C O M M I S S I O N O F I N Q U I RY I N TO S TAT E C A P T U R E H E L D AT PA R K TO W N , J O H A N N E S B U R G 10 1 0 M AY 2 0 1 9 D AY 9 2 20 10 MAY 2019 – DAY 92 P R O C E E D I N G S O N 1 0 M AY 2 0 1 9 C H A I R P E R S O N : G o o d m o r n i n g M r M o k o e n a , g o o d m o r n i n g e v e r y b o d y. A D V P H I L L I P M O K O E N A S C : G o o d m o r n i n g C h a ir. MR PETER STEPH EN VOLMINK : Good morning. C H A I R P E R S O N : T h a n k y o u . G o o d m o r n in g . Ar e y o u r e a d y ? A D V P H I L L I P M O K O E N A S C : W e a r e r e a d y. CHAIRPERSON : Okay you may proceed. ADV PHILLIP MOKOENA SC: M r Vo l m i n k y e s t e r d a y w h e n w e p a r te d w a y s w e w e r e ju s t a b o u t t o d e a l w it h t h e T- S y s t e ms w i t h p a r tic u la r 10 r e fe r e n c e to p a g e 4 8 p a r a g r a p h 1 0 5 o f y o u r w i t n e s s s t a te m e n t . M R P E T E R S T E P H E N V O L M I N K : Ye s . ADV PHILLIP MOKOENA SC: C o u ld y o u p l e a s e p r o c e e d d e a li n g w i t h t h o s e is s u e s th e r e ? MR PETER STEPHEN VOLMINK : C h a ir t h is s e c ti o n o f m y e v id e n c e d e a ls w it h a n a w a r d o f t h e I T D a t a S e r v ic e s te n d e r in i ti a l ly t o T S y s t e ms w h ic h w a s t h e n s u b s e q u e n tl y w i t h d r a w n a n d a w a r d e d n o w t o G ij i m a . I w il l t a k e y o u t h r o u g h w h a t I s a y i n p a r a g r a p h s 1 0 5 a n d f o ll o w i n g C h a ir. A D V P H I L L I P M O K O E N A S C : I t i s p a g e 4 8 C h a ir. 20 CHAIRPERSON : 48? ADV PHILLIP MOKOENA SC: 48. C H A I R P E R S O N : T h a n k y o u . Ye s . M R P E T E R S T E P H E N V O L M I N K : C h a ir s o I p o i n t o u t i n m y s t a t e m e n t t h a t d u r i n g J a n u a r y o f 2 0 1 0 Tr a n s n e t e n t e r e d i n t o th e in i ti a l a g r e e m e n t w i t h T- S y s t e ms f o r t h e p r o v is io n o f I T d a ta s e r v i c e s . Page 2 of 82 I t is a c r i ti c a l 10 MAY 2019 – DAY 92 s e r v ic e f o r Tr a n s n e t ’s o p e r a ti o n s . E ff e c t i v e l y i t e n a b le s a c c e s s t o a l l c r i ti c a l I T d a ta p e r ta in i n g t o t h e r a il o p e r a ti o n s , p o r ts , p i p e li n e s , p e r s o n n e l , a r a n g e o f f u n c ti o n s t h a t Tr a n s n e t r e q u ir e s in o r d e r to o p e r a t e e ff e c ti v e ly a n d e ff ic ie n tly. I t h e n s a y t h a t a ft e r t h a t i n it i a l t e n d e r w a s – th e c o n tr a c t w a s e n t e r e d i n to a s e r i e s o f v a r ia t io n s o r e x t e n s i o n s i n v a l u e t o t h a t c o n tr a c t th e n o c c u r r e d . A n d I e x p la i n t h o s e v a r ia t io n s i n o n e o f t h e a n n e x u r e s w h ic h I w o u ld li k e t o ta k e y o u t o . It is n o t d i r e c t ly g e r m a n e t o th e is s u e o f t h e a w a r d t o G ij i m a w h ic h s u b s e q u e n t ly f o l lo w e d b u t I t h o u g h t j u s t f o r c o n te x t I w o u l d l ik e t o g i v e 10 t h e c o m m i s s io n a f u l l s e n s e o f th e h is t o r y o f t h e m a t t e r. A D V P H I L L I P M O K O E N A S C : A n d h o w m a n y v a r i a t i o n s a r e y o u t a lk i n g – a r e y o u r e f e r r in g t o ? M R P E T E R S T E P H E N V O L M I N K : T h e r e w e r e i n t o t a l fiv e v a r ia t io n s . A D V P H I L L I P M O K O E N A S C : A n d t h o s e w e r e b e tw e e n 2 0 1 0 a n d 2 0 1 9 ? M R P E T E R S T E P H E N V O L M I N K : T h a t is c o r r e c t . A D V P H I L L I P M O K O E N A S C : A n d f o r t h a t p e r i o d n o s e r v ic e s w e n t o u t on tender? MR PETER STEPH EN VOLMINK : Sorry? A D V P H I L L I P M O K O E N A S C : D u r in g th a t p e r io d n o s e r v ic e s w e n t o u t 20 o n t e n d e r. I t w a s a ll e x te n d e d o n v a r i a t i o n s ? MR PETER STEPHEN VOLMINK : I t w a s e x t e n d e d o n v a r i a t io n s b u t p a r a ll e l t o t h a t … A D V P H I L L I P M O K O E N A S C : Ye s . MR PETER STEPHEN VOLMINK : Th e n e w te n d e r p r o c e s s w a s b e i n g evaluated and awarded and so on. Page 3 of 82 10 MAY 2019 – DAY 92 A D V P H I L L I P M O K O E N A S C : Ye s . T h e n m a y I r e fe r y o u t h e n to … CHAIRPERSON : I a m s o r r y e x t e n d e d o n v a r i a ti o n s m e a n s w h a t ? E x te n d e d o n v a r i a t i o n s , w h a t d o e s t h a t m e a n ? MR PETER STEPHEN VOLMINK: N o i t is u m – I u s e th e t e r m s o m e w h a t i n t e r c h a n g e a b ly. CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : To e x te n d t h e c o n tr a c t . C H A I R P E R S O N : O h t h a t i t w a s e x te n d e d . M R P E T E R S T E P H E N V O L M I N K : O r v a r ie d i n t h e s e n s e t h a t 10 C H A I R P E R S O N : O h y e s . O k a y. MR PETER STEPH EN VOLMINK : And the value. C H A I R P E R S O N : B u t b a s i c a ll y y o u m e a n i t w a s e x t e n d e d ? M R P E T E R S T E P H E N V O L M I N K : Ex a c t ly C h a ir. C H A I R P E R S O N : J a o k a y a lr i g h t . ADV PHILLIP MOKOENA SC: Exhibit BB2.1C. M r Vo l m i n k m a y I t h e n r e f e r y o u t o C h a ir t h a t s h o u l d b e t h e t h ir d f il e w i t h p a r tic u la r r e fe r e n c e to p a g e 1 0 8 6 . CHAIRPERSON : Is t h e r e fe r e n c e to t h ir d fi l e r e f e r e n c e t o E x h i b i t BB2.1.C? 20 ADV PHILLIP MOKOENA SC : 1C yes. C H A I R P E R S O N : O k a y. A D V P H I L L I P M O K O E N A S C : S o t h a t a t l e a s t i t b e c o m e s e a s i e r. C H A I R P E R S O N : O k a y. A D V P H I L L I P M O K O E N A S C : C h a ir to lo c a te it . C H A I R P E R S O N : A n d w h a t is t h e p a g e ? Page 4 of 82 10 MAY 2019 – DAY 92 ADV PHILLIP MOKOENA SC : The page number it is page 1086. CHAIRPERSON : 1086? A D V P H I L L I P M O K O E N A S C : Ye s C h a ir. CHAIRPERSON : Thank you. A D V P H I L L I P M O K O E N A S C : M r Vo l m i n k a r e y o u t h e r e ? M R P E T E R S T E P H E N V O L M I N K : I a m t h e r e C h a ir. ADV PHILLIP MOKOENA SC: Ye s c o u ld y o u p l e a s e i d e n t i fy t h a t document for us? MR PETER STEPHEN VOLMINK: 10 C h a i r t h is d o c u m e n t i s a d o c u m e n t w h ic h w a s i n i ti a lly p r e p a r e d b y o u r G r o u p s tr a t e g ic s o u r c i n g fu n c t io n o n e o f t h e u n i t s w i t h i n t h e p r o c u r e m e n t d e p a r t m e n t. It was a report w h ic h w a s d e l iv e r e d t o S C O PA t h e i n i ti a l i n te n d e d d a t e o f t h e p r e s e n t a ti o n was fo r December 2017. T h a t e n g a g e m e n t f i n a ll y h a p p e n e d in J a n u a r y o f 2 0 1 8 a n d t h e d o c u m e n t h a s j u s t b e e n u p d a t e d t o r e f le c t e v e n ts t h a t h a v e o c c u r r e d A D V P H I L L I P M O K O E N A S C : Ye s . MR PETER STEPH EN VOLMINK : Subsequent to January 2018. A D V P H I L L I P M O K O E N A S C : A n d c a n y o u t h e n ta k e u s p le a s e th r o u g h t h o s e s e v e r a l v a r i a ti o n s a n d e x t e n s i o n s t h a t y o u a l lu d e d t o ? 20 MR PETER STEPHEN VOLMINK : C h a ir w h a t t h e d o c u m e n t t h e n r e fl e c ts i s t h a t t h e in i ti a l a w a r d t o T - S y s t e m s w a s a fi v e y e a r c o n tr a c t w i t h a n o p ti o n t o e x te n d fo r a f u r t h e r t w o y e a r s . So the option was in c o r p o r a t e d in t o t h e i n it i a l c o n tr a c t w h i c h w a s t o r u n fr o m 1 J a n u a r y 2 0 1 0 t o 3 1 D e c e m b e r 2 0 1 4 w i t h a t o t a l i n i ti a l c o n tr a c t v a lu e o f a b o u t R 1 . 9 b il li o n . Page 5 of 82 10 MAY 2019 – DAY 92 A D V P H I L L I P M O K O E N A S C : T h a t w a s t h e i n i ti a l a m o u n t? M R P E T E R S T E P H E N V O L M I N K : T h a t is c o r r e c t . ADV PHILLIP MOKOENA SC: A n d s u b s e q u e n t ly ? Yo u c a n t a k e u s t h r o u g h t h e v a r i a ti o n s th e n ? MR PETER STEPHEN VOLMINK : C h a ir. Th e v a r ia t io n s t h e n w e r e a s f o l l o w s F ir s tl y th e fir s t v a r i a ti o n r e la t e d t o t h e e x e r c i s i n g o f t h a t t w o y e a r o p ti o n . CHAIRPERSON : L e t m e j u s t ta k e y o u b a c k t o t h is is s u e o f v a r i a ti o n a n d e x t e n s io n . Te c h n i c a ll y v a r ia t io n mi g h t b e c o r r e c t w h e n y o u m e a n 10 extending but n o r m a ll y or rather I a s s o c i a te variation with an amendment of MR PETER STEPH EN VOLMINK : The contract. C H A I R P E R S O N : Th e c o n t e n t s o f th e a g r e e m e n t . O k a y. S o I j u s t w a n t t o c o n f ir m t h a t w h e r e v e r i n t h i s d o c u m e n t t h e r e is a r e f e r e n c e t o v a r ia t io n s h o u l d I r e a d i t a s e x t e n s i o n o r s o m e ti m e s v a r ia t io n is u s e d to m e a n s o m e t h in g o t h e r th a n e x t e n s io n ? MR PETER STEPH EN VOLMINK : N o C h a ir i t w o u ld b e t h e f o r m e r meaning that… C H A I R P E R S O N : Ye s . 20 M R P E T E R S T E P H E N V O L M I N K : W h e r e v e r w e r e f e r to v a r ia t io n C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : It is a n e x t e n s i o n . CHAIRPERSON : An ex tension. M R P E T E R S T E P H E N V O L M I N K : In b o t h t i m e a n d v a l u e . CHAIRPERSON : Oh oh Page 6 of 82 10 MAY 2019 – DAY 92 M R P E T E R S T E P H E N V O L M I N K : S o i t i s n o t ju s t t h e t i m e e x te n s io n . CHAIRPERSON : Oh oh okay so… MR PETER STEPHEN VOLMINK : W i th th e t i m e e x t e n s i o n w o u ld b e a v a l u e [i n d is t in c t ] . CHAIRPERSON : O h s o s o v a r i a ti o n m ig h t b e m o r e a c c u r a te i n t h a t c o n te x t . T h a t is n o t j u s t a n e x t e n s i o n o f ti m e ? M R P E T E R S T E P H E N V O L M I N K : Ye s C h a i r. C H A I R P E R S O N : I t i s a ls o a v a r ia t io n o f t h e p r ic e ? MR PETER STEPH EN VOLMINK : Correct. 10 CHAIRPERSON : E ff e c ti v e ly a n a m e n d m e n t o f th e p r i c e t h a t m u s t o f n e c e s s it y c o m e w i th t h e e x t e n s i o n o f ti m e ? M R P E T E R S T E P H E N V O L M I N K : Pr e c is e l y. C H A I R P E R S O N : Ye s . O k a y. A lr i g h t . A D V P H I L L I P M O K O E N A S C : W o u l d th a t a ls o in c l u d e t h e v a r i a t i o n o f t h e s c o p e o f w h a t w a s i n t e n d e d to b e p e r f o r me d ? MR PETER STEPHEN VOLMINK : S o m e ti m e s th a t m a y w e ll b e . It w o u ld b e e x t e n d e d . C H A I R P E R S O N : Ye s . MR PETER STEPH EN VOLMINK : Ja. 20 A D V P H I L L I P M O K O E N A S C : Ye s . MR PETER STEPH EN VOLMINK : I w a s t h e n r e fe r r i n g t o t h e fir s t v a r ia t io n C h a i r w h ic h i n v o lv e d r e a ll y t h e e x e r c i s e o f th a t tw o y e a r o p t io n th a t I h a d r e f e r r e d t o e a r li e r w h ic h t h e n e x t e n d e d t h e c o n tr a c t fr o m 1 J a n u a r y 2 0 1 5 to 3 1 D e c e m b e r 2 0 1 6 . There were various r e a s o n s g i v e n f o r t h e e x e r c is in g o f t h is – o f t h e o p t io n . S o m e o f t h e m I Page 7 of 82 10 MAY 2019 – DAY 92 w i ll m e n t io n b r i e fl y. I n e s s e n c e C h a ir i t w a s s a id t h a t th e Tr a n s n e t h a d c o n tr a c te d G a r t n e r to r e v i e w a l l th e c u r r e n t s e r v i c e s t h a t w e r e b e in g r e c e i v e d f r o m T- S y s t e m s t o d e v e l o p a n e w s tr a t e g y. To is s u e a n e w s e t o f s p e c i fi c a t io n s . T h e R F P h a d t o b e w r it t e n a n d t h e m o ti v a t io n th a t w a s g iv e n w a s th a t w e – t h a t t w o y e a r e x t e n s i o n w a s r e q u ir e d in o r d e r t o c o m p l e te t h a t p a r t o f th e w o r k . A D V P H I L L I P M O K O E N A S C : A n d t h e s e c o n d e x te n s i o n ? MR PETER STEPHEN VOLMINK : T h e s e c o n d e x t e n s io n w a s fo r a f u r th e r p e r i o d o f n i n e m o n t h s fr o m 1 J a n u a r y 2 0 1 7 to 3 0 S e p te m b e r 10 2 0 1 7 I r e f e r t h a t is o n p a g e 1 0 8 7 j u s t t h e fo ll o w i n g p a g e . A n d w h a t i t s a y s C h a ir i s t h a t t h e n i n e m o n th e x t e n s io n w a s r e q u e s t e d t o e n a b l e Tr a n s n e t to f i n a li s e t h e n e w I T d a ta s e r v i c e s p r o c u r e m e n t e v e n t w h i c h w a s n o w r e a d y a t t h e a d j u d ic a ti o n s t a g e . So it had progressed but it h a d n o t y e t b e e n c o m p l e t e d a n d a fu r th e r e x te n s i o n o f b o t h ti m e a n d value was then requested. A D V P H I L L I P M O K O E N A S C : A n d th e i n i ti a l a m o u n t v a l u e w h i c h w a s R 1 . 9 b il li o n i t n o w b e c a m e R 3 . 8 b i ll io n , a m I c o r r e c t? MR PETER STEPHEN VOLMINK : C o r r e c t C h a ir. W i t h a ll t h e e x t e n s i o n s t h e r e w a s a s i g n i f ic a n t v a l u e e x t e n s i o n a s w e ll w h i c h n o w 20 s t o o d a t R 3 .8 b i ll i o n . A D V P H I L L I P M O K O E N A S C : A n d t h e th ir d ? M R P E T E R S T E P H E N V O L M I N K : T h e t h ir d e x t e n s io n … C H A I R P E R S O N : T h a t i s R 3 .8 b i ll io n h e y ? M R P E T E R S T E P H E N V O L M I N K : T h a t is c o r r e c t C h a ir. A D V P H I L L I P M O K O E N A S C : Ye s . Page 8 of 82 10 MAY 2019 – DAY 92 M R P E T E R S T E P H E N V O L M I N K : C h a ir t h e t h ir d e x t e n s i o n … A D V P H I L L I P M O K O E N A S C : P a g e 1 0 8 8 C h a ir. M R P E T E R S T E P H E N V O L M I N K : Is o n p a g e 1 0 8 8 . CHAIRPERSON : Thank you. M R P E T E R S T E P H E N V O L M I N K : A n d – a n d w h a t i t r e l a t e d to w a s a n in it i a l r e q u e s t a c t u a ll y f o r t w e l v e m o n t h s f o r – to e n a b l e Tr a n s n e t to e s s e n ti a l ly e x tr ic a t e i t s e l f fr o m th e u n l a w f u l a w a r d t h a t h a d b e e n m a d e t o T- S y s t e m s a n d t o a w a r d t h e t e n d e r to G ij i m a a s w a s i n i t ia ll y s u b m i tt e d b y m a n a g e m e n t . 10 B u t t h e r e w a s a p r o c e s s o f li ti g a ti o n t h a t h a d u n f o l d e d a n d t h e c o n c e r n w a s t h a t t h e li ti g a ti o n p r o c e s s w o u l d n o t r u n it s c o u r s e w i t h i n a t w e l v e m o n th p e r i o d . E v e n t u a l ly N a ti o n a l Tr e a s u r y a p p r o v e d t h e e x t e n s i o n b u t n o t f o r tw e lv e m o n t h s . T h e y o n ly g r a n t e d a n e i g h t m o n th e x t e n s io n d u r i n g w h ic h ti m e I t h i n k t h e r e w a s c o n s i d e r a b l e a t t e m p t a s I s a y f o r Tr a n s n e t t o e x tr i c a t e it s e l f fr o m t h i s in it i a l t e n d e r a w a r d w h ic h I w il l d e a l w it h i n m o r e d e t a i l i n a s h o r t w h i le I a m j u s t g iv i n g a n o v e r v i e w o f t h e v a r i o u s r e a s o n s f o r t h e e x t e n s i o n . A D V P H I L L I P M O K O E N A S C : A n d th e f o u r th o n e ? P a g e 1 0 8 9 t h a t i s w h e r e y o u f in d th e f o u r t h o n e . MR PETER STEPHEN VOLMINK: 20 C o r r e c t C h a ir. The fourth one the m o t iv a t i o n th a t i s s t a t e d in t h e d o c u m e n t is t h a t Tr a n s n e t h a d r e q u e s t e d t h i s e x t e n s i o n f o r th e c o m m e n c e m e n t o f w h a t I r e fe r t o a s d is e n g a g e m e n t p r o c e s s e s f r o m T - S y s te m s . I t is n o t t h e k i n d o f c o n tr a c t w h e r e – w h e n t h e c o n tr a c t e n d s t h e s e r v ic e p r o v i d e r m o v e s o ff a n d t h e n e w s e r v ic e p r o v id e r c o m e s in i m m e d i a t e ly. There is a process of d is e n g a g e m e n t . I n f a c t i f r e c o l le c t i o n – if m y r e c o ll e c t io n is c o r r e c t t h e Page 9 of 82 10 MAY 2019 – DAY 92 c o n tr a c t m a d e p r o v is io n f o r a s ix m o n t h p r o c e s s o f tr a n s i ti o n a n d d is e n g a g e m e n t a n d tr e a s u r y o n ly a p p r o v e d a t h r e e m o n th e x t e n s io n w h ic h w a s t h e n t h e f o u r t h v a r ia t io n . A n d t h e n th e fi f t h v a r i a ti o n … ADV PHILLIP MOKOENA SC : On page 1090. M R P E T E R S T E P H E N V O L M I N K : Is o n 1 0 9 0 . T h is w a s fo r th e p e r i o d 9 S e p te m b e r 2 0 1 8 t o 8 M a r c h 2 0 1 9 a n d t h e r e h a s b e e n n o f u r th e r e x t e n s i o n s a f t e r th a t d a t e . S o t h a t w a s t h e l a s t e x te n s io n . A D V P H I L L I P M O K O E N A S C : A n d t h e e n t ir e a m o u n t p u r s u a n t t o th o s e e x t e n s i o n s o r v a r i a ti o n s w a s a n a m o u n t o f R 4 . 