22 July 2024 | 03:17 AM

Going off the rails?

Key Takeaways

Several anomalies surround the appointment of former Public Investment Corporation boss Brian Molefe as the new chief executive of Transnet, the Mail & Guardian has discovered.

The Gupta family, who are close to President Jacob Zuma, this week denied weekend reports that they influenced the selection of Molefe, but details of the appointment process suggest a sham was put up to disguise a pre-arranged outcome.

The evidence is circumstantial but compelling.

The advertisement for the position of chief executive was published on January 26 this year and candidates were given until February 1 to respond.

Public Enterprises Minister Malusi Gigaba announced the appointment of Molefe just two weeks later, on February 16.

Transnet says 63 applications were received and nine applicants were interviewed.

The board’s corporate governance and nominations committee, chaired by Transnet chairperson Mafika Mkwanazi, handled the entire process.

Transnet declined to name other board members on the committee.

A senior executive with knowledge of Transnet board operations said the applications had to be vetted and interviews for busy executives and board members arranged. “Molefe’s appointment was miraculously quick.”

The appointment was swiftly followed by the resignation of Transnet non-executive director Juergen Schrempp, who had only been installed in December.

Transnet confirmed his resignation this week without explaining it. Schrempp, former chief executive of DaimlerChrysler, could not be reached for comment.

But the Sunday Times reported that he was unhappy about the handling of Molefe’s appointment and because Mkwanazi submitted three names of candidates to Gigaba without prior board approval.

This week Transnet reiterated that the full board had approved the names.

The appointment also caused ructions among the ANC’s alliance partners. A source close to Cosatu and the South African Communist Party said that both organisations had previously been given a commitment that Molefe would not get the job.

At the Public Investment Corporation (PIC), where he directed billions of rands in investments on behalf of the Government Employees Pension Fund (GEPF), Molefe was seen as an Mbeki man who used his position to fund transactions for Mbeki associates.

Most resented were the deals with the Telkom Elephant Consortium and funding for the Afrisam buyout of Holcim cement, which led the GEPF to write down more than half the R6-billion investment.

Last week Cosatu’s central executive committee expressed anger at the “growing trend of lack of consultation” regarding parastatals, including the “appointment of the Transnet board and CEO [chief executive officer]”.

Cosatu also announced an investigation into allegations “that the Gupta family uses underhand means and political influence to advance its interests”.

This week, at a meeting with Cosatu leaders Zwelinzima Vavi and Sdumo Dlamini, Ajay Gupta and Zuma’s son Duduzane rejected Cosatu’s allegations.

Cosatu said they confirmed they were friends of Molefe but said they had not influenced his Transnet appointment.

The family also denied a May 2010 M&G report suggesting Molefe’s PIC contract might have been extended for three months to facilitate the finalisation of the purchase of the Dominion uranium mine by the Guptas and Duduzane Zuma.

The Guptas and Molefe said separately this week that PIC had never approved funding for the mine, now called Shiva Uranium.

But the M&G has seen internal documentation showing that the PIC was intimately involved in the Shiva project.

Also a PIC employee said Molefe pushed for the project, which the investment committee eventually rejected as too risky.

Mkwanazi, who drove the appointment process, admits he has a personal relationship with the Guptas and has met them to discuss private business interests, but denied this influenced Molefe’s appointment.

Asked what these business interests were and whether they were disclosed to the board, Transnet said: “All our board members are required to disclose their private interests at each and every board meeting … Mr Mkwanazi has no existing business interests with the Gupta family. The discussions he’s had with them were exploratory and did not result in a partnership.”

A well-connected business person said that Gigaba was himself close to the Guptas. Answering questions about their relationship, the ministry said: “The minister met Mr Ajay Gupta in 2003, at which time he held no public office. They maintain cordial relations.”

Perhaps most telling was the prediction in the Gupta-owned The New Age that Molefe would be appointed Transnet chief executive.

On December 7 last year the paper, without quoting its sources, said: “The New Age has it on good authority that Molefe will be appointed CEO by the board.”

The paper correctly predicted other appointments to the new Transnet board, announced by Gigaba days later, including Mkwanazi, Zuma ally Don Mkhwanazi and Ellen Tshabalala, Zuma’s BEE adviser.

Gama’s return reeks of political meddling

The circumstances surrounding the reinstatement of Transnet executive Siyabonga Gama suggest a political solution to overcome the sidelining of a man senior ANC figures had punted to head the parastatal.

