Locomotive procurement memo altered to favour China South Rail, Zondo hears
Johannesburg - A former Transnet engineer has told the Zondo commission that changes were made by Transnet executives to a contract specification memorandum for the procurement of 100 locomotives which resulted in a Chinese company being unfairly favoured.
Francis Callard took the stand on Friday and explained how he was tasked with drawing up the business case for Transnet’s procurement of 100 electronic locomotives.
He drew up the business case and keeping in line with the needs, specifications and the urgency recommended that Mitsui & Co, a Japanese company, be selected.
He said his recommendations for Mitsui & Co was that the company already supplied Transnet and would be able to provide the locomotives with specific requirements with urgency.
"The business case addressed the urgency, the limited numbers of suppliers, and that the goods and services are highly specialised and largely identical to the previous locomotives purchased from Mitsui, the confinement meant the quickest delivery, making use of existing facilities," Callard said.
Callard said he submitted his business case in October 2013.
He said when he eventually received the business case document back in early 2014 when he was asked to add slides by former supply manager Lindiwe Mdletshe, he noticed that the memorandum had been changed and would favour the confinement to China South Rail (CSR), a Chinese based company.
Callard said he was taken aback by the changes which excluded a number of important specifications which motivated for the confinement to Mitsui & Co.
He said he could not say with certainty who had made changes to the business case, but he suspected former Transnet CFO, and head of group procurement at the time, Garry Pita had made the amendments.
“There is a trace of emails between myself and various parties that suggest that Gerry Pita was the author of the revised document,” he stated.
Callard said he decided to write an email to then head of Transnet Freight Rail Siyabonga Gama and the head of Transnet Freight Rail procurement Thamsanqa Jiyane.
He explained at length that the business case had been changed in favour of CSR and it did not take into consideration various aspects including urgency.
“This was difficult email to write. When I noticed the changes I highlighted that there was a significant risk to these changes. I pointed out that the changes affected project shongololo. I pointed out that the characteristics of the locomotives and how they interact with each other. I highlighted the business case as modified did not specify the locomotive,” he said.
He said Jiyane called him and questioned why he had sent the email.
“Later that afternoon I got a phone call from Mr Jiyane asking why did I send the email?” Callard responded: “Because these locomotives won’t work”.
“That was the substance of the conversation. The conversation did not raise any of the substantive issues I raised in the email,” Callard said.
The inquiry continues.