The succession crisis at the giant parastatal Transnet pits would-be chief executive Siyabonga Gama against the company’s board, which is concerned about his governance record.
Why then has Justice Minister Jeff Radebe taken the lead in Gama’s defence, describing his suspension as a ”monumental injustice”, while Public Enterprises Minister Barbara Hogan keeps a low profile?
The roots of the drama appear to lie in Radebe’s anger about his ousting by former president Thabo Mbeki from the public enterprises portfolio in 2004, and the sacking of the board that had reported to him.
Reinvigorated by his elevation under Jacob Zuma to the justice ministry, he now appears to be seeking to reassert control over his former empire.
Hogan, meanwhile, is said to be anxious to ensure that the disciplinary process surrounding Gama be allowed to run its course, so a decision can be taken on merit. That effectively pits her against Radebe, and the ANC’s deployment committee.
Another bit of unfinished business from Radebe’s period in control of Transnet is set to play out in court next week, when Sandile Zungu, a trusted associate of Radebe who was verbally promised a massive tender to buy MTN shares from the parastatal, challenges Maria Ramos’s decision to sell the shares to the highest bidder.
Radebe and those around him were intensely resentful of that decision, of Ramos’s approach to managing Transnet and of what they saw as their displacement by an Mbeki-aligned alliance.
They, and the ANC, are now making it clear that they are back.
What, then, of Hogan? She derives considerable political support from Deputy President Kgalema Motlanthe, but he chairs the deployment committee, which is said to be insisting on Gama’s appointment.
After bruising clashes with the party and the Cabinet over privatisation, and earlier over the Dalai Lama, Hogan may be calculating that she had best keep her powder dry. But Gama’s supporters are already interpreting her silence as dissent.
Here are two accounts of the dispute as seen from the two camps: supporters of Gama on the one hand and the Transnet board on the other.
From the Transnet camp
Transnet is not commenting on the case, citing the unfolding disciplinary process and the threat of legal action from Siyabonga Gama.
Sources familiar with the chain of events and sympathetic to Transnet set out a timeline dating back a year, which challenges Gama’s suggestion that his suspension has been coordinated in a last-minute attempt to block his bid for the top job.
The process of finding a successor to Maria Ramos began in October last year and on February 12, the shortlisted candidates were interviewed, including Gama.
Meanwhile, an investigation into alleged governance lapses by Gama had also started, following a 2008 tip-off to the hotline operated by Ernst & Young, to whom Transnet’s internal audit function had been outsourced.
A draft report of this investigation was handed to Ramos just before a February 13 board meeting.
Ramos informed the board about the report, pointing out that the investigation was incomplete and saying that as outgoing chief executive she felt she needed to hand the process over to the board.
Then-chairperson Fred Phaswana was briefed by the forensic investigators and in March obtained a legal opinion, which identified ”serious problems” in terms of the Public Finance Management Act and recommended that the allegations be put to Gama.
At this point, the acting chief executive, Chris Wells, was asked to take over the handling of the process and he obtained a second opinion, broadly confirming the conclusions of the first.
It is not alleged that Gama personally is guilty of theft, corruption or fraud; rather that he was responsible for improperly signing off on a series of tender processes — including a R19-million security deal that went to a company in which Communications Minister Siphiwe Nyanda holds a stake. That deal began with four bidders, the tender was then cancelled, and GNS Risk Advisory Services was given the deal in what is described as a ”confined” or ”no-bid” tender.
Such tenders have an approval threshold of R10-million, but Gama, it is alleged, allowed this tender through despite the fact that it came in at nearly double the threshold.
The two other contested tenders are for 212 new locomotives and for 50 refurbished ”like-new” locomotives. In both cases parts supplier Sibanye Trade and Services was central.
Gama allegedly lobbied the board to include Sibanye in work on the refurbishment deal and when the board insisted that the work instead be done by Transnet’s own railway engineering division (formerly Transwerk), he defied them to give work to Sibanye.
As Sibanye did not have the capacity to do the work, it is alleged, it began poaching Transnet staff, to the intense anger of senior management.
