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Former Chairman of the Board of Transnet, Mafika Mkwanazi. (Photo: Gallo Images / Alan Murdoch) Former Chairman of the Transnet board of directors, Mafika Mkwanazi. (Photo: Gallo Images / Alan Murdoch)
Mafika Mkwanazi faced repeated questioning about the irrational decision of the Transnet board to reinstate Siyabonga Gama and to pay his legal fees in a court case against the state company, which he lost.
“I’ve never seen anything like this,” said a bewildered Supreme Court Vice President Raymond Zondo on Monday, October 19. “I’ve never seen anything like this,” he repeated.
For him, it was simply too much that Transnet had paid the legal fees related to disgraced executive Siyabonga Gama’s attack on the rail, port and pipeline company in high court in 2009.
By paying more than 1 million rand to Gama’s legal representatives, Transnet scored an actual own goal, and at a premium.
In addition, Transnet paid legal fees that Gama accumulated during an internal disciplinary process at the company in which he pleaded guilty to three main charges.
Zondo’s comments on the Gama settlement have a significant influence. The second in command of the South African judiciary presided over countless cases in the labor court.
According to the Constitutional Court websiteZondo worked in the labor court since 1997. He served as presiding judge of the Labor Court of Appeal and the labor court “for a ten-year term.”
Logic challenged
The higher court ruled against Gama in early October 2009. The decision was in favor of Transnet and its representatives in a labor dispute that Gama initiated over his suspension.
Despite Gama’s defeat in court, then-CFO Anoj Singh approved that Transnet disburse more than R 1 million in legal fees for which Gama was, according to a court order, liable.
To make matters worse, Transnet undertook to pay Gama most of the legal fees of Transnet and its representatives, for which he was responsible, rather than his own legal fees.
The costly decision defied logic, and the chairman of the Transnet board, who sent the settlement agreement to Singh, did not provide insightful answers on Monday.
Presenting the final deposits to Gama’s lawyers, former board chairman Mafika Mkwanazi said they puzzled him.
Transnet did everything possible for Gama, and the question that Mkwanazi did not clearly answer is: “Why?”
Zondo referred Mkwanazi to the assessed cost of Transnet’s legal bill in the superior court litigation, as calculated by Bowman Gilfillan’s attorneys at Transnet.
“R426,000 that Mr. Gama owed to Transnet: you said they should stop trying to get that back. Why did you do that? “Asked Zondo.
Mkwanazi stuttered through his response: “At the time, the opinion was even that cost should be part of the deal discussion.”
Zondo was enraged: “Why? Why? Because that’s a question you would have asked anyone who told you that. You would have said, ‘Why?’ ”
An awkward pause followed.
“President, I did not necessarily ask the question why,” Mkwanazi meekly replied.
“But that’s the obvious question a company director should ask himself in such a situation,” said an irate Zondo.
Explaining the inexplicable
Advocate for evidence leader Anton Myburgh SC recalled evidence from the Transnet group’s former general manager of legal affairs, Siyabulela Mapoma, who said Mkwanazi had instructed him to draft Gama’s settlement agreement.
Mkwanazi maintained that it recommended Transnet to cover Gama’s legal fees, and not those of Transnet and its representatives.
Singh and Mapoma, he claimed, misinterpreted the agreement: “This is strange because even Mr. Mapoma and Mr. Singh should have gone back to that settlement agreement and interpreted[ed] correctly. ”
Mkwanazi continued: “I cannot explain this incorrect interpretation of Anoj Singh and Mr. Mapoma.”
Zondo insisted that Mkwanazi explain his conduct as chairman of Transnet’s board when it more than capitulated to Gama’s demands.
“You’ll have to really explain to me and the public correctly what your decision was, actually, here,” Zondo said.
Mkwanazi was quick to find an explanation. He alluded to documents that allegedly informed his decision to recommend Transnet to pay Gama’s legal fees in the higher court matter.
“No, but Mr. Mkwanazi, that’s not going to be good enough,” Zondo interrupted.
Towards the end of Monday’s hearing, Zondo said: “A large amount of taxpayer money went to Mr. Gama and his attorneys. First, in terms of late payments for nine months, second, in terms of legal costs for the higher court and for the issue of unfair dismissal.
Claims of a clique
After Transnet suspended Gama in 2009 pending a disciplinary investigation for allegations of misconduct, it took the matter to court.
Gama argued that there was a conspiracy among Transnet’s elders, who were members of a “clique” trying to thwart his ambitions to ascend to the group’s CEO.
