Transnet employees did not appear to negotiate with the best interests of the state-owned entity at heart when agreeing to relocation costs for the production of hundreds of locomotives in 2015, the state capture inquiry has heard.
The commission of inquiry has been investigating allegations of state capture, corruption and fraud since August 2018.
On Thursday, the commission continued to hear testimony from MNS Attorneys, which in 2018 was asked to probe allegations of fraud and irregularities by Transnet’s former board. The firm produced six investigative reports.
Thobani Mnyandu, an expert at MNS Attorneys in construction law and tenders, was testifying on Thursday about the group’s probe of R1.25 billion in relocation costs billed to Transnet after the site for the assembly of locomotives was changed from Pretoria to Durban.
The locomotives were part of a controversial contract for 1 064 new engines meant to upgrade and modernise Transnet’s fleet. But the tender has been dogged by allegations of kickbacks, fraud and irregularities after prices increased from R38.9bn to R56bn.
Mnyandu said that, in initial talks between locomotive manufacturers China North Rail, Bombardier Transportation and Transnet, the location for the assembly of the locomotives was Koedoespoort in Pretoria. This was then changed to Durban.
The inquiry already heard last week from a minority shareholder in the China North Rail consortium that the cost for the relocation was “simply unjustifiable”.
On Thursday, Mnyandu said “there was no relocation” in the strict sense of the word as the two locomotive manufacturer had not yet established themselves in Johannesburg.
Based on internal emails that MNS had access to as part of its probe, Mnyandu said the change in the assembly point was even initially expected to produce savings on some items, so as to be closer to the harbour where the locomotive parts would be shipped to SA from abroad.
The initial cost of the CNR relocation was estimated at R9.7 million, he said. This amount was later raised to R318 million and then again to over R647 million.
Mnyandu said, based on emails, Transnet staff did not appear to try and negotiate these costs down. He will continue his testimony on Friday, including his findings.