Transnet’s R300m Penalty Payment To China Avoidable: Mohammed Mahomedy

Mohammed Mahomedy testified at the State Capture Inquiry addressing controversial tender processes at Transnet.

Transnet incurred a R300 million penalty payment to China South Rail which was entirely avoidable. Acting group chief executive Mohammed Mahomedy made the revelation at the state capture inquiry on Wednesday.

Mahomedy has testified about an irregular contract with the Chinese company for hundreds of locomotives, which escalated from R38 billion to R49 billion.

“They agreed to pay R4.5 billion upfront when not one single locomotive had been delivered, and your first locomotive is only a month away. This is not warranted.”

Mahomedy said Transnet agreed to pay China South Rail 30% of the value of the contract within six months.

He said when six months passed, Transnet claimed it couldn’t pay. Mahomedy added that Transnet informed the company how much it owed in penalties. But it later transpired that funds were available.

The deal is still under investigation.