Brian Molefe, the Guptas and the capture of the SOE’s – connecting the dots.
How to eat a parastatal like Transnet – chunk by R600 million chunk – amaBhungane
Transnet with Brian Molefe as the CEO, and Anoj Singh, as the CFO, paid two companies, Regiments Capital- they admitted that they donated money to the ANC- , and Trillian Capital, controlled by the Gupta associate Salim Essa more than R600 million for transactional ” advice “, even though Transnet did have an internal treasury department. Regiments Capital was started by Litha Nyhonyha and Niven Pillay, but the real mover and shaker was Eric Wood, also a major shareholder in Regiments. He would later join up with the Gupta company Trillian Capital, and take some of the Transnet ” work ” that Regiments had to Trillian.
Make no mistake this was looting, trough eating and no doubt, some of it would have to be kicked back to various parties, no doubt the Guptas themselves as well.
This so called advice was all about the Transnet R50 Billion acquisition of new locomotives.
In Dot 1 I have described how the Guptas and Duduzane Zuma and the chairman of the Transnet bid adjudication committee, Iqbal Sharma, acquired the steel cutting company VR Lazer just before the announcement of the 4 bid winners for the Transnet locomotive tender. VR Lazer was visited by all four successful bid winners, 2 of them Chinese, just before the announcement of the bid winners.VR Lazer would therefor be guaranteed to do steel work for all 4 bid winners. And of cource Brian Molefe was the CEO of Transnet and Anoj Singh was the CFO. [ report also by amaBhungane ]
This more than R600 million paid to Regiments and Trillian for ” advice” grew out of an initial R35 million capped tender awarded to McKinsey, with Nedbank and empowerment partner Letsema as part of the consortium.
Soon after however, Regiments was awarded a R10 million share of that tender by Transnet. For further reference, all of this financial decisions would have to be made by CFO Anoj Singh, and approved by Molefe.
An enormous ballooning of this original ” advice ” transaction is what followed next. In February 2014 , the contract value grew to R41, 2 Million, of which R21 million ” fixed price ” would go to Regiments.
That “fixed price” lasted two months. In April 2014 Singh sent a memo to Molefe in which he now motivated for a post-facto revision in the fee allocation to Regiments, to add an additional R78.4-million.
The rationale for this was that Regiments gave the ” advice ” that Transnet could save cost by choosing 4 locomotive suppliers, instead of just one, as it would lead to a speed up of delivery.
As of March 2016, 2 of the suppliers did not deliver a single locomotive.
Regiments remuneration had just jumped from R21 million to R99,5 million.
“Under Singh, Regiments was now, without any competitive process, also appointed as transaction advisers and to lead negotiation of the terms of a loan from the China Development Bank.
It is alleged that Regiments, with Wood at the helm, acted as Singh’s direct advisers, with neither their role, terms of reference, budget nor their deliverables clearly defined. One source claimed Singh would simply issue ad hoc payment instructions. ” The Transnet treasurer at the time resigned.
On March 1 , 2015, Transnet appointed Phetolo Ramosebudi to the position of group treasurer for Transnet. It just so happens he had a relative working in the Regiments group.
Ramosebudi ballooned the Regiments contract with a further R 166 million, for the ” advice ” on the loan from the China Bank.The total now stood at a whopping R265, 5 million. All amounts would need to be signed off by Anoj Singh and Brian Molefe.
According to amaBhungane :
” There followed a series of transactions where Regiments was simply nominated without any tender process for further bouts of financial gymnastics, from which it raked off a percentage. But what Regiments earned was hidden in the overall cost of the transactions.”
These type of transactions involved further ” advice ” on the Chinese loans.
Regiments at one point even involved one of the Transnet pension funds, putting the pension fund at risk.
” At one point, even Nedbank decided that the reputation risk was too large and refused to continue paying Regiments as an agent of Transnet, insisting that Transnet pay Regiments directly. ”
In late 2015, Eric Wood jumped ship, joining the Salim Essa/Gupta company Trillian and took the Transnet business with him.
In April 2016 the Transnet board approved the transfer of the Regiments business to Trillian.
amaBhungane reported that Transnet paid Trillian R156 million in 2016.