Transnet officials have worked until midnight to finalise a review application on the controversial contracts related to the procurement of 1064 locomotives, members of Parliament heard.
The Standing Committee on Public Accounts (Scopa) on Tuesday was briefed by Transnet officials, including group CEO Portia Derby, board chairperson Popo Molefe and Public Enterprises Minister Pravin Gordhan on efforts to improve governance at the entity.
In particular the 1064 locomotives contracts – dating to 2014 - came under the spotlight. The matter has been a subject of investigation by the judicial commission of inquiry into state capture. Costs of contracts ballooned by 41% from R38.6-billion to R54.4-billion. Officials had previously announced intentions to approach the courts to recover monies lost to companies who did no work.
Gordhan told members of Scopa that there is a continued effort to recover funds lost through procurement during the state capture era. He said a review application will come before the high court relating to the 1064 locomotives.
Molefe similarly indicated that the review is being filed this morning.
"[It] is a complex contract which disadvantaged Transnet in many respects," said Molefe. He added that it bedevilled the work of freight rail – a "critical component" in revenue generation for the state-owned entity.
"We finished at midnight last night dealing with this application."
Gordhan said that the current board and management are in the process of repositioning and redirecting the business to ensure Transnet is a major logistics provider and to support the economic reconstruction and recovery plan through the provision of logistics.
Chief financial officer Nonkululeko Dlamini gave an overview of steps being taken to improve compliance with the public finance management act, including that contracts are being reviewed to as far back as 2011 to ensure compliance. As a result reported irregular expenditure has been ballooning – as it takes into account historical effects. For example as at 2017/18 reported irregular expenditure was R8.1-billion, by 2019 /20 this escalated to R114-billion.
Gordhan suggested to the committee that non-compliance linked to the state capture period be ringfenced from current data when it comes to reporting.
"History is being pulled into the current period, [which is why] we see large numbers in terms of irregular expenditure," he said. "The past keeps contaminating the evidence of the present," he said.
Derby’s appointment last year was one of many in terms of new leadership positioned to turnaround the organisation. Transnet also has new executives dealing with procurement and the majority of functions, members of the committee heard. Steps are also being taken to apply consequence management to ensure that wrong doing is not tolerated.