Molefe cries foul over Transnet, Eskom probe

06 August 2018 - 07:42
By Stephan Hofstatter
Former Eskom CEO Brian Molefe
Image: FREDDY MAVUNDA Former Eskom CEO Brian Molefe

Brian Molefe has lashed out at Treasury-appointed investigators for what he claims are procedural irregularities in their probe into the rot at Transnet and Eskom under his watch.

He claims he will be able to "explain what actually happened" if he were given sufficient time to peruse underlying documents for deals he authorised that appear to have enriched the Guptas.

Instead, he received a draft investigation report on July 27, without the more than 60 annexures it cited, and was asked to respond to it by August 13.

"They were supposed to have contacted me timeously, given me an opportunity to go through all the documents and allegations, and to respond properly," he said on Friday.

"This whole thing is, I think, procedurally unfair. It's not being done by the book."

The former Transnet and Eskom CEO has been implicated in wrongdoing by several probes, including the Treasury-led one that found evidence that Molefe and other officials had manipulated Transnet procurement processes to favour China South Rail (CSR) in awarding it three contracts worth R25bn between 2012 and 2014.

Documents contained in the Gupta leaks show that CSR paid alleged kickbacks worth R5.3bn to Gupta-linked companies in the United Arab Emirates and Hong Kong to secure the contracts. These include details of the kickbacks due for each contract, amounts paid and an agreement to pay Gupta lieutenant Salim Essa an "advisory fee" of R3bn.

The Treasury appointed Fundudzi Forensic Services in February to investigate the rail deals, several suspect coal contracts Eskom awarded to Gupta-owned mining company Tegeta and irregular payments worth billions or rand made to consultancies Regiments, Trillian and McKinsey.

The draft report claims that Molefe and other senior Transnet officials bent over backwards to ensure CSR won the rail contracts at hugely inflated prices. This included paying R509m more than it should have for a contract for 100 locomotives without informing the Treasury, as Transnet was supposed to.

The draft report also found Molefe and other officials had irregularly raised the price paid to four rail firms by almost R16bn from R38.6bn to R54.4bn without board and ministerial approval. This included paying R18bn to CSR - R6bn more than planned.

"The prices of locomotives seem to have been inflated given the fact that locomotive supply agreements are firm and fixed contracts in rand terms," the report says. It also found penalties CSR should have paid for late delivery, but did not, amounted to R190m.

Molefe said he will also be requesting Transnet audit and legal assurance reports obtained "at every single stage of each of the transactions. Subsequent to that there was an external audit, and nothing was found wrong with the transactions. And now suddenly there are things that are wrong."

Fundudzi's final report was due at the end of this month. Treasury spokesman Jabulani Sikhakhane on Saturday said the boards of Transnet and Eskom, "being the accounting authorities", would be responsible for implementing its recommendations. He said it was "also the responsibility of the accounting authorities to recoup the losses and/or lay criminal charges".