Transnet group acting chief executive officer Mohammed Mahomedy at the Zondo Commission. Picture: Karen Sandison/African News Agency(ANA)
Transnet group acting chief executive officer Mohammed Mahomedy at the Zondo Commission. Picture: Karen Sandison/African News Agency(ANA)

Zondo hears how millions were squandered at Transnet as Mahomedy concludes testimony

By Zintle Mahlati Time of article published May 16, 2019

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Johannesburg - Transnet acting chief executive officer Mohammed Mahomedy has told the Zondo commission in detail how Transnet squandered millions to Gupta-linked companies. 

Mahomedy concluded his testimony at the commission on Thursday. 

The new Transnet board, which was appointed in early 2018, undertook to review contracts issued by the SOE. Mahomedy told the commission how Gupta-linked Trillian Capital was paid millions for services it did not provide. 

Mahomedy summed up the payments as follows; R41 million, R23,9 million, R38,7 million, R11,4 million and R93 million. 

“The payments that we reflect; there was a payment marked Transnet property for R41 million, three invoices marked general freight business for R23,9 million, there were two invoices that had a reference of SWAT for R38,7 million, there was an invoice for Transnet engineering of R11,4 million and for the ZAR Club loan there was a payment of R93 million. There was no evidence as far as we have reviewed that any work was done for the provision of the service for the ZAR club loan,” Mahomedy said. 

“For the SWAT invoices; this amount was refunded to Transnet in December 2016 and we believe no work was executed by Trillian for that payment,” he said. 

Mahomedy said he was surprised to see that the payment had been made to Trillian for services that he was supposed to sign off on. 

He said there was a clear breach of Transnet governance methods with regards to the payments made to Trillian. 

Two Transnet executives, group procurement chief Gary Peters and supply chain manager Edward Thomas, signed off on most the payments and simply wrote “work done” on invoices.

He also told the commission how Transnet executives halted a contract with auditing firm Nkoni which would have seen the company pay close to a billion rand without proper processes being followed. 

He explained that Nkonki had an existing R500 million auditing contract with Transnet which would expire after five years. 

He said Nkonki then approached Transnet with an unsolicited bid to provide a variety of services. 

“They asked for three things which included procurement optimisation, bring in savings on procurement contracts, coal line optimisation and to engage with customers and tariffs. Those were the three issues and they were approved,” he said. 

The Transnet board committee approved the ballooning of the contract which would have seen Nkonki being paid close to a billion rand. 

Mahomedy said the approval of this extension was wrong as proper processes had not been followed. 

Mahomedy said the contract was stopped and Transnet did not pay the money. 

On Wednesday the commission heard how former Transnet executives flouted processes to award tenders. 

Mahomedy said governance procedures were often ignored in the awarding of contracts. Procurement regulations which govern how state-owned enterprises should procure services are required to be followed. 

In one instance, Mahomedy said with the China South Railway deal the submission for the procurement of the locomotives was sent to the minister of public enterprises and the board of directors. It did not follow the usual chain of approval through the management and board committees. 

“The agreement with China South Rail, this agreement was recommended to the then minister of public enterprises. It was a submission that was made directly to the board of directors. As far as we have checked, we have not seen any evidence of it surfacing at any other level of management or board committee meeting. It was presented to the board of directors and submitted to the minister for approval,” Mahomedy said.  

The inquiry continues on Friday with a Transnet engineer expected to take the stand.

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