9 b il li o n . 10 M R P E T E R S T E P H E N V O L M I N K : T h a t is c o r r e c t C h a ir. C H A I R P E R S O N : S o t h i s c o n tr a c t s t a r te d i n 2 0 1 0 ? M R P E T E R S T E P H E N V O L M I N K : Ye s . C H A I R P E R S O N : A n d i t i s s ti ll o n g o i n g o r h a s j u s t e n d e d ? M R P E T E R S T E P H E N V O L M I N K : A s c u r r e n tly it is n o lo n g e r o n g o in g . CHAIRPERSON : YEs. MR PETER STEPH EN VOLMINK : Th e l a s t e x te n s i o n w a s – it e x p i r e d on 8 March 2019 . C H A I R P E R S O N : T h is y e a r ? M R P E T E R S T E P H E N V O L M I N K : T h a t is w h e n th is c o n t r a c t e n d e d . 20 CHAIRPERSON : S o i t – i t w e n t o n fo r u l t i m a te ly a b o u t w h a t n i n e years? MR PETER STEPH EN VOLMINK : Ja. C H A I R P E R S O N : J a . O r ig i n a ll y i t w a s m e a n t t o b e fiv e y e a r s . M R P E T E R S T E P H E N V O L M I N K : Fiv e y e a r s . C H A I R P E R S O N : B u t t h e r e w a s a p r o v is i o n f o r a p o s s i b l e e x te n s i o n ? Page 10 of 82 10 MAY 2019 – DAY 92 MR PETER STEPH EN VOLMINK : Correct. C H A I R P E R S O N : J a o k a y. A D V P H I L L I P M O K O E N A S C : T h a t i s th e p o i n t C h a ir . M a y I th e n r e f e r you back to your witness statement paragraph 106 on page 48 and we c a n c o n ti n u e w it h th e e v i d e n c e fr o m t h e r e h a v i n g n o w p a i n t e d t h e c o n te x t t o t h e C h a ir. MR PETER STEPHEN VOLMINK: Fr o m 1 0 6 t h e p o i n t w e s i m p ly m a k e is t h a t G o v e r n a n c e w a s i n v o lv e d i n t h e r e v i e w i n g c e r t a in o f t h e s e a d d e n d a a n d w a s a ls o t h e n q u i t e i n v o lv e d i n a d v i s i n g t h e b o a r d t o 10 r e v e r s e i t s d e c is i o n t o a w a r d to T- S y s t e m s a n d to a w a r d t o G ij i m a . A D V P H I L L I P M O K O E N A S C : Ye s . Yo u m a y t h e n p r o c e e d to d e a l w i th t h e e v e n t s r e l e v a n t to G ij i m a . MR PETER STEPH EN VOLMINK : Ye s s o n o w i f I c a n f o c u s m o r e d ir e c t ly o n th e a w a r d t o T- S y s te m s C h a ir. In paragraph 107 and f o ll o w i n g I s t a te t h a t d u r i n g N o v e m b e r 2 0 1 5 Tr a n s n e t is s u e d t h is R F P t o t h e o p e n m a r k e t fo r t h e s u p p l y o f I T d a t a s e r v ic e s a n d T- S y s te m s r e s p o n d e d a n d G ij i m a r e s p o n d e d a n d a f e w o th e r s r e s p o n d e d . After q u i te a d r a w n o u t p r o tr a c te d t e n d e r p r o c e s s a r e c o m m e n d a t io n w a s m a d e b y m a n a g e m e n t t o a w a r d th e t e n d e r t o G i ji m a . H a v i n g s a i d th a t I 20 should a ls o point out to you C h a ir that my understanding is m a n a g e m e n t d i d h a v e s o m e m i s g iv in g s d u r i n g th e e v a l u a ti o n p r o c e s s a b o u t G i ji m a . T h e r e w e r e v a r i o u s c o m m e r c ia l a n d a ls o te c h n ic a l c o n c e r n s th a t m a n a g e m e n t h a d r a is e d a n d t h e y w e r e n o t a t f ir s t i n f a v o u r o f t h e a w a r d t o G ij i m a . B u t a ft e r e x te n s iv e e n g a g e m e n ts w i t h G ij i m a m a n a g e m e n t c a m e t o t h e c o n c l u s i o n u l ti m a t e l y th a t t h o s e r i s k s Page 11 of 82 10 MAY 2019 – DAY 92 h a d b e e n a d e q u a t e ly m i ti g a te d . B a s e d o n th e v i e w th a t t h e r i s k s h a d b e e n m it i g a t e d t h e y m a d e t h e r e c o m m e n d a ti o n to a w a r d to G ij i m a . W h a t I t h e n g o o n t o s a y is t h a t d u r i n g F e b r u a r y 2 0 1 7 t h e b o a r d t o o k a d e c is i o n n o t t o a w a r d to G i ji m a b a s e d o n t h o s e r i s k s t h a t m a n a g e m e n t h a d e a r li e r d e a l t w it h a n d to a w a r d it t o T - S y s t e ms . CHAIRPERSON : S o t h is is o n e o f t h o s e c o n tr a c ts w h i c h w e r e d e a l t w i t h d u r in g th e p e r i o d w h e n t h e b o a r d w a s g e t t in g i n v o l v e d in t h e a w a r d o f c e r t a in t e n d e r s ? MR PETER STEPHEN VOLMINK: 10 Th a t is c o r r e c t C h a ir. They had d e l e g a ti o n o f a u t h o r i ty. C H A I R P E R S O N : Ye s . MR PETER STEPH EN VOLMINK : I n t e r m s o f th e d e le g a ti o n o f a u t h o r i ty fr a m e w o r k . C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : To m a k e th o s e d e c is i o n s . C H A I R P E R S O N : Ye s o k a y. A D V P H I L L I P M O K O E N A S C : A n d w o u l d th is b e a n i n s ta n c e w h e r e b y t h e r i s k f a c t o r s a r e o n l y r a is e d a t a l a te r s t a g e w h e n th e y w e r e i n f a c t d e a lt w i th b y t h e m a n a g e m e n t a d e q u a te ly b u t t h e y a r e r a is e d i n o r d e r 20 t o n o t g r a n t t h e a w a r d t o th e [i n d is t in c t ] b i d d e r ? MR PETER STEPHEN VOLMINK : T h a t i s p r e c is e l y t h e d i ffi c u l ty t h a t G o v e r n a n c e h a d w i t h th is e n t ir e t r a n s a c t io n . T h e r is k s h a d b e e n h i g h l ig h te d a t a n e a r l ie r s t a g e a n d a s I t e s t if i e d i n t h e v ie w o f t h e t e c h n ic a l a n d o t h e r e x p e r ts w h o a s s e s s e d t h e m a t t e r t h e y w e r e s a ti s f i e d t h a t th e r i s k s h a d b e e n p r o p e r ly d e a l t w i th . Page 12 of 82 W h a t th e n 10 MAY 2019 – DAY 92 h a p p e n e d is … C H A I R P E R S O N : W e l l l e t u s t a lk a b o u t th a t a li t tl e b i t b e f o r e y o u . M R P E T E R S T E P H E N V O L M I N K : Ye s . C H A I R P E R S O N : M o v e o n a n d – a n d i t t a k e s u s to s o m e t h i n g t h a t w e d is c u s s e d a l i t tl e b i t y e s te r d a y n a m e ly t h a t i f m a n a g e m e n t h a s a r i g h t t o ta k e a v i e w o n a t e n d e r o n v a r i o u s fa c t o r s a n d – b u t t h e ir r o le is t o m a k e a r e c o m m e n d a ti o n a n d t h e b o d y t h a t m a k e s th e fi n a l d e c is io n is h i g h e r u p g e n e r a l ly s p e a k i n g th e h i g h e r b o d y w o u l d b e e n ti t le d t o ta k e a v i e w d i ff e r e n t t o t h a t o f m a n a g e m e n t o n a n y o f t h e f a c t o r s , i s i t n o t ? 10 G e n e r a lly s p e a k i n g . MR PETER STEPH EN VOLMINK : Generally speaki ng? C H A I R P E R S O N : Ye s , y e s . T h e r e f o r e w h e n a h ig h e r b o d y ta k e s a v i e w d i ff e r e n t t o th a t o f m a n a g e m e n t o n a n y p a r ti c u la r i s s u e o r f a c t o r th a t o n it s o w n o u g h t n o t t o r a is e e y e b r o w s b u t i t j u s t d e p e n d s o n e v e r y th i n g e ls e . MR PETER STEPH EN VOLMINK : Ja. CHAIRPERSON: O n a l l t h e c ir c u m s t a n c e s o f t h a t p a r ti c u la r te n d e r w h e t h e r it s h o u l d r a is e e y e b r o w s . B u t o n e o f th e fa c t o r s t h a t m a y le g i t i m a te ly b e t a k e n i n t o a c c o u n t i n s a y i n g s h o u l d th is r a is e e y e b r o w s 20 o r n o t is t h e e x p e r tis e t h a t m a n a g e m e n t m a y h a v e o n a p a r ti c u l a r is s u e k n o w l e d g e e x p e r ti s e a n d e x p e r ie n c e v i e a v i e k n o w le d g e e x p e r t is e a n d e x p e r i e n c e m a y b e o f t h e b o d y th a t d e c i d e s . I f it i s a – i f t h e s u b j e c t is a b o u t s o m e s c ie n ti f ic t e c h n ic a l t h in g a n d m a n a g e m e n t c o n s is ts o f a c o m m i t t e e o f s c i e n t is ts a n d I a m s i t t in g o n a h i g h e r b o d y a n d I a m a la w y e r I a m g o i n g t o b e v e r y c a r e f u l t o g o a g a in s t t h e v i e w o f s c i e n t is ts Page 13 of 82 10 MAY 2019 – DAY 92 in a f i e l d w h e r e t h e y a r e t h e e x p e r ts . M R P E T E R S T E P H E N V O L M I N K : Ye s . CHAIRPERSON : B u t i t d o e s n o t n e c e s s a r ily m e a n t h a t I a m g o in g t o r u b b e r s t a m p th e ir v i e w. M R P E T E R S T E P H E N V O L M I N K : Ye s . C H A I R P E R S O N : I m a y s t il l q u e s t i o n a n d s o m e t i m e s I m i g h t s h o w t h e m t h a t m a y b e th e y d i d n o t a t t a c h p r o p e r w e ig h t t o a p a r tic u la r fa c to r o r t h e y m i g h t e v e n c h a n g e t h e ir v i e w b u t w h a t I s h o u l d n o t d o i s b a s ic a l ly d is r e g a r d w h a t t h e y a r e – t h e v ie w th e y h a v e e x p r e s s e d . 10 M R P E T E R S T E P H E N V O L M I N K : Ye s . P r e c i s e ly. C H A I R P E R S O N : S o I a m j u s t g o in g b a c k t o it – t o t h is p o i n t w h i c h w e d is c u s s y e s te r d a y s i m p ly b e c a u s e y o u – y o u j u s t m e n t i o n e d th a t y o u h a d a c e r t a i n d i ffi c u l ty w i t h t h e fa c t t h a t t h e b o a r d l o o k e d a t a n i s s u e t h a t y o u h a d l o o k e d a t a s m a n a g e m e n t . A n d m y q u e s t io n g o e s b a c k i s . MR PETER STEPH EN VOLMINK : Ja. C H A I R P E R S O N : O f c o u r s e t h e y a r e e n ti t l e d t o l o o k a t … MR PETER STEPH EN VOLMINK : Ja, ja. C H A I R P E R S O N : T h e s a m e is s u e t h a t y o u h a v e lo o k e d a t a n d th e y a r e e n t i tl e d t o t a k e a d i ff e r e n t v i e w. T h e q u e s ti o n i s w h e th e r t h e ir v i e w 20 w e i g h e d a g a i n s t y o u r v i e w is s u c h t h a t i t s h o u ld p o i n t t o s o m e th i n g . MR PETER STEPH EN VOLMINK : Ja. C H A I R P E R S O N : Yo u w o u l d g o a l o n g w i t h t h a t ? M R P E T E R S T E P H E N V O L M I N K : C h a ir I a m – I a m i n l a r g e m e a s u r e in f a c t I a m in – I a m i n t o t a l a g r e e m e n t. C H A I R P E R S O N : Ye s . Page 14 of 82 10 MAY 2019 – DAY 92 M R P E T E R S T E P H E N V O L M I N K : W i t h th e – w it h w h a t y o u s a y. C H A I R P E R S O N : Ye s , y e s . M R P E T E R S T E P H E N V O L M I N K : B e c a u s e I – my e v i d e n c e s h o u ld n o t b e u n d e r s t o o d t o m e a n th a t I a m o f t h e v i e w t h a t t h e b o a r d i s b o u n d b y r e c o m m e n d a ti o n s o f m a n a g e m e n t . I t is a b o a r d f o r – i t i s c a l le d t h e a c c o u n t in g a u t h o r i ty f o r a g o o d r e a s o n . u l ti m a t e ly m a k e i ts d e c i s i o n s . T h a t is th e b o d y t h a t m u s t My d i ff i c u l t y d o e s n o t l ie w i t h th e p r i n c i p l e o f th e b o a r d . C H A I R P E R S O N : Ye s . 10 M R P E T E R S T E P H E N V O L M I N K : A r r iv i n g a t a d i ff e r e n t c o n c l u s i o n . C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : B u t C h a ir m y c o n c e r n s f ir s t ly is th a t w h e n t h e s e r is k s w e r e p r o p e r ly e v a lu a t e d a t a n e a r l ie r s t a g e a t t h e f u n c t i o n a l i ty a n d t h e c o m m e r c ia l g a t e a n d t h e b i d d e r p a s s e d t h a t t h r e s h o ld f o r f u n c t io n a l it y t h e n in f a c t w e – o u r o w n p r o c u r e m e n t r u l e s in Tr a n s n e t w a r n s a g a i n s t t h i s c o n c e p t o f d o u b le d ip p i n g w h e r e s o m e o n e w a s p r o p e r ly a n d f u lly a s s e s s e d a t a n y e a r li e r s ta g e a n d t h e n u n d e r th e g u is e o f a r is k e v a lu a ti o n t h o s e v e r y i s s u e s a r e n o w r e v is i t e d . A n d – s o I th i n k th a t i s t h e f ir s t c o n c e r n a n d t h e s e c o n d i s 20 ju s t t h e r a ti o n a li t y o f i t . C H A I R P E R S O N : Ye s . O k a y, o k a y. MR PET ER ST EPHEN VOL MINK : Because if management and I am not s a y in g m a n a g e m e n t is a l w a y s r i g h t I m e a n . C H A I R P E R S O N : Ye s , y e s . M R P E T E R S T E P H E N V O L M I N K : B u t i n t h is p a r ti c u l a r c a s e t h e r e w a s Page 15 of 82 10 MAY 2019 – DAY 92 q u i te a c o m p r e h e n s iv e m o tiv a ti o n CHAIRPERSON : Hm MR PETER STEPH EN VOLMINK : Put forward C H A I R P E R S O N : J a w h ic h d e a lt w i t h th e s e i s s u e s . M R P E T E R S T E P H E N V O L M I N K : To t h e b o a r d w h ic h d e a lt w i th a l l o f t h e is s u e s . C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : A n d o n e d o e s s e e a d e ta il e d l o g ic a l CHAIRPERSON : Response 10 M R P E T E R S T E P H E N V O L M I N K : A n a ly s is o n t h e p a r t o f th e b o a r d . CHAIRPERSON : No I… M R P E T E R S T E P H E N V O L M I N K : A s to w h y it h e l d a d i ff e r e n t v i e w. C H A I R P E R S O N : N o I t h i n k t h a t la s t p a r t w h ic h y o u s a y i s a n i m p o r ta n t f a c to r b e c a u s e i f t h e o n e v i e w i s f u lly m o t iv a t e d a n d th e o p p o s in g v i e w is n o t m o t iv e d a t a ll o r v e r y – o r m o ti v a te d v e r y i n s ig n if ic a n t ly y o u k n o w i t is s o m e t h in g t o lo o k a t . Ye s b u t I th i n k I u n d e r s t a n d y o u r p o s i ti o n . Yo u s a y i t i s n o t t h e p r i n c i p le . MR PETER STEPH EN VOLMINK : No. CHAIRPERSON : 20 T h a t y o u h a v e a p r o b l e m w i th i t i s t h e fa c ts o f t h e case. M R P E T E R S T E P H E N V O L M I N K : Pr e c is e l y. CHAIRPERSON : A n d t h e f a c t t h a t a t Tr a n s n e t t h e r e w a s a s I u n d e r s t a n d y o u a r u l e o r p o li c y a g a i n s t w h a t y o u d o u b l e d ip p in g . O k a y thank you. ADV PHILLIP MOKOENA SC: F o ll o w i n g f r o m t h e C h a ir q u e s t io n s o f Page 16 of 82 10 MAY 2019 – DAY 92 c la r i fi c a t io n . Yo u a r e a ls o g i v i n g th is e v i d e n c e a g a i n s t th e b a c k g r o u n d o f a n u m b e r o f tr a n s a c ti o n s t h a t s u ff e r e d t h e s a m e f a t e p r e m is e d o n t h is r is k f a c t o r s w h e r e b y a p r e f e r r e d b id d e r w h o w a s b e i n g th o r o u g h l y a s s e s s e d j u s t s i m p l y b e i n g i g n o r e d a n d a n o t h e r e n t it y b e i n g a w a r d e d t h e t e n d e r, a m I c o r r e c t ? M R P E T E R S T E P H E N V O L M I N K : T h a t is … ADV PHILLIP MOKOENA SC: A n d t h a t i s w h y – t h a t is w h y y o u a r e r a i s i n g t h e s e is s u e s s p e c if ic a l ly ? M R P E T E R S T E P H E N V O L M I N K : T h a t is c o r r e c t C h a ir. T h is i s h a r d l y 10 a n is o l a te d C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : In c i d e n t . C H A I R P E R S O N : O k a y. M R P E T E R S T E P H E N V O L M I N K : W e h a v e s e e n o th e r c a s e s i n t h e p a s t where C H A I R P E R S O N : Ye s . MR PETER STEPHEN VOLMINK: R is k s a r e i n v o k e d a t th e e l e v e n t h hour CHAIRPERSON : Hm. 20 M R P E T E R S T E P H E N V O L M I N K : A s a r e a s o n t o o v e r l o o k b i d d e r A in o r d e r t o g o to b i d d e r B . CHAIRPERSON : Ja. M R P E T E R S T E P H E N V O L M I N K : T h e – th e P P M d o e s s a y th a t r is k c a n be taken into consideration. CHAIRPERSON : Hm, hm. Page 17 of 82 10 MAY 2019 – DAY 92 MR PETER STEPHEN VOLMINK : I t s a y s i t m u s t b e a m a t e r i a l r is k s u c h t h a t i t c a n c a u s e s e v e r e p r e j u d ic e t o Tr a n s n e t i f i t w e r e n o t p r o p e r ly ta k e n i n t o a c c o u n t . CHAIRPERSON : Hm. MR PETER STEPHEN VOLMINK: And must not in v o lv e a r e c o n s i d e r a t i o n o f t h e v e r y f a c to r s th a t w e r e e a r li e r e v a l u a t e d . CHAIRPERSON : Hm. MR PETER STEPHEN VOLMINK : S o t h e p r i n c i p le I h a v e n o d i ffi c u l ty with. 10 CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : B u t i t is t h e o p p o r t u n is ti c u s e o f r is k . C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : In o r d e r t o C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : N o t a w a r d to a b i d d e r X C H A I R P E R S O N : Ye s . MR PET ER ST EPHEN VOL MINK : And to award to what appears to be t h e d e f e r r e d b id d e r. CHAIRPERSON : Ja. 20 A D V P H I L L I P M O K O E N A S C : L e t u s p r o c e e d t o d e a l w i t h s p e c i f ic fa c ts in o r d e r t o a t le a s t y o u k n o w p la c e th e m i n it p r o p e r c o n t e x t . Yo u m a y t h e n p r o c e e d t o t e ll u s w h a t h a p p e n e d ? MR PETER STEPHEN VOLMINK: happened is th a t G i ji m a Ye s th a n k y o u C h a ir. S o w h a t t h e y lodged a c o m p la i n t Procurement … Page 18 of 82 to the Tr a n s n e t 10 MAY 2019 – DAY 92 CHAIRPERSON : Okay just to complete. Management recommended t h a t G ij i m a b e a w a r d e d t h e c o n tr a c t a ft e r t h e c o n s e n t s o r r e s e r v a t i o n s t h a t m a n a g e m e n t h a d h a d – h a d b e e n m it ig a t e d t h r o u g h e n g a g e m e n t w i t h G i ji m a . MR PETER STEPH EN VOLMINK : Correct. CHAIRPERSON : But the board d id not go along w it h the r e c o m m e n d a ti o n o f m a n a g e m e n t a n d d e c i d e d t h a t t h e c o n t r a c t s h o u ld b e a w a r d e d t o T- Sy s t e m s a n d l a r g e ly a n d i f n o t e x c lu s iv e ly t h e ir r e a s o n s w e r e b a s e d o n c e r t a i n r is k s th a t t h e y a r t ic u l a te d , i s t h a t r i g h t ? 