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Alleged money laundering took place under Molefe’s watch

Zondo Commission wants to know how Gupta associate was able to pull off R200m ‘heist’ in Transnet’s R50bn acquisition of locomotives.
Former Transnet head Brian Molefe says he is not a ‘corruption-detection machine’. Image: Waldo Swiegers, Bloomberg

Former Transnet Group CEO Brian Molefe appeared before the Zondo Commission of Inquiry into state capture on Monday to give Transnet-related evidence, specifically on matters relating to McKinsey, Regiments, and the R50 billion acquisition of 1 064  locomotives.

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Evidence leader Anton Myburgh SC asked Molefe if he should have been able to detect any corruption at Transnet based on his qualifications and experience. Molefe replied that he was not a “corruption detection machine”.

Salim Essa and the Guptas

Molefe insisted that he did not know Salim Essa, the businessman with links to the Gupta family.

Myburgh put forward the proposition that the Guptas did not need to get to Molefe through Essa, as Molefe already knew the Guptas well. “You were dealing with the generals, you didn’t need to deal with the lieutenants.”

Myburgh explained that it has been presented in evidence to the commission that Essa and the Guptas were engaging in corruption and money laundering at Transnet while Molefe was at the helm.

Myburgh summed up what his questions to Molefe would be directed at: “You say you didn’t know. Why do you say that? Why didn’t you know? Were you diligent enough?

“Were you asleep at the wheel? Were these crooks too cunning for you? Or were you complicit?”

Myburgh explained that Molefe’s position is made more difficult because he was friends with the perpetrators. “You were frequenting their house, had a seat at the table.”

Molefe remained unconcerned: “If it is not true, or if it is unlikely, I would not waste my time in pursuing it. If it is a spurious allegation, I will not pursue it.” He maintains that he does not have a guilty conscience.

Procurement of consulting and advisory services – McKinsey 1 064 advisor contract

In 2011, just before Molefe was appointed, the Transnet board was given oversight over procurement through the establishment of the board acquisition and disposal council (BADC). The approval authority was increased to R2 billion in 2012.

The CFO could approve transactions up to R750 million and the CEO – Molefe – could approve transactions up to R1 billion. Myburgh said that in effect Molefe became a “one-person acquisition council”. Molefe disagreed, saying that assurance was given for every step in the process.

On May 30, 2012 Transnet issued a request to purchase (RFP) to nine different consortiums on a consignment basis.

On July 20, the contract was awarded to the McKinsey Consortium as the main bidder, and included Letsema as a co-bidder and the supplier development partner.

Certain documents were only recently added to the evidence bundle, and were only received by Molefe and his lawyers the night before his appearance at the commission. Molefe was hence going to be given time to go through these documents and seek legal advice.

‘Conflict of interest’ leads to Letsema being replaced

Molefe approved a memorandum from Transnet chief financial officer at the time, Anoj Singh, dated August 22, 2012, which stated that Letsema needed to be replaced as the supplier development partner due to a “conflict of interest”. The memorandum further stated that a supplier development partner with better credentials be found.

Myburgh asked Molefe to explain what the conflict of interest was in relation to Letsema.

Molefe said that as he recalls, Barloworld was a potential bidder. Letsema was in partnership with Barloworld, and that this would be a conflict – “but if you read the memo, it will explain it”.

There is no memo in the file.

Myburgh wanted to know why the conflict of interest wasn’t picked up during the tender evaluation process, and why it was not recorded in the bundle. Myburgh said Molefe could look into this overnight.

Myburgh later asked Molefe why he hadn’t applied his mind and provided that the replacement supply development partner be subjected to a verification and evaluation process.

Regiments appointed as supplier development partner

The Transnet acquisition council awarded the consulting and advisory service to McKinsey on August 22. The financial implications were that Mckinsey would have to sub-contract 30% of the value of the contract to a supply development partner. The contract was for R50 billion.

Myburgh informed the commission that “that some four months later, on December 6, 2012, Transnet and McKinsey concluded a letter of intent which reflects that Regiments replace Letsema”.

Molefe insisted that there must be a memo explaining why Regiments was appointed.

Myburgh explained that the memorandum instructed McKinsey to replace the development partner, hence there would be no Transnet ‘memo’ to explain why Regiments was selected.

Molefe again insisted that there must be a memo.

Myburgh related the evidence given by Ian Sinton of Standard Bank on what Regiments director Nevan Pillay told him. Essentially, at a meeting held with McKinsey, Regiments was told that McKinsey would appoint Regiments as the supply development partner on the basis that Regiments pay over 50% all of its earnings to Essa, and 5% to Gupta associate Kuben Moodley.

Myburgh said: “The rest is history. Following on Regiments’ appointment more than R200 million was transferred from Regiments to Gupta shell companies … on the face of it, Essa pulled of a heist … for every rand received by Regiments, 50% was paid to Essa, for doing nothing.”

The money flow report

The commission’s “money flows team” had prepared two reports tracking the money flows from Regiments to Gupta shell companies, which in turn made payments to lower level shell companies. None of these companies had any income or expenditure other than the money laundering payments. Hundreds of millions of rand were laundered by Essa through these shell companies.

These payments were fraudulently reflected by Regiments as business development payments.

Molefe said he didn’t know anything about this.

Myburgh put it to Molefe that while he was at the helm of Transnet, there was large-scale money laundering happening.

Molefe denied any knowledge of this, and also commented that “money laundering” is not a finding.

‘Let’s see what comes out of the wash’

Molefe said he will wait for the commission’s final finding – “let’s see what comes out of the wash … what I can categorically say [is] that I had no knowledge of [these] schemes … and I deny any wrongdoing”.

Myburgh mentioned that McKinsey has conceded to the fact that all the contracts involving Regiments were tainted and has therefore agreed to pay back all monies in relation to these contracts. This will be around R650 million.

Molefe says it is up to the commission chair to make a finding, and will not comment on McKinsey’s concession.

Myburgh noted that the great irony is that “all this started” when Molefe authorised Singh’s memorandum that Letsema must be replaced.

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Wot?? Really, you mean he’s a crook … too?

This is just the usual cadre response ….. “It wasn’t me”, “I know nothing”, “It must have been some one else, WMC?”.
And again, as usual, nothing will happen … no one is accountable for anything, no one gets arrested, no one appears in court, no one goes to jail … and no monies are recovered.

So sad that pathological liars like Molefe linked SA to global criminality who are hellbent on destabilising the country and laundering as much as they can into offshore shell companies. The ANC is now a global criminal organization and SA stands at a critical juncture. When I see that Merafe can’t export ferrochrome because of only 40% availability of Transnet trains, then the people of SA deserve justice before the country descends into a complete failed state.

Molefe keeps misleading the Commission and the South African public by saying that he does not have ‘a guilty conscience’, what Molefe is not saying is that he oes not have a conscience to begin with.

This guys is absolutely irritating on Television.

more of a stupid storyteller…

Please just stick to the truth!

Concentrating on the job at hand and simultaneous ensuring that the
kick backs a split correctly is quite a challenge. No wonder the job side hat to suffer.

After the rule changed, that evidence at the Zondo Commission can be used against them, the people that appear, are not going to incriminate themselves.

So, largely a waste of time and money.

Bring them before court.

Ahh…the Saxonwold shebeen runner denying any Gupta knowledge, again.

The tragedy of Molefe. Could have been an agent for so much good but choose to be a crook.

End of comments.

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