Gauteng - Retired Transnet electrical engineer Francis Callard on Friday told the commission of inquiry into state capture how the state-owned rail, port and pipeline company bent its procurement rules to favour a Chinese locomotive manufacturer.
Gupta-linked China South Rail elbowed out Japanese railway freight vehicles and locomotives company Mitsui despite Callard recommending that the contract be awarded to Mitsui.
Callard, who worked for Transnet for 45 years and is now assisting Mncedisi Ndlovu and Sedumedi Attorneys with investigations at the troubled entity, told the commission chaired by Deputy Chief Justice Raymond Zondo about a memorandum he had prepared for approval by former Transnet freight rail chief executive Siyabonga Gama.
In a business case Callard had prepared for his bosses appointing Mitsui, Transnet’s suspended supply chain manager Lindiwe Mdletshe removed the benefit of the standardisation of the locomotives, which had two elements, namely operational and maintenance standardisation.
The whole section was deleted and replaced with a claim that China South Rail has been adjudicated to be the best bidder.
The 95 electric locomotives were for general freight use.
According to Callard, among the reasons cited for the removal of Mitsui was that it hadn’t fared well in the two most recent tenders issued by Transnet.
Another reason cited was that appointing Mitsui through confinement would pose unnecessary risks to Transnet, Callard testified.
In terms of Transnet’s supply chain management policies, confinement refers to appointing a supplier without going through a competitive bidding process.
“Effectively, none of this addresses the key point that was made out of standardisation and inter-operability and that has been replaced with extraneous material,” Callard said.
He said he had been taken aback by Mdletshe’s amendments and felt this was not right.
“It’s flawed in thinking, it’s flawed in execution.”
Mdletshe had requested Callard’s assistance with formatting the memorandum stating the business case that had been distributed widely to Transnet bosses.
“I noticed that the memorandum had been changed significantly to give effect to confine and award to CSR for 100 electric locomotives and the confinement I had to Mitsui was totally removed,” said Callard.
He said his business case not only removed Mitsui, but in addition to the 100 electric locomotives it increased the diesel component from 60 to 80.
Transnet chairperson Popo Molefe has previously told the commission that Mdletshe, who was suspended last year and is facing disciplinary action, had proposed a settlement with the entity.
Earlier this week, acting chief executive Mohammed Mahomedy told Justice Zondo that Transnet was biased towards China South Rail and that the company had scored the lion’s share of the R54.5 billion contract to supply 1 064 locomotives.
China South Rail, which has been accused of paying billions of rand in bribes to secure Transnet contracts, was awarded a share of 359 of the 1 064 locomotives and the company was paid 30%, or R5.4bn of its R18bn deal, in deposits or advanced payments.
Transnet is also in the process of talking to certain service providers where there are certain allegations against them to reach an agreement on some sort of settlement to recover some of these monies back into Transnet.