10 M R P E T E R S T E P H E N V O L M I N K : T h a t is c o r r e c t C h a ir. C H A I R P E R S O N : A n d th e n G i ji m a lo d g e d a c o m p la in t ? MR PETER STEPH EN VOLMINK : A complaint. C H A I R P E R S O N : O k a y, a lr i g h t t h a n k y o u . M R P E T E R S T E P H E N V O L M I N K : T h e c o m p la i n t w a s t h e n r e c e iv e d b y t h e P r o c u r e m e n t O ff ic e r o f t h e Pr o c u r e m e n t O m b u d s m a n i t i s o n e o f th e f u n c t i o n s w h ic h I h a v e t o o v e r s e e w i t h i n th e o r g a n i s a t io n . B u t b e c a u s e it i m p l ic a t e d t h e a c c o u n ti n g a u t h o r it y t h e r e i s a n a ti o n a l tr e a s u r y p r e s c r i p t i o n th a t w h e n a c o m p la i n t i m p l ic a te s t h e a c c o u n t in g a u th o r i ty it m u s t n o t b e i n v e s ti g a t e d b y t h e o r g a n o f s t a te i t s e l f i t m u s t b e 20 r e fe r r e d to N a t io n a l Tr e a s u r y. A n d t h a t p r o c e s s w a s f o l lo w e d . N a ti o n a l Tr e a s u r y c o n s id e r e d the complaint and u lt i m a t e ly came to the c o n c l u s i o n t h a t t h e p r o p o s e d a w a r d t o – o r th e a w a r d in f a c t t h a t h a d b e e n m a d e to T- Sy s te m s w a s in v a li d a n d t h a t G i ji m a s h o u l d b e a w a r d e d t h e t e n d e r. ADV PHILLIP MOKOENA SC: A n d d i d G o v e r n a n c e a l s o a g r e e w it h Page 19 of 82 10 MAY 2019 – DAY 92 w h a t N a t io n a l Tr e a s u r y w a s s a y i n g ? MR PETER STEPH EN VOLMINK: G overnance agreed w it h the c o n c l u s i o n t h a t t h e t e n d e r w a s i n v a l id – u m s o r r y t h a t t h e t e n d e r a w a r d t o T- Sy s t e m s w a s i n v a l id a n d t h a t t h e t e n d e r h a d to b e a w a r d e d t o G ij i m a . S o w e s h a r e d t h a t c o n c l u s io n . W e h e l d s li g h t ly d i ffe r e n t v i e w s o n h o w r is k s o u g h t to b e e v a l – te c h n ic a l d i f – d i ff e r e n c e s th a t w e h a d w h ic h p e r h a p s w e d o n o t r e a l ly n e e d t o d e l v e i n t o . ADV PHILLIP MOKOENA SC: B u t w h a t w a s t h e n th e a d v ic e o r t h e r e c o m m e n d a ti o n o f G o v e r n a n c e ? 10 MR PETER STEPHEN VOLMINK: W e l l w h e n G o v e r n a n c e c o n s id e r e d t h e m a t t e r p r o d u c e d q u i t e a c o m p r e h e n s iv e m e m o r a n d u m o n t h e m a t te r a s w e l l s p e l li n g o u t th e v a r i o u s r is k s a n d h o w i t h a d b e e n m i ti g a te d a n d w e t h e n m a d e t h e f o l lo w in g r e c o m m e n d a t io n s w h ic h a r e c o n t a in e d i n p a r a g r a p h 11 0 … ADV PHILLIP MOKOENA SC: Page 49 C h a ir. Ye s you can ( in t e r v e n e s ) . MR PETER STEPH EN VOLMINK: A n d w e r e c o m m e n d e d t h a t Tr a n s n e t a b i d e – t h e f ir s t r e c o m m e n d a ti o n is Tr a n s n e t m u s t a b id e b y t h e r u li n g t a k e n b y N a t i o n a l Tr e a s u r y. S e c o n d l y t h a t T - Sy s t e m s s h o u l d b e i n v i t e d 20 t o m a k e r e p r e s e n t a ti o n s o n h o w – o n Tr a n s n e t ’s p r o p o s e d d e c is i o n t o a b i d e t h e – t h e r u l i n g o f N a t io n a l Tr e a s u r y. We felt it would be i m p o r t a n t to i n v i te – r e p r e s e n t - T- S y s t e m s h a d n o w a lr e a d y b e e n a w a r d e d t h e te n d e r a n d o u r p r o p o s a l w a s w e ll l e t u s w i t h d r a w i t a n d w e t h o u g h t th a t a p r o c e d u r a l ly f a ir p r o c e s s w o u l d b e t o a t l e a s t i n v it e r e p r e s e n t a ti o n s . T h e t h ir d a s p e c t o f o u r r e c o m m e n d a t i o n w a s t h a t Page 20 of 82 10 MAY 2019 – DAY 92 Tr a n s n e t w h o s h o u l d p r o c e e d t o m a k e th e a w a r d t h e n to G ij i m a f o ll o w i n g a ju d i c i a l p r o c e s s t o s e t a s id e t h e a w a r d t o T - S y s t e m s . We w e r e c o n s c io u s o f t h e r u l e a g a i n s t s e l f - h e l p a n d s o a n d w e th o u g h t i t w o u ld b e b e t t e r t o f o l lo w a j u d ic i a l p r o c e s s r a t h e r t h a n s i m p ly w i t h d r a w in g fr o m o n e a n d a w a r d i n g t o a n o t h e r. ADV PHILLIP MOKOENA SC: A n d w h a t u l t i m a te ly h a p p e n e d to t h a t tender? MR PETER STEPH EN VOLMINK: C h a ir I s h o u l d p e r h a p s j u s t s a y t h a t h e v ie w s t h a t w e h a d e x p r e s s e d w e r e a ls o c o n fir m e d b y s e n i o r c o u n s e l . 10 W e h a d s o u g h t t h e o p i n i o n s o f A d v o c a t e S ib e k o a n d A d v o c a t e F o r d a n d t h e y w e r e i n l a r g e m e a s u r e i n a g r e e m e n t w i th th e v i e w s t h a t w e r e – were expressed . C h a ir u l ti m a t e l y w h a t t h e n h a p p e n e d is a f te r m u c h d e li b e r a t i o n th e B o a r d t h e n t o o k a r e s o l u ti o n t o s e t a s i d e i t s e a r l ie r a w a r d t o T- Sy s te m s a n d Tr a n s n e t t h e n a p p r o a c h e d th e H i g h C o u r t fo r a n o r d e r d e c la r i n g i ts e a r li e r a w a r d t o T - S y s t e ms t o b e in v a li d a n d a d ir e c t io n t h a t it b e a l lo w e d to a w a r d t o G i j i m a . T h e m a t te r w a s in i ti a l ly s tr o n g ly o p p o s e d b y T- S y s t e m s b u t a f te r s o m e p r e li m i n a r y s k ir m is h e s t h e y w it h d r e w t h e ir o p p o s it i o n a n d th e m a tt e r w a s t h e n s e t d o w n f o r h e a r in g i n th e J o h a n n e s b u r g H ig h C o u r t o n 1 2 D e c e m b e r 2 0 1 8 a n d t h e 20 c o u r t e s s e n ti a l ly g r a n t e d th e o r d e r a s p r a y e d f o r b y – b y Tr a n s n e t a n d I h a v e a t ta c h e d a c o p y o f t h e j u d g m e n t i n t h e p a p e r s ( i n t e r v e n e s ) . ADV PHILLIP MOKOENA SC: So it was only a f te r a ll th o s e in t e r v e n t i o n s t h a t t h e B o a r d t h e n d e c i d e d t o d o th e c o r r e c t th i n g ? M R P E T E R S T E P H E N V O L M I N K : C o r r e c t C h a ir. ADV PHILLIP MOKOENA SC: Ye s . N o w f r o m p a g e - 11 3 p a r a g r a p h Page 21 of 82 10 MAY 2019 – DAY 92 11 3 p a g e 5 0 y o u a r e n o w d e a l i n g w i t h th e a c q u is i ti o n o f th e 1 0 0 lo c o m o t iv e s ? MR PETER STEPH EN VOLMINK : Correct. A D V P H I L L I P M O K O E N A S C : C a n y o u p l e a s e t a k e u s th r o u g h it ? MR PETER STEPH EN VOLMINK: C h a ir I – I w a s a s k e d b y t h e in v e s t i g a t o r s t o l o o k a t t h is c o n fi n e m e n t o f th e – o f - f o r t h e a c q u is i t io n o f 1 0 0 l o c o m o t iv e s th a t w a s i n it i a ll y c o n fi n e d to a c o m p a n y c a l l e d M i ts u i A f r i c a R a il S o lu t io n s o r M A R S f o r – fo r s h o r t - a n d a s e c o n d c o n fi n e m e n t w h e r e t h e i n i ti a l p r o p o s e d a w a r d t o M A R S w a s n o w 10 c o m p le t e l y ig n o r e d a n d a s e c o n d c o n fi n e m e n t w a s t h e n m o tiv a t e d fo r t h e a w a r d o f t h e v e r y s a m e t e n d e r t o C h in a S o u t h R a i l o r C S R a n d I w a s a s k e d t o r e f le c t o n – j u s t o n t h e r a ti o n a l a s c o n t a i n e d i n t h e c o n fi n e m e n t d o c u m e n ts i ts e l f . A D V P H I L L I P M O K O E N A S C : Ye s a n d t h e n w h a t t r a n s p ir e d w h e n y o u h a v e – a f te r h a v i n g r e v i e w e d a n d a s s e s s e d y o u k n o w th e t w o c o n fi n e m e n ts ? MR PETER STEPH EN VOLMINK: Ye s . S o C h a ir in e s s e n c e I s a y i n p a r a g r a p h 11 3 a n d f o l l o w in g th a t t h e i n i ti a l m o t iv a t i o n w a s m a d e i n October 2013. 20 I s a i d in m y i n it i a l s t a te m e n t t h a t i t w a s s u b m i t t e d b y M r Br ia n M o l e f e b u t u p o n f u r th e r c o n s i d e r a ti o n o f th e d o c u m e n ts I s e e h e d i d n o t s i g n th a t c o n fi n e m e n t . H e n c e in m y a m e n d e d s t a t e m e n t I s i m p l y m a k e t h e p o i n t th a t a s u b m is s i o n w a s m a d e r a th e r t h a n b u t a p a r t fr o m t h a t m i n o r c h a n g e t h e p o i n t t h a t I m a k e is t h a t th is c o n fi n e m e n t d e s c r i b e d in g l o w i n g t e r m s t h e v ir t u e s o f M i t s u i – M A R S . W h y w e s h o u l d a w a r d to M i ts u i A fr ic a R a il S o l u ti o n s a n d f o r e x a m p l e Page 22 of 82 10 MAY 2019 – DAY 92 C h a ir I p o i n t th a t in p a r a g r a p h 11 4 t h e r e a r e a n u m b e r o f s u b paragraphs. I t s a y s th e r e t h a t t h e s e M A R S l o c o m o t iv e s t h e y w e r e I t h i n k fo r t h e C l a s s 1 9 E - it is a p a r t ic u l a r c la s s o f l o c o m o ti v e s . T h e s e MARS l o c o m o t iv e s are known th e y meet r e q u i r e m e n ts and the p r o t o ty p i n g is n o t r e q u i r e d . Th e y h a v e d o n e t h is b e f o r e . I t g o e s o n t o s a y t h a t t h e c o n f in e m e n t to M A R S w a s r e q u i r e d f o r p u r p o s e s o f s t a n d a r d i s a t io n b e c a u s e M A R S h a d d o n e a n u m b e r o f t h e s e t e n d e r s a n d a n u m b e r o f t h e l o c o m o t iv e s b e fo r e . T h a t th e r e w e r e M A R S f a c i li t ie s t h a t w e r e r e a d i ly a v a i l a b le f o r i m m e d i a t e p r o d u c t io n . 10 Lead ti m e s w o u l d b e k e p t to a m i n i m u m a n d a l s o th e r e w o u l d b e s i g n i f ic a n t s a v in g s . A c r o s s t h e p a g e o n p a g e 5 1 t h e v ir t u e s o f M A R S a r e f u r th e r e x t o ll e d b y t h e i n d iv i d u a l s w h o s u b m i t te d t h e m e m o a n d i t s a y s th e r e t h a t t h e M i ts u i m o d e ls w e r e o p e r a ti n g o p ti m a ll y a n d i n fa c t e x c e e d e d t h e ir d e s i g n p a r a m e te r s t h a t w e d o n o t n e e d to tr a i n n e w – to t r a i n o u r d r i v e r s o n a n y n e w m o d e l b e c a u s e t h e y h a v e b e e n tr a in e d o n t h e M i ts u i model. S o t h e y a ls o s p e a k a b o u t e x t e n s iv e s o c i o e c o n o m ic b e n e fi ts t h a t w o u l d b e a s a r e s u l t o f t h e a w a r d t o M i ts u i i n c l u d i n g j o b r e t e n ti o n a t Tr a n s n e t E n g i n e e r in g a n d jo b c r e a ti o n a n d u lt i m a t e ly t h e y s a id i t w a s n o t i n t h e in t e r e s t o f Tr a n s n e t to f o ll o w – t o a w a r d t o a n y o n e e ls e . S o 20 in e s s e n c e w h a t w e s e e … A D V P H I L L I P M O K O E N A S C : Ye s . MR PETER STEPH EN VOLMINK: Is a m o tiv a ti o n t o – t o c o n f i n e t o M A R S b a s e d o n w h a t w e r e d e p i c te d a s o u t s t a n d in g q u a li t ie s th a t – t h a t MARS had. A D V P H I L L I P M O K O E N A S C : A n d t h a t w a s t h e j u s t if ic a ti o n w h y n o t – Page 23 of 82 10 MAY 2019 – DAY 92 Tr a n s n e t w a s n o t s u p p o s e d t o g o o u t o f – o u t to te n d e r o n a – o n a n o p e n f a ir c o m p e t i ti v e b i d d i n g s y s t e m ? MR PETER STEPH EN VOLMINK: T h a t – t h a t w a s th e b a s is f o r – fo r t h e c o n fi n e m e n t . T h a t is c o r r e c t . ADV PHILLIP MOKOENA SC: Ye s . However three months down the li n e t h e r e w a s … MR PETER STEPH EN VOLMINK : But then correct … A D V P H I L L I P M O K O E N A S C : Ye s . MR PETER STEPH EN VOLMINK: 10 Correct C h a ir. T h is MARS c o n fi n e m e n t s e r v e d a t – a t a B o a r d – a t a m e e ti n g o f th e B A D C w h ic h i s a S u b C o m m i t t e e o f th e B o a r d w h ic h i s e n tr u s te d s p e c i f ic a l ly w i t h p r o c u r e m e n t m a tt e r s a n d I w a s n o t a t t h a t m e e ti n g . I h a v e n o p e r s o n a l k n o w l e d g e a s t o w h a t tr a n s p ir e d w h o s a id w h a t a t th a t m e e t i n g . A l l w e k n o w fr o m t h e r e c o r d is t h a t t h r e e m o n th s a f t e r th is in i ti a l M A R S c o n fi n e m e n t h a d b e e n m a d e th e r e w a s n o w a s e c o n d c o n fi n e m e n t . T h is ti m e t o a w a r d th e te n d e r t o C h i n a S o u t h R a il a n d n o lo n g e r t o – to M i ts u i a n d I h a v e a l s o a t t a c h e d a c o p y o f th a t c o n fi n e m e n t t o t h e papers. ADV PHILLIP MOKOENA SC: 20 Ye s . If I m a y r e f e r y o u to E X H I B I T B B 2 .1 D . Yo u c a n n o w i g n o r e C . W e a r e n o w g o i n g t o D . MR PETER STEPH EN VOLMINK: D , s o r r y. L e t m e j u s t p u t C a w a y. Ye s . C H A I R P E R S O N : I n t h e m e a n ti m e I c a n a s k w h e t h e r t h e – t h i s s e c o n d s u b m is s io n f o r c o n fi n e m e n t m e a n t t h a t t h e r e w e r e g o in g t o b e t w o s u b m is s io n s b e fo r e t h e B A D C f o r c o n fi n e m e n t – o n e t o M i ts u i a n d t h e Page 24 of 82 10 MAY 2019 – DAY 92 o th e r o n e t o C h i n a R a il o r w h e t h e r t h e f ir s t o n e w a s e ff e c tiv e ly withdraw? MR PETER STEPH EN VOLMINK: I t h i n k it is t h e la t e r C h a ir. I t h in k t h e fir s t o n e w a s e ff e c t iv e l y w i t h d r a w n b e c a u s e i f o n e lo o k s a t t h e c o n te n ts o f th e C h i n a S o u t h R a il c o n fi n e m e n t t h e – t h e r e i t i s s a i d th a t M i ts u i ’s q u a li ty a n d a l l th e v a r i o u s a s p e c t s t h a t w e r e f ir s tl y p r a is e d in t h e fi r s t … C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : C o n fi n e m e n t . 10 C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : T h e y s a y n o M i ts u i is … CHAIRPERSON : Ja. M R P E T E R S T E P H E N V O L M I N K : N o t u p t o s c r a tc h . CHAIRPERSON : A dilution of … M R P E T E R S T E P H E N V O L M I N K : Ye s . C H A I R P E R S O N : T h e p r a i s e s t h a t h a d b e e n h e a p e d o n M i ts u i . M R P E T E R S T E P H E N V O L M I N K : T h a t is c o r r e c t . C H A I R P E R S O N : J a , o k a y. A D V P H I L L I P M O K O E N A S C : I f y o u g o t o p a g e 11 9 6 . 20 M R P E T E R S T E P H E N V O L M I N K : 11 9 6 o r 11 9 7 ? A D V P H I L L I P M O K O E N A S C : 11 9 7 . T h is w i ll b e … C H A I R P E R S O N : I a m s o r r y. I t h o u g h t t h a t w a s D . A D V P H I L L I P M O K O E N A S C : D fo r … C H A I R P E R S O N : D f o r D o r is . A D V P H I L L I P M O K O E N A S C : F o r D o r is . Page 25 of 82 10 MAY 2019 – DAY 92 C H A I R P E R S O N : J a , o k a y. D f o r D a v i d . D fo r D o r i s , o k a y. A D V P H I L L I P M O K O E N A S C : O n p a g e 11 9 7 C h a ir. C H A I R P E R S O N : O k a y. S o t h a t is 11 … ? ADV PHILLIP MOKOENA SC: 97. CHAIRPERSON : Thank you. A D V P H I L L I P M O K O E N A S C : C o u l d y o u i d e n ti f y t h a t d o c u m e n t f o r u s M r Vo l m in k ? MR PETER STEPH EN VOLMINK: C h a i r t h is is a s u b m i s s io n m a d e b y M r Br ia n M o l e f e t h e t h e n G r o u p C h i e f E x e c u ti v e o f Tr a n s n e t t o t h e 10 Tr a n s n e t B o a r d A c q u is i ti o n s a n d D is p o s a ls C o m m i t t e e – th e B A D C – a n d th e s u b j e c t s i m p l y s a y s : “ Mi ti g a ti o n o f M D S v o lu m e s … ” M D S j u s t s ta n d s f o r M a r k e t D e m a n d S tr a t e g y. “ MD S v o l u m e s a t r i s k t h r o u g h i n v e s t m e n t in a n d p r o c u r e m e n t o f 1 0 0 C la s s 1 9 E e q u iv a le n t d u a l v o l t a g e e l e c tr ic lo c o m o t iv e s a n d 6 0 C l a s s 4 3 d i e s e l lo c o m o t iv e s .” ADV PHILLIP MOKOENA SC: A n d h e is t h e o n e w h o w a s m o ti v a t i n g t h e a w a r d i n fa v o u r o f M it s u i ? 