Transnet former execs awarded contracts without board or management consultation | CTlive.info - South Africa News

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Acting Transnet CEO Mohammed Mahomedy. Screengrab

Johannesburg – Acting Transnet CEO Mohammed Mahomedy has detailed how former Transnet executives disregarded procurement procedures to award contracts worth millions of rand. 

Mahomedy was appointed as acting Transnet acting CEO earlier in April and appeared at the Zondo commission on Wednesday. 

When the new Transnet board took over in early 2018 it took a decision to review various contracts that were awarded under the previous leadership.

Mahomedy said they found irregularities regarding procurement practices in a number of contracts. The infamous China South Railway contract to supply over a thousand locomotives, contracts involving Gupta-linked Regiments Capital and Trillian Capital, the Neotel deal and the Durban relocation deal were just some of the contracts which were reviewed. 

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.  

Mahomedy said contacts which involved Regiments and Trillian, companies which have been linked to Gupta associates, all bypassed processes. Trillian was paid over R16 million in one instance and the payment never went through processes. 

“When we look at Regiments and Trillian they feature prominently and what we have found was transactions that would give Regiments approval to provide certain services. Like the China Development Bank loan where Regiments was given R166 million as a success fee. That transaction was approved but it not was served at any management meeting.”

“A number of executives at Transnet were completely ignorant that some of these transactions had occurred and knew of this through media reports and not through the various committee they may have sat on,” Mahomedy said.

On the Durban relocation deal, Mahomedy said the same lack of regard for processes was observed. The relocation was approved by five people with no board or management consultations.

“The Durban relocation, when we reviewed the documents it seems that certain individuals approved this move. This move had not been served to any relevant committee. Something as significant as this and the impact on delivery should have been introduced at the executive committee level at Transnet. The value was R1,2billion,” said Mahomedy. 

The inquiry continues.

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