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Transnet’s Diedre Strydom and former managing director of railways at Hatch, Henk Bester, said the pair wielded a lot of power and weren’t shy about using it.
Transnet’s Diedre Strydom told the state capture commission on Tuesday that Salim Essa and Anoj Singh had a lot of power and were not afraid to use it.
JOHANNESBURG – The state capture commission heard on Tuesday how Gupta partner Salim Essa and former Transnet CFO Anoj Singh raised a rail and port contract by R200 million after Essa told bidders it wanted R80 million to secure the deal.
Transnet’s Diedre Strydom and former managing director of railways at Hatch, Henk Bester, said the pair wielded a lot of power and weren’t ashamed to use it.
The contracts were intended to ensure that the country would increase its capacity to transport manganese from the North Cape to the Eastern Cape for export abroad.
Strydom told the commission that Essa knew everything there was to know about Transnet contracts.
And for the expansion of the rail and port infrastructure for manganese, he and Singh called a meeting with H2N, one of the joint ventures that had already been shortlisted, and told them that he could make sure he got the contract for a fee.
“He then proposed to H2N that they can pay what amounts to a bribe of about R80 million and that he can secure the contract for them,” Strydom said.
Strydom said H2N did not win the contract, but another company, Flag, did.
“The worrying thing about the Flag award was that the award was more than R200 million higher for the same work,” he said.
Strydom said McKinsey & Company, which was appointed by Singh alone, filed what it called a business risk case to justify awarding the contract to Flag.
TRANSNET PLANS HIT
At the same time, the commission heard how Transnet’s plans to expand its rail network and ports to increase the country’s manganese exports were hit by Singh, Essa and McKinsey.
The commission heard how contractors were forced to partner with Singh’s chosen companies, pay Essa search fees for contracts they already had, and how McKinsey frustrated others until they abandoned the contracts and sued Transnet.
Some officials reported wrongdoing and others destroyed evidence, and two years later the project was abandoned.
South Africa and Ukraine have 80% of the world’s manganese deposits, and more than a third of the manganese used by industrialized economies in glass and steel production comes from the Northern Cape.
Strydom said that in 2013 things were looking up.
“At that stage, South Africa had developed China as a very lucrative market because the quality of our manganese grade was very suitable for its foundries and furnaces,” he said.
Transnet wanted to expand its railways and ports to transport and export up to 16 million tons per year.
“The value of the rail contract was approximately R 1 billion depending on the business case and the port contract was approximately R 700 million,” Strydom said.
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