Former Transnet chief executive Brian Mofele told the Zondo commission on Tuesday that he did not wish to feel intimidated by repeatedly being asked why he had approved a R78.4-million payment to Regiments when there was no contractual obligation to do so.
Molefe took exception when evidence leader Anton Myburgh impressed on him that half the sum in question found its way to Regiments owner Salim Essa, whom he described as the “money-laundering lieutenant” of the Gupta family.
Molefe insisted that he did not know Essa.
But Myburgh said this may have been irrelevant because Molefe readily acknowledged that he had a seat at the table of the Gupta family, whose surname had become a byword for state capture.
Myburgh was referring to evidence he had presented on Monday, showing how Essa had used payments secured from Transnet to launder a small fortune through shell companies.
Molefe said the commission was not an adversarial process nor a place for Myburgh to indulge his “conspiracy theories”. Molefe insisted that he knew nothing about the benefit Essa derived from contracts he approved. “I hope we are not in this commission to entertain Mr Myburgh’s personal conspiracy theories.”
Regiments was brought in as a substitute for Letsema, which was part of a consortium of consultants to Transnet, including McKinsey on a contract that was revised several times but initially inked in late 2012. The aim was to advise Transnet on a R50-billion acquisition of locomotives to boost its freight business.
Molefe approved the substitution on the basis of a memorandum from Transnet chief financial officer Anoj Singh, which stated that Letsema had a conflict of interest.
Deputy Chief Justice Raymond Zondo intervened to say Myburgh’s line of questioning was allowed in terms of the rules of the commission and that it would help if Molefe used “yes” or “no” as a starting point to his answers.
This prompted Molefe’s legal counsel, Nkokotana Motsepe, to object. “It is as if he is in an interrogation room … As long as Mr Molefe does not feel intimidated … if he feels attacked he is going to respond in a particular way, and I don’t think we need to get to that point.”
The exchange related to a decision by Molefe to approve an exceptional payment request for R78-million from Regiments for advice that allegedly saved Transnet R2.8-billion in hedging and escalation costs on the locomotive deal. The consortium, in which Regiments soon became the dominant partner, had been appointed on a fixed benefit contract worth R35.2-million, but at Singh’s urging the scope and the worth subsequently grew.
Molefe said he decided to approve the request, which more than doubled the value of Regiments’s earnings, in the hope that the company would provide Transnet with even greater savings in future. It later transpired that the saving never happened.
Again Molefe had relied on a memorandum from Singh, and he testified that he never questioned its veracity or asked him how Regiments had managed this feat.
“It is a huge saving you are talking about … did you ask him ‘how did that come about?’’ Zondo asked.
Molefe responded: “No chair, I didn’t. You know my attitude was when you are a group chief executive of a company you have to trust your colleagues, you have to trust in somebody, so if they tell you that it is raining outside, you don’t stick out your hand through the window to check if it is raining. I was not doubting anybody’s bona fides at the time.”
He stopped short of attributing improper motive to Singh in hindsight, suggesting instead that he too would have been acting on information provided by colleagues.
But, on Molefe’s telling, he failed to side with Singh when Transnet treasurer Mathane Makgatho — a former colleague of his at the treasury — was dead set against using Regiments as brokers to secure financing to the tune of R1.5-billion from the China Development Bank on the locomotive deal.
The proposal would earn Regiments R150-million annually for five years for something that, Makgatho has insisted, the finance team at Transnet could handle with ease.
“I have huge respect [for] Mathane … she came to me a few times to complain about [Regiments director] Eric Woods and Anoj Singh,” Molefe recalled.
He said the matter turned into a debate with Makgatho “bitterly disagreeing” and his way of resolving it was to call a meeting with her, Singh and Wood to give them a chance to settle it.
“In the debate she could not sway them … I actually understood her position and sympathised with her,” Molefe said.
As a result, he never implemented the proposal. In her testimony, Makgatho told the commission she warned Molefe that Singh was corrupt and that signing his proposal would be a ticket to prison.
The deal did go ahead after Molefe had left Transnet for Eskom and litigation has since been launched against the company to recover close to a quarter of a billion rand.
On Tuesday Molefe again insisted that he has never been implicated in wrongdoing by witnesses at the Zondo commission, despite being served numerous rule 3.3 notices to that effect. He also repeated that he was unfairly portrayed by former public protector Thuli Madonsela as a key figure in the state capture scandal.