State capture: How former army general 'irregularly' scored R95m from Transnet

Transnet skeletons that are 13 years old have come out of the cupboard to haunt former SA National Defence Force commander Gen Siphiwe Nyanda.

This emerged at the state capture commission hearings on Wednesday afternoon during the testimony of a director at law firm Bowmans (formerly Bowman Gilfillan), Chris Todd.

Todd shone the spotlight on a security services contract awarded to General Nyanda Security (GNS) at the end of 2007 by Transnet, to the value of R95.5m.

According to Todd, who represented Transnet in the fallout that resulted from the irregularities that were flagged in the awarding of the contract, GNS was nowhere close to qualified for the job.

For starters, instead of Transnet going on open tender, the contract was confined to GNS — and it was none other than controversial former Transnet Freight Rail CEO Siyabonga Gama who signed off on the deal.

Gama, who was subjected to disciplinary processes by Transnet after the awarding of the contract to GNS, denied having links with, or even knowing, Nyanda, said Todd. But during the disciplinary hearing, telephone records were presented that showed him in constant communication with Nyanda in the period leading up to the awarding of the contract.

Faced with this evidence, Gama U-turned and admitted that the awarding of the contract to GNS was “fraudulent and a scam”, Todd claimed. However, Todd continued, Gama during his disciplinary hearing blamed former managers who no longer worked for Transnet.

The contract was not only awarded without open tender but there was confusion from the onset about its duration, said Todd.

The agreement stipulated that the contract was for one year, but GNS ended up going on for 25 months — for which it billed and invoiced Transnet to the tune of R95.5m. Worse still, Todd testified, GNS had falsely claimed that it had experience, and even plagiarised its pitch from an American security company.

“The appointment of GNS had been in breach of procurement regulations,” said Todd.

“Transnet attempted to ascertain what GNS had been doing. It became apparent that there were serious questions on whether they had done what they were contracted to do. From a quick analysis of GNS, it emerged that GNS did not have employees and was not registered with a private-security authority. They were, from the get go, in breach of the contract.”

Quizzed on not having warm bodies employed, GNS apparently claimed that its business model was such that they outsourced to other companies. But that, too, was in breach of their contract with Transnet, which stipulated that they could do this only with the consent of the parastatal.

After Gama was dismissed in 2010, Transnet mounted a lawsuit against GNS in an effort to recover the R95.5m — but that energy quickly waned when Gama was reinstated in 2011.

Upon Gama's return, said Todd, managers within the TFR division at Transnet reneged and started assuming a posture that was pro-GNS. And GNS had launched a counterclaim against Transnet seeking damages for the contract cancellation to the tune of R487m.

But after back and forth accusations between the two parties, a settlement agreement was reached in 2014 and both Transnet and GNS withdrew their lawsuits.

But the drama was not yet over because a month after the settlement agreement, GNS — which at the time was trading as Abalozi — was demanding “restitution and reasonable compensation” from Transnet amounting to R40m.

That was in September 2014, and a month later they upped the demand to R60m.

But Transnet, which at this stage had no legal representation after Todd was sent packing, instead offered to pay R20m for damages.

Todd read from a Transnet memo dated January 30 2015 and written by one Ndiphiwe Ntsilinga to then Transnet CFO Anoj Singh: “The purpose of this submission is to request the group CFO to authorise the payment of an amount of R20m in full and final settlements of the legal disputes between Transnet and Abalozi.”

“And so that was then approved and paid,” said Todd.

Todd offered his view on these events.

“Transnet had strong grounds to recover all or a substantial portion of the R95.5m.”

Todd said it was the most unusual set of circumstances — which also indicated a party that was not at all concerned with the financial interests of Transnet.

Nyanda's company in total benefited by more than R115m from Transnet, for adding little or no value.

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