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Publication

CITY PRESS

Page

1.2

Date

Sun 13 May 2018

AVE (ZAR)

52311.77

TRANSNET:

BRIANHELPEDTO LOOTA tender to buy locomotivesfor Transnet wasinflated by , and split between four

suppliers, one a Gupta-linked companyABRAM MASHEGO and SIPHO MASONDO € Hold the members of the board at the time, who "failed tonews@citypress.co.za apply their minds to the transaction", accountable;

rian Molefe was found to have lied to theTransnet board to inflate the controversial1064 locomotive tender - from whichGupta family-linked businesses scoredbillions of rands in kickbacks - fromR38 billion to R54.5 billion.

The name of the former Transnet group chiefexecutive looms large in the 219-page report, inwhich the transaction is described as "cloaked incorrupt and reckless activity". It was compiled bylaw firm Werksmans and is dated December 7 lastyear.

The report, which City Press obtained,precipitated the resignation of three boardmembers from the parastatal two weeks ago.They were chairperson Linda Mabaso andnonexecutive directors Vusi Nkonyane andYasmin Forbes.

Public Enterprises Minister Pravin Gordhancriticised the Transnet board in Parliament twoweeks ago. He accused it of deliberatelystalling on taking action against individualsimplicated in corruption worth billionsof rands.He accused them of failing to act

on the report'srecommendations andconclusions, whichincluded that Transnettake immediate stepsto:

®Discipline "all those currently in the employ of theenterprise" who gave the board "misleading,

incorrect and inadequate information"about the deal;

€ Ask the Hawks and the StateSecurity Agency to investigate thetransaction;

® Institute action to recoverwasteful expenditure fromthose responsible and whounlawfully benefited from thetransaction; and

®Consider suspending"certain executives" to

"ensure that theinvestigation anddisciplinary inquiry is

allowed to proceed withoutinterference".

Because of the size ofthe contract and the

Brian Molefe

TRANSNET:

BRIANHELPEDTO LOOTFrom page 1

"On the face of it, the Tequesta contract, if itis genuine, suggestsbribery by paymentsmade, and to be made by CSR in relation tothe award of business on the 1064 contract,and related to the pricing thereof," he found.Werksmans found that instead of speeding

up delivery, the division of the contractbetween four companies slowed downprocurement of the locomotives and hiked thecost by R5.1billion.Included in the report are memos Gordhan

sent to the Transnet chairperson later in 2013."I am concerned that the profitability of the

project is highly dependent on Transnet'sgeneral freight business being able to growthe volumes transported at amounts aboveGDP growth and tariffs charged aboveinflation. Failure to achieve these optimisticgrowth figures will have an adverse effect onthe expected revenues and thus theprofitability of the project," Gordhan writes.

"I have noted that, whereas Transnet isclaiming that increasing locomotive capacityand efficiency will lead to lower tariffs forcustomers, real increases in tariffs are beingprojected to sustain the project."The report sheds further light on Sharma's

conduct. Sharma had by then acquired astake in Gupta-linked company VR LaserServices. Before the winning bidders - whowere required to source up to 60% of theircomponents in South Africa - wereannounced, he took them to see itsoperations. VR Laser manufactures suchcomponents. He did not declare his interestto the bid adjudication committee. Werksmansfound that he refused to recuse himself fromthe meeting where the draft report byauditors PwC containing those allegations wasdiscussed.Wainer's report contains information about

the performance on the contract by its fourwinning bidders: CSR, BombardierTransportation, General Electric and ChinaNorth Rail.By September last year, about two and a

half years into the contract, CSR hadunderperformed by 59%, delivering 124locomotives of the 302 it was supposed tohave supplied by that point. But China NorthRail and Bombardier Transportation haddelivered none of their respective 179 and 215locomotives.

The best performer was General Electric,which underperformed by 29%, delivering 162of its 228 locomotives.Transnet spokesperson Molatwane Likhethe

said the report was found to be inconclusive."All the report says is that the business case

to the board was signed by Messrs Gama,Singh and Molefe.

"That is a standard practice for anyprocurement process and therefore there isno criminality."MNS Attorneys' chairperson Mncedisi

Ndlovu confirmed his firm had been asked toinvestigate the 1064 locomotive tenderfurther as well as the alleged role individualsinvolved played in any corruption.Molefe told City Press this week that he

had not seen the report, which had beenhanded to both the Transnet board andGordhan. "I will not comment until I see it,"Molefe said.Molefe did not avail himself to read the

report, saying he had a family bereavement.

TALK TO USWho should be held accountable for thealleged looting at Transnet and how canthe parastatal be fixed?SMS us on 35697 using the keyword TRANSNETand tell us what you think. Please include yourname and province. SMSes cost RL50