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Former Transnet CEO Siyabonga Gama. (Photo: Gallo Images / Leon Sadiki)
Transnet’s board of directors twisted into legal knots to secure the return of former CEO Siyabonga Gama in 2011. Gama returned to SOE with a clean slate and a full pocket, despite adverse findings against him. Christopher Todd, a partner at the Bowmans law firm, testified in the investigation Thursday.
The Transnet board acted irrationally when it reinstated former Freight Rail CEO Siyabonga Gama in 2011. The question is: why?
The evidence before the chairman of the State Capture Inquiry, Supreme Court Vice President Raymond Zondo, points to the former President Jacob Zumaand a special advisor to the then Minister of Public Companies Malusi Gigaba.
Zuma ordered the ‘reinstallation’ of Siyabonga Gama as CEO of Transnet
In a written submission to the investigation, Gigaba has denied any influence on Gama’s return to the state company (SOE). However, his special adviser, Siyabonga Mahlangu, reportedly called the head of Transnet’s legal group to push for Gama’s reinstatement.
Expert advice
Christopher Todd, a partner at the Bowmans law firm, testified in the investigation Thursday.
Todd is an employment law expert who worked closely with Transnet in connection with the disciplinary investigation into Gama’s conduct. He detailed what was clearly irrational behavior on Transnet.
As indicated in the first minutes of his appearance, Todd has previously presided over the labor court. He is an expert in employment law, with decades of experience and academic papers published in his name.
“It is important to your evidence that everyone knows that Transnet had the benefits of an employment law specialist,” Zondo noted.
Todd acted on Transnet’s behalf when Gama initiated superior court proceedings against individual board members in September 2010. Todd said Gama’s attack on individual board members reflected the tone of the engagements at the time.
Gama argued that he was the victim of a conspiracy on Transnet, driven by a “clique” that was trying to thwart his ambitions to become CEO of the group. Gama’s offer failed: he lost the superior court case.
Three strikes, not out
Gama’s conduct as CEO of Transnet Freight Rail (TFR) came under scrutiny during disciplinary proceedings, following his suspension in 2009. He faced three main charges and was found guilty on all fronts of Transnet’s internal process.
The first concerned an 800 million rand contract for the renovation of 50 locomotives. The second was related to an irregular security contract that ultimately generated a bill of about R95 million. The third concerned Gama’s attack on his colleagues who raised the problem of his misconduct.
The Transnet board objected to an outside entity assembling the refurbished locomotives. He supported Transnet’s own workshop division to complete the work in South Africa and agreed to do so. However, Gama concluded a contract that achieved the opposite.
“That involved corruption,” Todd said of the remodel contract. He said the project manager responsible for execution under Gama had a vested interest in the joint venture that secured reassembly of the renovated locomotives in conflict with the board’s direction.
“The idea was simply that the board had told Mr. Gama and his team in specific terms that when doing this transaction you must use a Transnet facility and not an external service provider and he went against this,” said Zondo .
The security services contract was linked to the then Communications Minister Siphiwe Nyanda.
It had a 50% stake in the company Transnet awarded the job to, General Nyanda Security Advisory Services (GNS). “The irregularity was severe,” Todd said.
A public and open bidding process for the security work was initiated, then abandoned, and GNS made an unsolicited offer for the work (with advice provided by Transnet officials). Two officials who pushed for the proposal were fired. Gama approved and signed the proposal.
Gama exceeded his authority because, according to Todd, the annual value of the contract with GNS was R18 million, while Gama had delegated authority to sign contracts up to a maximum of R10 million.
(In this Daily maverick Article, a figure of R19 million is recorded for the GNS contract, according to a report by the then Minister of Public Enterprises, Barbara Hogan, in Parliament).
Zuma ordered the ‘reinstallation’ of Siyabonga Gama as CEO of Transnet
Todd testified that Gama exceeding his authority was not the reason for the attack on Gama over the security agreement. The real problems lay in Gama’s conduct during the disciplinary investigation and his approval for a lockdown in favor of GNS.
Golf buddies
Todd said: “Mr. Gama, in the course of the hearing, specifically expressed to Transnet’s witnesses on his advice that he had no personal relationship with General Nyanda.”
However, the phone records reflected many phone calls between Gama and Nyanda before the contract was concluded, including a call four days before the contract ended.
Cornered by these facts, Gama admitted that he and Nyanda were golf friends and said that he had denied a personal relationship because he was concerned that too much would be done about the connection.
Todd said: “This was always evident, even in Mr. Gama’s own version: ‘I am the CEO of TFR, I am signing a security contract for R18 million and you can put anything in front of me, you can say anything and put anything in front of me ‘… ”
“And you sign,” Zondo added.
Msholozi’s Favorite
At this, Zondo recalled Hogan’s evidence in November 2018. He reported his surprise at Zuma’s position on the perfect candidate for the position of group CEO at Transnet. Zuma deemed Gama fit for the top job, despite three serious attacks on Gama stemming from the disciplinary process.
“[Zuma] he wanted me to go ahead with the appointment of Gama. I said, ‘I can’t do that. He then said that an appointment should not be made for Transnet until the disciplinary process against Gama is concluded. I told him I would provide more evidence. I already felt that the president was exceeding his authority here, ”Hogan testified.
Indicate your terms
After the adverse findings against him during the disciplinary process, Gama was summarily dismissed. However, it wasn’t long before he was competing for reinstatement on Transnet.
“How does an employee who has been fired as CEO of TFR get into the bargaining negotiations and demand an even higher position? What makes you put that on the table? “asked Zondo.
Transnet had issued a final warning against Gama stemming from the damning findings against him. However, this was moot when he returned to the SOE. The six-month warning elapsed between Gama’s firing and his return in 2011. Instead of having an ax to his head, he entered Transnet with a clean slate.
“It was a very strange message to send. In a way it said that Mr. Gama is back in full influence with no real consequences for his conduct, ”Todd said.
“There is no risk,” Zondo said, adding that no practical consequences apply.
Advocate for evidence leader Anton Myburgh SC saw a critical benefit of this decision: When Gama applied for the position of CEO of the Transnet group, he had a seemingly clean record.
Transnet reached an agreement with Gama on scandalous terms. The SOE covered Gama’s late payment of R10 million, paid bonuses and paid the bill for most of his legal fees. “The terms of the deal were obviously adverse for Transnet,” Todd said.
Despite legal advice from various sources showing that Transnet had a strong case against Gama, the board capitulated to his lawsuits. In Todd’s view, the purpose of avoiding arbitration (precisely because Transnet had a strong case) was to ensure Gama’s return, unimpeded.
“He strongly supports the position that the decision was made to reinstate Mr. Gama,” Myburgh said.
“They wanted Mr. Gama to get back in business, that’s the only logical conclusion,” Todd said.
Todd stated that to ensure Gama’s return, it was clear that good governance was not the board’s priority.
“Unless the board has decided, ‘You know what? Let’s have CEOs who don’t read documents or don’t care and try to cover it up and fight like crazy when held accountable. ‘ Because that’s the bottom line. That’s what Mr. Gama did, ”Todd said.
The key to unraveling the saga of Gama’s return was: what made the chairwoman of the board, Mafika Mkwanazi, decide that Gama should be the prodigal son of Transnet?
An order from the highest office in the country is a persuasive probability. Mkwanazi can give an answer when he testifies on Friday, October 16. DM
