Analysis: Transnet 'racism' case could set precedent for other state capture matters
The outcome of the legal challenge to Pravin Gordhan's firing of the board has implications far beyond this case
Public Enterprises Minister Pravin Gordhan insisted in court on Monday that his decision to fire the Transnet board was driven by its failure to act against corrupt and reckless activities related to state capture.
But former board member, and head of the Transnet audit committee, Seth Radebe argued that Gordhan’s decision to axe him, after he’d been in his position for just four months, was irrational, illegal and defined by “unfair discrimination”.
This, Radebe’s lawyers told the High Court in Pretoria, was because Gordhan chose not to fire a white board member, Arlana Kinley, who had been appointed at the same time as Radebe. Kinley later resigned.
Radebe has filed an urgent application to challenge his dismissal by Gordhan and to seek the removal of the new Transnet board appointed by Gordhan.
At the heart of this case is Transnet’s R50bn acquisition of 1,064 locomotives, which, according to the Gupta Leaks e-mails, allegedly resulted in Gupta-linked companies received multibillion-rand in kickbacks.
Gordhan’s lawyer, Nazeer Cassim, said that after a “thorough investigation” the minister concluded: “This man is no good at this point in time for the Transnet board. He can’t be the chairman of the audit committee.”
Cassim said any suggestion that Gordhan’s decision to fire the Transnet board was driven by racism is “rubbish”.
“There is nothing here that shows Minister Gordhan is a racist. With great respect, that’s just rubbish, for want of a better word,” Cassim told the court.
Radebe’s case is the first court challenge over the removal of a state-owned enterprise board, allegedly for failing to take action in response to evidence of state capture. The outcome of this legal challenge to the Transnet board’s removal has implications far beyond this case.
Radebe’s legal team, which includes advocates Dali Mpofu and Tembeka Ngcukaitobi, argued that the way in which he was removed had deeply damaging implications for his professional reputation. This is because it was now perceived that he was somehow connected to state capture.
Gordhan has denied ever accusing Radebe of involvement in state capture.
Rather, Cassim argued that the minister was deeply concerned that Radebe and his board had failed to take any disciplinary action against three senior officials heavily implicated by a Werksmans Attorneys’ investigation.
Gordhan said evidence contained in the Werksmans report made it clear that there were grounds for further investigation of several former and current Transnet officials in relation to the 1,064 locomotives deals.
“The Werksmans report was delivered to Transnet on 7 December 2017. Despite not being complete, legally speaking, the report still found that the procurement process was cloaked in corrupt and reckless activity. It contained certain recommendations, including establishing a judicial inquiry, instituting disciplinary proceedings against (and suspending) those employees involved with the tender and mentioned in the report, seeking to recover misappropriated funds, and reporting the illegal conduct to the Hawks for potential prosecution,” Cassim said.
“The audit committee of Transnet, which (Radebe) chaired, nevertheless regarded the report as ‘inconclusive’, an opinion the board adopted, and did not implement all of its recommendations, including the taking of disciplinary action against those employees implicated therein.
“It chose instead to appoint another firm of attorneys (and not forensic investigators as initially envisaged) to conduct a further investigation at additional cost and causing further delay.”
Cassim argued that this further investigation by MSN Attorneys, which cost R27m, was essentially a “rehash” of the Werksmans report.
According to Radebe, however, Werksmans “could not interview” certain “material and key persons” when they conducted their procurement investigation – including former Eskom CFO Anoj Singh and Gupta family lieutenant Salim Essa. He said the firm itself acknowledged its report was “incomplete”.
This, he maintained, is why he and the former Transnet board decided to appoint another audit firm to do further forensic investigation into the procurement of the 1,064 locomotives – a decision he said was made in good faith.
Ngcukaitobi urged Judge Hans Fabricius on Monday to take note of how Radebe and Transnet had taken action in response to the Werksmans report, which included trying to identify “which employees were responsible” for alleged state capture malfeasance”.
According to Radebe, there were not just three employees involved in the locomotive transaction “but 130”.
Fabricius will hand down judgment on September 25.