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Transnet has started court proceedings to recoup R189m from its former executives and a Gupta-linked financial services company Regiments Capital for inflated payments in the acquisition process of locomotives by the state-owned firm.
The papers, filed on Thursday in the South Gauteng High Court, cite former CEO Siyabonga Gama and ex group chief financial officer Anoj Singh and two other officials, as people who played a central role in facilitating the unjustifiable payment.
The papers state that Transnet, on June 11, 2015, with Singh’s assistance, paid Regiments R166m, excluding VAT, for arranging cross currency swaps (CCS)and credit fault swaps (CDS) with JP Morgan for the acquisition process of 1064 locomotives from China South Rail.
“Only R15m (excluding VAT) was due, owing and payable for the transaction services provided by Regiments, including the arrangement of CCS and CDS with JP Morgan."
“Without cause and unjustifiably, Regiments was enriched, and Transnet was impoverished by the R151m,” read the papers.
Singh was Transnet Group Chief Financial Officer between 2012 and 2015, while Gama was fired as CEO in October, following his suspension by the board.
Gama’s suspension came after an investigation report by Werksmans Attorneys, Mncedisi Ndlovu & Sedumedi Attorneys, and Fundudzi Forensic Investigators into the awarding of the locomotives contract which expanded from R38.6bn to R54.5bn, with kickbacks allegedly flowing to Gupta associates.
Gama was head of Transnet Freight Rail (TRF) division during the acquisition period.
According to the papers, Singh and Garry Pita, a former Chief Supply Chain Office, who is another respondent in the case, recommended that Gama approve Regiments’s R189m payment for the “provision of transaction advisory services”.
Transnet is seeking an order for Regiments to pay back a total of R189m, which is inclusive of VAT for the R166m it was paid, "alternatively the defendants (the one paying the other to be absolved)" are ordered to pay the company the same amount.
“Transnet owed Regiments R15m, (excluding VAT) not R166m (excluding VAT) for supplying transaction advisory services.”
The papers state that Singh, Gama, Pita and Robert Ramosebudi, who resigned in October, breached their fiduciary duties in approving the payment.
The Transnet board only learnt about the overpayments in September 2018.
The court bid is the first major action by the board to act against those who have been found to have enabled the draining of resources at the troubled entity which has been dogged by allegations of financial mismanagement.
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