20 M R P E T E R S T E P H E N V O L M I N K : T h a t – t h a t is c o r r e c t C h a ir. ADV PHILLIP MOKOENA SC: Ye s . N o w if y o u – w h i le y o u a r e s t il l o p e n i n g t h a t m e m o r a n d u m m a y I a ls o r e f e r y o u to p a g e 1 2 2 3 a n d c o u l d y o u p le a s e i d e n t i fy th a t d o c u m e n t fo r u s ? MR PETER STEPH EN VOLMINK: M r Br ia n M o l e f e to the T h i s i s a – a s u b m is s i o n fr o m Tr a n s n e t Board Page 26 of 82 of D ir e c t o r s dated 10 MAY 2019 – DAY 92 2 1 J a n u a r y 2 0 1 4 w h ic h h a s t h e s a m e h e a d i n g a s t h e e a r l ie r – e a r li e r c o n fi n e m e n t t h a t I q u o te d . I t a ls o s a y s : “ Mi ti g a ti o n of MDS volumes at risk th r o u g h in v e s t m e n t i n a n d p r o c u r e m e n t o f t h e 1 0 0 d u a l v o l t a g e e l e c tr ic lo c o m o t iv e s .” A D V P H I L L I P M O K O E N A S C : B u t th is o n e a d i ff e r e n t e n t i ty w a s – w a s m o t iv a t e d f o r ? M R P E T E R S T E P H E N V O L M I N K : C o r r e c t . T h i s is n o w t h e C S R . ADV PHILLIP MOKOENA SC: 10 N o w d i d y o u h a v e a n o p p o r t u n i ty o f r e a d in g b o t h th e s e m e m o r a n d u m s ? A r e t h e y d i ff e r e n t i n a n y m a n n e r ? MR PETER STEPH EN VOLMINK: C h a ir t h e d o c u m e n ts – t h e t w o m e m o r a n d a a r e e s s e n ti a l ly - t h e s u b s ta n c e o f i t is a l m o s t i d e n ti c a l . W h e r e i t d i ff e r s is w h e r e t h e v i r t u e s o f C S R a r e n o w e x to ll e d i n t h e s e c o n d m e m o r a n d u m w h e r e a s th e q u a l i ti e s o f M A R S … C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : A r e h ig h li g h t e d i n t h e f ir s t … C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : T h e f ir s t d o c u m e n t . CHAIRPERSON : Hm. 20 ADV PHILLIP MOKOENA SC: May I now refer you back to your s t a te m e n t – E X H I B I T B B 2 . 1 A … M R P E T E R S T E P H E N V O L M I N K : Ye s . ADV PHILLIP MOKOENA SC: And page 51 and take us through p a r a g r a p h 11 6 a n d o n w a r d s ? M R P E T E R S T E P H E N V O L M I N K : C h a ir i n p a r a g r a p h 11 6 a n d f o l lo w i n g Page 27 of 82 10 MAY 2019 – DAY 92 I s i m p ly h i g h li g h t m y – h o w I d e a l w it h m y o b s e r v a t io n s o f t h e s e c o n fi n e m e n ts a s I w a s r e q u e s te d t o d o b y t h e - b y t h e C o m m i s s io n – t h e C o m m is s i o n ’s i n v e s ti g a to r s a n d w h a t I s a y i n p a r a g r a p h 11 6 . 1 is t h a t th e c o n f in e m e n t t o C h i n a S o u t h R a i l f ir s t ly i n v o k e s u r g e n c y a s a g r o u n d f o r c o n fi n e m e n t a n d a s w e d is c u s s e d y e s te r d a y u r g e n c y i s s o m e t h i n g t h a t h a s t o b e d e a l t w i t h i m m e d ia t e ly b e c a u s e o f a p o t e n t ia l c r is is t h a t i s lo o m i n g a n d I m a k e t h e p o i n t th a t t h r e e m o n th s h a d a lr e a d y e la p s e d s i n c e th is e a r li e r c o n fi n e m e n t t o M i ts u i w h ic h w a s a l s o based on urgency – by the way – and no steps had been taken to 10 p r o c u r e a n y l o c o m o ti v e s d u r in g th a t t i m e a n d I q u e s t i o n w h e t h e r t h i s m a t t e r c o u l d g e n u in e ly b e u r g e n t if n o a c t i o n h a d b e e n t a k e n b u t I th i n k more s i g n i f ic a n t ly the second point that I make is that t h is m e m o r a n d u m i t m is q u o t e s t h e P P M a n d p e r h a p s C h a ir i f y o u w o u l d a l lo w m e . I t is a v e r y s h o r t c la u s e fr o m t h e P P M t h a t I ju s t w a n t to r e a d in t o th e r e c o r d . CHAIRPERSON : Ja, you may do – do that. MR PETER STEPH EN VOLMINK: I n p a r a g r a p h 11 6 .2 I s a y t h a t t h e m e m o r a n d u m q u o te s t h e P P M a s s ta t in g t h e f o ll o w i n g : “ W h e r e a g e n u i n e u n f o r e s e e a b l e u r g e n c y h a s a r is e n 20 s u c h u r g e n c y s h o u l d n o t b e a t tr i b u ta b l e t o a l a c k o f p r o p e r p l a n n in g .” A n d t h e n t h e u n d e r li n e d w o r d s a r e a d d e d . “However where a genuine urgency has been c r e a te d b y t h e l a c k o f p r o p e r p l a n n in g u r g e n c y c a n s t il l b e r e li e d u p o n a s a g r o u n d f o r c o n fi n e m e n t . I n Page 28 of 82 10 MAY 2019 – DAY 92 such cases a p p r o p r i a te a c t io n must be taken a g a in s t t h e i n d iv i d u a l o r i n d iv id u a ls r e s p o n s i b le f o r t h e b a d p l a n n in g .” N o w I s a y i t m is q u o t e s t h e P P M b e c a u s e t h o s e u n d e r li n e d w o r d s w e r e c o n ta in e d i n a d r a f t w h ic h w e h a d s u b m i t t e d t o t h e B o a r d a n d i t r e la t e s t o a p o i n t C h a ir w h ic h y o u m a d e y e s t e r d a y w h ic h is to t h e e ff e c t th a t i f a g e n u i n e u r g e n c y h a s c o m e a b o u t b u t i t i s a s a r e s u l t – e v e n i f it is a r e s u l t o f p o o r p la n n i n g … C H A I R P E R S O N : Ye s . 10 M R P E T E R S T E P H E N V O L M I N K : T h e r e is s ti ll a n u r g e n c y … C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : To b e d e a l t w i t h … CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : A n d i t c a n b e r e l ie d u p o n … CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : A s a c o n fi n e m e n t … CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : B u y o u m u s t d e a l w i th t h e in d i v i d u a l … 20 C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : W h o h a s c r e a te d th e c r is is … CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : B u t w h e n t h is w a s t a k e n to t h e B o a r d a t t h e t i m e t h e y fe l t s tr o n g l y t h a t b a d p l a n n in g c o u l d n e v e r b e a n e x c u s e f o r c o n f i n e m e n t a n d t h e y d e le t e d t h e r e f e r e n c e t h a t h a s b e e n Page 29 of 82 10 MAY 2019 – DAY 92 underlined here. C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : S o I t h i n k t h e p o i n t is t h a t … CHAIRPERSON : Hm. MR PETER STEPH EN VOLMINK: T h e r u l e w h ic h t h e y h a d n o w r e li e d upon … C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : Is n o t th e – it is a n o n - e x is t e n t r u le . C H A I R P E R S O N : Ye s . 10 M R P E T E R S T E P H E N V O L M I N K : I t h i n k f u r th e r m o r e C h a ir … CHAIRPERSON : Hm. MR PETER STEPH EN VOLMINK: I m a k e t h e p o i n t i n p a r a g r a p h 11 6 .4 … A D V P H I L L I P M O K O E N A S C : O n p a g e 5 2 C h a ir. CHAIRPERSON : W e ll I a m ju s t s t il l t h i n k i n g a b o u t th is p o in t a b o u t p o o r p l a n n i n g a n d u r g e n c y. Yo u k n o w – f o r w h a t i t is w o r th . I t h i n k y o u – you understood the point… M R P E T E R S T E P H E N V O L M I N K : Ye s . C H A I R P E R S O N : W h e n w e h a d t h e d is c u s s io n y e s t e r d a y. I m e a n i f – i f 20 t h e C o m m i s s i o n ’s a d m in is tr a tiv e w in g w a s s u p p o s e d t o b r i n g s o m e t h i n g t o m y a tt e n ti o n t o s a y I m u s t p l e a s e c o n v e n e a c e r ta in u r g e n t m e e ti n g t o d e a l w i th a c e r ta i n s i tu a ti o n b e c a u s e i f I d o n o c o n v e n e th a t m e e t in g a n d a c e r t a in d e c i s i o n is m a d e w e a r e g o i n g t o – w e w i ll n o t b e a b l e to s i t i n t h is v e n u e f r o m n e x t w e e k a n d t h e c o m m is s i o n w il l h a v e n o w h e r e t o s i t a n d I t h in k t h a t th e a d m in is tr a t iv e w i n g s h o u ld h a v e to l d m e a Page 30 of 82 10 MAY 2019 – DAY 92 m o n th a g o . I c a n n o t s a y I a m n o t g o in g t o c o n v e n e a m e e ti n g b e c a u s e y o u p e o p l e h a d p o o r p la n n i n g . Yo u s h o u l d h a v e t o l d m e l a s t m o n th . MR PETER STEPH EN VOLMINK: Ja. CHAIRPERSON : I am going to say you should have told me la st month b u t n o w t h a t t h is h a s h a p p e n e d I m u s t c o n v e n e t h e m e e t in g … M R P E T E R S T E P H E N V O L M I N K : W e h a v e to d e a l w i th i t. C H A I R P E R S O N : B e c a u s e w e c a n n o t a ff o r d n o t t o s i t n e x t m o n t h - n e x t w e e k b e c a u s e w e w il l n o t h a v e … M R P E T E R S T E P H E N V O L M I N K : Ye s . 10 C H A I R P E R S O N : W e w il l h a v e n o v e n u e . M R P E T E R S T E P H E N V O L M I N K : Ye s . C H A I R P E R S O N : S o I d e a l w i t h th e p o o r p l a n n in g b u t I r e c o g n is e t h a t t h e r e i s u r g e n c y b e c a u s e - f o r e x a m p l e – t h e le a s e i s e x p ir in g o v e r t h e weekend. MR PETER STEPH EN VOLMINK: Ja. C H A I R P E R S O N : S o t h e m e e t i n g s t h a t a r e s e t – t h e h e a r in g s t h a t a r e s e t d o w n f o r n e x t w e e k a n d t h e o th e r w e e k w il l n o t t a k e p l a c e i f I d o n o t m e e t w it h th e l a n d l o r d a n d s a y t h e a d m in is tr a ti o n h a s r e a ll y b e e n p o o r in p l a n n i n g . 20 T h e y s h o u ld h a v e b r o u g h t th is t o m y a tt e n ti o n b u t n o w t h e y h a v e b r o u g h t – t h e y s h o u l d h a v e b r o u g h t i t t o m y a t te n ti o n m u c h e a r l ie r b u t t h e y h a v e n o w b r o u g h t i t . Can we do something? I c a n n o t s a y I a m n o t g o in g t o m e e t w it h th e l a n d l o r d b e c a u s e th e y s h o u l d h a v e to ld m e la s t m o n t h . MR PETER STEPH EN VOLMINK: Ja. I a m v e r y f u l ly a p p r e c ia t iv e o f w h a t y o u a r e s a y in g C h a ir. Page 31 of 82 10 MAY 2019 – DAY 92 C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : T h a t a l s o m o tiv a t e d … C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : T h e – th e i n c l u s i o n … C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : O f t h a t c la u s e th e s e n t e n c e … C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : T h a t w a s u n d e r li n e d . C H A I R P E R S O N : Ye s . 10 MR PETER STEPH EN VOLMINK: M a n a g e m e n t fe l t t h a t i f y o u a r e d e a li n g w i t h a g e n u in e e m e r g e n c y … CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : T h e n w e c a n n o t c lo s e o u r e y e s t o t h e fact that CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : T h e r e c o u l d b e a n o p e r a ti o n a l … C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : I m p l o s io n … C H A I R P E R S O N : Ye s . 20 MR PETER STEPH EN VOLMINK : As a result of not … C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : O b t a in in g a p a r tic u l a r. C H A I R P E R S O N : Ye s . MR PETER STEPH EN VOLMINK: L e t u s d e a l w i th t h a t p e r h a p s o n a c o n fi n e m e n t b a s is . Page 32 of 82 10 MAY 2019 – DAY 92 C H A I R P E R S O N : Ye s . MR PETER STEPH EN VOLMINK: S o m e t i m e s w i th a h e a v y h e a r t o n e has to … C H A I R P E R S O N : T h a t is r i g h t, y e s . M R P E T E R S T E P H E N V O L M I N K : A g r e e to th e s e th i n g s … C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : A n d – a n d d is c i p li n e th e p e r s o n … CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : B u t l e t u s a c q u ir e th e … 10 CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : T h e p r o d u c t. C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : If I r e c a l l c o r r e c tly … CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : T h e B o a r d ’s c o n c e r n a t t h e ti m e w a s t h e s e s e l f - c r e a te d u r g e n c i e s a n d h o w e a s il y i t g e t s in v o k e d a s a r e a s o n n o t t o fo ll o w a p r o c u r e m e n t p r o c e s s . T h e r e w a s a v i e w t h a t th e s y s te m h a d b e e n s u b je c t t o a b u s e – c o n s i d e r a b l e a b u s e … C H A I R P E R S O N : Ye s . 20 MR PETER STEPH EN VOLMINK : Maybe the pendulum swung … C H A I R P E R S O N : Ye s . MR PETER STEPH EN VOLMINK : Quite far … C H A I R P E R S O N : B e c a u s e o f th a t j a . M R P E T E R S T E P H E N V O L M I N K : O n t o th e o n e s id e … C H A I R P E R S O N : Ye s . Page 33 of 82 10 MAY 2019 – DAY 92 M R P E T E R S T E P H E N V O L M I N K : B u t I t h i n k th a t … C H A I R P E R S O N : Ye s . MR PETER STEPH EN VOLMINK: Th a t m o tiv a t e d t h e e x c lu s i o n o f t h e ( in t e r v e n e s ) . C H A I R P E R S O N : Ye s . O k a y, n o t h a t is fi n e . A D V P H I L L I P M O K O E N A S C : Yo u m a y p r o c e e d fr o m p a r a g r a p h 11 6 . 4 . MR PETER STEPH EN VOLMINK: I n p a r a g r a p h 11 6 . 4 I m a k e t h e p o in t t h a t c e r t a i n g r o u n d s f o r t h e c o n fi n e m e n t t h a t a r e s e t o u t n o w in t h e C S R m e m o w e r e id e n tic a l to t h e M i t s u i m e m o . I t i s a s if t h e g r o u n d s 10 f o r c o n fi n e – th e r e w a s lik e a c u t , c o p y, p a s te e x e r c is e d o n e fr o m th e g r o u n d s o f c o n f in e m e n t fo r M A R S a n d p u t in t o th e C S R . N o w t h e y a ls o say that: “ T h e s e d i e s e l l o c o m o tiv e s fr o m C S R t h e y a r e k n o w n a n d th e y m e e t te c h n ic a l r e q u ir e m e n ts a n d s e t u p c o s ts a r e n o t r e q u ir e d a n d fa c i li ti e s a r e r e a d i ly a v a i la b le f o r C S R . ” T h e v e r y – t h e v e r y t h i n g s th a t w e r e s a i d a b o u t M i ts u i a n d I m a k e th e o b s e r v a t i o n C h a ir i n – s o r t o f in t h e m i d d l e o f t h a t p a r a g r a p h I s a y a s s u m i n g th a t t h e s e f a c ts r e g a r d i n g C S R w e r e tr u e th a t t h e y h a d a ll o f 20 t h o s e q u a li t ie s w h y w a s th e c o n f i n e m e n t t h e n n o t m a d e t o C S R i n th e fir s t in s t a n c e a n d w h y d i d it ta k e th r e e m o n th s t o r e a l is e t h a t C S R a c t u a ll y h a d th e s a m e a t tr i b u te s a s M i ts u i i n r e l a t i o n to s e t u p c o s t s a n d p r o to t y p i n g a n d a t v e r y l e a s t t h a t s u g g e s ts b a d p la n n i n g a n d w h e n t h e r e i s b a d p l a n n i n g a s w e h a v e s a id t h a t e ffe c t iv e l y n e g a t e s a g r o u n d f o r c o n f in e m e n t a n d t h a t is t h e – t h e o b s e r v a ti o n t h a t is m a d e t h e r e . Page 34 of 82 10 MAY 2019 – DAY 92 ADV PHILLIP MOKOENA SC: B u t le t u s – le t u s d e a l w i th th e e ff e c t s o f th e s e n u m e r o u s c o n f in e m e n ts . W h a t t h e y m e a n t w a s t h a t a p a r ty t h a t w a s n e v e r s u b je c te d t o a n y t e n d e r p r o c e s s a n a m e w il l b e m e n ti o n e d a n d a n a w a r d w i ll b e g i v e n to t h a t e n ti ty ? MR PETER STEPH EN VOLMINK: c o m p le x th a n th a t . I t is s li g h t ly – i t i s s l ig h tl y m o r e S o a n e n ti ty w o u l d b e r e c o m m e n d e d a s f o r th e c o n fi n e m e n t . A D V P H I L L I P M O K O E N A S C : Ye s . MR PETER STEPH EN VOLMINK: 10 It has to be approved by the person w i t h d e l e g a t e d a u t h o r i ty … A D V P H I L L I P M O K O E N A S C : E x a c tl y. M R P E T E R S T E P H E N V O L M I N K : B u t i t is s t il l a t e n d e r p r o c e s s . S o a n R F P w o u l d th e n b e i s s u e d t o th a t o n e o r s o m e ti m e s o n e o r t w o o r th r e e h o w e v e r m a n y e n ti ti e s a r e li s t e d i n t h e c o n fi n e m e n t . S u b m is s i o n s m u s t b e r e c e iv e d . I t m u s t b e e v a l u a t e d . I t m u s t s e r v e b e fo r e t h e Ac q u is i ti o n C o u n c il . I t h i n k th e f u n d a m e n t a l d i ffe r e n c e is t h a t it i s n o t a n o p e n in v i ta t io n t o - t o a n y – a n y b id d e r to ( in t e r v e n e s ) . ADV PHILLIP MOKOENA SC: I n t h i s r e g a r d t h e r e w e r e o n ly t w o m e m o s . T h e fir s t o n e m o t iv a te d M i ts u i ? 