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Witness at Anoj Singh disciplinary hearing says locomotive prices were 'deliberately' inflated

Nov 15 2019 21:24
Azarrah Karrim

A former Transnet engineer has testified that he believes there was a "specific and deliberate process" to inflate the price of locomotives in a multi-billion rand Transnet tender

Former Transnet strategy manger, Francis Callard, was testifying for a third day on Friday at the disciplinary hearing of Transnet's former CFO Anoj Singh. 

Is was a third consecutive day of testimony for Callard relating to the controversial locomotive tender. The engines were meant to modernise and upgrade Transnet's ageing fleet, but the contracts have been dogged by allegations of corruption and maladministration.

Singh's disciplinary hearing is being conducted by the SA Institute of Chartered Accountants. Singh, who has pleaded not guilty to the 18 charges he is facing related to his conduct at Transnet and Eskom, was again not present on Friday.

Callard on Friday showed the panel overseeing the hearing a video of a March 2014 meeting which centred around negotiations of pricing models for the company’s locomotive contract. 

According to Callard, the video shows feedback given to Singh by a negotiation team made up of Transnet executives about what pricing model the state-owned freight rail and port group would use for the locomotive contacts. 

Alleged corruption and maladministration related to the locomotives was previously explored during the judicial commission of inquiry into state capture earlier in the year, where Callard also gave evidence. 

Splitting tenders 

The video, according to Callard, depicts the aftermath of an announcement to bidders where they were informed Transnet would be splitting the tenders across companies, to which the bidders “nearly all fell of their chairs”, according to one official in the video. 

When negotiations commenced, Callard told the committee, there was only a draft negotiation mandate with draft strategies which were discussed, “but whether they served as a basis for negotiation is hard to say”.

The video also appears to show that the committee evaluated the contracts on break pricing and not batch pricing. The Request for Proposal had asked for break pricing, according to Callard. 

He explained on Friday explained that “break pricing would refer to the price penalty that would be paid after a contract had been concluded, after production had been commenced and if the contract had to be terminated for whatever reason”.

Batch pricing, meanwhile, refers to the regulation of the rate of delivery of the locomotives over the contract period in batches.

Callard told the panel that in the video, “we’ve heard Mr Singh acknowledge that the price will increase because of batch splitting."

The video appears to show that the committee did not take escalation into account during the evaluation process

At one point suspended Engineering chief executive Thamsanqa Jiyane remarks: “The only one thing that you wouldn’t know about the issues around their escalation things [sic]. It was not part of the evaluation.”

Singh replies, "So put that on the table and we are getting that from Regiments”. It is not clear from context what escalations are being referred to.

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