The capture of Transnet was a “sophisticated operation” in which key individuals responsible for making strategic decisions were targeted in an effort to benefit the interests of a few, board chairperson Popo Molefe said.
Molefe testified before Justice Raymond Zondo’s commission of inquiry into state capture. He shared details on the wrongs the Transnet board had found at the state rail, port and pipeline company after its appointment in May 2018.
Molefe said that he was inspired by the Freedom Charter, which promises that the wealth must be shared among all South Africans, to take the position of chairperson.
“Looking at what was happening in the country where small sections of people; small cliques or groups were appropriating public funds, appropriating wealth for themselves; I had to say – the Freedom Charter does not say this should be the case.
“The Freedom Charter says the wealth must be shared among all the people, not amongst thieves or crooks, but among the people of South Africa,” Molefe told the commission.
He joined Transnet as he saw it as an opportunity to join those “working selflessly” to turnaround the organisation so that it could achieve the developmental objectives of the country.
Molefe noted that there had been a loss of key skills at the organisation and an overall weakening of the institution.
He also commented on the appointment of Brian Molefe as CEO in 2011.
“[Molefe] was a man who was well educated, and in many ways was respected. He was trained by the government under some of the ministers who are highly respected like Trevor Manuel and President [Thabo] Mbeki,” he said.
Molefe remarked that it was strange that before his appointment, The New Age, a newspaper owned by the Gupta family, had reported Brian Molefe would become CEO of Transnet.
“Once he (Brian Molefe) came in, we saw a group of people with a common purpose to advance interests of those pursuing quick accumulation of wealth for themselves, through certain companies and linkages to important big businesses – some of which were awarded contracts through Transnet,” Molefe explained.
He went on to describe that for money to flow to a select few, there needs to be a weakening of governance within the company, procurement processes flouted and the weakening of the skills base of the company.
“We think there was a clear pattern of how the capture was implemented. The starting point was to capture the decision maker – the person in the top position,” Molefe said of the capture of Transnet.
Thereafter other key strategic positions which control the organisation’s resources such as the chief financial officer, chief procurement officer or treasurer were targeted. They would then collude among themselves to weaken the governance system, identify big tenders and wrongfully award contracts.
When the board came in they learnt that contracts of huge amounts of money- up to R1m – could be signed off without accounting to the board, and procurement processes were abused to wrongfully extend the terms of contracts. Further, once tenders were incorrectly awarded, the scope of such contracts would be extended to allocate more capital to them.
He explained that those at the top would take control of mechanisms meant to detect corruption.
“On the top there would have people with a veneer of skills and professionalism but what is lacking from them is ethical leadership and moral values necessary to underpin the qualifications they have,” Molefe said of the capturing of the organisation.
The board is making sure to check the ethical background and moral code of candidates for the permanent appointments it will be making in executive positions in the next four months, Molefe told the commission.