Tue. Oct 22nd, 2019

How Transnet ‘bigwigs’ flouted processes for Chinese manufacturers

transnet state captureA debt bill that was accumulated by the dark arts of hedge accounting.

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Since the first week of May, the state capture inquiry has heard startling revelations about the underhanded dealings that drove Transnet to the ground with insurmountable debt.

As reported by Business Day, the locomotive authority’s former engineer, Francis Callard was the latest witness to testify at Deputy Chief Justice, Raymond Zondo’s commission of inquiry into state capture.

State capture inquiry: Callard tells all about Transnet

While the commission was reeling from the damning testimony of Mohammed Mohamedy, Transnet’s acting group executive, Callard delivered more evidence that unveiled another layer of the rampant corruption that has gripped the locomotive authority over the years.

Related: Why Raymond Zondo’s brother could soon be implicated

Witnesses testify about the 1 064 locomotive deal

Mohamedy had unveiled the crooked dark arts of hedge accounting that is part of the reason why Transnet currently sits with a cumulative debt bill of R23-billion.

As reported by Daily Maverick, the state parastatals shoddy contracts with two Gupta-linked companies, Regiments Capital and Trillian Capital Partners, in securing interest rate swaps on a range of loans it made from 2016 has done nothing but put it in a state of financial paralysis.

How Transnet processes were flouted to award China South Rail

However, Callard’s testimony focused on the high pressure that was applied by the entities former bigwigs to see through the acquisition of 1 064 locomotives from a Chinese manufacturer.

Related: ANC decides to let Angelo Agrizzi’s State Capture testimony slide

According to the former engineer, tender processes were flouted in order to see the deal through.

Callard told the commission that the bidding process for the procurement of the mass locomotive project was meant to include a cost evaluation. However, this was blatantly ignored, seemingly to cast favour in the way of China South Rail (CSR).

“Bigwigs misled acquisitions committee” – Callard

Callard also told the commission about how executives found ways to mislead the board acquisitions and disposals committee about a business case they had presented on the prospective purchase of 100 electric trains from CSR.

“I developed a business case for the 100 locomotives for the coal export line. It was unilaterally changed by Transnet group executives to favour CSR. The changes and implications were material and I submit that the representation made to the [acquisitions committee] was misleading in certain respects,” Callard explained.

Related: Shamila Batohi assembles state capture team to fast-track prosecutions

The former engineer explained that his model addressed many factors that affected growth in the entity, However, the then-executive, Brian Molefe, shot the idea down.

The commission has since adjourned on the topic of the state parastatal until the witnesses have been requested to reappear for potential cross-examination requests from implicated persons.

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