NEWS
13/05/2018 10:29 SAST | Updated 13/05/2018 10:29 SAST

Brian Molefe Fingered In Report Over Gupta-Linked Contract Inflation

A report, which City Press obtained, led to the resignation of three board members from the parastatal two weeks ago.

Brian Molefe during an interview in 2015.
Bloomberg via Getty Images
Brian Molefe during an interview in 2015.

Brian Molefe was reportedly found to have lied to the Transnet board to inflate the controversial 1 064 locomotive tender from R38-billion to R54.5-billion.

The controversial Gupta business family scored billions in kickbacks from the same deal.

According to City Press, Molefe, then CEO of Transnet, was fingered in a 219-page report compiled by law firm Werksmans and is dated December 7 last year.

The report, which City Press obtained, led to the resignation of three board members from the parastatal two weeks ago.

In the report's recommendations, it ordered that members of the board at the time, who "failed to apply their minds to the transaction", should be held accountable; "all those currently in the employ of the enterprise" who gave the board "misleading, incorrect and inadequate information" about the deal should be disciplined; and the Hawks and the State Security Agency should be asked to investigate the deal.

In April 2013, Transnet's board approved a proposal to buy 1 064 electric and diesel locomotives for its general freight business, which would cost them R38.6bn over seven years. However, City Press said the report found that with the assistance of Molefe, former chief financial officer Anoj Singh, board tender committee chairperson Iqbal Sharma, and Jiyane, the contract ballooned to R54.5bn.

The report's authors found that Molefe asked the board to approve the increase in costs, saying that the inflated amount was to accommodate fluctuations in currency value and variations in cost. However, these had already been factored into the R38.6-billion figure.

Last year, AmaBhungane and Scorpio reported that billions were syphoned off of a Transnet contract to supply locomotives, to the offshore accounts of the Guptas and associates. A subsidiary of China South Rail was reportedly awarded the lion's share of a massive contract to supply 359 of 1064 locomotives to Transnet in March 2014. A Gupta-linked company was reportedly paid to ensure that the Chinese were awarded the contract. Its fee was to be about R3.8 billion.

Total kickbacks to the Gupta associates and friends allegedly amounted to over R5 billion.