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Transnet CEO receives pink slip

‘An investigation into the reason for the termination is continuing’ – Edward Kieswetter.

NOMPU SIZIBA: The board of Transnet delivered a letter to group CEO Siyabonga Gama yesterday, advising him that his employment contract with the state-owned enterprise had been terminated. The letter comes almost a month after he was told to justify why he shouldn’t be dismissed. This follows the labour court on Friday stating that the issues between Gama and Transnet should rather be dealt with at arbitration.

To tell us more about the decision and the way forward I am joined on the line by Professor Edward Kieswetter, a Transnet board member. Thanks very much, professor, for joining us. Why did the board not follow the advice the labour court handed down just this past Friday, and proceed to arbitration with Mr Gama?

EDWARD KIESWETTER: Good evening. Just to be clear, based on the court decision on Friday, Mr Gama in his application had sought an interdict against the board of Transnet from acting on its notice to terminate his employment.

We have to declare that the board followed procedure, which was to notify him on October 1, giving Mr Gama 10 days to provide the board with any reasons why we should not act on this intent. Mr Gama chose not to respond. We extended this on two occasions. Mr Gama instead decided to go to the court to seek an interdict. The court was very clear. The court stayed his application, subject to arbitration. This does not preclude the board from acting on its original notice of intention, and the board acts in terms of his [Mr Gama’s] employment contract, which provides for the board to terminate his employment on certain prescribed terms.

NOMPU SIZIBA: Alright. Mr Gama earns something like R6.5 million or more per annum, and you guys have undertaken to pay him for a further six months. Some might view that as still rewarding someone who was found to have conducted malpractice at the organisation. My understanding is that when your contract is terminated for malfeasance, or when you are fired, you can’t necessarily expect any benefits. Please just clarify that for us.

EDWARD KIESWETTER: With pleasure. First of all, the reason for the termination. There is an investigation that is continuing. The board obviously will follow the investigation and react as information becomes clear. In this particular instance it is very clear that the board is acting based on a loss of trust and confidence in the CEO, not in this instance on the substance of some of the allegations. It is more on the behaviour, during the investigation of his fiduciary responsibility, that the board considers could be very important for a CEO in an executive seniority – and clearly we expect the behaviour to be in line with the values of integrity that we wish to uphold.

So the first clarity is that the basis is a loss of trust. Secondly, Mr Gama’s employment contract allows for a dismissal on that basis, with a six-month notice period. So again, because of the level of seniority and to bring certainty into the organisation, it is common practice that, when a CEO serves his notice period, he is not required to be at work – but rather, to bring certainty and stability into the organisation, his employment arrangement with the company ceases immediately. That takes effect today. So he is no longer in the employ of the company.

However, in terms of the employment contract he is entitled to a six-month notice period, which notice period will be paid to him in terms of his employment contract.

NOMPU SIZIBA: Nicely explained.

EDWARD KIESWETTER: In terms of your original question, we believe that the alternative path, regardless of its financial implications, would have prolonged a period of uncertainty and that would not have been in the interests of the company. Our fiduciary accountability is to bring stability and create an environment that revitalises an important state-owned company at Transnet. We believe that this serves the best interests of the company.

NOMPU SIZIBA: Now you have this clean slate, and you need new leadership. How soon are you hoping to get new leadership, and what are the non-negotiables that the board will be looking for when considering the right candidate?

EDWARD KIESWETTER: First of all, during this week we will make a further announcement as to an interim arrangement that the board will put in place. And then it will start a more intense process of recruitment to find an appropriate leader.

There are a number of issues that are important for the board. Firstly, there would be the technical competence of an individual to manage an organisation as complex and as huge as Transnet, but we are also very cognisant that it must be a person beyond reproach, a person who buys into the values and integrity that the board wishes to uphold, and is able and competent to act at this level in the organisation. It’s very clear that the decision of the board must render the company in a position which is significantly better than where we find ourselves unfortunately at the moment.

NOMPU SIZIBA: The state-capture theme that we’ve been hearing about from the inquiry, and even before, following the Gupta leaks, indicates frauds of unimaginable proportions that have gone on. And of course in the case of Transnet it’s known how the SOE [state-owned enterprise] overpaid for those locomotives and the purpose that that overpayment served. How much engagement has the Transnet board had with the police or prosecuting authorities about ensuring that the people who are responsible for many transgressions are brought to book? These actions have served to disrupt South Africa’s development programme.

EDWARD KIESWETTER: Well, the investigation commenced with the appointment of this new board, so it is already far advanced. You may be aware that the first report was addressed by Werksmans and, because of it not being conclusive, a second investigation was started by the attorneys MNS [Mncedisi Ndlovu & Sedumedi]. All of this predated our appointment as board members. But we have been in continuous engagement with the legal team; we are in continuous engagements with counsel on these matters. We engage with the SIU [Special Investigations Unit] and other investigative authorities to the fullest extent to ensure that a number of areas are addressed.

Firstly of course, as this decision would indicate, and the previous decision to suspend some of the other executives, is the employment relationship with individuals who are somehow implicated or affected by this. We believe we need to address that. We have also addressed that substantively in the last two months. Now the two executives plus the chief executive at the moment.

The second issue will obviously be to consider any of the civil actions to recover any of the monies that are alleged to have been wrongfully or unnecessarily paid to various parties.

And then thirdly, to consider whether there are any criminal cases or civil cases that can be pursued.

So this will take its course. And of course alongside there will be the broader investigation by the commissions that are seeking to address the issue of state capture. Our board is focused on working with the authorities and the relevant parties to ensure that the Transnet [issues] specifically are addressed, and we work with all of the instruments and processes that have been availed [to] us, either by the president through the commissions of inquiry, or by the forensic investigations that have been launched, and the investigating authorities that are involved.

NOMPU SIZIBA: Professor, lastly – given Transnet’s pivotal position in the economy and its serving as an anchor for development – if you can get the leadership right, are we hopeful that the company can be self-sufficient in terms of making sufficient profits, and that it can be a catalyst for much-needed growth in the country going forward?

EDWARD KIESWETTER: Transnet is actually a wonderful and a very solid company. It employs over 50 000 people, close to 60 000 if some of the other employment relationships are included. There are many, many hardworking and honest people employed in the company. Leadership is key and we believe by addressing the true leadership position, such as we are doing now, that will begin to set the right tone – it will begin to ensure that the organisation is clear [about] where the board stands and what our requirements are. And we are very confident that the challenges that are currently being faced link back to the culture and the issues that have surfaced in the past number of years. We are very confident that Transnet will play its role as an important catalyst in the economy of South Africa, and we are looking forward to leading that process.

NOMPU SIZIBA: On that positive note, professor, we’ll leave it there. Thank you so much for your time.

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So they did not find anything against him but proceeded to fire him eventhough the investigation is incomplete. Wrong doing should be punished but there is due process and it has to be fair to both parties.

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