director at the law firm MNS, Tshiamo Sedumedi, at the state capture inquiry. Picture: Karen Sandison/African News Agency(ANA).
director at the law firm MNS, Tshiamo Sedumedi, at the state capture inquiry. Picture: Karen Sandison/African News Agency(ANA).

Inquiry hears Molefe violated regulations in Transnet locomotive contract

By Zintle Mahlati Time of article published May 29, 2019

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Johannesburg - Former Transnet CEO Brian Molefe has remained a key player in the irregularities exposed at the Zondo commission with investigators reporting that he violated regulations in approving the price of the tender of a locomotive which saw the price increase from R38,9 billion to R54 billion. 

Tshiamo Sedumedi from MNS Attorneys continued with his testimony on Wednesday, giving details about his law firm's investigation into contracts awarded by Transnet. 

He explained that the investigation focused on four contracts related to the acquiring of locomotives. MNS was appointed by Transnet’s previous board and concluded their investigations last year. 

Sedumedi explained how Transnet’s tender to procure over a thousand locomotives ballooned from about R38 billion to R54 billion. 

He said that Transnet violated its own rules and regulations firstly in changing the cost method used to price the costs of the locomotives. This resulted in the price changing over the approved amount. The minister of public enterprises had approved the first amount of R38 billion. 

When the costs changed, Molefe did not seek further approval from the minister and simply went to the board with a memorandum motivating for the approval of the price change. The board agreed and approved it, but the decision to approve the increase had already been taken at the time. 

Sedumedi said this went against regulations. 

He also highlighted that if Transnet had not changed its price calculations then it would not have incurred any additional cost. 

Molefe’s influence appeared again in relation to a Chinese bidder.

On Tuesday, the commission heard how Transnet favoured a Chinese manufacturer over other bidders when it sought the procurement of locomotives. 

Transnet had issued a tender in 2011 and called for bidders. MNS found that from the very beginning Chinese railway manufacturer China South Rail (CSR) received preferential treatment. He demonstrated this finding by explaining a series of emails between former Transnet group chief executive Brian Molefe and a representative from China South Rail. 

The email appeared to be thanking Molefe for a previous meeting, but it also asked to him organize that CSR is able to access Transnet facilities, that they create a working relationship and for Molefe to organize a local partnership for CSR. Sedumedi said this provides strength to the argument that Transnet favoured CSR. He said it also showed that Molefe played along with CSR and did not push back on these requests. 

“There were two persons that were responsible for the tender processes and questions had to be directed to. CSR seems to have had a direct line to GCE (Molefe). The GCE (Molefe) in his response doesn’t say sorry we are in procurement and please refer your queries to the people responsible for the RFP. Molefe responded that he will send the requests to Siyabonga Gama.”

“This confirms the view that CSR seemed to have benefited from this relationship. It creates the impression that CSR was favoured over other bidders. In the bidding space, fairness is key, you cannot as an organization be seen to be favouring a particular entity,” said Sedumedi. 

Molefe served as Transnet CEO before moving to Eskom where he served in the same role. He has been largely accused of assisting the Gupta in the looting of SOEs. 

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