Zondo commission: Expert says ballooning of Transnet locomotives unjustifiable

Johannesburg - The Zondo commission heard evidence of Transnet irregular handling of a contract to acquire locomotives which saw the prices balloon from R38 billion to R54 billion.

An expert witness Allister Chabi, an actuarial scientist, who was tasked with breaking down the numbers for Transnet locomotive purchase deal.

He told the commission that when he along with MNS Attorneys analysed the numbers of purchasing 1064 locomotives it was clear that the initial cost of R38 billion was justifiable and that an increase in the estimated total cost of the deal could have been increased but not to R15 billion that was added.

He said overall an 11% increase could have been justifiable, but not the 41% that Transnet’s board approved.

In the first part of the Transnet leg of the state capture investigation, MNS officials had laid out how former Transnet CEO Brian Molefe had irregularly approved the increase of the cost of the locomotive tender to acquire 1064 locomotives.

MNS had been appointed by Transnet previous board and were tasked with evaluating the locomotive tender. The company concluded its findings last year.

Tshiamo Sedumedi from MNS Attorneys said 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.   

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