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Transnet procurement process an 'aberration', state capture inquiry hears

May 09 2019 13:40
Sibongile Khumalo

Evidence presented at the state capture inquiry on Thursday shifted to procurement processes at Transnet, which have been identified by the new board as being at the heart of financial flows of the state-run freight rail company.

Peter Volmink, Transnet's executive head of governance, told the commission that procurement since 2016 had been "something of an aberration".

The inquiry is investigating allegations of state capture, corruption and fraud. "There were certain individuals who were granted the power to award tenders," said Volmink.

He added that the awarding of contracts should have been overseen by an acquisition council, with legal, compliance and risk factors considered. He told the inquiry that Transnet's current procurement rules, however, were not clearly written. This led to differing interpretations of the regulations. 

According to Volmink, changes in the Transnet procurement system saw the awarding of tenders being shifted from the acquisition council to individuals such as the chief supply chain officer and chief financial officer.

'A clear breach'

The chief supply chain officer was given the power of an acquisition council for contracts of up to R50m, while the chief financial officer had the power to adjudicate contracts of up to a billion rand, acting as an acquisition council.

"That person was the adjudication committee," said Volmink.

Volmink also said that some of Transnet's contracts with global consultancy McKinsey were awarded under abnormal circumstances. "The letters of award were issued while the tender process was still underway. This is a clear breach."

'Architects of capture'

On Tuesday, Transnet chairperson Popo Molefe described the former top Transnet executives Brian Molefe, Siyabonga Gama and Anoj Singh as the "architects of capture".

He said these executives had signed off on large and irregular contracts, flouting procurement processes to "facilitate the entry of companies which were their darlings".

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