20 M R P E T E R S T E P H E N V O L M I N K : O n ly M i t s u i . A D V P H I L L I P M O K O E N A S C : A n d t h e n e x t o n e m o tiv a t e d o n ly … M R P E T E R S T E P H E N V O L M I N K : O n ly C S R . A D V P H I L L I P M O K O E N A S C : Ye s . T h a t i s t h e p o i n t t h a t – y e s . M R P E T E R S T E P H E N V O L M I N K : Ye s , y e s . A D V P H I L L I P M O K O E N A S C : Yo u m a y p r o c e e d t h e n . Page 35 of 82 10 MAY 2019 – DAY 92 MR PETER STEPH EN VOLMINK: I a l s o p o i n t o u t C h a ir th a t th e C S R m e m o n o w r e f u t e d t h e v e r y q u a li ti e s t h a t h a d e a r l ie r b e e n s ta t e d a b o u t M A R S . I t n o w s a y s t h a t: “ M A R S h a d n o t d o n e w e l l d u r i n g t h e 1 0 6 4 lo c o p r o c e s s a n d t h e r e w a s a n o t h e r 9 5 lo c o tr a n s a c ti o n .” I a ls o s a y th a t : “This SD of MARS was not … S u p p ly D e v e l o p m e n t . “ … w a s n o t a k e y fa c t o r w h e n M A R S w a s a w a r d e d 10 t h e c o n tr a c t. ” A n d t h e n i t a ls o s a y s t h a t : “ I f w e c o n ti n u e with MARS that would create u n n e c e s s a r y r is k f o r Tr a n s n e t .” It says that: “ C S R o n t h e o t h e r h a n d h a d e x c e ll e d i n a l l o f th e s e S D r e q u ir e m e n t s . ” A n d C h a ir i n e s s e n c e I c o m e to t h e c o n c l u s i o n h a v in g d e a l t w i t h a ll o f t h is t h a t t h e a b o u t t u r n i n s u c h a li m i t e d p e r i o d o f ti m e I t h i n k i t – it d e f ie s r a ti o n a li ty. I t d e f ie s lo g i c a t l e a s t fr o m my o b s e r v a t io n . I s h o u ld 20 a ls o p o in t o u t a n d I d e a l w i t h t h i s in p a r a g r a p h 11 7 th a t i t w a s – i n a d d it i o n i t w a s s ta t e d t h a t r e g a r d i n g t h e s e r e p u t a t i o n a l r is k s th a t Tr a n s n e t w o u l d s u ff e r it w a s t h e n s a i d th a t it w a s n o t e l a b o r a te d o n b u t e x c e p t t o s a y t h a t th e r e w a s s p e c u l a ti o n in th e m e d i a a r o u n d M i t s u i ’s lo c a l p a r tn e r s a n d t h e ir p o l i tic a l a ffi li a ti o n s a n d i t s a i d t h a t Tr a n s n e t w o u ld n e v e r e n t e r ta i n a w a r d s b a s e d o n t h e p o li t ic a l p r o w e s s o f a n y Page 36 of 82 10 MAY 2019 – DAY 92 b u s i n e s s p a r t n e r s to a n O E M b u t t h e r is k d o e s n o t n e e d t o b e t a k e n in t o a c c o u n t f o r – fr o m a r e p u t a t i o n a l p e r s p e c ti v e . E s s e n t i a l ly t h e y w e r e s a y i n g lo o k w e h e a r s o m e w o r r y i n g s t o r ie s b u t t h e p o i n t i s w h y w e r e th o s e w o r r y i n g s t o r ie s n o t a f a c t o r w h e n M A R S w a s m o tiv a t e d fo r c o n fi n e m e n t t h r e e m o n th s e a r l ie r w h e n th e s e s t o r ie s h a d c o m e a b o u t – I t h i n k – w a y b e fo r e th a t . S o I t h in k a l l o f t h i s – C h a ir t h e m o s t g e n e r o u s in t e r p r e t a ti o n t h a t I c a n g i v e i s t h a t i t is a s a r e s u l t o f j u s t b a d p l a n n i n g a n d I s a y t h a t i s th e m o s t g e n e r o u s . W h e th e r t h e r e a r e o th e r n e f a r io u s m o t iv e s th a t i n fl u e n c e t h is o th e r s w i ll c o m e a n d t e s ti fy. 10 ADV PHILLIP MOKOENA SC: Then we can proceed Ye s . M r Vo l m i n k Just clearing those bases, fine. to deal with the McKinsey c o n fi n e m e n ts . M R P E T E R S T E P H E N V O L M I N K : A s f a r a s th e M c Ki n s e y c o n fi n e m e n t s a r e c o n c e r n e d C h a ir … ADV PHILLIP MOKOENA SC: C h a ir t h e y a r e f r o m p a g e 5 4 p a r a g r a p h 11 8 . M R P E T E R S T E P H E N V O L M I N K : C h a ir I – I s a y i n p a r a g r a p h 11 8 t h a t … C H A I R P E R S O N : I a m s o r r y – I a m s o r r y M r Vo l m i n k . 20 M R P E T E R S T E P H E N V O L M I N K : Ye s . CHAIRPERSON : When the BADC – that Board Committee – dealt with m a t t e r s s u c h a s th is – y o u k n o w – t h is r e q u e s t f o r c o n fi n e m e n t w o u l d t h e y h a v e th e b e n e fi t o f s o m e b o d y a t t h a t s t a g e - I k n o w th e r e c o m m e n d a ti o n t h a t y o u e x p r e s s e d g o i n g fo r w a r d . W o u l d t h e y c a l l f o r s o m e b o d y w it h s o m e m o r e k n o w l e d g e o f p r o c u r e m e n t fr o m w i t h i n Page 37 of 82 10 MAY 2019 – DAY 92 Tr a n s n e t a n d s a y y o u k n o w t h e r e i s th is r e q u e s t g iv e u s s o m e a d v ic e . W h a t is y o u r v i e w ? Yo u k n o w - is t h is in c o m p li a n c e i s t h is n o t in c o m p li a n c e w i th t h e p r e s c r i p ts a n d p o l ic i e s o r w o u ld t h e y r e l y o n t h e r e l e v a n t E x e c u tiv e m e m b e r s o f m a n a g e m e n t o r C E O a n d s o o n ? MR PETER STEPH EN VOLMINK: C h a ir i f m e m o r y s e r v e s m e c o r r e c tl y t h e A D C c a ll e d t h e G r o u p C h i e f S u p p l y C h a ir O ff ic e r … CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : To a t t e n d … CHAIRPERSON : Hm. 10 M R P E T E R S T E P H E N V O L M I N K : T h e ir m e e ti n g s … CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : A n d t o – I w o u l d i m a g in e t h a t i f t h e r e w e r e p r o c u r e m e n t p r o c e s s r e la t e d is s u e s … C H A I R P E R S O N : Ye s . MR PETER STEPH EN VOLMINK: T h e y w o u l d l o o k t o th e G r o u p C h i e f S u p p l y C h a in O ff ic e r to s a y … C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : Is t h is c o r r e c t o r n o t c o r r e c t . C H A I R P E R S O N : J a . S o - s o t h e y w o u l d h a v e a t t h e m e e ti n g a v a i l a b le 20 to them such a person? M R P E T E R S T E P H E N V O L M I N K : C o r r e c t C h a ir. C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : W h e t h e r th a t p e r s o n a s p r e s e n t w h e n these matters were discussed … C H A I R P E R S O N : Yo u d o n o t k n o w ? Page 38 of 82 10 MAY 2019 – DAY 92 MR PETER STEPH EN VOLMINK : I cannot say … C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : B u t u s u a lly … C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : T h e G r o u p C h i e f S u p p l y C h a ir O ff ic e r w o u ld b e p r e s e n t … CHAIRPERSON : Would attend, yes. M R P E T E R S T E P H E N V O L M I N K : A t - a t th e s e d is c u s s i o n s . CHAIRPERSON : 10 W o u ld a t te n d , o k a y t h a n k y o u . ADV PHILLIP MOKOENA SC : C a n y o u n o w m o v e o n to d e a l w i th t h e M c K in s e y c o n f in e m e n ts ? MR PETER STEPHEN VOLMINK : C h a ir I – w it h r e g a r d s th e M c K in s e y t r a n s a c t io n s I ’v e a ls o b e e n a s k e d t o c o m m e n t o n t h e g r o u n d s o f th e c o n fi n e m e n t t o M c K in s e y I m a k e t h e p o in t i n p a r a g r a p h 11 8 t h a t o v e r a th r e e y e a r p e r i o d 2 0 1 2 t o 2 0 1 8 t h e r e w e r e a t l e a s t e i g h t c o n tr a c ts t h a t w e r e a w a r d e d t o M c K in s e y c o n s u l ti n g fo r v a r io u s consultancy work. ADV PHILLIP MOKOENA SC : And this a ll eight were on c o n fi n e m e n ts ? 20 MR PETER STEPHEN VOLMINK : A l l e i g h t fo ll o w e d a c o n fi n e d t e n d e r p r o c e s s a n d I – a s u m m a r y is c o n t a i n e d in th e b u n d l e i n t h e A n n e x u r e s b u t o n th e n e x t p a g e C h a ir, o n p a g e 5 5 p a r a g r a p h 1 2 5 1 t o 1 2 5 8 I s u m m a r i s e d th e s e c o n fi n e m e n ts . ADV PHILLIP MOKOENA SC : A n d w h a t is th e v a l u e – t h e t o t a l v a l u e o f t h e s e c o n fi n e m e n ts ? Page 39 of 82 10 MAY 2019 – DAY 92 MR PETER STEPHEN VOLMINK: v a r io u s c o n f i n e m e n ts came to C h a ir t h e c o m b i n e d v a l u e o f t h e s e about 1 . 6 b il li o n and with some a m e n d m e n ts a n d in c r e a s e s t o s c o p e o f w o r k a n d v a lu e t o a b o u t 2 .1 b i ll i o n . ADV PHILLIP MOKOENA SC : A ll th a t d i d n o t g o o u t o n t e n d e r ? MR PETER STEPHEN VOLMINK: I t d i d n o t g o o u t o n o p e n te n d e r, i t w a s a w a r d e d b y o f a c o n f in e d t e n d e r p r o c e s s . ADV PHILLIP MOKOENA SC : Ye s n o w f r o m p a r a g r a p h 1 2 0 y o u e x p r e s s c e r t a i n v i e w s a b o u t t h e j u s t if ic a ti o n s t h a t w e r e c o n t a i n e d i n th e 10 c o n fi n e m e n t , c o u l d y o u p l e a s e t a k e u s th r o u g h th e m ? MR PETER STEPHEN VOLMINK : C h a ir I h ig h li g h t v a r i o u s v ie w s w h ic h I h a v e o f t h e c o n fi n e m e n t s t a r ti n g w i t h t h e e n tr e n c h i n g o f monopolies. ADV PHILLIP MOKOENA SC : Ye s . MR PETER STEPHEN VOLMINK: A n d I s a y th a t b e c a u s e in t h e P P M w h ic h is o u r m a n u a l o f h o w t h e s e t h i n g s a r e to b e d o n e i t , i n fa c t, c a u ti o n s th a t b e c a u s e c o n f i n e m e n t i s a d e p a r t u r e fr o m a n o p e n t e n d e r p r o c e s s i t m u s t b e d e a l t w i th , w i th g r e a t “ c ir c u m s p e c t io n ” a n d i t w a r n s – ju s t l o w e r d o w n i n t h a t p a r a g r a p h I s a y t h a t t h e P P M a ls o w a r n s t h a t 20 t h e m i s u s e o f c o n f i n e m e n t h a s th e p o t e n ti a l t o e n tr e n c h m o n o p o l ie s a n d a s s u c h is a t o d d s w i t h t h e i m p e r a t iv e s w it h t h e n e w g r o w t h p a t h w h ic h w a s o n e o f t h e f la g s h i p g o v e r n m e n t p o lic e s a t t h e t i m e . I m a k e t h e p o in t , C h a ir, i n p a r a g r a p h 1 2 2 t h a t o u r p r o c u r e m e n t p r o c e d u r e s r e q u ir e d o u r d e l e g a t e d a u t h o r i ti e s t o b e v i g i la n t a g a in s t t h e c r e a ti o n o f m o n o p o l i e s a n d a t fa c e v a l u e a n y c o m p a n y w h o h a s r e c e i v e d w o r k b y Page 40 of 82 10 MAY 2019 – DAY 92 w a y o f a c o n fi n e d te n d e r p r o c e s s o v e r a t w o y e a r p e r i o d w i t h e i g h t a w a r d s b e i n g m a d e t o t a l li n g 1 . 6 b il li o n , o n t h e f a c e o f i t , th a t s e e m e d t o c r e a te a m o n o p o lis t ic s i tu a ti o n . W h a t I a ls o h i g h l ig h t e d is t h a t t h e r e w a s s o m e a w a r e n e s s e v e n o n t h e p a r t o f th e G r o u p C h ie f E x e c u tiv e a b o u t th e d a n g e r s o f m o n o p o l i e s s o w h e n c e r t a i n o f th e s e c o n fi n e m e n t s w e r e b r o u g h t fo r w a r d – I d e a l w i t h t h is in p a r a g r a p h 1 2 3 t h e r e is a s u b m is s io n t h a t s e r v e d b e f o r e th e Ac q u i s i ti o n C o u n c i l a t o n e p o i n t a n d it c o n t a in e d t h e f o ll o w i n g p a r a g r a p h , w h ic h y o u w i ll f i n d i n i t a l ic s towards the end of paragraph 123 and it says, 10 “ d u r i n g p o s t - te n d e r n e g o ti a ti o n s t h e G C E r a is e d a c o n c e r n t h a t Tr a n s n e t h a d b e e n a w a r d in g b u s in e s s e x c e s s i v e ly t o M c K i n s e y a n d C o m p a n y a n d a s a r e s u l t th is w i ll e x p o s e Tr a n s n e t t o i n s u r m o u n t a b l e r is k s s h o u l d a n y u n s a v o u r y c ir c u m s t a n c e s o c c u r ” , A n d a t th a t p o i n t a d e c is i o n w a s m a d e t o a w a r d p a r t o f t h e b u s i n e s s t o D e l o i t t e ’s , b u t e v e n t h a t e n d e d u p i n b e i n g c a n c e ll e d a n d t h e a w a r d w a s m a d e to M c K in s e y. S o I t h i n k , i n e s s e n c e , d e s p i t e t h e e a r l ie r c o n c e r n s a n d a w a r e n e s s t h a t w e c o u ld b e d e a li n g w i th a m o n o p o l is t ic s i t u a t io n t h e a w a r d p r o c e e d e d , n e v e r th e le s s o n a l l o f these things. 20 ADV PHILLIP MOKOENA SC: Ye s t a k e u s t h r o u g h th e g r o u n d s o f c o n fi n e m e n t a s y o u d is c u s s i n p a r a g r a p h 1 . 5 . MR PETER STEPH EN VOLMINK : C h a i r i n 1 . – s o r r y in 1 2 5 , I j u s t a g a in q u o t e w h a t th e – o u r i n t e r n a l g r o u n d s a r e a n d I s a y th a t t h e s e c o n fi n e m e n ts r e li e d o n t w o g r o u n d s , u r g e n c y f ir s t ly, I m e n t i o n t h a t a s g r o u n d A ) in p a r a g r a p h 1 2 6 a n d g r o u n d D ) w h i c h is t h a t s e r v i c e s a r e Page 41 of 82 10 MAY 2019 – DAY 92 h i g h ly s p e c i a l is e d a n d l a r g e ly i d e n t ic a l t o w o r k p r e v i o u s l y p e r f o r m e d a n d I j u s t w a n t to e n g a g e f o r a fe w m o m e n ts o n b o t h o f t h o s e g r o u n d s , w h e t h e r t h e y w e r e j u s t if i e d in t h e c o n te x t o f t h e M c K i n s e y tr a n s a c t i o n s . U n d e r u r g e n c y C h a ir, i t i s s t a t e d th a t t h e g r o u n d f o r c o n fi n e m e n t s a r e urgent based on certain revenue related risks. I t w a s s t a t e d th a t E B I T D A R is a t r is k a n d t h e r e ’s a n e e d t o d e li v e r o n M D S , t h e M a r k e t D e m a n d s S t r a t e g y w h ic h w a s a fl a g s h i p p r o g r a m m e o f Tr a n s n e t a t t i m e a n d it s t a t e s th a t i f w e d o n ’ t g e t t h e s e s e r v ic e s w e c o u ld p la c e t h e w h o le M D S a t r is k . 10 N o w a s I t e s ti fi e d y e s te r d a y, t h e g r o u n d s f o r u r g e n c y is t h a t i t m u s t b e a g e n u in e u n f o r e s e e a b l e u r g e n c y a n d I s a y i n my s ta t e m e n t t h a t t h e P P M c o n t e m p l a t e s t h a t t h e s i t u a t io n t h a t g a v e r i s e t o th e u r g e n c y s h o u l d n o t b e a n tic i p a t e d a n d s h o u ld th e r e f o r e b e g e n u i n e l y u n e x p e c t e d a n d I q u e s t io n w h e t h e r t h e r e v e n u e r is k s th a t w e r e h i g h l ig h te d were g e n u in e ly unexpected. A revenue risk is not s o m e t h i n g w h i c h Tr a n s n e t w o u l d r e a li s e n o w, o n e s e e s d e c l in e s in v o l u m e s a n d d e c l i n e s i n r e v e n u e u s u a l ly o v e r a p e r i o d o f ti m e a n d I c e r t a i n l y d o n ’ t t h i n k t h a t, t h a t w a s u n f o r e s e e a b l e . On the second g r o u n d w h ic h r e la t e s t o t h e f a c t t h a t t h e s e r v i c e s fr o m Mc k i n s e y a r e 20 h i g h ly s p e c i a lis e d a n d l a r g e ly i d e n t ic a l to w o r k w h ic h t h e y p r e v i o u s ly d i d . I s a y th e f o l l o w in g i n p a r a g r a p h 1 3 0 o f m y s t a te m e n t C h a ir, I s a y t h a t , “ a ll t h e c o n fi n e m e n t m e m o s j u s t i fi e d t h e c o n f i n e m e n ts to Mc k i n s e y o n t h e g r o u n d s th a t i t w o u l d r e s u l t i n w a s t e d t i m e a n d m o n e y. I t w a s s t a te d t h a t a n e w s e r v i c e p r o v i d e r w o u l d h a v e t o a c q u a i n t i ts e l f w i t h Tr a n s n e t’s p r i c i n g s tr a te g ie s , c a p i ta l p r o g r a m m e , o v e r a ll M D S , w h e r e a s Page 42 of 82 10 MAY 2019 – DAY 92 M c K in s e y a lr e a d y h a d t h a t k n o w l e d g e ” a n d g r o u n d D ) d o e s m a k e a l lo w a n c e f o r a s i tu a ti o n w h e r e I c a n c o n fi n e t o s o m e o n e o n th e g r o u n d s th a t i t ’s a h i g h ly s p e c i a lis e d s e r v i c e a n d I j u s t w a n t a b i t m o r e fr o m th a t p e r s o n b a s e d o n w h a t t h e y h a v e d o n e b e f o r e . We, in Tr a n s n e t w e r e fe r to i t s o m e t i m e s a s t h e s c h o o l f e e s , t h e s c h o o l f e e s c la u s e . W e s a y w e h a v e p a id t h e s c h o o l f e e s o f t h i s c o n s u l ta n t h e h a s c o m e to l e a r n a l l o f o u r s h o r tc o m i n g s , o u r d i ffic u lt i e s , o u r s y s t e m s a n d w e w a n t h i m t o d o a n e x tr a b i t o f w o r k b u t i f w e h a v e t o g o o u t o n t e n d e r, I m u s t p a y t h e s c h o o l f e e s n o w o f a n o t h e r p e r s o n w h o s e h a v i n g 10 t o r e - l e a r n a l l o f th e s e d i ff ic u l ti e s . S o i n a n a p p r o p r i a t e c a s e , I th in k t h e r e is ju s t i fic a ti o n f o r s u c h a w a r d s , in f a c t I th i n k th e fi r s t f e w M c K i n s e y tr a n s a c ti o n s – t h e f ir s t t w o o r t h r e e , I w a s – I s u p p o r te d th a t a t t h e ti m e , I th o u g h t t h e r e w a s a ju s t i fic a ti o n f o r i t b a s e d o n t h i s s c h o o l f e e s c l a u s e b u t w h a t w e h a v e h e r e C h a ir is t h a t i t is n o w s a i d t h a t M c Ki n s e y h a s a ll o f – t h e y ’ v e g o t – t h e y ’r e p r o p r i e ta r y ir o n o r d e m a n d a n d s u p p ly m o d e l a n d th e y ’v e g o t proven t o o l k i ts for n e g o t ia t io n and the lik e and the p o i n t . . .