On Wednesday, October 7, 2009, in South Gauteng Superior Court, Judge Brian Spilg dismissed Gama’s application with costs, including the cost of attorneys for most of the defendants (11 of 13).
“In my opinion, there are reasonable and probable grounds to support the decision to initiate disciplinary proceedings and suspend Mr. Gama,” Spilg wrote in his judgment.
“There is also no case of perceived bias that could affect the legality of the process. Much less the institutional bias, ”continued Spilg.
Gama lost in high court, but the Transnet board did their best to satisfy his demands and reinstate him.
During two days of testimony, Mkwanazi faced repeated questioning about the board’s irrational decision to reinstate Gama in 2011.
Steroid reset
On Wednesday, October 14, the extremely generous conduct of the board was called into question.
Gama was slapped with a final six-month written warning, which had elapsed when he returned to Transnet.
“Virtually no consequence was applied,” Zondo said the week before.
Despite adverse findings against Gama, which included an attack on colleagues that held him accountable, he received more than R10 million in late payments, bonuses and legal fees, after his high court attack on suspension of Transnet.
Last week, Zondo said the Mkwanazi board had more than capitulated to Gama’s demands.
“They paid their 75% contribution on their legal expenses and all that. So it seems to me that it is something much more than a capitulation, ”he said.
“Maybe resetting on steroids,” Myburgh said.
‘Animated by Malusi Gigaba’
Mkwanazi was a key cog in the machine that facilitated Gama’s return, and it ran on political fuel. Faced with the consequences of his position, he expressed confusion.
On Friday, October 16, Mkwanazi stated that the then Minister of Public Enterprises, Malusi Gigaba, had encouraged him to review Gama’s dismissal.
According to Mkwanazi, Gigaba noted that white executives face lighter penalties for the same acts. The minister’s input was nothing more than advice to reconsider the matter, he said.
In a written response to the State’s Capture Investigation, Gigaba recorded that it played no role in Gama’s settlement and his return to Transnet.
Mapoma said Mkwanazi told him that the charge to ensure that Gama returned to the parastatal came from “higher up” than Gigaba’s ministry. He guessed that by “taller” Mkwanazi meant then-president Jacob Zuma.
Gigaba’s predecessor, Barbara Hogan, has previously testified that Zuma favored Gama and was determined to have him promoted to CEO of the group, although she was aware that Gama was under a dark cloud. Zuma has denied the claim.
Friday October 16 Mkwanazi dismissed Mapoma’s evidence crediting him for referring to the then president.
“That is their assumption,” Mkwanazi testified on Friday. “I don’t drop names, especially [former] President Zuma. ”
Political ties
Last week, labor law expert and partner at Bowmans’ attorneys, Christopher Todd, testified about the damage caused by Gama’s return to the state company.
Gama was summarily fired in 2010, following a disciplinary investigation into his misconduct.
The following year, he was reinstated, despite adverse findings against him and a lost case in superior court.
During the disciplinary investigation, Gama faced three main charges, one of which was related to a security services contract that Transnet irregularly awarded to a company with political connections.
The appointment came after the public company inexplicably ruled out an open bidding process, which was underway.
General Nyanda Security (GNS) Risk Advisory Services won the security contract after making an unsolicited offer to Transnet.
Gama, as then CEO of Transnet Freight Rail (TFR), signed the security contract of 19 million rand per year, while he was only authorized to sign contracts of up to 10 million rand.
After Gama returned to Transnet in 2011, the state-owned company lost its appetite to recover around R95 million from GNS, after several amendments to the security contract.
When questioned about the contract during an internal disciplinary investigation, Gama initially concealed his relationship with then-communications minister Siphiwe Nyanda, who owned 50% of GNS.
After being cornered with phone records, Gama admitted that he and Nyanda were “golf buddies” and said he didn’t want too much of the bond done.
“It has far-reaching consequences for the entire business,” Todd said of Gama’s reinstatement.
Todd gave Transnet legal advice on the Gama matter. He testified in the investigation on Thursday, October 15.
Gama admitted that the GNS contract was “suspicious and a scam,” but upon his return to SOE, as “a consequence or a coincidence,” Todd said, the will to recover parastatal funds evaporated.
“For me, I don’t accept that it was a coincidence,” Todd said.
He testified that Gama’s return was against good governance at Transnet and, in his opinion, Gama’s reinstatement demonstrated that good governance was not the board’s priority.
Mkwanazi concluded his testimony on Monday, having offered more questions than answers about his own conduct and that of the Transnet board.
Testing on Transnet will continue on Tuesday, October 20. Procedures must begin at 10 am. DM
