Neels Blom Writer at large
A locomotive belonging to Transnet. Picture: BLOOMBERG/OAKBAY RESOURCES & ENERGY
A locomotive belonging to Transnet. Picture: BLOOMBERG/OAKBAY RESOURCES & ENERGY

An unusual disagreement has arisen between state-owned transport company Transnet and corporate law firm Werksmans following Transnet’s statement last week that there was no cause "at this stage" for disciplinary processes or suspensions of any of its officials in connection with alleged impropriety in the R54bn procurement process of 1,064 locomotives from four original equipment suppliers in 2014.

Transnet engaged Werksmans in 2017 to investigate what it called media allegations of impropriety linked to procurements from General Electric, Bombardier Transport, China South Rail and China North Rail.

Corlett Manaka, the law firm’s head of litigation, said on Friday that Transnet’s board was trying to absolve the people under investigation for wasteful and irregular expenditure in the locomotive deal.

The Werksmans recommendation to Transnet was not only to institute "appropriate disciplinary action against those individuals identified in the report, but also that law-enforcement agencies should be brought in to investigate the matters identified in the report".

Transnet spokesman Molatwane Likhethe described the Werksmans report as "incomplete and inconclusive".

He said the board had decided not to act because the investigators had been unable to reach some people, in particular former Transnet employees, as well as parties or companies outside of Transnet implicated in the allegations.

Manaka said Werksmans was surprised by Transnet’s statement because there was nothing unsubstantiated in its recommendations and that in its opinion there was indeed cause to act.

He agreed that the report was incomplete, because not all the witnesses could be interviewed, but that it had no bearing on the recommendations to act against the people named in the report.

Client privilege prevented him from providing the terms of reference for the investigation or from naming the people involved, Manaka said. "It is for Transnet to divulge."

Transnet has not named anyone involved either.

Business Day reported three weeks ago that the locomotive deal was likely to come under the spotlight in criminal investigations of state capture.

A well-placed source had told investigative reporter Stephan Hofstatter that there had been a proposal for a kickback to a member of the Gupta family at a meeting in Zurich in September 2012.

Gupta-family members are being investigated on wide-ranging charges of corruption. Among those who allegedly attended the meeting in Zurich were a former Bombardier executive, a Transnet official and a close Gupta associate, Salim Essa. No evidence has come to light that Bombardier acceded to the alleged request. It is known, however, that aircraft and train manufacturer Bombardier was awarded a R13bn portion of the R54bn locomotive deal.

Likhethe said Transnet’s board had resolved to appoint an independent forensic auditor to continue the investigation. The board had approved the recommendation by Werksmans that certain matters in the report be referred to the judicial commission of inquiry into state capture headed by Deputy Chief Justice Raymond Zondo, he said.

"The board has therefore undertaken to refer all relevant matters pertaining to this investigation to the inquiry promptly."

Likhethe said the board had in any event reported the allegations to the Directorate for Priority Crime Investigation.

He said the steps taken by the board demonstrated Transnet’s "unyielding commitment to rooting out corruption" in Transnet, ensuring that it continued to remain a "solid state-owned enterprise, both in financial and commercial terms, delivering good results as demonstrated by our recent financial performance".