Last week Gama was reappointed to a position in the chairman’s office following “a review of his dismissal”, conveniently sidestepping an appeal process at a bargaining council due five days later.

The appeal was halted on the orders of chairperson Mafika Mkwanazi, who headed the review committee and confidentially settled with Gama, a spokesperson said.

Gama, the former chief executive of Transnet Freight Rail, was summarily dismissed last June after an independent arbiter found him guilty of “negligence” over the award of two contracts, including an R18.9-million security contract awarded to a company, GNS, part-owned by his golfing partner, former communications minister Siphiwe Nyanda.

Gama has long enjoyed high-level ANC support in his campaign to head the parastatal, including from Justice Minister Jeff Radebe and Nyanda himself.

He was dismissed under the watch of former public enterprises minister Barbara Hogan, who faced heavy political pressure over the action, and acting Transnet group chief executive Chris Wells.

Hogan was later fired in President Jacob Zuma’s November Cabinet reshuffle and replaced by Malusi Gigaba, who immediately appointed a new board headed by Mkwanazi.

Wells announced he would resign by March 31, or as a soon as a permanent GCE was found.

On December 15 Transnet’s board announced Mkwanazi would assume the role of acting GCE, doubling as chairperson, which clashes with good governance principles.

Spokesperson Mboniso Sigonyela acknowledged that “combining the two positions is not ideal”, but said it was a board decision “to facilitate a smooth handover to a new GCE”.

Last month Gigaba appointed Brian Molefe to the position. A week later Gama was reinstated.

Transnet has not explained why the current board overturned the previous board’s dismissal of Gama. Sigonyela said the board’s corporate governance and nominations committee “dealt with the matter” and that Mkwanazi was asked to finalise it.

Sources close to the process told the M&G that Gama, who was appealing his dismissal, was to have a hearing via Transnet’s bargaining council last Monday and that the previous week there was to be a sale in execution of his assets, worth R1-million.

This was in terms of a costs order against Gama, who had launched several challenges to the disciplinary process in the South Gauteng High Court.

Transnet had been awarded judgment to recover the costs by attaching Gama’s assets, but had not yet proceeded to do so.

According to a source familiar with the matter the Transnet board sub-committee dealing with the disciplinary process received advice from attorney Chris Todd indicating that the prospects were good of having the disciplinary findings and dismissal of Gama confirmed.

Todd is a partner at Bowman Gilfillan, the firm representing Transnet against Gama.

But an 11th-hour order came for these processes to be halted, according to two of the sources.

It is understood that Transnet’s legal department wrote to Bowman Gilfillan to say that on instructions from the chair and acting GCE — which in this case was the same man, Mkwanazi — the hearing and sale of assets should be put on hold to allow for negotiations.

It is understood that a review of Gama’s disciplinary process and its outcome was ordered and advocates Dumisa Ntsebeza and Kameshni Pillay were consulted.

It is not clear what advice the advocates gave, but almost immediately after this, Gama’s reinstatement was announced.

Neither Sigonyela nor Gigaba would say what the cost implications of the Gama settlement would be for Transnet, whether it would pursue the legal costs owed by Gama, or whether Transnet would back-pay the executive’s salary and outstanding bonuses.

The 200-page disciplinary report on Gama describes serious negligence, a failure to carry out duties and dishonesty on his part.

It did not find evidence that he was “wilfully” negligent, but said both contracts were signed under “highly suspicious circumstances”.

Gama was found guilty on a third charge of causing “irretrievable breakdown” of trust between himself, Transnet and senior executives, who he accused of “malicious skulduggery” aimed at prejudicing his ambition to become GCE, which was found to be without basis.

The findings revealed that Nyanda and Gama played golf together and phone records showed they talked regularly.

Notably, they had a conversation just days before Gama authorised the GNS contract and Nyanda called him to commiserate after he was suspended last year.

Gama initially implied that he knew of Nyanda only “as any member of the public would”, but when confronted with the phone records, conceded this was incorrect.

Transnet is still pursuing a multimillion-rand civil suit against the Nyanda-linked security company, GNS.

Molefe will decide on the composition of his executive — and Gama’s new job — within two weeks.

This article was produced by amaBhungane, investigators of the M&G Centre for Investigative Journalism, a nonprofit initiative to enhance capacity for investigative journalism in the public interest. www.amabhungane.co.za.

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Buyeleni Sibanyoni and Sam Sole

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