State Capture: Zondo shocked at how Brian Molefe ‘gave away’ R20m

State Capture Commission chairperson Deputy Chief Justice Raymond Zondo has blasted former Transnet CEO Brian Molefe for approving a R20 million payment to a company without interrogating the legal aspects of the matter.

Molefe continued giving testimony at the commission and admitted that the money, which was paid to Abalozi, a company owned by former Communications Minister Simphiwe Nyanda, was in fact not a settlement ordered by a court of law.

The former CEO claimed that prior to his arrival at Transnet, the state-owned entity had filed papers suing the company for making monetary claims for work which had not been done. Abalozi subsequently filed a countersuit, in which they approximately R95 million for loss of income.

Brian Molefe did not seek legal advice on R20m ‘settlement’

Brian Molefe told Zondo that they then agreed on an out-of-court settlement, which the DCJ took issue with, questioning why he failed to seek legal opinion on the matter.

“Did you bother to say, ‘let us get a legal opinion as to whether this claim of theirs has got any merit, and if so, how close and what risk do we have of paying half of R95 million’?” Zondo asked.

Molefe then admitted that they didn’t bother seeking legal advice on the matter, but emphasised that the company’s claim had merits. He claimed Transnet employees had been untruthful and hidden information which proved that Abalozi had in fact done the work.

He said the justification for the settlement would have been in a memo.

“As far as I can recall there would have been a memo saying that, ‘here is the matter and we recommend that we settle in this manner’, and this document itself was drafted at Transnet by our legal department. So perhaps, in the process of drafting, if they had seen that this was untoward, not possible or unreasonable, perhaps they should have advised,” Molefe said.

Borrowing from his own legal experience, Zondo said he had never seen a settlement agreement, such as the one reached between the Transport Department and the company.

“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 R1 million,” he said.