Ombudsman rejects Transnet tender boss's complaint
The Press Ombudsman has dismissed a complaint brought by businessman and Transnet board member Iqbal Sharma against the Mail & Guardian.
The M&G reported last month that Sharma chaired the Transnet board tender committee that oversaw a R50-billion locomotive contract, and that while this process was ongoing he acquired part of a company potentially well-placed to benefit from sub-contracts on the locomotive tender.
Sharma’s partners in the company include Rajesh Gupta and Duduzane Zuma, as well as a close business associate of Sharma’s, Salim Essa.
At the time of the award, Transnet declared the R50-billion transaction to be “South Africa’s single biggest infrastructure investment initiative by a corporate”. Sharma’s complaint included that the story was “untruthful, misleading and unbalanced”, and that it “had harmed [his] reputation and dignity”.
But Press Ombudsman Johan Retief, ruling on Thursday, stated: “I do not believe for a single moment that the reporting was malicious or that it has unnecessarily harmed Sharma’s reputation and dignity. The complaint is dismissed.”
In a separate development, Transnet has called in forensic auditors from PricewaterhouseCoopers, amaBhungane can reveal. The company was coy about their terms of reference, saying only they had been appointed “as independent advisors on governance related matters”.
However, PwC contacted amaBhungane and were then provided with a copy of Sharma’s complaint and the M&G’s full response, these being public documents. The report at the centre of the dispute revealed that Sharma, while chairing Transnet’s Board Acquisitions and Disposals Committee, finalised a deal in December last year to buy a Gauteng engineering firm, VR Laser Services.
VR Laser produces steel plate components for heavy vehicle bodies and had previously done some work for Transnet. In February, a company in which Rajesh Gupta and Duduzane Zuma are partners acquired their stake in VR Laser – an interest they endeavoured to keep hidden. Throughout this period, Sharma was overseeing the locomotive tender process.
Though the committee he chaired did not have the authority to decide on the assignment of tender awards, it provided oversight on the process followed by executives. Sharma tied up his acquisition of his part of VR Laser a matter of weeks before Transnet announced the main tender winners in March.
The M&G also reported that as Sharma was putting the finishing touches to both the tender and his acquisition of the property holding company linked to VR Laser, each of the four multinational train manufacturing companies that would later win a slice of the locomotive supply contract visited the engineering company’s premises to assess the possibility of subcontracting work to VR Laser.
The winning bidders are required by state procurement policy to source up to 60% of their locomotive components from South African subcontractors, placing VR Laser in a highly advantageous position. The company bills itself as “a complete one-stop fabrication facility for the manufacture of all types of vehicle hulls for any original equipment manufacturer”.
Sharma complained: “There is absolutely no conflict in my private business affairs and my role and responsibility to Transnet.
The property company has certainly never done or plans on doing any business with Transnet.”
“I did not participate in the company… [and] I remain with a property company … and have nothing to do with the operating business.”
But the ombud accepted the M&G’s argument that:
- VR Laser’s previous owners had done business with Transnet, they had worked hard to position VR Laser for future locomotive subcomponent manufacturing contracts, and the company remains a registered supplier to Transnet;
- Sharma admitted it was he who approached VR Laser at the outset; * Sharma has ongoing, overlapping business interests with Essa, who owns 74% of VR Laser;
- Essa had a prior business relationship with Sharma in Issar Capital, which owns the property company; and
- Sharma derived a direct material benefit from VR Laser.
In his ruling, Retief wrote: “Documentary evidence provided by the newspaper proves that Essa plays a leading role in Issar Capital. “I also take into account that Sharma confirmed that he approached VR Laser first, and that he included Essa afterwards, along with his admission that his company (VRLS Properties) received rent from VR Laser.
“Therefore, I do believe that the M&G was justified in believing that it was not true that Sharma had nothing to do with VR Laser – even though it may be true that Sharma was not actively involved in the operating business.” The Press Ombudsman’s complaints procedure allows either party seven days to appeal the ruling.
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