Gama was already on suspension on a separate charge of failing to carry out proper bidding and evaluation procedures © Transnet
Gama was already on suspension on a separate charge of failing to carry out proper bidding and evaluation procedures © Transnet

Transnet CEO forced out amid corruption claims

posted by Alex Daniel
25 October 2018

South African state-owned freight and rail company Transnet has fired its chief executive after a long-running dispute over corruption allegations.

The company’s board wrote to Siyabonga Gama on Sunday evening to inform him of the decision to cut ties on suspicion of corruption relating to a tender for new locomotives.

Gama has been blamed by his own bosses for the “inexplicable increase in excess of R9bn [$619m] in costs” for the contract, according to a statement from the Transnet board of directors.

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

Gama was already on suspension on a separate charge of failing to carry out proper bidding and evaluation procedures, accusing him and other executives of neglect or breaking the law.

In an August letter of intention, the board of directors cited two probes, by legal firms Werksmans Attorneys and Mncedisi Ndlovu & Sedumedi Attorneys, that “revealed various acts of possible misconduct” by Gama, engineering chief executive Thamsanqa Jiyane and executive manager Lindiwe Mdletshe.

The allegations arising from the probes refer to the R9bn price increase, and are separate to the Treasury report, which is part of the ongoing public inquiry into allegations of state capture surrounding the Gupta family.

Transnet board chairman Popo Molefe said: “We value and require transparency, accountability and expenditure that is cost-effective and value for money. But we have found Mr Gama’s conduct – particularly during the investigation into the tender for new locomotives, with an inexplicable increase in excess of R9bn in costs – to be incompatible with that culture.

“This has led to a loss of trust and confidence in Mr Gama’s ability to manage Transnet at the highest level.

“President Cyril Ramaphosa has made it clear that decisive interventions are needed to stabilise and revitalise state-owned companies – and that is precisely what the Transnet board is doing.”

Gama is the latest high-level casualty of South Africa’s crackdown on state-capture, following the resignation of finance minister Nhlanhla Nene earlier this month after he admitted he met with members of the influential Gupta family, who have faced repeated allegations of corruption. The Guptas have consistently denied any corruption allegations.

Read SM’s analysis of the future for South Africa's embattled state-owned firms here.

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