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Molefe and the R78m ‘success fee’ paid to Regiments

It was ‘a decision that would typically be taken by a CEO in my position’ says former head of Transnet.
Brian Molefe said it was not possible for a request of this nature to end up on his desk without being correct. Image: Supplied

Former Transnet Group CEO Brian Molefe appeared before the Zondo Commission of Inquiry into state capture on Tuesday to continue with his Transnet-related evidence. Anton Myburgh SC was the evidence leader.

Molefe’s evidence was peppered with business homilies and analogies, and provided a window into the CEO’s decision-making process.

For example, in explaining why it was necessary to approve a generous payment of R78.4 million to Regiments Capital when doing so wouldn’t be in accordance with any agreement – there being nothing in law compelling Transnet to make such a payment, as Myburgh put it – Molefe said: “This was a decision that would typically be taken by a CEO in my position.”

The R78.4 million payment

On April 16, 2014 McKinsey addressed a letter to Transnet advising that it had ceded its transaction advisory rights and obligations to Regiments on February 5, 2014.

On April 16, 2014, Vikas Sagar of McKinsey advised Transnet chief financial officer at the time Anoj Singh that McKinsey would, with effect from February 5, 2014, cede its rights and obligations to Regiments.

On the same day, Singh wrote a memorandum to the CEO, Molefe, to request approval of a R78.4 million “success fee” payment to Regiments.

The memorandum claimed that Regiments had saved Transnet R2.8 billion, and that they should therefore be paid R78.4 million.

Molefe approved the request on April 17, 2014.

Molefe said that Regiments initially wanted to be remunerated on a different basis, but now they requested a change in the remuneration model: “Regiment[s] was coming back and saying, guys, I have already saved you R2.8 billion. So please, can you reconsider the remuneration model that would effectively allow me to be paid another R78 million and what I simply did, I looked at the situation, I thought R2.8 billion is not bad for R78 million, and I approved it, that is in English, that is what happened.”

Shedding further light on his reasons: “It is a well-known principle in business, that remuneration should be linked to the benefits to the company.”

Molefe did however, after further questioning, concede that it was quite generous and that Transnet didn’t have to make the payment.

Myburgh questioned Molefe on whether he knew that half of the R78.4 million had gone to Salim Essa, a businessman with links to the Gupta family.

He didn’t know that.

Myburgh said Molefe should understand why this contract is being placed under scrutiny, and went on to make the point that Essa was the Guptas’ money-laundering lieutenant.

Anger, interrogation, harassment

At this point Molefe got really angry, and accused Myburgh of saying that he knew Essa, whereas he had categorically stated that he does not.

Molefe turned to commission chair Deputy Chief Justice Raymond Zondo, and said he hoped “we aren’t here for Myburgh’s preconceived theories but to listen to objective evidence that is not tainted by what Myburgh has read … I am not here to answer to what is in Myburgh’s head”.

Zondo explained that Myburgh must probe whether it is possible that Molefe did know Essa, on the basis that he was friendly with the Gupta family.

Zondo said at the end of the day, Myburgh will have to make a submission to the inquiry, based on the evidence before the commission, on whether Molefe knew Essa or not.

Molefe’s attorney interrupted and said they would like to put it on the record that Molefe did not know Essa. The attorney further made a complaint that Molefe was patronised the previous day, and is now being “interrogated and harassed”.

Zondo referred the attorney to the rules, which provide that the evidence leader is entitled to ask questions to get to the truth.

MNS forensic report

Myburgh then turned to the Mncedisi Ndlovu & Sedumedi Attorneys (MNS) forensic report.

The report concluded that the cession of McKinsey’s rights and obligations to Regiments was invalid because, at the time McKinsey purported to cede the contract, McKinsey’s rights in respect of the transaction advisory services had lapsed.

MNS was of the opinion that the approval of the R78.4 million was irregular because the alleged cost saving was part of the letter of intent/master services agreement deliverable and budgeted for at R13.5 million.

In other words, Regiments had not secured any savings for Transnet.

This was surprising to Molefe, as he had trusted the bona fides of his colleagues (there was only one, Singh).

Were savings affected? Molefe doesn’t know

Myburgh referred to a memorandum dated April 23, 2014, written by Transnet chief procurement officer Edward Thomas, in which he disagrees with the change in the remuneration model.

