Court hands Gordhan a win in Transnet case
Application by the SOE’s former board member Seth Radebe to be reinstated is dismissed
Public enterprises minister Pravin Gordhan has scored another victory in his project to clean up the country’s state-owned enterprises (SOEs) after nearly a decade of looting and maladministration under Jacob Zuma’s presidency.
The high court in Pretoria on Tuesday dismissed an application by former Transnet board member and head of the audit committee Seth Radebe to have his removal from the SOE declared unlawful and unconstitutional and to have the newly appointed board removed.
Gordhan, President Cyril Ramaphosa’s point man to clean up the rot at SOEs, has replaced boards and executives at Transnet, Denel and SA Express since his appointment in February. The cleanup of the state has seemingly sparked a backlash from parts of the ANC, with reports of a plot to remove Ramaphosa.
The court challenge by Radebe was seen as part of the fight-back against Gordhan and the new administration.
Radebe was hired by former public enterprises minister Lynne Brown in December 2017. As chair of the audit committee he took possession of the Werksmans forensic report into the dodgy procurement of 1,064 locomotives, whose cost escalated from R38.6bn to R54.4bn.
In its final report, Werksmans recommended that Transnet institute disciplinary action against individuals identified in the report and that law enforcement agencies investigate matters identified in it. Radebe, however, declared the Werksmans report incomplete and refused to take action.
Gordhan replaced the entire Transnet board in May, putting Popo Molefe at the helm.
The new board has now taken action against those implicated in the Werksmans report, and two subsequent reports following investigations. Earlier in September, Thamsanqa Jiyane, chief officer of advanced manufacturing at Transnet Engineering, and Lindiwe Mdletshe, senior manager for strategic sourcing at Transnet Freight Rail, were suspended.
Transnet CEO Siyabonga Gama has been issued with a notice of intention to suspend him and is expected to hear his fate in the near future.
Radebe claimed that Gordhan put pressure on the former Transnet board to remove Gama and threatened to remove board members if they did not do so. He was also of the opinion there was no evidence of wrongdoing against Gama.
In the Radebe judgement, judge Hans Fabricius said Gordhan had taken “relevant facts into account and made a rational decision” when he removed the Transnet board.
“He kept in mind the precarious position of the South African economy and the role that Transnet had to play therein,” Fabricius said.
“The minister’s views were explained wholly and adequately in my opinion.”
Fabricius said it was clear that Radebe had no confidence in Gordhan as the representative of the shareholder in Transnet, yet he wanted to be reinstated as a nonexecutive director.
He said that it was not stated how this relationship could then be to the benefit of Transnet, or the economy as a whole, which the judge viewed as a critical consideration.
Fabricius also highlighted the former board’s inaction against officials implicated in the Werksmans report. Even if it was incomplete, there was sufficient evidence to compile charge sheets against those implicated and officials should have been placed on suspension pending disciplinary proceedings. “That would have been the prudent course of action.”
Fabricius said the board ought to have regularly considered its stance in order to protect Transnet’s financial position and credibility, yet the board remained “supine”.
The judge also said that he could not find that Gordhan’s decision to remove Radebe was racially motivated or that it could be regarded as racial discrimination, as was alleged.
The public enterprises ministry welcomed the judgment, saying that it had placed emphasis on the need to urgently restore good corporate governance at SOEs such as Transnet.
“Today’s judgment confirms our belief that the previous board failed to demonstrate an appreciation of the seriousness of allegations of maladministration and corruption or the ability to deal with these decisively in order to protect the institution,” the ministry said.