicly on the matter.

Lender Agreements

In its annual financial statements published on Monday, Transnet said it had signed agreements for bilateral and syndicated loans amounting to R15.8 billion that contain a clause stating that a qualified audit opinion is a default event, enabling the lenders to call in their loans.

“The board and management have engaged these lenders to share the nature of the qualification, root causes, remedial actions and timelines for remediation,” the company said. “To date, half of the lenders granted waivers and/or reserved rights to immediate acceleration. Transnet is confident that an agreement will be reached with all affected lenders.”

Futuregrowth, which has about R180bn under management, has been openly critical of how state-owned firms are run and announced in 2016 it would stop buying bonds of six of them.

The company said earlier this month it’s still not prepared to resume lending to Eskom.

An investigation by law firm Werksmans Attorneys found Transnet had squandered billions of rand and breached regulations while a separate study commissioned by the Treasury said the company overpaid for locomotives after switching a supply contract to a Chinese rail company. 

Gama, 51, was named chief executive of Transnet in April 2016, having acted in that position for the previous 12 months.

The Transnet board last week gave Gama and two other executives until Monday to argue why they should not be suspended. The chief executive is fighting to save his job, saying in a letter to chairperson Popo Molefe seen by Bloomberg the decision was based on an incomplete report.

A Transnet spokesman did not immediately respond to a request for comment.

- BLOOMBERG