Transnet multibillion-rand locomotive deal: ‘It’s strange, to say the least,’ notes judge

22 Oct 2020

According to finance executive Yousuf Laher, former Transnet CFO Anoj Singh was ‘known to raise his voice and have a temper’. Laher testified that he held a ‘little fear’ that he would be branded as insubordinate if he raised too many questions about two Transnet locomotive deals.

Transnet finance executive Yousuf Laher feared raising certain financial risks with then CFO Anoj Singh, who was known to “have a temper”.

Laher said he was working in a “very pressurised environment” when negotiations for two high-stakes locomotive deals were under way.

Laher testified at the State Capture Inquiry on Wednesday 21 October and Thursday 22 October.

The first contract, valued at about R50-billion, was between Transnet and China South Rail (CNR) for 1,064 locomotives.

The second contract, valued at about R4.5-billion and made on confinement between Transnet, China North Rail (CNR) and others, was for 100 electric locomotives.

Regarding the first contract, the then Transnet CEO, Brian Molefe, approved a R3-million increase in the price per locomotive without the requisite approval.

Laher questioned the price hike but did not harbour any suspicions about possible corruption.

In retrospect, it struck the chartered accountant that “something untoward” was afoot.

Evidence leader advocate Anton Myburgh SC pressed Laher, asking if he did enough to protect Transnet’s best financial interests.

Laher insisted he did his best to analyse the figures, and to flag anomalies. “My fear if I was any more vigilant I would have been insubordinate,” he added.

Laher added he trusted Singh’s explanation for the price hike, and did not question Singh’s response that he need not worry as negotiations were “all about” the ultimate price.

Laher described himself as an “eyewitness” to the financial process preceding Transnet’s acquisition of 1,064 locomotives from CNR.

He detected various oddities when he crunched the numbers. Laher testified he raised risks about the pricing, and debated them with Singh.

“I suppose at the back of the mind there was the little fear that if I debated it too vigorously then it’s I’m basically telling him he doesn’t know what he was talking about,” said Laher.

“And he was a respected individual. Highly experienced, highly intelligent, and he was my senior. He was my principal.”

Retired Transnet electrical engineer Francis Callard implicated Laher during his evidence at the State Capture Inquiry in mid-2019.

Chairperson Deputy Chief Justice Raymond Zondo asked, “Why would you have thought that giving him your honest advice would be insubordination?”

“It was a very small fear at the back of my head. The explanations he gave me at the time seemed reasonable,” said Laher.

He said he held a “little fear” of dealing with his superior, and he needed to show Singh respect.

“You have suggested that you didn’t go, you stopped at a certain point, going beyond a certain point was insubordination,” said Zondo.

“He [Singh] was known to raise his voice and have a temper. There is that little fear at the back of your head that it could happen to you,” replied Laher.

Laher had worked for Transnet for almost a decade by the time he consulted Singh and others on the locomotive deals.

Retired Transnet electrical engineer Francis Callard implicated Laher during his evidence at the State Capture Inquiry in mid-2019.

Callard said Singh tasked Laher with finding a way to justify the R3-million increase in the price per locomotive.

Furthermore, the retiree was “shocked” at Transnet’s decision to pay CSR some R7-billion before any locomotives were delivered.

“Mr Callard is not a financial expert,” retorted Laher.

“How does one get to a situation where the advance payment was 20 times more than what they initially asked for?” asked Myburgh.

Laher argued that because the bidders were going to deliver half the locomotives in a shorter period of time than initially agreed, more funds were required.

“If it’s half a batch why would you need 15 times advance payment? Why? It’s half the batch,” asked a perplexed Myburgh.

“It is quite strange, to say the least,” said Zondo.

Proceedings resume on Friday 23 October 2020. Siyabonga Mahlangu, former adviser to former public enterprises minister Malusi Gigaba is set to testify from 10am. DM

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