Consortium clings to ‘trade secrets’

AmaBhungane went to court this week in a bid to force the winning bidder in a controversial R4-billion locomotive tender to disclose its shareholding.

In September 2012 Transnet awarded CSR E-loco Supply a contract to supply 95 electric locomotives as part of a multibillion-rand project to renew its ageing fleet.

The contract, announced at a press conference in October 2012, involved Chinese rail giant CSR and its Zhuzhou Electric Locomotive Company, as well as two little-known empowerment companies: Basadi Dirang Systems Development and Matsete Industrial Services. In December, amaBhungane asked for copies of the shareholding registers for CSR E-loco and the two empowerment companies.

The revised Companies Act, which came into force in 2011, has a strict disclosure section that amaBhungane and its lawyers helped to frame when the Bill was processed through Parliament. The right to know who owns a company is considered a key tool in enforcing commercial accountability.

Section 26 states that any person “has a right to inspect or copy the securities register of a profit company” provided they comply with a set procedure and pay an administrative fee. The Act gives companies 14 days to comply; unreasonable refusal or obstruction is a criminal offence.

In an email dated January 18 2013, sent on behalf of all three companies, Lietsiso Mohapeloa refused the requests.

Bidding for another tender
Mohapeloa, a former Lesotho civil servant, said the consortium was preparing to bid for another tender for a further 599 locomotives.

“The way we have structured our consortium is what gave us a competitive edge in the past bid process, which advantage we want to retain in the upcoming bid …”

He complained that “releasing this type of information … at this point would constitute a risk as it translates to releasing ‘trade secrets’ to the public, including competitors”.

“This position will, however, change when the evaluation process has advanced sufficiently to take away the risk, at which point we will happily release the information to you.”

AmaBhungane pointed out that the Act made disclosure of shareholding mandatory; there is no way this information may be considered a trade secret.

The tender period for the Transnet 599 project closed in April, but in court this week counsel for the companies continued to argue that their shareholding amounted to a trade secret and should remain confidential until the tender is awarded.

The Act makes no provision for any grounds for refusal at all, but ­advocate Roshnee Mansingh, for the respondents, contended that the court should read such grounds into the legislation based on the fact that the section dealing with criminal offences refers to where companies “unreasonably refuse access”.

Judge Caroline Heaton-Nicholls questioned how, given the disclosure provisions in the Act, the companies could have any expectation of confidentiality.

Mansingh said the BEE component of their consortium was a secret competitive advantage that was “equivalent to a pricing formula”.

Just what this secret advantage might be has become even more intriguing given the controversy that has arisen over the earlier award.

Business Day reported in July that the Transnet 95 contract was up to six months behind schedule.

Judgment is expected next week. Steven Budlender appeared for amaBhungane, instructed by Webber Wentzel.

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The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See for our stories, activities and funding sources.

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Sam Sole Author
Guest Author
Sam Sole
Sam Sole works from South Africa. Journalist and managing partner of the amaBhungane Centre for Investigative Journalism. Digging dirt, fertilising democracy. Sam Sole has over 17731 followers on Twitter.

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