Thomas explained that the benefits Transnet obtained resulted from the deliverables provided for in terms of the fixed fee agreement that was in place. And that it was irrelevant that Regiments Capital accepted the rights and obligations of the fixed fee contract.

Molefe claimed that Thomas’s memorandum never reached him or Singh.

Molefe had to concede that he didn’t know if any savings were affected.

Molefe, in regard to Singh’s memorandum, said he trusted that Transnet had quite a robust internal audit and a robust legal department, and it was not possible for something like this to end up on his desk without being correct.

Myburgh noted that there were no levels of authority on the memorandum, it had come directly from Singh.

Molefe: “I trusted Singh”.

He elaborated: “As group CEO you have to trust your colleagues and subordinates … if they tell you that it is raining outside you do not take out your hands through the window and check if it is raining.”

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For the next 25 years we will still be trying to forget the stench of the scale of corruption perfected at Eskom.

The ‘legacy of apartheid’ was all the rage to the politicians of yesteryear. The ‘legacy of BEE’ will be used (and abused?) by future generations.

Add to that another 25 years of Zondo Commission, and more commissions..sooner or later they’ll start another commission to police the commission

I’m so tired of reading all and sundry appearing in front of the commission. Every day there’s new shocking evidence that emerges ..It’s like a live soap opera with no finality..One season runs into the next, into eternity, to keep us the population entertained!

After 3 years and touching a Billion to fund , the commission has yet to lock up the fiends!

It’s evident this entire thing is an orchestrated farce.

…. and at Transnet … and Denel … and SAA … and SABC … and … and …

… Regiments … Nedbank … Mckinsey … KPMG

….Who else???????

Do you think that there is only private sector corruption and that ANC wrongs, make a right?

Everything that that ANC Cadre, Molefe and every other ANC cadre touched turned to rot.

SA has turned to rot under the ANC.

That is how Patronage Networks work.
Its part of the ANC culture for the last 106 years… The only know how to enslave each whilst jostling for position, sticking together and dividing the new rewards.

There is not way of changing that, they believe in centrally controlling things and sleeping with one eye open. The less Law enforcement there is the more they can continue to share the loot (Tax Payers and Hard Working Citizens Efforts)

Sadly its costing Billions for our constitution to be held up, at the end of the day is it worth it for the average people to live like this?

What we need is for Business, Citizens and Government to be completely separated, the amalgamation of Business and Government is just a recipe for Socialism, whilst you cannot have business if Citizens and Government are in Cahoots… at the Moment we have both of the combinations

Yip. They instill perpetual servitude on the masses.

So if i point out to the management of a company that a certain expense is too high, consider other options, i must get a commission thereon, whilst it forms part of my job description as an employee of the company to prevent and protect the company’s interests – give me that job, i take it with open arms

Johannes : Methinks you may not meet the BEE requirements !?

How much of the pension that he stole, that the court ordered he pays back has he paid back ? 0 , zip, nothing

there is nothing anyone can do about this .

This fellow is quite entertaining to listen too, almost a clone of the great SABC saviour, wild eyed Cloudy Motsuneng.

Unexpected answers, deep thought, amazing skewed analysis of the situation, that’s now apart from the odd bare faced lies.

It would be funny if it had no underlying story.

… and they all have a common character trait: they rate themselves. Most people can see the clown a mile away but they rate themselves 100%. To the day he dies this nincompoop is going to believe that he did nothing wrong and that he wwas a successful CEO. Same with Cloudy, JZ, that mampara who ran SARS into the ground, I forgot his name.

I agree. Watching molefe respond to questions with his arrogant little nuggets of “wisdom” made me realise how confused his perception of leadership is or of what a ceo does. I imagine he watched too many episodes of generations or the like.

I do know that we should not be amused by these guys as what they do is damaging to us living in the RSA but I cannot help but being fascinated and amused by these guys as you and boepens have explained. In past blogs others have mentioned the Dunning Kruger effect but this does not go on to explain in the SA context how others listen to them and give them such high profile high paying jobs maybe they also suffer from the same sickness.

Disadvantage is a terrible thing.

