Hawks told of Transnet dodgy deals
Officials suspended over procurement
Transnet has reported a matter to the Hawks involving now suspended officials who entered into irregular procurement contracts with service providers.
The irregularities were unrelated to the purchase of locomotives or kickback agreements disclosed in the Gupta e-mails, Transnet spokeswoman Viwe Tlaleane said. These were the subject of a separate investigation, she said.
The leaked Gupta e-mails show that Gupta family associates scored R5.3bn in kickbacks from locomotive procurement deals with Transnet.
The amaBhungane Centre for Investigative Journalism earlier reported that the Guptas had influenced procurement processes at the state-owned rail company and were pocketing R10m from each R50m locomotive bought.
Among the chief architects of this alleged procurement perversion were then board chairman Iqbal Sharma and former chief financial officer Anoj Singh, who is now finance chief at Eskom, the state-owned utility.
Transnet’s external auditors, SizweNtsalubaGobodo, had reported two matters to the Independent Regulatory Board for Auditors. “We wish to point out that the issues were discovered by management and shared with the external auditors,” Tlaleane said.
These irregularities related to nonadherence to “stipulated internal procurement processes and requirements of law in procurement contracts entered into between Transnet and various service providers by a number of senior officials”.
Business Day reported on Monday that the audit regulator had referred one Transnet irregularity to the Hawks, the auditor-general, the Department of Public Enterprises and the Department of Labour.
A second report was still being processed, the regulator said. The irregularities were no longer taking place, according to Transnet. One of the matters had since been resolved and the investigation found that the company had not suffered loss.
Transnet had reported the second matter to the Hawks and a probe was under way. “The affected senior officials have been suspended, legal action has been taken where appropriate, and disciplinary actions are under way,” Tlaleane said.
The affected suppliers were no longer being used and payments had been put on hold until “finalisation of the legal investigation”, where money would be recovered, including interest and legal costs.
The matter would be disclosed in Transnet’s annual report for 2017, Tlaleane said.
“There have not been any significant movements on the prices of our instruments and the spread on the Transnet SOC Ltd bonds are stable.”
Transnet and Eskom have been subjected to scrutiny by the audit regulator, following reports submitted to the board by SizweNtsalubaGobodo.
In the case of Eskom, the audit irregularities related to Impulse International — at which former Eskom acting CEO Matshela Koko’s stepdaughter was a director — and the reinstatement of former CEO Brian Molefe. The audit regulator referred these to the Companies and Intellectual Properties Commission, the auditor-general and the Department of Public Enterprises.
Under the Auditing Profession Act, a reportable irregularity is any unlawful act or omission committed by any person responsible for the management of an entity that has caused or is likely to cause material financial loss to the entity, is fraudulent or amounts to theft, or represents a material breach of fiduciary duty. Auditors have a duty to report such irregularities for investigation.