Executives acted collaboratively to the detriment of Transnet: Mahomedy

executives acted collaboratively to the detriment of transnet mahomedy - Executives acted collaboratively to the detriment of Transnet: Mahomedy

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Transnet’s Acting Group Chief Executive Officer Mohammed Mahomedy has told the State Capture Commission  that he has come to understand that Transnet executives, board members and external service providers acted collaboratively to the detriment of Transnet, causing the company severe financial loss.

He says transactions for advisory services from Trillian Capital, Regiments, McKinsey and Nkonki by-passed proper governance processes and cost Transnet billions of rands in losses.

Mahomedy says proper procurement and governance processes were flouted when Regiments and Trillian were paid R166 million and R93 million respectively for what he calls “unwarranted” advisory service fees.

He adds that Transnet irregularly paid Gupta-linked Regiments Capital over R280 million for a contract that was originally set at R35 million.

Mahomedy has told the Commission that former Chief Executive Officer, Brian Molefe requested the board to approve an irregular R16 billion increase in payment for the 1064 locomotives tender.

“There was a level of intent that was issued to Mckinsey to assist with the business case, amongst other things, related to the advisory on 1064. My role was to assist Mckinsey in coordinating the activities between freight rail and the group functions and managing the process of getting the business case completed at the time.”

He says the acquisition was originally set at R38 billion, but Molefe asked the board to approve an increase to R54 billion.

Mahomedy says he was removed from the negotiations by former Chief Financial Officer, Anoj Singh who was appointed by Molefe to head the locomotives negotiations.

He says consulting firm, McKinsey withdrew from the negotiations as it felt that Transnet was rushing the process and rendered its services to Regiments.

Last week, Transnet’s Executive Manager for Governance, Peter Volmink, revealed that the company was making payments to McKinsey before contracts had formally been awarded.

The then Transnet chief executive, Brian Molefe, reportedly brought McKinsey to Transnet to address the firm’s financial risks.

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