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Gupta associate Salim Essa had knowledge of contracts at Transnet, inquiry told

Transnet’s Diedre Strydom and former managing director of rail at Hatch, Henk Bester, said the pair wielded a lot of power and were not shy to use it.

Transnet's Diedre Strydom on Tuesday told the state capture commission Salim Essa and Anoj Singh wielded a lot of power and weren't afraid to use it

JOHANNESBURG - The state capture commission on Tuesday heard how Gupta associate Salim Essa and former Transnet CFO Anoj Singh escalated a rail and port contract by R200 million after Essa told bidders he wanted R80 million to secure the deal for them.

Transnet’s Diedre Strydom and former managing director of rail at Hatch, Henk Bester, said the pair wielded a lot of power and were not shy to use it.

The contracts were intended to ensure that the country would increase its capacity to transport manganese from the Northern Cape to the Eastern Cape to be exported overseas.

Strydom told the commission Essa knew everything there was to know about Transnet contracts.

And for the expansion of rail and port infrastructure for manganese, he and Singh called a meeting with H2N - one of the joint ventures that had already been shortlisted – and told them he could ensure they got the contract for a fee.

“He then proposed to H2N that they can pay what is tantamount to a bribe of about R80 million and he can secure the contract for them,” Strydom said.

Strydom said H2N did not get the contract but another company, Flag, got it.

“What was concerning about the award to Flag was that the award was an amount that was more than R200 million higher for the same work,” she said.

Strydom said McKinsey & Company – which was single-handedly appointed by Singh - put up what it called a business risk case to justify awarding the contract to Flag.

TRANSNET’S PLANS DEALT A BLOW

At the same time, the commission heard how Transnet’s plans to expand its rail network and ports to increase the country’s manganese exports were dealt a blow by Singh, Essa, and McKinsey.

The commission heard how contractors were forced to partner with companies chosen by Singh, pay Essa finding fees for contracts they already had, and how McKinsey frustrated others until they abandoned the contracts and sued Transnet.

Some officials reported wrongdoing and others destroyed evidence, and two years later the project was abandoned.

South Africa and Ukraine have 80% of the world’s manganese deposits, and more than a third of the manganese used by industrialised economies in the production of glass and steel comes from the Northern Cape.

Strydom said in 2013 things were looking up.

“South Africa at that stage had developed China as a very lucrative market because the quality of the quality of our manganese was very suited to their smelters and furnaces,” she said.

Transnet wanted to expand its rail and ports to transport and export up to 16 million tons per annum.

“The value of the rail contract was about a R1 billion as per the business case and the port contract was about R700 million,” Strydom said.

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