Transnet manager denies claims he gave order to hike up locomotive prices
Former Transnet manager Yousuf Laher on Wednesday denied any wrongdoing in the controversial buying of locomotives by the company.
Laher, the executive manager in the finance department of Transnet Freight Rail, told the state capture commission that he took instructions from Transnet's CFO at the time, Anoj Singh, on these transactions — which saw the rail and port company entering into contracts to acquire locomotives.
Laher was at the commission to present his evidence, and also respond to the evidence of former Transnet strategy manager Francis Callard, who implicated him in wrongdoing.
Callard's evidence was in relation to the acquisition by Transnet of 1,064 locomotives from CRRCE loco and 100 locomotives from China South Rail (CSR).
Laher was part of the finance evaluation team and the negotiation team for the acquisition of 1,064 locomotives, and said he was roped in as a member of the negotiation team for the 100 locomotives at the last minute.
Among Callard's allegations was that Laher had handed him an instruction to draft a memorandum for the increase in the estimated total costs payable to CSR from R3.8bn to R4.8bn for these locomotives.
Laher denied this allegation on Wednesday.
He told the commission that in February 2014 he was asked by Singh to help Thamsanqa Jiyane, then Transnet Engineering CEO, with the finance-related negotiations for the 100 locomotive deal.
Laher said Singh told him and his team that the Transnet board had approved the procurement of the 100 locomotives from CSR using the confinement process.
This is when other procurement mechanisms such as an open tender, would be impractical due to urgency or limited market suppliers, and where Transnet confines goods to one or a limited number of bidders.
“At that point in time, it took me by complete surprise because we were involved with 1,064 (locomotive) negotiations and I am wondering why we needed an extra 100 locomotives. In any case, he said it was approved by the board,” Laher said.
Laher said while his team was busy with negotiations, Singh asked him to prepare reasonability calculation for these 100 locomotives.
Laher said Transnet had purchased similar locomotives from CSR in 2012.
“I came to a figure of R41m. My calculation was based on taking the price of the 20E locomotive purchased in 2012 (R28m) and adjusting for a change in exchange rates between 2012 and 2014, as well as increasing the cost of that locomotive for inflation,” Laher said.
“I then presented the R41m figure to Mr Singh and Jiyane as a benchmark for them to use in the negotiations.
“Mr Jiyane pitched at R38.5m. CSR disagreed and wanted R49m. It was a to-and-fro, and we did not agree on anything.”
Laher said that a day or two later, he was informed that then Transnet CEO Brian Molefe had approved the price of R44m for the locomotives.
Laher said he informed Singh that the price was excessive. However, Singh's response was that this was a process of negotiating.
“He said the price of R44m was reasonable. In light of Mr Singh's seniority and expertise and experience, I deferred to the explanation he provided to me,” he said.
Responding to an accusation that he had a role in the increase of the price of the 100 locomotives, Laher said he did not approve the price because he did not have authority to do so.
He said the increase was approved by the steering committee, which had the powers.
“I cannot be responsible for something I cannot approve,” Laher said.
Laher will appear again on Thursday.
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