Transnet taking former executives to court for a lost R1.3 billion.

Acting CFO Mohammed Mahomedy says Transnet is spending significant time going through thousands of contracts.

Transnet board chair Popo Molefe said on Thursday that civil action was proceeding and papers had been served to the former officials of the state-owned freight and rail company after it lost R1.3 billion through suspicious dealings and malfeasance largely to do with the purchase and maintenance of 1,064 locomotives. 

This would include the money given to transactional advisers such as Trillian and Regiments Capital.
 
R618 million of the R700 million prepayment made for the maintenance of the locomotives had been recovered, and Transnet was still negotiating to recover the VAT paid. 
 
Investigative reports found irregularities when General Electric, Bombardier, China North Rail and China South Rail were awarded contracts for the acquisitions of locomotives worth R54 billion, of which not all have been delivered to Transnet as were due by December 2017. 
 
While General Electric had delivered as it had promised, China South Rail had only provided 208 of 359, Bombardier only 25 of 350 and China North Rail only 21 of the 233 it was meant to deliver. 
 
Transnet will be engaging with the companies on the failure to meet the delivery schedule and what the penalties would be. 
 
They are also reviewing all contracts at the company, which included the procurement of 1,064 locomotives.
 
The company's acting CFO Mohammed Mahomedy [pictured] said the entity was spending a significant a amount of time going through thousands of contracts it had entered into in recent years.
 
The Transnet board has already taken internal action by dismissing Siyabonga Gama as CEO, suspending senior executives and issuing summonses to recover the money lost. This includes Gama, other former CEO Brian Molefe, and former CFO and alleged Gupta ally Anoj Singh
 
Molefe said when the new board took over the company was “nothing short of a horror movie”. He accused those who were appointed to positions at the state-owned entity of only being there to loot, and dubbed them “professional thieves”.

“Some of the key architects of state capture had turned Transnet into a piggybank. Some went to office to loot, but I must hasten to say, there were many people who knew nothing and did their jobs.”

The disciplinary proceedings against suspended officials are expected to get under way next week. 
 
Mahomedy said that despite the R8.1 billion - possibly more - in irregular expenditure, the company was able to generate 3.5 percent growth in cash generated from operations, which was sufficient for the company to service its debt. 

He said: 

“What is also key is, we have sufficient lines of credit secured in the recent months … Transnet is confident it will meet obligations and commitments.”