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Parliamentary inquiry into localisation policy underway

Oct 30 2017 07:04

Cape Town - Parliament’s portfolio committee on trade and industry on Tuesday agreed on the way forward for an inquiry into localisation and public procurement, including Transnet's dodgy procurement of over 1 000 locomotives. 

In a statement issued on Tuesday, committee chairperson Joanmariae Fubbs (ANC) said it is envisioned that the inquiry would include public hearings with Transnet, the Passenger Rail Agency of South Africa (Prasa) equipment manufacturers and state departments among others.

The inquiry follows after Transnet had briefed Parliament in September on among other things its acquisition of 1 064 locomotives at a cost of R50bn.

READ: Parliament to investigate massive Transnet locomotive tender 

Fin24 earlier reported that the locomotive purchase has been dogged by questions of whether they are indeed being manufactured in South Africa, and whether a Gupta associate benefited from a kickback with one of the companies that won a tender.  

According to Department of Trade and Industry regulations “rail rolling stock”, such as locomotives, is one of 21 government-designated commodities that must comply with localisation policy, which states that government can only award tenders to companies that conform to this policy.

Fubbs in her statement said members of the committee were concerned about perceptions that state-owned entities (SOEs) were not implementing the localisation policy effectively.

READ: Davies vows govt will properly police 'buy local' policy 

Given that public procurement is intended to promote economic development and employment, the committee was not fully satisfied with the responses provided by Transnet regarding the procurement of locally manufactured items and would seek in-depth responses, she said.

Fubbs pointed out however that the committee’s “concern” does not apply only to Transnet and its acquisition of the 1 064 locomotives but rather to SOEs in general.

“The Committee is of the view that the engagement process it has followed has not yielded the desired outcome. This inquiry is informed by Parliament’s constitutional obligation to exercise oversight in the interest of good governance.”

She further said the overarching purpose of the Parliamentary inquiry is therefore to ensure that the localisation and local public procurement policies are effectively implemented to achieve job creation and other economic development objectives.

READ: Parliament grills Transnet on Gupta links 

According to Dean Macpherson, Democratic Alliance (DA) spokesperson on trade and industry, there are indications that for each R50m spent by Transnet on the locomotives, R10 million was paid to a company Tequesta as an “advisory fee”.

Tequestra is said to be a Gupta front company that helped to secure a deal to supply 359 of the 1 064 locomotives tendered for by Transnet.  

Macpherson said in a statement it is also clear, through leaked emails that the Gupta family may have scored nearly R6bn worth of fees without a single locomotive being built in South Africa.

Fubbs said on Tuesday that Parliament will as a first step have a meeting with all the relevant stakeholders in November and will then determine the timeframes of the inquiry in the beginning of 2018 when the committee resumes its activities after the Parliamentary recess.

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