Molefe to Cut `Deep' Graft Claws at South Africa's Transnet

(Bloomberg) -- South Africa’s port and freight rail operator needs to cleanse itself of “pervasive corruption” so it can improve efficiencies and win back public and investor confidence, its interim chairman said.

Together with the power utility, Transnet SOC Ltd. is at the center of President Cyril Ramaphosa’s bid to improve the management of public institutions engulfed by corruption scandals during the nine-year tenure of Jacob Zuma, his predecessor. Faced with a loss of voter support, the ruling African National Congress forced Zuma to quit in February and replaced him with Ramaphosa.

The new leader named ex-Finance Minister Pravin Gordhan as public enterprises minister, who this month appointed Popo Molefe as Transnet’s interim chairman and overhauled its board. Molefe has dedicated his first days on the job to assessing the extent of the graft there.

“We need to find out how deep this problem has gone, because it is a pervasive problem,” Molefe, 66, said in an interview at Bloomberg’s Johannesburg office Wednesday. “It is in the interest of looters, thieves, corrupt people to compromise as many people as possible.”

‘Deep’ Claws

Transnet has been caught up in allegations of corruption linked to the Gupta family, who are friends with Zuma and have done business with his son. The questionable deals allegedly enabled them and their allies to earn massive kickbacks on a locomotives deal. Everyone involved has denied wrongdoing. Ramaphosa in April referred claims of mismanagement and graft at state power utility Eskom Holdings SOC Ltd. and Transnet to the Special Investigating Unit.

“The claws run very deep, you can’t set specific targets to say ‘by this time we will be done’,” said Molefe. “As we uncover these things and the evidence is adequate, we will have to act and communicate, because our people want action. There is political will” to fix the problem, he said.

Transnet last year reduced its seven-year capital-investment plan by 17 percent to 229.2 billion rand in response to lower-than-anticipated freight demand.

“I am going there to help discharge the mandate of the company -- it has to invest in infrastructure to and use that to attract more investment,” Molefe said.

During Molefe’s time at the helm of the Passenger Rail Agency of South Africa, the company made losses due to irregular spending. He then challenged some contracts the company entered into, alleging bid-rigging and corrupt activities.

--With assistance from Amogelang Mbatha and Ntando Thukwana.

To contact the reporters on this story: Nkululeko Ncana in Johannesburg at nncana@bloomberg.net;Sam Mkokeli in Johannesburg at mmkokeli@bloomberg.net

To contact the editors responsible for this story: Karl Maier at kmaier2@bloomberg.net, Ana Monteiro, Mike Cohen

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