And to think that when Molefe arrived at Eskom the public was told that he is “Mr Fixit” since he achieved so much success at Transnet. But now we know that he and Singh knew each other from those Transnet days and currently Transnet is on its last legs.

…. more like Mr F it up.

Molefe … told the commission of his wonderful degrees…

… this dude is nothing but a ‘Talker’

Let’s not forget about the employees and “Papa Action” dancing and singing on his return to Eskom

Well lets be honest.
He did FIX Gupta bank balances along with all the other parasites…..

It’s strange that Myburgh has not put it to Molefe that he consistently gives evidence of a ‘dereliction of duty’. He is CEO after all is said and done.

I am not sure why OUTA has not resorted to taking this piece of turd to court and find him guilty as a Delinquent Director – ala DoDo Myeni!

The big picture is getting lost in the detail here.

Imo Molefe and Singh were the heads of the “commercial arm” of State Capture and Zuma and Ace were the heads of the “political arm” of State Capture.

The theatre before the Zondo Commission is a waste of time and money – get them into court to answer criminal charges.

Sorry – – but the only words that come to mind are – – –

ONLY IN SOUTH AFRICA

sad – incredible to think how the poor could have benefitted – – – if only . . . . . . . . . . . . .

No one cares for the poor. if any… a handful.

The poor are unfortunately used to empower the politician.

In Academia too… researchers worrying about the poor…
… just to publish an article

This is just the usual ANC cadre waffle …..”It wasn’t me, it was someone else”, “I knew nothing about it, it must have been colonialism’s doing”, “I thought it was a BEE deal”, “I’ve no idea how R78m appeared in my bank account, I never check my account”, “It’s all a big conspiracy against me”, “There are apartheid spies everywhere trying to take me down”……
And still NO one is accountable for anything, NO one’s been arrested, NO one’s in court, NO one’s in jail and NO monies have been recovered.
Five years later, SAPS/Hawks are still investigating, the NPA are still watching from the sidelines and the ANC are still “fighting corruption”.

Don’t worry mate. The saps/hawks are in on it too. Remember the “raid” at the gupta place last year? (or was it the year before) Evidence was collected not to prosecute, but most likely to use as a bargaining chip for a bribe or to get rid of (probably the former)
Nothing ever came about this raid. Zilch. Nada

Apparently ‘molefe’ means ‘pay [him/her]’ ! (From names.org).

The ANC completely “rubbish” the saying “where there is smoke, there is fire”, with them the occupants are being carried down the fire ladders with smoke inhalation and third degree burns, Fire engines circled with hoses pumping, while the building is ablaze, but there is no fire!!!

It is embarrassing and degrading as a SA resident to be “led” by this lot, and the standards are still on there way down-more frightening!

Failed State!

Don’t worry, the ANC integrity committee is working hard on this and will release a statement soon.

Mind boggling. Stupidity or Naivete?
“The ignorant are ignorant of their ignorance.” Peter Baskerville

My Grandfather always told me that when it comes to money there is no such thing as stupidity, naivity or ignorance.
Our ANC cadre’s are drilled and skilled from day one in exile on how to count sheep and money and take what they want!!!

When you are left in charge of a spaza shop you can hand out a free packet of chips to a passer-by. But the same does NOT apply when your are a CEO of a massive corporation.

Says who?? These looters haven’t built anything up from scratch and are quite happy to hand out the hard earned earnings of someone else. The only qualification required to run these big corporations seem to be oversized pointed shoes and expensive Italian suits. Surely you don’t need anything more? They move sideways to these senior positions while many qualified and deserving people who have served their time get overlooked.

hahaha this country has become a joke, nothing will come out of this, you guys are all wasting your time thinking that these thieves will own up. Trying to get honest people running this country is like trying to squeeze water from a stone. Ain’t gonna happen. The worst is yet to come. Just look up north and see.
Best one can do is pack your bags and leave. Look already how many people have left (the ones with enough bucks at least)

“The attorney further made a complaint that Molefe was patronised the previous day, and is now being “interrogated and harassed”.”

So many snowflakes with bruised egos that need to be delicately probed to finally skewer the festering abscess that is the ANC cadre cult.

SKELM!!! If it looks like a turd, smells like a turd and feels like a turd, it is most likely not a golden nugget.

End of comments.

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