Gordhan to defend Transnet cleanup
Despite “much umbrage and professed indignation”, Public Enterprises Minister Pravin Gordhan had brought few facts to disprove that he was racist towards former Transnet board member Seth Radebe, Dali Mpofu SC said in court papers.
When Gordhan was appointed as public enterprises minister in February, he made sweeping changes to the boards of state-owned enterprises to return them to financial viability and address allegations of corruption and state capture.
Mpofu will represent Radebe at what is viewed as the first legal push-back to these changes. At the urgent application, scheduled to be heard in the high court in Pretoria on Monday, Radebe will argue that Gordhan removed him from the board unlawfully and that the new board should be dissolved.
Gordhan has rejected Radebe’s claim of racial discrimination, saying there was “wholesale looting” at Transnet.
He says since his appointment he has been determined to prevent malfeasance and recover losses.
The chair of the Transnet board, Popo Molefe, has entered the fray, saying that if the court were to declare the appointment of the board unlawful, it would potentially “cripple Transnet ... rendering it rudderless and jeopardising Transnet’s commercial relationships and creating administrative chaos”.
The new board was appointed to usher in an era of good governance and to ensure that maladministration is properly addressed, says Molefe in an answering affidavit.
Radebe has accused Gordhan of racism because he was fired but a “white woman” was retained, though they were hired at the same time and sat on the same committee.
In heads of argument for Gordhan, Nazeer Cassim SC says Radebe, as the former chairperson of the audit committee, did not take action after being given a Werksmans Attorneys report that showed widespread corruption at the state-owned entity.
“The minister emphatically denies that his decision was motivated by the fact that Ms [Arlana] Kinley is a white female and the racial connotations relied upon by the applicant,” says Cassim.
Radebe and the previous board failed to institute disciplinary action against employees implicated in irregular tenders, nor did it suspend them pending investigations, giving them an opportunity to destroy evidence and intimidate witnesses.
“As a result, the minister adopted the view that the applicant [Radebe] had not complied with his fiduciary duties towards Transnet. To permit him to remain on the board would result in the minister being remiss in his duties to improve the governance of state-owned companies,” says Cassim.
According to the papers filed, prior to Radebe’s appointment, Werksmans had been tasked by the previous board to conduct an investigation into the procurement of 1 064 locomotives, amounting to R54.5-billion, between 2012 and 2014. The procurement process was alleged to be tainted by kickbacks of R5-billion to Gupta-linked companies.
Werksmans delivered its report on December 7. According to Gordhan, the report was incomplete but contained recommendations, “including establishing a judicial enquiry, instituting disciplinary proceedings against (and suspending) those employees involved with the tender … and reporting the illegal conduct to the Hawks for potential prosecution”, says Cassim.
But Mpofu argues for Radebe that, because the report was incomplete, it would have been irrational for the board to suspend employees or take disciplinary action. Instead, Radebe hired another law firm to conduct further investigations into the implicated officials, to find grounds for disciplinary action.
“Any reasonable board acting within the structures of the law … could not precipitously, irrationally and unfairly suspend employees. It had to satisfy itself about the rationality and fairness of the reasons for the suspension,” says Mpofu.
Cassim says Kinley was not removed from the board because continuity was needed and that she “did not occupy the position as chair of the audit committee, she was merely a member thereof. She had furthermore opposed the decision for another forensic investigator to be appointed pursuant to the Werksmans report.”
But Mpofu says the continuity argument is circular and the distinction made by the minister between the chairperson and a member of a committee had “no legal basis”.
Meanwhile, Molefe has urged the court to consider that the new board has been in discussions with funders and creditors and immersed in complex forensic investigations, and was steadying the entity.
“The funders were very specific in obtaining clarity as to who they would be dealing going forward and assurance that the board will maintain stability,” wrote Molefe.
He also stated that funders had indicated that Transnet was already in default and had threatened to call up the finance facilities. But after meeting the new board they agreed to wait “so as to give Transnet an opportunity to continue on the path to recovery and stabilisation”.