Tenders fuel Transnet fire

Transnet has been accused of awarding lucrative tenders to companies with links to its current and former board members.

A dossier compiled by disaffected senior Transnet employees says that three current and former board members have links with companies to which the parastatal has awarded contracts worth more than R700-million in the past three years.

These new allegations are providing ammunition for supporters of suspended Freight Rail chief executive Siyabonga Gama, who are using them to hit back at the board which has accused him of poor governance. Last week the Mail & Guardian reported that senior managers at Transnet and Transnet Freight Rail (TFR) were calling for the entire board to step down.

The M&G report quoted from a dossier the senior managers had compiled in which they accused the board of failing to discipline former chief executive Maria Ramos, who last year dismissed allegations against Gama as “baseless” and “utter rubbish” but later raised them at her final board meeting.

The dossier identifies construction company Basil Read as one of the contracted companies. Former national director of public prosecutions Bulelani Ngcuka holds a 3,6% stake in Basil Read through his Vuwa Investments.

Two contracts were awarded to Basil Read while Ngcuka was a Transnet board member.
He resigned from the board in August this year, but remains chairperson of the Transnet Foundation’s advisory board.

The employees’ dossier, which the M&G has seen, says one contract for R260-million involved upgrading the Port of Durban and the other, worth R430-million, was to provide a multi-purpose terminal at the port.

Basil Read’s website says it has been involved in upgrading the Durban port for Transnet since 2006. The site confirms the value of the contracts.

Ngcuka also bought shares from Grand Parade Investment (GPI), a BEE company that partly owns GrandWest Casino in Cape Town, a few months after Transnet approved the sale of V&A Waterfront.

The property was sold to a consortium involving Dubai World, the United Kingdom-based London and Regional Group Holdings, local BEE companies and individuals including GPI chairperson Hassen Adams.

Ngcuka was chairperson of the V&A Waterfront when Transnet sold the property.

Ngcuka said this week he had not participated in the tender adjudication process. “Again, this is another futile attempt by my detractors to besmirch my name. They will fail again as it happened before,” he said.

Another board member linked to Basil Read is Peter Moyo, who was appointed to the board in July last year. Moyo is a shareholder and executive director of Amabhubesi, a consortium that holds an 18% stake in Basil Read.

A further beneficiary of Transnet tenders is Cape Town-based tycoon Fred Robertson, who is a co-director with former Transnet chairperson Fred Phaswana of Brimstone Investment Corporations. Phaswana left Transnet last month after the contracts were awarded. He could not be reached for comment.

Transnet has two contracts with Brimstone subsidiaries Aon South Africa and Lion of Africa. Aon was this year awarded a two-year contract worth R6,5-million to advise Transnet pensioners in connection with the parastatal’s reconstruction of its medical aid scheme. Lion of Africa, which is 60% owned by Brimstone, provides insurance for Transnet.

Phaswana’s relationship with Brimstone came under the spotlight recently when his co-director Robertson struck a deal to lease Transnet-owned land in Cape Town, allegedly at well below market rate.

According to Transnet insiders, a consortium in which Robertson is a shareholder, Liesbeeck River Club, is allegedly paying a rental based on a land value of about R3,5-million, while the market value of the land is about R40-million.

Robertson’s consortium has now offered to buy the property. Attempts to contact Robertson were unsuccessful.

Transnet spokesperson John Dludlu said none of the board members implicated had any influence on the outcome of tenders because independent and non-executive members of the board do not adjudicate tenders or execute transactions.

On Ngcuka’s shares in GPI, Dludlu said the Transnet board had adopted a strict conflict of interest policy ahead of the V&A Waterfront sale process. “To ensure the disposal complied with all the requisite governance protocols, KPMG was appointed as independent governance process auditors and its report, which was publicised, endorsed the process [as] consistent with all the governance requirements,” said Dludlu.

On the Cape Town land deal, Dludlu said the tenant—Liesbeeck River Club—made an offer in June to buy the land and that Transnet still needed to go through an evaluation process for the property before it makes a decision.

He rejected any insinuation of corporate misgovernance by Phaswana. Dludlu said the transaction in question never featured on the board’s agenda during Phaswana’s tenure and that the board would not be involved in the transaction as it fell within the delegated authority of the executive.

Mmanaledi Mataboge

Mmanaledi Mataboge

Mmanaledi Mataboge is the Mail & Guardian's political editor. Raised in a rural village, she later studied journalism in a township where she fell in love with the medium of radio. This former radio presenter and producer previously worked as a senior politics reporter for the Mail & Guardian, and writes on politics, government, and anything that gives the disadvantaged, poor, and the oppressed a voice.
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    Matuma Letsoalo is a senior politics reporter at the Mail & Guardian. He joined the newspaper in 2003, focussing on politics and labour, and collaborated with the M&G's centre for investigations, amaBhungane, from time to time.In 2011, Matuma won the South African Journalist of the Year Award and was also the winner in the investigative journalism category in the same year.In 2004, he won the CNN African Journalist of the Year prize – the MKO Abiola Print Journalism Award. Matuma was also a joint category winner of the Mondi Shanduka SA Story of the year Award in 2008. In 2013, he was a finalist for Wits University's Taco Kuiper Award.
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