This comment published in Business Day of Tuesday, Spetember8:Transnet: Gama’s R800m ‘blunder’
Embattled rail boss was ‘not a top candidate’ for CEO’s vacant post.
By HILARY JOFFE and ARTWELL DLAMINI
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 yesterday.
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.
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.â€
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 justiceâ€.
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.
http://www.businessday.co.za/Articles/C ... x?id=80881
Has Gama become the Hlophe of parastatals?
By HILARY JOFFE
Published: 2009/09/08 06:35:02 AM
IS SUSPENDED Transnet Freight Rail CE Siyabonga Gama the parastatal sector’s John Hlophe? The common thread is the powerful but ultimately inexplicable political support the two men have received for their candidacy for top jobs — and the damage that this support could do (or has already done) to crucial state institutions .
The ANC’s national working committee reportedly wants to see Gama become the new CE of Transnet. So does the South African Transport and Allied Workers Union. Then there’s Justice Minister Jeff Radebe , who denounced the Transnet board’s decision to suspend Gama, pending a disciplinary hearing into Gama’s award of two contracts worth more than R800m, as a “gross injusticeâ€.
And at the weekend, Vusi Mona, the former City Press editor who is now deputy director-general for communications in the Presidency, chimed in with a column in his old newspaper that suggested Gama’s career was being destroyed by a “disinformation campaignâ€, and that this was part of a pattern of black executives in state- owned entities falling out of favour . City Press said the column was written in Mona’s personal capacity. But government officials this senior never really write in their personal capacities.
Of course, Gama may be a good guy and he clearly has good friends, and in high places too. But there’s little to indicate he is the best man for the Transnet job. There’s even less to explain why his friends are so convinced of his credentials that they would see the fundamentals of corporate governance at Transnet thrown out in order to achieve this. For not once, but twice, the Transnet board has gone through the procedures of interviewing and short- listing applicants for the job, and twice Gama has failed to be chosen as the board’s preferred candidate. The first time, the board’s choice was Pravin Gordhan, who had to pull out of the race ahead of the April elections because he was told the ANC had him in mind for a Cabinet post; the next time it was BP Southern Africa CE Sipho Maseko, who is now top of a short list of three that does not include Gama. All three are black. So though Gama’s supporters, like Hlophe’s, have played the race card, his race cannot have had much to do with it.
But his judgment might have. Because even though there is no suggestion at this stage that Gama benefited personally, or acted fraudulently, when he awarded the contracts that are the subject of the disciplinary hearing, he didn’t exactly cover himself in glory. Nor, allegedly, did he follow the rules of the Public Finance Management Act.
When Transnet reported its financial results recently it mentioned delays in the programme to renew and expand its fleet of locomotives, a programme crucial to the company’s effort to improve the efficiency of its freight rail service . Now it’s emerging that one factor in the delays was that at least one of those locomotive contracts went to a firm that was not competent to do the work. Gama allegedly twice flouted the board’s express instructions to ensure Transnet’s own engineers did the R800m refurbishment of 50 locomotives . The disciplinary investigation was prompted when it became clear the programme was going wrong.
Fixing the mess has since cost Transnet time and money, and it has cost SA’s economy too. Transnet’s R80bn investment programme is key to the government’s efforts to make the economy more competitive and cut the cost of doing business. It is also part of the stimulus package meant to help SA out of recession. Those macroeconomic benefits, and the need to make sure the turnaround at Transnet continues, are surely more important to the government and the trade unions than the fate of any single individual. So even if Gama turns out to be an innocent victim, it’s hard to see why the support for him is so fierce . Is any of it to do with the beneficiaries of those contracts? That’s a possibility one doesn’t even want to think about.
Nor does one want to contemplate the possibility that the top jobs at parastatals will go not to the people best qualified to do them but to those who are best at rounding up political support. The last thing we can afford is that executives at Eskom or Transnet spend their time running to Luthuli House or the Union Buildings , instead of running their businesses properly.
Joffe is senior associate editor.