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Complainants in the dark about probe into Transnet's R647m payment

May 24 2019 14:36
Lameez Omarjee, Fin24

More than a year has passed without the Hawks updating complainants about their progress in investigating a suspicious R647m payment made by Transnet, the state capture commission of inquiry has heard. 

The commission has been investigating allegations of state capture, corruption and fraud at state entities since August 2018.

Roberto Gonsalves, on the stand for a second day on Friday, testified how minority shareholders in a consortium which benefited from a locomotive contract lodged a complaint with the Hawks about what appeared to be a multi million rand irregular payment. This was after Transnet executives did not address the matter themselves, he said. 

He told the commission that apart from one initial meeting, he has not had any feedback from the Hawks. Approached for comment on Friday, Hawks spokesperson Brigadier Hangwani Mulaudzi told Fin24 by email that because the matter is under investigation, the law enforcement agency is not obliged to "divulge" information pertaining to it in the "public space".

Gonsalves represents one of the minority shareholders in a consortium, including China North Rail, which in March 2014 was awarded a contract to supply 232 diesel locomotives to the state-run freight rail company. 

The 232 locomotives were part of a larger order of 1064 new trains which was supposed to modernise Transnet's fleet. The multi-billion rand contracts for the locomotives have been beset by cost inflation and allegations of corruption and kickbacks.

On Thursday Gonsalves told the commission that the consortium had been paid R647m for relocation costs after the delivery point for the locomotives was changed from Koedoespoort, Pretoria to Bayhead, Durban.

The consortium had previously adjusted its price to reflect an additional relocation cost of  R9.7m and this was accounted for in the final price charged to Transnet, which the state, rail and freight entity had paid. The R647m would therefore be over and above the R9.7m.

'Money was unjustified' 

But almost a year later China North Rail contracted an advisory firm called Bex to determine a relocation claim to be made against Transnet. Minority shareholders in the consortium did not approve the move. This new claim came to R647m, which Transnet also paid. 

"We believe the R647m is unjustified. We were already paid the R9.7m," Gonsalves said.

Gonsalves told the commission how minority shareholders had raised concerns over the payment with Transnet executives at a meeting. He recalled that then-Transnet Freight Rail CEO, Siyabonga Gama, was the only one who seemed "alarmed" by the news. 

"The other executives did not seem perturbed, one would have expected a stronger reaction from executives. We're talking about a massive amount of R647m."

The minority shareholders then lodged a complaint with SA's directorate for priority crime investigation, the Hawks. Gonsalves said the majority shareholders of the consortium were not pleased. "We thought it was the proper thing to do… We (minority shareholders) had nothing to hide. We knew it would affect the relationship with them (majority shareholders)."

'No Real Progress'

After lodging a complaint with the Hawks, a captain from the commercial crime unit for serious economic offences met with one of the minority directors in 2017, he said. "There was no real progress on that. Since then there has been no communication with Hawks."

Zondo questioned why the Hawks had, to this day, not updated the minority shareholders. 

"Maybe they have a lot of work, a lot on their hands. But one would have expected at least they would have to inform you on what is happening," Zondo said. "It is important to keep people who have submitted complaints to them (the Hawks) informed.

"Especially because there are allegations against law enforcement agencies that they have not been pursuing matters they should be pursuing … If people think nothing happens when you submit information for investigation, then they will lose confidence in them (law enforcement agencies)," Zondo said. 

Mulaudzi told Fin24 that the Hawks agree with Zondo's sentiments. "We fully agree with the Judge Zondo's comments. We continuously emphasise to our investigators to give feedback to complainants and if there is anyone who feels aggrieved they are more than welcome to raise their concern with the National Head of the Hawks," he said.

Gonsalves told the commission that the minority shareholders of the consortium have not yet engaged with the new Transnet board, but would be willing to assist in their internal investigations.

The inquiry will resume on Monday at 10:00.

*This article was updated at 15:00 on Friday May 24, 2019 to include comments from the Hawks.

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