Transnet CEO tells Zondo Inquiry of irregularly awarded contracts

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JOHANNESBURG, May 16 – Transnet’s acting group chief executive, Mohammed Mahomedy, on Wednesday told the Zondo Commission that a review of tender documents by Transnet’s new board revealed that several contracts at the state-owned freight operator had been entered into irregularly.

Mahomedy was the acting chief financial officer at Transnet before being shifted to his current role in May last year following allegations of numerous costly scandals involving former executives at the organisation.

He told the inquiry – chaired by deputy chief justice Raymond Zondo – that the board was unaware of Transnet entering into several transactions and was only made aware of the agreements through media reports.

The transactions were undertaken by “key role players” that included Transnet former board members, executives and private companies, and “were to the detriment of Transnet’s best interests,” said Mahomedy.

Various procurement processes had been flouted, he said.

He testified that a maintenance contract entered into between Transnet and China South Rail was irregular, saying the new board could find no evidence of the agreement “at any management committee meeting”.

The controversial deal – involving companies allegedly linked to the Gupta family – saw China South Rail receive contracts amounting to about R25 billion to supply locomotives to Transnet. China South Rail is alleged to have paid bribes amounting to billions of rand to secure the deal.

Another contract Mahomedy touted as irregular was Transnet’s multi-billion rand acquisition of 1064 locomotives.

Former Transnet chief executive Brian Molefe allegedly bypassed normal procurement processes and took a request for the deal straight to the board. The deal had already been entered into when Molefe made the request, said Mahomedy.

Management consultancy firm McKinsey and Company was contracted to advise Transnet on the acquisition of the locomotives but would not be able to meet a tight deadline and so pulled out.

Regiments Capital, which was McKinsey’s partner at the time, took over the deal from McKinsey, but it appeared that the deal had actually been “ceded” to Regiments by McKinsey, said Mahomedy.

He said that Transnet’s former CFO, Anoj Singh, had also entered into a contract with Regiments for the deal about a month earlier. Mahomedy said there appeared to be a “parallel system at play” that had “no sign of procurement processes”.

Mahomedy’s testimony is set to continue on Thursday.

– African News Agency (ANA)