( in t e r v e n ti o n ) . CHAIRPERSON : 20 I g u e s s t h a t s i n c e w e ’r e lo o k in g – w e ’r e t a lk i n g a b o u t q u i te a h ig h n u m b e r o f c o n tr a c ts t h a t w e r e a w a r d e d to M c K i n s e y, I th i n k your statement says about eight. MR PETER STEPH EN VOLMINK : Correct. C H A I R P E R S O N : I g u e s s t h a t y o u m i g h t n o t h a v e j u s t p a id , y o u k n o w, t h e s c h o o l f e e s , y o u m u s t h a v e ta k e n t h e m t o u n iv e r s i ty a s w e l l s o it h a d to t a k e l o n g . Page 43 of 82 10 MAY 2019 – DAY 92 MR PETER STEPHEN VOLMINK: W e c o u ld h a v e p a id f o r m a n y u n iv e r s i ti e s M r C h a ir. ADV PHILLIP MOKOENA SC : O n t h a t u n iv e r s i ty n o te , I s e e i t ’s quarter past eleven . CHAIRPERSON : O k a y w e ’ ll t a k e th e t e a a d jo u r n m e n t a n d r e s u m e a t h a l f p a s t e l e v e n , w e ’r e a d jo u r n e d . I N Q U I RY A D J O U R N S I N Q U I RY R E S U M E S CHAIRPERSON : Okay let us proceed. 10 A D V P H I L L I P M O K O E N A S C : T h a n k y o u C h a ir. CHAIRPERSON : Thank you. ADV PHILLIP MOKOENA SC: Mr Vo l m i n k ju s t b e f o r e t h e t e a a d j o u r n m e n t y o u w e r e s t il l t a k in g th e C h a i r i n r e l a ti o n t o p a r a g r a p h 1 3 1 o f y o u r s t a te m e n t p l e a s e c o n ti n u e a n d s u m m a r i s e w h a t y o u a r e s a y i n g there? MR PETER STEPHEN VOLMINK: That is correct. Th a n k y o u C h a ir. T h e p o in t t h a t I w a s a d d r e s s i n g b e fo r e t e a r e la t e s t o t h e s e c o n d g r o u n d f o r c o n fi n e m e n t w h e r e i t w a s s a i d t h a t t h e s e r v ic e s a r e h i g h ly s p e c i a lis e d a n d o n ly o b t a in a b l e fr o m G ij i m a . W h a t I s a y i n p a r a g r a p h 20 131 is where the PPM… C H A I R P E R S O N : D id y o u – d i d y o u s a y f r o m G ij i m a ? A D V P H I L L I P M O K O E N A S C : N o t G i ji m a . MR PETER STEPH EN VOLMINK : Sorry you asked? C H A I R P E R S O N : W e l o n g p a s t G ij i m a ? A D V P H I L L I P M O K O E N A S C : Yo u m e n t io n e d G ij i m a . Page 44 of 82 10 MAY 2019 – DAY 92 MR PETER STEPH EN VOLMINK : Oh. C H A I R P E R S O N : W e l o n g p a s t G ij i m a . MR PETER STEPHEN VOLMINK: S o r r y m y – m y a p o lo g ie s C h a ir. What I – what I… C H A I R P E R S O N : C h i n a S o u t h a n d M u ts u i , M u ts u i. M R P E T E R S T E P H E N V O L M I N K : Ye s I t h i n k w e h a d a l s o p a s t … CHAIRPERSON : That is where we are. M R P E T E R S T E P H E N V O L M I N K : P a s t th e r e . C H A I R P E R S O N : O h w e a r e p a s t t h a t a s w e l l. 10 M R P E T E R S T E P H E N V O L M I N K : I t h i n k w e a r e n o w w i t h Mc K i n s e y. C H A I R P E R S O N : O h ja . M R P E T E R S T E P H E N V O L M I N K : I t h i n k I m e a n t t o s a y M c Ki n s e y. C H A I R P E R S O N : O h w e a r e a t M c K i n s e y j a . O k a y. MR PETER STEPHEN VOLMINK: T h e p o in t th a t I w a n te d to m a k e is t h a t w h e r e t h i s g r o u n d is d e a l t w i t h i n t h e P P M i t s a y s t h a t w h e n th is g r o u n d D is r e li e d u p o n p r o p e r c o n s id e r a ti o n m u s t b e g iv e n t o t h e p u b lic i n te r e s t a s w e ll a s Tr a n s n e t’s i n t e r e s t . I n o th e r w o r d s i t c o n v e y s t h e n o ti o n th a t it is n o t s u ff ic i e n t fo r Tr a n s n e t o ff ic ia ls t o c o n s id e r t h e f a c t th a t t h e s e r v ic e s a r e h i g h l y s p e c i a l is e d a n d c a n o n ly b e o b t a in e d 20 fr o m M c K i n s e y. I m a k e t h e p o in t t h a t t h e r e is a n o v e r w h e l m in g p u b li c in t e r e s t in open, f a ir, c o m p e t i tiv e tendering processes and th e a v o i d a n c e o f m o n o p o lis t ic s i tu a ti o n s . A n d h a d t h a t r e q u i r e m e n t o f th e p u b lic in t e r e s t b e i n g t a k e n i n t o c o n s i d e r a t io n a s w e l l w h e n th a t g r o u n d D w a s c o n s i d e r e d I th in k it w o u ld h a v e p o in t e d u s a w a y fr o m r e p e t it iv e c o n fi n e m e n ts t o M c K in s e y w h e n t h e p u b lic in t e r e s t i n f a c t r e q u ir e d Page 45 of 82 10 MAY 2019 – DAY 92 s o m e t h i n g e ls e . CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : A n d t h e r e c a n in m y v ie w C h a ir b e n o d is t in c ti o n b e t w e e n t h e p u b lic in t e r e s t a n d Tr a n s n e t ’s i n te r e s t a s a p u b lic b o d y. C h a i r I th e n d e a l w i t h a n o t h e r c o n c e r n w h ic h I p i c k e d u p a n d t h a t is t h a t in a n u m b e r o f i n s ta n c e s p a y m e n ts w e r e m a d e to M c K in s e y e v e n b e f o r e t h e te n d e r s w e r e a w a r d e d . S o t h e t e n d e r is s ti ll u n d e r w a y a n d p a y m e n ts a r e b e i n g m a d e . A n d I d e a l w i th t h a t in paragraph 132. 10 ADV PHILLIP MOKOENA SC : Ye s . M a y I t h e n t a k e y o u to E x h i b i t BB2.1D for David? MR PETER STEPHEN VOLMINK: Ye s . A n d i f y o u m a y p le a s e g o t o page 1342. M R P E T E R S T E P H E N V O L M I N K : Ye s . ADV PHILLIP MOKOENA SC : In o r d e r t o s u b s t a n ti a te w h a t y o u a r e s a y in g i n p a r a g r a p h 1 3 2 y o u th e n p la c e r e li a n c e o n a n u m b e r o f e m a i ls s t a r ti n g f r o m p a g e 1 3 4 2 o n w a r d s . C a n y o u p le a s e t a k e u s t h r o u g h th e e m a i ls ? M R P E T E R S T E P H E N V O L M I N K : G l a d ly C h a ir. 20 A D V P H I L L I P M O K O E N A S C : Yo u c a n f o l lo w t h e c h r o n o l o g y t h a t s u it s y o u k n o w th e v e r s i o n . MR PETER STEPHEN VOLMINK: C h a ir p e r h a p s j u s t f o r p u r p o s e s o f c h r o n o lo g y i t m a y b e b e t te r t o s t a r t w i t h t h e f ir s t e m a i l w h ic h y o u w ill fi n d f u r t h e r d o w n in t h e a n n e x u r e . C H A I R P E R S O N : I a m s o r r y. I a m o n B B 2 .1 D , is t h a t t h e w r o n g le v e r Page 46 of 82 10 MAY 2019 – DAY 92 a r c h fi le ? A D V P H I L L I P M O K O E N A S C : T h a t is t h e r ig h t o n e . CHAIRPERSON : That is the right one? A D V P H I L L I P M O K O E N A S C : Ye s . O n p a g e CHAIRPERSON : Page 1 ADV PHILLIP MOKOENA SC : 1342. CHAIRPERSON : Oh. ADV PHILLIP MOKOENA SC : 1342. C H A I R P E R S O N : I t h i n k I w a s o n 1 2 4 2 . Ye s . 10 M R P E T E R S T E P H E N V O L M I N K : C h a ir i f w e c a n s t a r t o n p a g e 1 3 4 4 . C H A I R P E R S O N : Ye s . MR PETER STEPHEN VOLMINK : I t is a n e m a il w r i t te n b y t h e th e n p r o c u r e m e n t m a n a g e r C i n d y F e li x t o M r E d w a r d T h o m a s C H A I R P E R S O N : T h e o n e a t t h e b o tt o m ? M R P E T E R S T E P H E N V O L M I N K : T h a t is c o r r e c t C h a ir. CHAIRPERSON : Ja. MR PETER STEPH EN VOL MINK : Right at the bottom. And it is dated t h e 11 J u ly 2 0 1 4 . A n d i t s a y s : “ D e a r E d w a r d , I r e fe r to y o u r t e x t m e s s a g e r e c e iv e d 20 t h is m o r n in g w h e r e y o u h a v e i n s tr u c t e d u s t o c r e a t e purchase orders for p a y m e n ts to M c K in s e y w h e r e n o c o n tr a c ts e x i s t . be made to As the P to P t h a t i s P r o c u r e t o P a y b u s in e s s p r o c e s s o w n e r f o r T C C s h e is n o w d e s c r ib in g h e r s e l f p l e a s e b e a d v is e d t h a t I r e q u ir e w r i t t e n p e r m is s i o n v i a e m a i l f r o m y o u Page 47 of 82 10 MAY 2019 – DAY 92 a s t h e a c ti n g G r o u p C h i e f S u p p ly C h a i n O ff ic e r t o r e q u e s t m y t e a m t o c r e a t e p u r c h a s e o r d e r s a s th is i s a d e v ia t io n i n t h e P t o P p r o c e s s a n d e ff e c t iv e ly o u r s u p p ly c h a i n p o li c y a n d p r o c u r e m e n t p r o c e d u r e s w h ic h is b a s e d o n t h e r e g u l a to r y s ta t u t e s w e a r e b o u n d b y a s a s t a te o w n e d c o m p a n y. It i s m y u n d e r s t a n d in g t h a t t h e p a y m e n t r e q u e s ts is fr o m B u s i n e s s a n d i t is b e in g a p p r o v e d a s d u ly p a y a b le b y t h e G r o u p C h i e f Fi n a n c i a l O ff i c e r A n o j S i n g h a s t h e 10 r e s p e c ti v e d e le g a te d a u t h o r i ty fo r Tr a n s n e t and c u s t o d i a n o f t h e s e tr a n s a c t io n s . ” S h e c o n t in u e s : “ We a s s u m e t h a t th e a p p l ic a b l e r is k s i n m a k i n g s u c h p a y m e n t s h a v e b e e n c o n s id e r e d b e f o r e r e l e a s e o f t h e s e r e s p e c ti v e r e q u is i ti o n s .” A n d s h e t h e n l is ts t h e s e v a r i o u s tr a n s a c t io n s w h e r e p a y m e n t i s s u p p o s e d to b e m a d e . S h e s a y s : “ T h e te n d e r s a c c o r d i n g t o y o u a ffe c te d i n c l u d e th e f o ll o w i n g :” 20 She refers to: “ T h e c o a l b r e a k t h r o u g h o f 2 m e t r ic t o n n e s ” T h a t is o n e o f t h e c o n fi n e m e n t s to M c K i n s e y. A n d s h e s a y s – s h e i s n o w g e t t in g a s t a t u s u p d a t e – s h e s a y s : “No evaluation is in progress. Business is not r e s p o n d i n g a n d t h e b u s in e s s o w n e r s w a n t e d – n o t e d Page 48 of 82 10 MAY 2019 – DAY 92 t h a t b u s i n e s s d o e s n o t a g r e e t o t h i s r e q u e s t .” I n e s s e n c e s h e is s a y in g t h e r e is n o e v a l u a t io n h a s h a p p e n e d y e t b u t w e m u s t p a y th e s e r v ic e p r o v i d e r. S h e m e n ti o n s t h e n e x t o n e r e la t in g t o t h e r e n e g o t ia t io n o f t h e K u m b a ir o n o r e c o n tr a c t a l s o o n e o f t h e c o n fi n e m e n ts . S h e a g a i n s a y s : “ N o e v a l u a t io n in p r o g r e s s B u s i n e s s n o t r e s p o n d i n g a n d B u s i n e s s o w n e r w a n te d to … ” I t h in k s h e p r e t t y m u c h t h e s a m e s t a tu s . Regarding the third c o n fi n e m e n t r e g a r d in g t h e m a n g a n e s e e x e c u ti o n i n i t ia t iv e s h e a g a in 10 says: “ I t is c u r r e n tl y i n e v a lu a ti o n s t a g e .” T h e fo u r t h c o n fi n e m e n t . N M P P D R is k in g a n d A c c e l e r a ti o n c u r r e n tl y in e v a l u a t i o n s ta g e a n d C a p it a l O p t i m is a ti o n w h ic h i s th e fi f t h o n e s h e says: “ I t is o n l y is s u e d o n 1 0 J u ly a n d w e o n l y r e c e iv e d s u p p ly c h a i n m a n a g e m e n t s i g n o ff th is w e e k .” A n d s h e c o n c lu d e s b y s a y in g : “ Ki n d ly be a d v is e d that we do n ot and she underlines do not recommend that this be paid .” 20 A n d s h e p u t s i t i n b o ld . “ U n t il s u c h t i m e a s t h e s e c o n tr a c ts a r e c o n c l u d e d a s t h e s c a le o f t h e r is k is s ig n i f ic a n t i n r e l a ti o n t o t h e payments being made to s e r v ic e p r o v id e r s w h o k n o w i n g ly t o o k o n t h e r is k o f d o i n g w o r k w i t h o u t a p r o p e r t e n d e r p r o c e s s b e in g c o m p le t e d .” Page 49 of 82 10 MAY 2019 – DAY 92 T h e r e a r e o t h e r p a r a g r a p h s w h ic h fo ll o w b u t I t h i n k th a t i s … A D V P H I L L I P M O K O E N A S C : T h a t c a p t u r e s th e e s s e n c e . MR PETER STEPHEN VOLMINK: Th a t c a p t u r e s th e e s s e n c e o f w h a t s h e w a s s a y i n g w h ic h i n m y v i e w c a p tu r e s th e i n te r n a l c o n t r o ls a b s o l u t e ly c o r r e c tl y. ADV PHILLIP MOKOENA SC : And then what happened after she have n o w d is p a tc h e d th a t e m a i l? MR PETER STEPHEN VOLMINK: W e ll t h e n C h a ir w e h a v e a n o t h e r e m a i l fr o m M r E d w a r d T h o m a s n o w in r e s p o n s e to th e e m a il fr o m C in d y 10 F e l ix a n d th e c o n t e n ts y o u w ill f in d o n p a g e 1 3 4 4 a n d h e s a y s : “ D e a r C in d y f ir s tl y a c o n tr a c t u a l o b li g a t i o n h a s b e e n c r e a te d o n c e t h e c o n fi n e m e n t p r o c e s s w a s a p p r o v e d . A l e t t e r w a s is s u e d to M c K i n s e y w h e r e b y Tr a n s n e t r e q u e s t e d t h e m t o c o m m e n c e w o r k w h il e t h e R F P w a s is s u e d a n d t h e y w e r e t o r e s p o n d t o t h e R F P in d i c a t in g t h a t s h o u l d Tr a n s n e t n o t c o n c l u d e t h e p r o c u r e m e n t e v e n t a f te r th e R F P w a s c o m p l e te d Tr a n s n e t c o m m i ts t o p a y f o r w o r k d e l iv e r e d u n t il t h a t point. 20 Thus a c o n tr a c t is in place thus no c o n d o n a t i o n is r e q u ir e d a t a ll f o r a n y p a y m e n t th a t is t o b e m a d e t h u s t h e r e a r e n o r is k s r e g a r d i n g t h i s p a y m e n t t h a t c a n b e v a l id ly m a d e . Th e f a c t t h a t Tr a n s n e t w il l b e n e g o t ia t in g p r ic e f u r t h e r t h r o u g h th e R F P p r o c e s s w i ll b e ta k e n in t o a c c o u n t in f u t u r e p a y m e n t s t o b e m a d e .” Page 50 of 82 10 MAY 2019 – DAY 92 A n d in e s s e n c e h e i s s a y i n g th a t a s fa r a s h e is c o n c e r n e d a c o n tr a c t e x i s ts a n d p a y m e n ts c a n b e m a d e a g a i n s t t h a t c o n t r a c t . A D V P H I L L I P M O K O E N A S C : D e s p i t e t h a t a n a ly s is t h a t r e a ll y s h o w e d t h a t t h e p r o c e s s w a s i n c o h e r e n t a t t h a t s ta g e a n d t h e r e w a s n o c o n tr a c ts i n p l a c e a t th a t s t a g e ? M R P E T E R S T E P H E N V O L M I N K : T h a t is c o r r e c t C h a ir . W i t h r e s p e c t I t h i n k t h e c o n t e n ts o f th is s e c o n d e m a i l – th e c o n t e n ts a r e p a te n tl y in c o r r e c t . A c o n fi n e m e n t w h e n o n e g e t s a p p r o v a l t o c o n fi n e C H A I R P E R S O N : I t d o e s n o t c r e a t e a c o n tr a c t ? 10 M R P E T E R S T E P H E N V O L M I N K : It d o e s n o t c r e a t e a c o n tr a c t a t a l l. CHAIRPERSON : And everybody should know that. MR PETER STEPH EN VOLMINK : I would imagine. CHAIRPERSON : Hm. MR PETER STEPHEN VOLMINK: And all it does is to say you have p e r m is s io n n o t to is s u e t h is R F P C H A I R P E R S O N : F o r o p e n te n d e r s . M R P E T E R S T E P H E N V O L M I N K : Fo r o p e n t e n d e r CHAIRPERSON : Hm. MR PETER STEPHEN VOLMINK : 20 B u t y o u c a n n o w is s u e t h e R F P to t h is o n e o r t w o o r th r e e o r h o w e v e r m a n y y o u h a v e c o n f in e d t o a n d t h e n w h a t fo ll o w s CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : I s a p r o c e s s w h i c h m ir r o r s th e o p e n tender process. C H A I R P E R S O N : Ye s b u t c o n fi n e d t o t h o s e Page 51 of 82 10 MAY 2019 – DAY 92 MR PETER STEPHEN VOLMINK: B u t c o n fi n e d t o t h o s e t w o o r o n e o r h o w e v e r m a n y. CHAIRPERSON : Hm. MR PETER STEPH EN VOLMINK : A n d t h e c o n tr a c t g e ts c o n c lu d e d a t the end of that process. CHAIRPERSON: Hm. MR PETER STEPH EN VOLMINK : I t i s u n h e a r d o f th a t o n e c a n c o n c l u d e a c o n tr a c t f ir s t a n d th e n C H A I R P E R S O N : E v a l u a te . 