Tuesday, September 15, 2009

South African Rail Freight Enquiry Damages the Industry

Transnet CEO Appointment Squabble Continues
Shipping News Feature

JOHANNESBURG, SOUTH AFRICA – Accusations levelled at Transnet Freight Rail’s CEO, Siyabonga Innocent Gama, are dividing opinions and causing undoubted damage to the country’s freight capability. Mr Gama was shortlisted for his position after the incumbent Ms Maria Ramos gave up the job earlier this year.

Observers are saddened that, once again, what should be an internal company issue to be settled fairly by the powers that be has degenerated into the type of tawdry South African power struggle so often derided by the outside world. The parties involved seem blissfully unaware of the way such matters affect trade with the country.

The précised version of events begins in 2008 with a call to the “corruption hot line” hosted by Ernst and Young, Transnet’s auditors. The subsequent report alleges Mr Gama had signed off on contracts which had been improperly tendered for, including a R19-million agreement favouring a company in which ANC Communications Minister General Siphiwe Nyanda was a stakeholder.

It has been subsequently alleged that a locomotive refurbishment contract, which was expected to go to Transnet’s own engineering division, finished with Sibanye, a company involved in earlier deals which were cancelled when details of direct connections with at least one Transnet Executive were exposed. Mr Gama is said to have unilaterally overruled the Transnet’s boards wishes.

The opposite sides of the dispute have polarized and, as seems inevitable with this country’s politics, the race issue is now entering the arguments. Chris Wells, the acting CEO of Transnet, has been accused of “ulterior motives” and withholding documents from Mr Gama’s lawyers.

The Transnet board, which it is believed only included Mr Gama on the shortlist for his position after intense lobbying from the government, are now facing a protracted court battle over the matter.

The squabbling parties seem unaware that the R80 billion which forms their capital expenditure programme will, in a large part, remain suspended until peace reigns.

It is seen as imperative that the warring factions sort the whole mess out and return to modernizing South Africa’s rail freight and multi modal infrastructure.