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Transnet institutes a group-wide investigation into contracts

By Siseko Njobeni Time of article published Oct 24, 2017

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JOHANNESBURG - Freight transport and logistics group Transnet has instituted a group-wide investigation into its contracts and suppliers amid the rampant allegations of rent seeking and kickbacks at state-owned companies. 

Transnet group chief executive Siyabonga Gama yesterday (MON) said that the company was dealing with the allegations of wrongdoing in its contracts.   Gama insisted that the problem was not about Transnet governance processes or integrity but about suppliers.

“As you know, (when) we enter into contracts with you, we do not know who you enter into contracts with. It is not our job to to police that,” Gama said on the sidelines of the two-day Transnet Indaba in Kempton Park. 

“There is nothing untoward that we have seen within Transnet. At the moment, everything that has been reported we are investigating it. As soon as the investigations have been completed, we will be able to share (the outcome).” 

Transnet contracts have featured prominently in the so-called Gupta leaked emails, backing up claims that the Gupta family exerted its influence on state-owned companies as part of the so-called state capture. In November last year, Transnet severed ties with Trillian and Regiments Capital. The two companies were named in former Public Protector Thuli

Madonsela’s state of capture report last year.

Since then, there have been new details of how Trillian, a company with strong links to the Gupta family, allegedly facilitated access to state-owned companies such as Transnet for kickbacks disguised as “fees.”

Gama said the Transnet probe would cover everything.

He said Transnet had approached all its suppliers and asked if there were paying a commission to a third party and asked them to give reasons for the payments.

“We have a team of auditors that Transnet has engaged. Most of these people that are cited we do not know them and they do not do any business with Transnet. We cannot go to someone that we have not met and say ‘what have you done?’ We are dealing directly with our own suppliers. I cannot go and deal with a third party that I do not know. Some of (the suppliers) are coming back to us this week to give us progress reports,” said Gama 

Meanwhile, Gama said he was happy with the supplier development that had taken place as a result of the company’s multi-billion rand locomotives contract. 

He was responding to a question about the damage to Transnet’s reputation because of lack of funding for South African Bureau of Standards (SABS) to conduct verification of local content in the 1 064 locomotives that Transnet is buying from different suppliers. 

“Transnet is not responsible for funding the SABS. The SABS, through the government agencies, must fund that. As Transnet, we are comfortable that supplier development is taking place,” Gama said.

 “We are comfortable that those things that (original equipment manufacturers) said they would subcontract, that they are subcontracting. I continue to extend an invitation to anyone who believes that supplier development  is not taking place to go to our manufacturing facilities.” 

In 2014 Transnet awarded a R50 billion locomotives contract to Bombardier Transportation, China South Rail, China North Rail and General Electric. SABS was appointed the local content verification agent. Since the conclusion of the contracts, there have been allegations that the Chinese suppliers were lagging behind in localisation.

Gama said the company was aware of a recent decision by Parliament’s portfolio committee on trade and industry to investigate compliance and local public procurement policy of Transnet 

“We have extended to them (an invitation) to visit Transnet,” said Gama. He said it would be “useful” for the parliamentarians to visit Transnet before formulating the terms of reference of the inquiry. 

In his address at the Indaba, Gama said, while intra-Africa trade was improving, there were still bottlenecks “in terms of logistics networks. We as Transnet see that as an opportunity for us to go in there and use our core competencies that we have gained…We look at Africa and see a continent that is rising.  If Africa must rise, what is it that we as Transnet must do. So the development of cross-border logistics is important.”


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