Transnet suspends executives in procurement probe

16 August 2018

The chief executive of Transnet and two other senior staff members are to be suspended following a number of probes into procurement misconduct.

The state-owned port and freight operator said group chief executive Siyabonga Gama, engineering chief executive Thamsanqa Jiyane and executive manager Lindiwe Mdletshe, while be placed on precautionary suspension while their conduct is investigated.

The news follows revelations earlier this month by Bloomberg that a Treasury commissioned report found Transnet overpaid R509m ($38m) after changing locomotive suppliers.

The suspension revolves around two internal probes that reportedly found Transnet failed to carry out proper bidding and evaluation procedures and accused the firm’s executives of neglect or taking unlawful actions.

In a letter of intention, the Transnet board of directors cited two probes, by legal firms Werksmans Attorneys and Mncedisi Ndlovu & Sedumedi (MNS) Attorneys, that “revealed various acts of possible misconduct” by the three executives.

Bloomberg reported the the Werksmans report found the company wasted billions of rand and broke a number of regulations when it changed the terms of a deal to buy 1,064 locomotives, while MNS said the firm did not follow proper bidding procedures or adhere to the applicable legal framework.

The Treasury report was a separate investigation that found the R509m additional spend occurred when Transnet switched a supplier contract from the Japanese firm Mitsui & Co to a Chinese supplier for the purchase of 100 locomotives. The Treasury probe is part of the ongoing investigation into allegations of state capture surrounding the Gupta family.

Transnet said the Werksmans and MNS reports “recommended further investigations to be conducted to establish the extent of the misconduct” and said the executives would be placed on “precautionary suspension until the finalisation of the further investigations and disciplinary enquiries”.

While Transnet did not explicitly outline the nature of the investigations, it said the misconduct identified by the reports included contraventions of the constitution, the Public Finance Management Act, the Preferential Procurement Regulations, and its own internal procurement policies, among other things.

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