State capture: Transnet agreements 'went straight to the board for approval, bypassing managers'

China South Rail allegedly paid about R5bn in kickbacks to companies linked to the Gupta family and in return scored about R25bn in locomotive contracts irregularly signed off by Transnet, the former acting group CEO told the state capture inquiry.
China South Rail allegedly paid about R5bn in kickbacks to companies linked to the Gupta family and in return scored about R25bn in locomotive contracts irregularly signed off by Transnet, the former acting group CEO told the state capture inquiry.
Image: Moreri Sejakgomo

Transnet acting group chief executive officer Mohammed Mahomedy told the state capture inquiry on Wednesday that key roleplayers at the state-owned company and certain companies acted to the detriment of Transnet's best interests.

Mahomedy made the statement in his affidavit to the commission, parts of which were read by advocate Phillip Mokoena who was leading evidence. Mahomedy was the group's acting chief financial officer when he penned the affidavit.

"I understand that there was a system where a set of key roleplayers and Transnet executives, board members and certain companies acted in consult to the detriment of Transnet's best interests," Mahomedy said.

He then described various transactions which flouted the company's normal procurement processes. These transactions are now under the spotlight at Transnet.

"Certain transactions were approved through normal processes and some of the transactions did not go through the governance processes prescribed within Transnet. If we look at the Neotel transaction, there was an approved memorandum to appoint Neotel in October 2013," he said.

"In November, a memorandum was signed by [then CEO Brian Molefe] nullifying the decision of the people who approved the [previous] contract and replacing Neotel with P-Systems. Then in December, another memorandum approved the appointment of Neotel."

Neotel scored a R4.9bn contract from Transnet to upgrade CCTV systems at the country’s ports without a competitive bidding process being finalised.

"If we look at the maintenance agreement with China South Rail ... As far as we have reviewed, we have not seen any evidence of it surfacing at any management committee meeting. It was presented directly to the board of directors and then subsequently delivered to the minister's office for approval," Mahomedy said.

The Chinese company allegedly paid about R5bn in kickbacks to companies linked to the Gupta family and in return scored about R25bn in locomotive contracts irregularly signed-off by Transnet.   


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