Sibanye is also a player in the multimillion-rand deal for 212 new locomotives, which was cancelled after it emerged that a senior Transnet executive shared business interests with Sibanye director Gustav Adams.
In all these cases Transnet was exposed to massive wasted costs running into ”tens of millions”, Gama’s critics say.
These allegations were put to Gama in writing in mid-June and he responded on July 20 in what people familiar with his answers describe as a ”dismissive” fashion, claiming the board’s own legal adviser told him he could go ahead. This is apparently disputed by the adviser in question.
Following a July 28 board meeting a third legal opinion was obtained, from Bowman Gilfillan.
This opinion, according to people briefed on its contents, said the investigation had revealed contraventions of the Public Finance Management Act and raised ”serious questions about Gama’s excercise of fiduciary duty”. ”The board is obliged to act,” it concluded.
A three-person sub-committee of the board once again mandated Wells to take action.
The succession process unfolded against this backdrop. Following the February interviews five candidates, including Gama and then South African Revenue Service commissioner Pravin Gordhan, were shortlisted.
The board strongly preferred Gordhan and intended to appoint him until he was informed by Luthuli House that he should make himself unavailable, as he was to serve in the Cabinet after the elections. ”There was no second choice,” said a person familiar with the circumstances.
Nevertheless, in March, then-public enterprises minister Brigitte Mabandla requested profiles of all five, which were supplied to her.
This dossier included a profile of Gama that detailed the allegations against him.
It is not clear whether she in turn handed this shortlist to the ANC’s deployment committee, and why, if the committee wanted Gama, it made no such recommendation to the board either through Mabandla or her successor, Barbara Hogan.
Following Gordhan’s withdrawal, a new search process was undertaken, and two new names were added to the shortlist. BP’s Sipho Maseko emerged as ”clear preference” of the board, because of his international experience and exposure to senior management in the sector. His name was sent to Hogan on June 9.
On this account there is nothing sinister about the timing of Gama’s suspension. If Transnet were a private sector company, Maseko would already have been appointed — the process has been delayed by elections, a change of minister and the gathering political storm around Gama. — Nic Dawes
On Thursday, Transnet announced that ”in view of the furore that has … been triggered by an internal disciplinary process initiated in relation to the chief executive of one of Transnet’s operating divisions”, Maseko had indicated that he would ”no longer be available as the preferred candidate for the vacant position of the group chief executive”.
From the Gama camp
Siyabonga Gama was to launch an urgent application on Thursday in the South Gauteng High Court against Transnet to have his suspension reversed and the charges against him dropped.
A close confidant of Gama told the Mail & Guardian that his court challenge is based on Transnet’s motive and timing in charging him days before the Cabinet was expected to announce him as the new Transnet CEO.
Gama’s sympathisers believe his suspension is aimed at preventing him from taking up the top job at Transnet. ”The charges against him are neither here nor there,” said one. ”They are not directed at the right person. This is something timed to cause confusion and chaos so that Gama is tried in the court of public opinion. They [Transnet management] want to cause doubt about Gama’s judgment and create an impression that he can’t do his job.”
The source alleged the charges against Gama were first made by former Transnet chief executive Maria Ramos, who allegedly preferred a different candidate. The idea was that instead of appointing Gama, he should be investigated so as to prejudice his chances of being recommended.
The source claimed Gama was targeted by a small clique within the Transnet board because he was seen as independent. ”They saw him as someone who could not be easily influenced to do corruption at Transnet, particularly in the special programmes where they employ family and friends who are often overpaid for services rendered. This is about protecting economic interests.”
Gama’s defence regarding the awarding of a contract to GNS Risk Advisory Services without a tender being issued will be that the companies who applied for the initial tender issued in April 2007 did not meet specified requirements, the source said.
”They wanted people with the ability to infiltrate crime syndicates. The security department of Transnet Freight Rail abandoned the process and opted to call for three quotations from three companies who were interviewed and evaluated. After that process the security unit made recommendation to the board, which approved GNS and sent it to the general manager responsible for security and then to Gama for final approval,” said the source.