Johannesburg - Deputy Chief Justice Raymond Zondo lambasted Transnet bosses, including former group chief executive officer Brian Molefe, for paying a R20-million fee to former Communications Minister Simphiwe Nyanda without any valid reasons as a settlement following a disputed security contract.
Justice Zondo’s outrage came after Molefe admitted that the R20m fee was not a settlement sanctioned by a court of law.
He told the commission the dispute between the transport department and the former minister’s security company, Abalozi, had resulted in civil lawsuits being lodged against each other.
According to evidence, Molefe said Transnet had filed papers suing Abalozi for making monetary claims for work not performed before his arrival at the freight agency.
Abalozi had lodged a counter application and was suing Transport for R95m in loss of income for its former directors and founder members, as well as loss of income.
Molefe said General Nyanda then escalated the dispute to his office, which prompted him to demand answers from his head of security, General Muzwendoda Toka.
“The officials had claimed that Abalozi did not do any work which warranted them to be paid. When I questioned General Toka about it, he denied the officials’ claims. General Toka showed me time sheets that were right. I was convinced that Abalozi had done the work.
“I did not ask for statements. General Toka showed me fields of proof of work done,” Molefe said.
He said officials had hidden proof that Abalozi had performed work for Transnet, saying their officials were untruthful and, as a result, General Nyanda’s company had suffered reputational damage.
The parties, the commission heard, agreed on an out-of-court settlement. Detailing the contents of the settlement, the commission heard that Abalozi initially demanded a fee of R40m for restitution and compensation. The security company added an additional R20m for loss of revenue on October 6, 2014, but Molefe settled for R20m.
Both evidence leader advocate Anton Myburgh and Justice Zondo described the fee paid to General Nyanda as a “give away“.
Justice Zondo was visibly angry that the settlement was not the outcome of court proceedings. He was also particularly angry that Abalozi had also made claims on behalf of their founding directors. Justice Zondo also expressed anger that both parties had withdrawn litigation against each other, yet Transnet had agreed to pay R20m as a settlement.
“It is shocking. In all the years I've been in legal practice I have never seen a settlement agreement like this. Normally each party pays for their own legal costs. Or one party pays for a certain part of the costs. Generally, these amounts never exceed R1m,” Justice Zondo said.
In reply, Molefe insinuated that his decision might have been prompted by a memorandum drafted by Transnet to justify the payment.
He is expected to produce that memorandum during his next appearance, the date of which is to be determined by his counsel and the commission’s legal team.