10 M R P E T E R S T E P H E N V O L M I N K : Ev a lu a t e l a t e r. C H A I R P E R S O N : T h e s u p p li e r l a t e r. MR PETER STEPH EN VOLMINK : I have never heard of suc h. CHAIRPERSON : I m e a n w h a t – w h a t p o i n t w o u ld – w o u l d i t s e r v e to e v a l u a t e w h e t h e r t h e s u p p l ie r is th e r ig h t k in d o f s u p p li e r if y o u h a v e a lr e a d y c o n c l u d e d a c o n tr a c t ? M R P E T E R S T E P H E N V O L M I N K : W e ll p r e c i s e ly C h a i r b e c a u s e e v e n i f it is a c o n fi n e d – a c o n fi n e d t e n d e r CHAIRPERSON : Hm. MR PETER STEPHEN VOLMINK : 20 It must go through a rigorous evaluation process. CHAIRPERSON : Hm. MR PET ER STEPHEN VOL MINK : If that bidder does not make any of t h r e s h o ld s l e t u s s a y f o r f u n c ti o n a li t y o r l o c a l c o n te n t th a t b id d e r i s e x c lu d e d , t h e b i d d e r f a l ls a w a y. B u t i f I a lr e a d y h a v e c o n tr a c t in p la c e I r e a ll y p u t th e c a r t b e f o r e th e h o r s e a n d I th in k th a t i s e x a c t ly w h a t Page 52 of 82 10 MAY 2019 – DAY 92 happened in this instance. A D V P H I L L I P M O K O E N A S C : A n e m a il t h a t y o u w a n t u s to – th a t y o u w a n t to c o m p l e t e w i t h ? M R P E T E R S T E P H E N V O L M I N K : I t – I th in k t h a t is t h e n j u s t a f o l l o w u p e m a il w h e r e t h e s t a ff i s t o ld t h a t l o o k E d d i e h a s n o w in f o r m e d u s t h a t t h e r e is n o b r e a c h o r d e v i a ti o n a n d p a y m e n t m u s t n o w b e m a d e . I t h i n k th a t th e s t a ff f e l t t h a t t h e y n o w h a d n o a l te r n a tiv e . C H A I R P E R S O N : J a t h e y h a d m a d e t h e ir p o i n ts a n d . MR PETER STEPHEN VOLMINK : 10 Th e y h a v e m a d e t h e ir p o i n t , th e y h a v e s t a t e d t h e ir p o s i ti o n . CHAIRPERSON : And – hm. MR PETER STEPH EN VOLMINK : But someone higher up in the food c h a i n h a d in s tr u c te d th a t t h e p a y m e n t m u s t b e m a d e a n d I t h i n k th e i m p r e s s io n th a t o n e g e ts is u n d e r p r o t e s t t h e p a y m e n ts th e n f l o w. A D V P H I L L I P M O K O E N A S C : C a n y o u t a k e u s fr o m p a g e 6 0 p a r a g r a p h 133 onwards? C H A I R P E R S O N : T h a t i s b a c k t o t h e s t a t e m e n t? A D V P H I L L I P M O K O E N A S C : Ye s b a c k to t h e s t a te m e n t M r C h a ir. MR PETER STEPH EN VOLMINK: 20 Ye s . C h a ir I t h e n j u s t I m a k e t h e p o i n t th e r e t h a t t h e r e s h o u l d h a v e b e e n n o c o n f u s i o n a b o u t t h i s t o b e g in w i t h b e c a u s e in o u r p r o c u r e m e n t r u l e s i n th e P P M o f th e 2 0 1 3 v e r s i o n w h ic h a p p li e d a t t h e ti m e th e r e w a s a p r o v is io n w h i c h I q u o t e on – in paragraph 134 where it says: “No employee shall a c c e p ta n c e o f b id s . a n ti c i p a t e th e approval of T h e r e f o r e n o e m p lo y e e m a y Page 53 of 82 10 MAY 2019 – DAY 92 e n t e r i n t o c o n tr a c ts v e r b a l ly o r i n w r i ti n g o r p l a c e any orders before the prescribed a d j u d ic a ti o n p r o c e s s h a s b e e n p e r fo r m e d . A n a u t h o r i t y h a s b e e n d u ly g r a n t e d b y a m a n a g e r w i t h a p p r o p r ia t e D O A . ” S o th a t r u l e w a s a lw a y s t h e r e a n d t h e r e is a f u r t h e r p r o v is io n th a t s a y s : “ Ev e n i f y o u h a v e a c o n fi n e d t e n d e r i t s a y s t h o s e tenders w il l “close at th e relevant a c q u is i ti o n c o u n c i l” . W h a t t h a t s i m p ly m e a n s a s I h a v e e x p la i n e d b e f o r e is a te n d e r g e ts 10 is s u e d . T h e r e m u s t s t il l b e a c l o s i n g d a t e . Th e r e m u s t – a n d a ll t h e n o r m a l p r o c e s s e s o f a d j u d i c a t io n th e n f o ll o w s . C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : A n d t h a t is w h a t I d e a l w i th o n – i n paragraph 134 yes. ADV PHILLIP MOKOENA SC : And 135? MR PETER ST EPH EN VOLMINK : In paragraph 135 I say that on the 9 A p r il 2 0 1 4 w e l l b e f o r e th e s e R F P ’s w e r e is s u e d t h e G r o u p C h i e f Fi n a n c i a l O ff ic e r w h o w a s M r A n o j S in g h a t t h e ti m e w r o t e to b o t h M c K in s e y a n d R e g i m e n t s a n d r e q u e s t e d t h e m t o “ m o b i lis e a M c K in s e y 20 le d c o n s o r t iu m ” h e s a y s to h a v e in i ti a l d i s c u s s i o n s w i th o u r t e a s . B u t w e k n o w n o w fr o m w h a t w e h a v e s e e n i t w a s n o t ju s t d is c u s s i o n s . T h e y w e r e m o b i li s e d to d o a c t u a l w o r k a n d – a n d I t h in k t h a t f o r m e is a fundamental breach of process. A s a r e s u l t o f th is C h a i r w e a c t u a ll y f e l t t h e n e e d t o is s u e a f u r th e r d ir e c t iv e t o B u s i n e s s . A n d I d e a l w i t h t h a t i n p a r a g r a p h 1 3 6 th e d ir e c ti v e i ts e l f I t h i n k is a t t a c h e d a s P V 4 6 Page 54 of 82 10 MAY 2019 – DAY 92 w h ic h … A D V P H I L L I P M O K O E N A S C : C h a ir i t is o n p a g e 1 3 5 3 . MR PETER STEPHEN VOLMINK: And I do not propose to read the e n t ir e d ir e c ti v e C h a ir s a v e t o s a y th a t t h is d i r e c t iv e e x p l a i n e d t o B u s i n e s s th a t a c o n fi n e m e n t – a c o n f i n e d t e n d e r p r o c e s s i s s t il l a t e n d e r p r o c e s s a n d th a t n o o n e s h o u l d j u m p t h e g u n . That everyone s h o u l d w a i t u n ti l t h e t e n d e r p r o c e s s i s c o m p le t e d b e i t a c o n f i n e d tender process or an open tender process. T h e r e s h o u ld b e n o e n g a g e m e n ts w i t h a b i d d e r u n t il th a t p r o c e s s h a s b e e n c o m p le t e d a n d 10 o n ly a ft e r t h e r e le v a n t d e le g a t e d b o d y h a s m a d e t h e a w a r d o n l y t h e n c a n o n e e n g a g e a n d is s u e le t t e r s o f i n te n t a n d c o n t r a c t s c a n b e c o n c l u d e d e tc e te r a . A n d t h a t i s i n e s s e n c e th e c o n te n ts o f t h e d ir e c t iv e t h a t w a s i s s u e d . CHAIRPERSON : Wa s t h a t d ir e c ti v e p r o m p t e d b y k n o w le d g e o f t h e r e s p o n s e t o Ms C i n d y F e l ix . M R P E T E R S T E P H E N V O L M I N K : J a Fe lix . CHAIRPERSON : What was her surname? M R P E T E R S T E P H E N V O L M I N K : Fe li x . C H A I R P E R S O N : F e lix , F e l ix . 20 M R P E T E R S T E P H E N V O L M I N K : Ye s . C H A I R P E R S O N : To M s F e l ix e m a i l . M R P E T E R S T E P H E N V O L M I N K : Ye s i t w a s C h a ir. CHAIRPERSON : It was prompted by that? M R P E T E R S T E P H E N V O L M I N K : Ye s i t w a s s h e r a i s e d n o t o n l y C in d y b u t o t h e r p e o p l e in t h e s u p p l y c h a i n c o m m u n i ty c a m e t o G o v e r n a n c e Page 55 of 82 10 MAY 2019 – DAY 92 and said you must address this issue because we are being asked to m a k e p a y m e n ts w h il e t e n d e r p r o c e s s e s a r e s t il l u n d e r w a y. A n d t h a t i s w h e n w e i s s u e d t h is t o t h e e n tir e o r g a n i s a t io n . C H A I R P E R S O N : A n d d o y o u k n o w w h e th e r Mr A n o j S i n g h w o u l d h a v e s e e n t h e d ir e c t iv e q u i t e s o o n a f te r i t w a s c ir c u l a t e d o r is s u e d o r i s t h a t something you do not know? MR PETER STEPHEN VOLMINK: C h a ir it is a d d r e s s e d fi r s tly t o a l l E X C O a n d e x t e n d e d E X C O m e m b e r s o f w h ic h Mr A n o j S i n g h w a s a m e m b e r. 10 C H A I R P E R S O N : Wa s a m e m b e r. Ye s s o … MR PETER STEPH EN VOLMINK : But he would have. C H A I R P E R S O N : Ye s s o – s o h e – i t w a s t o b e e x p e c t e d th a t h e w o u ld see it? M R P E T E R S T E P H E N V O L M I N K : T h a t h e w o u ld h a v e s e e n i t . C H A I R P E R S O N : J a . O k a y. B u t a f t e r th e r e w a s n o c h a n g e o f a t t i tu d e in th e – o n h is p a r t a f t e r t h e is s u i n g o f t h is d ir e c tiv e i n r e la t io n t o p a y m e n t s t o t h is e n t i ty ? M R P E T E R S T E P H E N V O L M I N K : I a m n o t a w a r e t h a t th e r e h a s b e e n a n y. 20 C H A I R P E R S O N : Yo u a r e n o t a w a r e . MR PETER STEPH EN VOLMINK : Change. C H A I R P E R S O N : O k a y, o k a y. A l r i g h t . ADV PHILLIP MOKOENA SC : Yo u c o n c l u d e o n t h a t t o p i c M r Vo l m i n k on page 137. M R P E T E R S T E P H E N V O L M I N K : In p a r a g r a p h 1 3 7 . Page 56 of 82 10 MAY 2019 – DAY 92 ADV PHILLIP MOKOENA SC : Paragraph 137 yes. MR PETER STEPHEN VOLMINK : I s i m p l y s a y C h a ir t h a t i t w a s m o s t ir r e g u l a r to e n g a g e M c K in s e y t o c o m m e n c e w o r k b e f o r e t h e t e n d e r p r o c e s s a n d I s a y t h a t i t c r e a te s t h e i m p r e s s io n t h a t t h e c o n fi n e m e n t s t o M c K in s e y a m o u n t e d t o li t tl e m o r e th a n a n E x p o s t f a c to e x e r c is e t o ju s t i fy t h e a w a r d o f B u s i n e s s t h a t h a d a lr e a d y o c c u r r e d . Why go t h r o u g h th e p r e te n c e o f a c o n f in e d t e n d e r p r o c e s s w h e n i n fa c t t h e t e a m s a r e a lr e a d y o n t h e g r o u n d d o i n g t h e w o r k ? A n d i t j u s t c r e a te s t h e i m p r e s s i o n in my m i n d t h a t t h is w a s E x p o s t f a c to j u s t i fic a ti o n f o r 10 w h a t h a d a lr e a d y h a p p e n e d . A D V P H I L L I P M O K O E N A S C : A n d fr o m p a r a g r a p h 1 3 8 y o u a d d r e s s i n g a n e w t o p i c . Ta k e u s t h r o u g h i t? MR PETER STEPH EN VOLMINK : T h is i s n o w s t il l o n th e M c K i n s e y c o n tr a c ts . I a m r a i s i n g a f u r th e r c o n c e r n t h a t I h a v e w i t h t h e c o n tr a c t s C h a ir. A n d i t r e la t e s t o w h a t w e r e f e r t o a s p a r c e l li n g o f tr a n s a c t i o n s . A D V P H I L L I P M O K O E N A S C : W h a t d o e s t h a t – w h a t d o e s th a t m e a n ? M R P E T E R S T E P H E N V O L M I N K : W e ll i n e s s e n c e w h a t it m e a n s is t h a t y o u c a n n o t b r e a k u p a tr a n s a c ti o n i n t o s m a ll e r v a lu e c o m p o n e n ts t o b r i n g i t t o a l o w e r l e v e l o f d e l e g a ti o n w h e n i n f a c t i f y o u t a k e th e 20 c u m u la t iv e v a l u e i t s h o u ld g o to a h i g h e r l e v e l o f d e le g a t i o n . I t i s e v e n d e a lt w i th I t h i n k i n o u r c o d e o f e t h i c s w h e r e it is s ta t e d t h a t i t is c o n s i d e r e d a n e t h i c a l b r e a c h t o u n b u n d l e a tr a n s a c ti o n in t o s m a ll e r c o m p o n e n ts i n o r d e r t o a v o id h i g h e r le v e ls o f a u t h o r i ty a n d s c r u t in y. N o w I r a is e th a t in t h e c o n t e x t o f t h e M c K i n s e y c o n tr a c ts b e c a u s e I s a y t h a t o v e r a p e r io d o f f o u r d a y s a n d th a t i s fr o m t h e 3 1 M a r c h 2 0 1 4 t o Page 57 of 82 10 MAY 2019 – DAY 92 t h e 3 A p r il 2 0 1 4 w h e n I r e v i e w e d t h e s e c o n fi n e m e n ts I n o ti c e d t h a t t h e f o r m e r G C E Mr Br i a n M o le f e a p p r o v e d f o u r c o n f in e m e n ts w i th a c o m b in e d v a l u e o f R 6 1 9 m i ll i o n . N o w M r M o l e f e h a d d e l e g a ti o n to a p p r o v e c o n fi n e m e n ts b u t o n ly u p t o R 2 5 0 m i ll io n . E a c h o n e o f th e s e f o u r f a ll s u n d e r 2 5 0 . S o t h e f ir s t o n e is 1 3 0 m i ll i o n . T h e s e c o n d o n e w a s 2 3 9 , t h e th ir d o n e w a s 1 5 0 mi ll i o n a n d t h e f o u r th c o n f i n e m e n t w a s 1 0 0 m il li o n . S o v i e w e d o n th e ir o w n t h e y w o u ld h a v e f e l l w i t h i n h is d e l e g a t e d a u t h o r i ty. B u t v i e w e d c u m u l a tiv e l y i t s h o u l d h a v e b e e n r e fe r r e d t o a h i g h e r l e v e l w h i c h is th e b o a r d a c q u i s i ti o n a n d d is p o s a l 10 committee. C H A I R P E R S O N : Wa s i t t h e s a m e tr a n s a c ti o n ? M R P E T E R S T E P H E N V O L M I N K : C h a ir ? C H A I R P E R S O N : Wa s i t th e s a m e t r a n s a c t io n t h e s e f o u r c o n fi n e m e n ts ? D i d th e y r e l a t e t o th e s a m e jo b ? M R P E T E R S T E P H E N V O L M I N K : Th e y r e la t e to t h e a w a r d o f d i ff e r e n t a s p e c ts o f w h a t i s b r o a d ly t h e M c K i n s e y c o n f in e m e n t . C H A I R P E R S O N : O k a y. MR PETER STEPHEN VOLMINK : S o t h e c o a l c o n tr a c t. The coal c o n tr a c t to M c K i n s e y w a s t o a p p o i n t M c K i n s e y t o h e lp u s to i m p r o v e 20 o u r e ff ic ie n c i e s o n t h e c o a l . B u t t h e i r o n o r e c o n tr a c t w h ic h is t h e s e c o n d o n e w a s a ls o g e a r e d a t e n h a n c in g e ff ic ie n c ie s , in c r e a s i n g revenue. T h e th ir d o n e w h ic h w a s t h e m a n g a n e s e c o n tr a c t h a d th e s a m e e s s e n ti a l c h a r a c t e r i s t ic s i t w a s a b o u t h o w w e c a n g e t Mc K i n s e y t o h e lp u s t o i m p r o v e o n o u r p r o d u c ti v i t y a n d s o o n a n d th e N N P P c o n tr a c t. S o t h e y – t h e y i n e s s e n c e r e l a t e to t h e s a m e s c o p e o f w o r k . Page 58 of 82 10 MAY 2019 – DAY 92 C H A I R P E R S O N : A n d th e y w e r e g i v e n o v e r M R P E T E R S T E P H E N V O L M I N K : Fo u r d a y s . C H A I R P E R S O N : A fe w d a y s . MR PETER STEPH EN VOLMINK : A four day period. C H A I R P E R S O N : A fo u r d a y p e r i o d . M R P E T E R S T E P H E N V O L M I N K : Ye s . CHAIRPERSON : S o i t i s o v e r a v e r y s h o r t p e r i o d a n d r e la t e s to e ffe c t iv e l y t h e s a m e p r o je c t? M R P E T E R S T E P H E N V O L M I N K : Es s e n ti a lly t h e – e x a c tly. 10 C H A I R P E R S O N : S a m e p r o je c t . MR PETER STEPH EN VOLMINK : And … A D V P H I L L I P M O K O E N A S C : A n d t o t h e s a m e e n ti ty. M R P E T E R S T E P H E N V O L M I N K : A n d t o t h e s a m e e n ti ty. C H A I R P E R S O N : A n d to t h e s a m e e n t i ty. MR PETER STEPHEN VOLMINK : Ye s . A n d i t s e e m e d to m e C h a ir a t f a c e v a l u e t h a t t h is a m o u n te d to a n u n b u n d li n g o f th e s e c o n t r a c t s to f a ll w it h in t h e d e l e g a t e d a u t h o r i t y o f th e G C E . C H A I R P E R S O N : W e ll w e w i ll s e e i n t h e e n d w h e t h e r t h e f in d in g w il l b e t h a t t h a t is w h a t h a p p e n e d b u t o n th e f a c e o f it i t d o e s s e e m t h a t t h e s e 20 f a c to r s th a t y o u h a v e m e n ti o n e d c o u ld s u p p o r t w h a t y o u a r e s a y i n g . I mean the manganese one and the NMPP one were done on the same d a y. MR PETER STEPH EN VOLMINK : Ja. CHAIRPERSON : Is that right? M R P E T E R S T E P H E N V O L M I N K : T h a t is c o r r e c t . Page 59 of 82 10 MAY 2019 – DAY 92 C H A I R P E R S O N : 3 A p r i l 2 0 1 4 w h y w e r e t h e y d o n e s e p a r a te ly ? MR PETER STEPH EN VOLMINK : Ja. CHAIRPERSON : A n d th e n t h e ir o n o r e o n e h a d b e e n d o n e t w o d a y s e a r l ie r. M R P E T E R S T E P H E N V O L M I N K : Tw o d a y s e a r l ie r. CHAIRPERSON : And the coal one had been done one day earlier than t h e ir o n o r e o n e . M R P E T E R S T E P H E N V O L M I N K : O n e d a y e a r li e r. Th a t i s m y c o n c e r n . CHAIRPERSON : 10 S o t h o s e f a c t o r s m a y w e ll s u p p o r t w h a t y o u r p r o p o s i ti o n m a y b e . MR PETER STEPHEN VOLMINK: Ye s C h a ir. U m a n d I c o n c lu d e t h a t p o i n t o v e r t h e p a g e w h e r e I j u s t s a y t h a t t h e r u l e s a r o u n d p a r c e ll in g i n Tr a n s n e t s ta t e s t h e f o l lo w i n g a n d I a m o n p a g e 6 3 o f m y s t a te m e n t . A D V P H I L L I P M O K O E N A S C : Ye s . MR PETER STEPH EN VOLMINK : Paragraph 141. “ T h e r u le s a r o u n d p a r c e l li n g s a y s t h a t w h e n t h e fu ll scope of work is known at a point in time r e q u ir e m e n t s m a y n o t b e d e li b e r a t e l y s p l it i n t o p a r ts o r i t e m s o f l e s s e r v a l u e i n o r d e r t o k e e p th e 20 tr a n s a c ti o n w i t h i n a p a r ti c u l a r d e l e g a t i o n o f a u th o r it y le v e l o r t o k e e p i t b e l o w a p a r t ic u l a r t h r e s h o l d o r a p e r s o n w i t h h i g h e r le v e ls o f d e l e g a ti o n . T h i s is c o n s i d e r e d p a r c e ll in g a n d w ill b e r e g a r d e d i n a s e r io u s l ig h t a s it a m o u n ts t o n o n - c o m p l ia n c e w i t h p r o c u r e m e n t p r o c e d u r e s .” Page 60 of 82 10 MAY 2019 – DAY 92 S o I t h i n k th e r u l e s a r o u n d t h a t w e r e c l e a r ly s ta t e d in t h e c o m p a n y a t t h e ti m e . A D V P H I L L I P M O K O E N A S C : Ye s . A n d y e s t e r d a y y o u d i d e d u c a t e u s a b o u t w h a t y o u t e r m e d t h e c o n f i d e n ti a l c o n f in e m e n ts a n d y o u h a d a n e x c h a n g e w i th t h e C h a ir w h e t h e r – d o e s t h a t c o n f o r m w i t h th e p r i n c i p l e s o f t h e [i n d is t in c t] S e c t io n 2 1 7 o f th e C o n s ti t u t i o n a n d w h e t h e r c a n o n e ju s t i fy t h a t w i th i n th e p r in c i p l e s o f o p e n c o m p e ti t iv e tr a n s p a r e n t t e n d e r s y s t e m ? M R P E T E R S T E P H E N V O L M I N K : Ye s . 