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Transnet CEO suspended pending an investigation

The CEO of South African transport utility Transnet, Siyabonga Gama, has been served with a suspension notice while his role in a procurement scandal is investigated

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The investigation centres on overpaying in a R54B (US$3.64B) contract for 1,064 diesel-electric locomotives, including a R5B (US$337M) payment to a company linked to the controversial Gupta family. The locomotives were bought from General Electric, Bombardier Transport, China South Rail and China North Rail.

 

Two other executives have also been suspended: the chief officer of advanced manufacturing at Transnet Engineering‚ Thamsanqa Jiyane; and the senior manager for strategic sourcing for Transnet Freight Rail‚ Lindiwe Mdletshe.

 

They are alleged to have refused to cooperate with investigators, including by not handing over laptops and mobile phones that could have evidence pertinent to the case. Investigations into the case have been carried out by the South African Treasury and two law firms, Werksmans and MNS Attorneys.

 

Gama had welcomed the dismissal of the entire Transnet board two months ago following a succession of corruption scandals. One of the sacked board members, Seth Gumede, has appealed to the High Court to seek to have his dismissal overturned.

 

Gama has been defended by supporters of former South African president Jacob Zuma, but Transnet’s Chairman Popo Molefe said that the Board had concluded that "representations by the employees were implausible and that their continued presence at Transnet is likely to hinder and prejudice further forensic investigations that the board has instituted.”

 

The case has overshadowed Transnet’s good financial results, which were released in late August. The parastatal recorded an 11.3% rise in income to R72.9B (US$4.9B) for the year to the end of March. EBITDA jumped 18% to R32.5B (US$2.2B).

 

Gama presented the results before the suspension was enacted. He said: “The year under review though, has been characterised by a number of serious procurement-related governance challenges, which has impacted on the company’s reputation and the ability to attract investment. The Board, together with management, is developing a comprehensive corrective action plan to prevent the recurrence of such instances.”

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