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Transnet: Gama's R800m 'blunder'

Transnet executive Siyabonga Gama's insistence on awarding an R800m contract to overhaul 50 locomotives to an outside company — against the express instructions of Transnet's board — is delaying the upgrade of the parastatal's ageing rolling stock, and led to Gama's suspension last week, it emerged over the weekend.

Meanwhile, the controversy over the suspension is hampering Transnet's efforts to fund its R80bn capital spending programme.

Though it has enough cash to meet its needs now, it had planned to go to international markets with a $500m global bond issue. Those plans have been put on ice until the crisis over Gama is resolved.

Gama's decision to award the 50 “like new” locomotive contract to Sibanye Trade Services, which apparently had little experience of renovating locomotives, was one factor that prompted disciplinary action against him last month, said a source close to Transnet.

The other was that he exceeded his authority by granting a R19m security tender to a company allegedly linked to Communications Minister Siphiwe Nyanda. Gama had authority to sign off on contracts only up to R10m.

The controversy has raised the issue of his executing his duties in line with the Public Finance Management Act and adherence to accepted governance standards.

Gama was finally suspended over these allegations last Tuesday, 1 September.

However, it has emerged that investigations into suspected irregularities in the award of the contracts began long before Transnet's board began its search for a new CEO late last year.

And despite allegations by Gama's supporters that he is the subject of a conspiracy aimed at stopping him getting the top job, it is understood reliably he never was in line for the CEO's post.

While Gama was on an initial short list of five candidates for the CEO post that the board compiled in February, it decided that one candidate, Pravin Gordhan, stood head and shoulders above the rest, and put forward only his name.

When Gordhan was named finance minister and pulled out of the race, Transnet's board restarted the process of choosing a CEO. Gama was not included on its new short list of three candidates, headed by BP executive Sipho Maseko.

Gama, through his lawyer Themba Langa, threatened to challenge his suspension legally, but Langa would not be drawn on any details of that action late yesterday.

Transnet spokesman John Dludlu said yesterday the company had yet to receive any documentation relating to the legal challenge. “But when — and if we do — the company will defend its position.”

While Transnet will press ahead with its hearing on Gama, it is now up to Public Enterprises Minister Barbara Hogan to make a decision on the appointment of a new Transnet CEO, which will require the Cabinet's approval.

However, the appointment has become embroiled in political wrangling, with Justice Minister Jeff Radebe coming out recently in support of Gama, and accusing the Transnet board of engineering Gama's ousting and describing the accusations against Gama as a “miscarriage of justice”.

Black Management Forum president Jimmy Manyi waded into the debate yesterday, saying that the timing of the allegations against Gama suggested an agenda to frustrate the Transnet executive's consideration as the group CEO.

However, a source said the locomotive contract under investigation went back to 2007, long before the search for a new CEO began. The board agreed then to Gama's request to include an empowerment partner, Sibanye, in the contract, but twice instructed that Transnet Rail Engineering must do the work.

Questions about irregularities began to emerge only last year, when the delivery of the locomotives was delayed and Sibanye tried to poach Transnet staff to complete the contract.

The internal disciplinary hearing threatens to delay the appointment of Transnet's CEO, seven months after Maria Ramos left the transport parastatal for Absa.

The South African Transport and Allied Workers' Union backs Gama for the CEO post, while a group of managers and staff at Transnet Freight Rail has demanded his reinstatement and appointment as group CEO.

Source: Business Day

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