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Former Transnet CFO pushed for accelerated locomotive delivery


From EWN: A former Transnet employee has told SA Institute of Chartered Accountants (Saica) disciplinary hearing into Anoj Singh’s conduct that the former CFO ordered the accelerated delivery of more than 1,000 controversial locomotives.

On Thursday, Francis Callard told the Saica hearing that Singh demanded the delivery of up to 480 locomotives be brought forward at the risk by negating critical factors, such as Transnet engineering’s capacity.

Callard claims Singh told their team that by accelerating the delivery of the locomotives, Transnet would have saved R10 billion without explaining how this would materialise.

He explained it did not include forex hedging and escalation costs.

“When one is building a model of this nature, you ask the projected delivery and time period for the model. So, we want seven years. So, we would go to our treasury department and ask for the rand to dollar exchange rate for the next four to five years. That would be a rand exchange rate that one could purchase from the bank.”

Singh is accused of intentionally misleading the Transnet board and abusing his position during the procurement of the rail transport vehicles.

Callard said the acceleration of the delivery was not only contrary to Transnet freight rail’s available structure, but it was also beyond the company’s scope.

He added that it was also contrary to the procurement strategy of the locomotives business case, which stated delivery would only be accelerated and decelerated depending on market demands.

“Worst state”

Callard also claims the state-owned company’s freight rail division is in a worse state than it was before controversial locomotives were procured.

He told the disciplinary committee that although the business plan, which Singh signed-off for the locomotives was meant to increase the division’s performance and profits, things have since taken a turn for the worse.

He explained that there are three major issues with the locomotives, including the late delivery of the rail vehicles and that market demand volumes failed to materialise.

His line of evidence is focusing on how Singh misled the Transnet board about the profitability of the project.

Treasury’s forensic investigation into various allegations at Transnet and Eskom found that Singh and former Transnet CEO Brian Molefe misrepresented facts to the SOE’s board by indicating that the R38.6 billion total cost of the locomotive contracts excluded potential price escalations.

The eventual final cost of the tender was over R54 billion.