10 ADV PHILLIP MOKOENA SC : C a n y o u t e ll u s th e n w h a t d id t h i s a ls o e n t a i l i n r e l a ti o n t o M c Ki n s e y ? MR PETER STEPH EN VOLMINK : in d i c a t e d y e s te r d a y that c la s s if i e d a s c o n f id e n t i a l . a I n r e l a ti o n t o M c Ki n s e y C h a ir I number of th e s e c o n fi n e m e n t s were A n d I w il l c o m e b a c k t o t h a t a s p e c t i n a m o m e n t b u t f ir s t l e t m e s a y th is t h a t b e c a u s e c o n fi n e m e n t s is a p r o c e s s t h a t i s – t h a t h a s g r e a t p o te n ti a l f o r a b u s e w h e r e g r o u n d s a r e r e l ie d u p o n th a t a r e a c t u a l ly – t h a t s h o u l d n e v e r j u s t i fy c o n f i n e m e n t . Va r i o u s s a f e g u a r d s a n d l e v e ls o f r e v u e w e r e b u i lt i n t o t h e p r o c e s s a n d I m e n ti o n t h a t i t h a s t o s t a r t w i th th e o p e r a ti n g d iv is io n . T h e e n d u s e r 20 d e p a r t m e n t h a s t o m o t iv a t e f o r t h e c o n fi n e m e n t . It then has to go to t h e o p e r a ti o n d iv i s i o n C P O , t h e a c q u is it io n c o u n c i l a n d t h e C h i e f E x e c u t iv e o f t h a t o p e r a t in g d i v is i o n a n d t h e n i t c o m e s t o G r o u p w h e r e i t a g a in h a s t o u n d e r g o v a r io u s l e v e l s o f r e v u e fr o m t h e G r o u p C h ie f S u p p ly C h a i n O ff ic e r a n d t h e r e w a s e v e n a p r a c ti c e a l th o u g h n o t u n i fo r m ly o b s e r v e d t h a t G o v e r n a n c e h a d t o r e v i e w th e s e a s w e l l . A n d I Page 61 of 82 10 MAY 2019 – DAY 92 s a i d y e s t e r d a y t h a t w h e n a c o n fi n e m e n t w a s c l a s s i fi e d a s c o n fi d e n t ia l n o n e o f t h e s a f e g u a r d s a p p li e d . S o i t s a il e d p a s t a l l t h e s e r e v i e w i n g b o d ie s a n d w o u l d h a v e g o n e s tr a i g h t t o t h e G C E . A n d … C H A I R P E R S O N : W e r e a l l c o n f i d e n ti a l c o n fi n e m e n ts d e a l t w i t h b y o n e f u n c t i o n a r y s a y th e G C E O o r th e B A D C o r w e r e th e y d e a l t w i th b y d i ff e r e n t b o d ie s ? M R P E T E R S T E P H E N V O L M I N K : It w o u ld d e p e n d o n t h e v a l u e . C H A I R P E R S O N : O h o k a y. MR PETER STEPH EN VOLMINK : So… 10 C H A I R P E R S O N : S o t h a t p r in c i p l e s ti ll a p p li e d ? M R P E T E R S T E P H E N V O L M I N K : T h a t p r i n c i p le s t il l a p p l ie d . C H A I R P E R S O N : O k a y. MR PETER STEPHEN VOLMINK: B u t i t w o u ld n o t g o t h r o u g h a n y o f the CHAIRPERSON : Ja. MR PETER STEPH EN VOLMINK : Reviewing bodies. C H A I R P E R S O N : Ye s . A c o n fi d e n ti a l c o n f in e m e n t i n e ff e c t m e a n t th a t o n ly o n e f u n c t i o n a r y p e r s o n o r b o d y w o u l d d e c i d e i t a n d t h e r e w o u l d b e n o m u l ti p l e s t a g e s o f i n v o l v e m e n t b y d i ff e r e n t p e o p l e ? 20 M R P E T E R S T E P H E N V O L M I N K : T h a t is p r e c is e ly t h e c a s e . C H A I R P E R S O N : Ye s . MR PETER STEPH EN VOLMINK: So it would come from the author of the document … C H A I R P E R S O N : Ye s . MR PETER STEPH EN VOLMINK: A n d b e r e c e iv e d b y th e a p p r o v i n g Page 62 of 82 10 MAY 2019 – DAY 92 a u t h o r i ty … . C H A I R P E R S O N : A u t h o r i ty. M R P E T E R S T E P H E N V O L M I N K : W i t h n o in t e r v e n i n g … C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : L e v e ls o f s c r u ti n y. C H A I R P E R S O N : J a , o k a y. MR PETER STEPH EN VOLMINK: C h a i r I t h e n s t a te t h a t o n p a r a g r a p h 1 4 9 I m a k e t h e p o in t t h a t a l l o f th e s e l e v e l s o f r e v i e w a r e b y p a s s e d a n d then in paragraph 150 … 10 ADV PHILLIP MOKOENA SC : On page 65. MR PETER STEPH EN VOLMINK : On page 65 … A D V P H I L L I P M O K O E N A S C : Ye s . MR PETER STEPH EN VOLMINK: I say that: “ Se c o n d ly th e c o n fi n e m e n t m e m o s c o n t a i n v e r y li t tl e if anything that e x p la in s why these s u b m is s io n s w e r e c l a s s i fi e d a s c o n fi d e n t i a l.” I mean … C H A I R P E R S O N : T h e – y o u to l d m e y e s t e r d a y th a t th e o r i g in a l s o u r c e o f th is c o n c e p t o f c o n f id e n ti a l c o n fi n e m e n t c a m e fr o m d e le g a te d 20 a u t h o r i ty fr o m t h e B o a r d . M R P E T E R S T E P H E N V O L M I N K : It w a s i n th e D O A fr a m e w o r k , y e s . C H A I R P E R S O N : Ye s . T h a t is w h e r e c a m e … MR PETER STEPH EN VOLMINK: Ja. C H A I R P E R S O N : I t c a m e f r o m o r i g in a lly a n d – y o u k n o w – y o u h a d to p u t in t o a p o l ic y … Page 63 of 82 10 MAY 2019 – DAY 92 M R P E T E R S T E P H E N V O L M I N K : ( In t e r v e n e s ) . C H A I R P E R S O N : A n d s o o n . I d o n o t r e m e m b e r w h e th e r I a s k e d t h is q u e s t io n y e s t e r d a y b u t w a s i t p r o v id e d in t h a t o r ig i n a l d e le g a te d a u t h o r i ty o r w a s i t – w a s t h e r e a p r o v is io n t h a t s a i d u n d e r w h a t c ir c u m s ta n c e s a c o n tr a c t o r jo b c o u l d b e c la s s if i e d o r c o u ld q u a l if y a s c o n fi d e n ti a l – c o n f in e m e n t c o u l d b e r e g a r d e d a s c o n f i d e n ti a l ? Yo u t o ld u s y e s t e r d a y a n d to d a y t h e g r o u n d s in t e r m s o f p o li c y - t h e g r o u n d s f o r c o n fi n e m e n t . Yo u m a y c o n fi n e a t e n d e r i f o n e o f th e f o ll o w i n g g r o u n d s e x i s ts . 10 MR PETER STEPH EN VOLMINK: Ja. CHAIRPERSON : W h e t h e r – w a s t h e r e a s i m il a r t h i n g t h a t w a s p u t u p b y th e B o a r d w h e n th e y c a m e u p f o r th e f ir s t t i m e w i t h t h i s c o n c e p t o f c o n fi n e – c o n f i d e n ti a l c o n fi n e m e n t ? MR PETER STEPH EN VOLMINK: c o n ta in e d i n t h e D O A fr a m e w o r k . Chair there were no g u i d e l in e s I th in k t h e r e w a s s i m p ly a li n e t h a t s a i d w h e n th e – w h e n i t is c o n f id e n ti a l … C H A I R P E R S O N : Ye s . MR PETER STEPH EN VOLMINK: I t c a n b e c o n s i d e r e d b y t h e f in a l a p p r o v a l a u t h o r i ty w i t h o u t d ir e c ti n g it to t h e l o w e r le v e ls o f a u t h o r i ty. 20 S o t h e r e w a s i n e s s e n c e to a n s w e r y o u r q u e s t io n t h e r e w e r e n o g u i d e li n e s . C H A I R P E R S O N : N o g u i d e li n e s o r g r o u n d s th a t w e r e g iv e n . MR PETER STEPH EN VOLMINK: No, no. C H A I R P E R S O N : A n d w h o w a s g i v e n t h e a u t h o r i ty to d e c l a r e o r d e c i d e t h a t a p a r ti c u l a r c o n f in e m e n t w o u l d b e a c o n f id e n ti a l o n e ? Page 64 of 82 10 MAY 2019 – DAY 92 M R P E T E R S T E P H E N V O L M I N K : T h e o r ig in – t h e o r i g i n a t o r … C H A I R P E R S O N : Ye s . MR PETER STEPH EN VOLMINK : Of the document … C H A I R P E R S O N : Ye s . MR PETER STEPH EN VOLMINK : Would for various reasons state why h e t h i n k s i t is c o n fi d e n t ia l . CHAIRPERSON : Hm. MR PETER STEPH EN VOLMINK: It w o u l d b e t a k e n to th e f in a l a p p r o v a l a u th o r it y. 10 CHAIRPERSON : Hm. MR PETER STEPH EN VOLMINK: W h o t h e n r e v ie w i t a n d if t h e a p p r o v a l a u th o r it y a g r e e s th a t i t w a s c o n fi d e n ti a l i t w o u l d b e s ig n e d o ff . CHAIRPERSON: I t is q u i t e c l e a r fr o m w h a t y o u – y o u e x p la i n t h a t i t m e a n t i t w a s n o t t o b e d e a l t w it h b y d i ff e r e n t b o d i e s a n d C o m m i t t e e s a n d fu n c t io n a r i e s w h o o t h e r w is e w o u l d d e a l w i t h i t if it w a s n o t a – a c o n fi d e n ti a l c o n fi n e m e n t . S o – s o i n e ff e c t w o u l d i t b e c o r r e c t t h a t i t w a s t h e r e f o r e t o b e ta k e n a s c o n fi d e n t ia l b e t w e e n th e o r i g i n a t o r – t h e a u t h o r – a n d t h e n th e … M R P E T E R S T E P H E N V O L M I N K : A n d t h e ( in d is ti n c t) . 20 CHAIRPERSON : Approving body? MR PETER STEPH EN VOLMINK: Ex a c t ly. Th a t i s h o w i t w o u l d b e understood. CHAIRPERSON : It i s – it i s q u i te a s tr a n g e t h i n g i n a – i n a S t a t e O w n e d E n ti ty. S o m e b o d y s a y s th e r e a r e c e r ta i n c o n tr a c ts w h ic h w i ll b e r e g a r d e d a s c o n f id e n ti a l b u t w e a r e n o t s a y i n g w h i c h o n e s – y o u k n o w Page 65 of 82 10 MAY 2019 – DAY 92 – w h a t a r e th e … M R P E T E R S T E P H E N V O L M I N K : ( In d is ti n c t) . C H A I R P E R S O N : C r i te r i a f o r c o n f i d e n ti a li t y a n d i f s o a n d s o c l a s s i fi e s it a s c o n f id e n t i a l i t c a n c o m e to u s a n d t h e n i t d o e s n o t h a v e t o g o t h r o u g h o t h e r p e o p l e a n d w e w i ll – w e w i ll t h e n d e c id e i f w e a p p r o v e o r not … MR PETER STEPH EN VOLMINK: Ja. CHAIRPERSON : A n d t h e n – a n d t h a t c o u l d e n t a i l a lo t o f t a x p a y e r s m o n e y. 10 MR PETER STEPH EN VOLMINK: W e l l th a t is e x a c tl y t h e d a n g e r h e r e C h a ir t h a t … CHAIRPERSON : Hm. MR PETER STEPH EN VOLMINK: As we have seen in some of these in s t a n c e s th a t I a m t a lk i n g a b o u t … CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : T h is c o n c e r n i s n o t a n a b s tr a c t … CHAIRPERSON : Hm. MR PETER STEPH EN VOLMINK : Academic concern. It is rooted in the r e a l e x p e r i e n c e s o f th e o r g a n i s a t io n . 20 CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : T h a n k f u l ly t h e c o n c e p t o f c o n fi d e n ti a l c o n fi n e m e n ts … CHAIRPERSON : Hm. MR PETER STEPH EN VOLMINK : Has been removed … CHAIRPERSON : Hm. Page 66 of 82 10 MAY 2019 – DAY 92 MR PETER STEPH EN VOLMINK: B y t h e c u r r e n t B o a r d b u t i t c r e a te d h u g e r i s k fo r t h e o r g a n is a ti o n a t th e ti m e . CHAIRPERSON : D i d y o u e v e r g e t to k n o w w h o e x a c tly c a m e u p w i t h t h is c o n c e p t o r i s th e r e s o m e t h in g t h a t y o u r e a ll y d o n o t k n o w a p a r t fr o m t h a t i t c a m e fr o m t h e B o a r d ? MR PETER STEPH EN VOLMINK: I h o n e s tl y c a n n o t – c a n n o t s a y th is in d i v i d u a l o r t h a t in d iv i d u a l a n d ( i n t e r v e n e s ) . CHAIRPERSON : Ja, okay but it came from the Board, ja. MR PETER STEPH EN VOLMINK: 10 But we know that it came – it o r i g in a te d fr o m t h e d e l e g a ti o n ( i n t e r v e n e s ) . CHAIRPERSON : O r ig i n a t e d fr o m t h e B o a r d , j a b u t o th e r t h a n - t h e c o n fi n e m e n t is w h a t w a s c o n s id e r e d to b e c o n f id e n t i a l b u t o n c e t h e t e n d e r h a d b e e n a w a r d e d t h e t e n d e r i t s e l f w a s n o t c o n fi d e n t ia l . Is t h a t r ig h t ? MR PETER STEPH EN VOLMINK: Ye s a n d I t h in k t h a t i n i ts e l f is a n o d d it y … C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : B e c a u s e i t is c o n f i d e n ti a l u p u n ti l th e c o n fi n e m e n t i s a p p r o v e d … 20 C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : B u t t h e n y o u m u s t s ti ll is s u e t h e R F P t o t h a t b i d d e r. C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : I t m u s t s t il l b e r e c e iv e d . I t m u s t s ti ll … Page 67 of 82 10 MAY 2019 – DAY 92 C H A I R P E R S O N : A n d a t t h a t s t a g e i t is n o t – i t is n o t c o n fi d e n ti a l. MR PETER STEPH EN VOLMINK: A n d t h a t – t h a t p a r t is n o t - is n o t c o n fi d e n ti a l w h i c h is – w h i c h is a f u r t h e r … C H A I R P E R S O N : It is v e r y s t r a n g e . M R P E T E R S T E P H E N V O L M I N K : It is v e r y s t r a n g e . I t is v e r y s tr a n g e , ja . CHAIRPERSON : S o i t – I w o n d e r w h e t h e r i t w a s d e s ig n e d t o a v o i d a s i tu a ti o n w h e r e lo w e r m a n a g e m e n t a n d o t h e r b o d i e s w o u l d s a y n o t h i s is n o t c o n fi d e n ti a l a n d i t w o u ld b e d i ffi c u l t f o r th e a p p r o v in g a u t h o r i t y t o 10 k e e p o n o v e r r u l i n g t h e m b e c a u s e t h e y m a y h a v e w a n te d to – t o tr e a t t h o s e a s c o n f i d e n ti a l b u t m a n a g e m e n t s a w n o t h i n g s u g g e s ti n g … M R P E T E R S T E P H E N V O L M I N K : C o n fi d e n ti a l a b o u t i t . CHAIRPERSON : Ja. M R P E T E R S T E P H E N V O L M I N K : W e l l t h e r e is a p r o v is io n th a t d ir e c ts t h e lo w e r l e v e l b o d ie s … CHAIRPERSON : Hm. MR PETER STEPH EN VOLMINK : As to what they must consider when a p p r o v in g a c o n f in e m e n t a n d i t d o e s s a y t h e r e m u s t b e a r o b u s t r e v i e w … 20 CHAIRPERSON : Hm. MR PETER STEPH EN VOLMINK: O f t h e g r o u n d s o f c o n f in e m e n t a n d t h e m o t iv a t i o n f o r th e c o n f in e m e n t … CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : B e fo r e it i s t a k e n t o … CHAIRPERSON : Hm. Page 68 of 82 10 MAY 2019 – DAY 92 M R P E T E R S T E P H E N V O L M I N K : T h e f in a l a p p r o v a l b o d y. CHAIRPERSON : Hm. MR PETER STEPH EN VOLMINK: Th e i n t e n t io n C h a ir i s t h a t p o o r ly ju s t i fi e d … C H A I R P E R S O N : M o ti v a t io n . M R P E T E R S T E P H E N V O L M I N K : O r u n ju s ti f ie d … C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : M o ti v a t i o n s e i th e r f o r c o n fi n e m e n t o r w h a t e v e r th e c a s e m a y b e … 10 CHAIRPERSON : Hm. MR PETER STEPH EN VOLMINK: W h a t e v e r t h e g r o u n d o f c o n fi n e m e n t may be… CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : A n d i f it is p o o r l y m o tiv a t e d … CHAIRPERSON : Hm. MR PETER STEPH EN VOLMINK: It would be dealt with at that lower le v e l o f r e v ie w. CHAIRPERSON : Hm. MR PETER STEPH EN VOLMINK : So that we do not have to burden the 20 fi n a l … C H A I R P E R S O N : H m , b o d y. MR PETER STEPH EN VOLMINK : Approval body … CHAIRPERSON : Ja. M R P E T E R S T E P H E N V O L M I N K : W i t h a p o o r ly m o t iv a te d … C H A I R P E R S O N : P o o r l y m o t iv a te d … Page 69 of 82 10 MAY 2019 – DAY 92 M R P E T E R S T E P H E N V O L M I N K : S u b m i s s io n . C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : T h a t w a s t h e u n d e r ly i n g r a ti o n a l e b u t if y o u to o k t h o s e r e v i e w in g b o d ie s o u t o f t h e e q u a ti o n … CHAIRPERSON : Hm. MR PETER STEPH EN VOLMINK: W e ll then it just goes s t r a ig h t through. CHAIRPERSON : So – so it was a way of ensuring that cer tain c o n fi n e m e n t r e q u e s ts w e r e n o s u b je c te d t o t h e n o r m a l s c r u ti n y t h a t t h e 10 p o li c i e s and procedures of the comp any required requests for c o n fi n e m e n ts t o b e s u b j e c t e d t o ? M R P E T E R S T E P H E N V O L M I N K : Ye s C h a i r. C H A I R P E R S O N : T h a t is w h a t i t w a s a b o u t ? MR PETER STEPH EN VOLMINK: T h a t – t h a t - it s e e m e d t o m e th a t w a s t h e u n d e r ly i n g m o t iv a t i o n . CHAIRPERSON : A n d i t w a s n o t a b o u t k e e p i n g s e c r e t t h e a m o u n ts r e l a ti n g t o t h e t e n d e r b e c a u s e o n c e t h e c o n fi n e m e n t h a d b e e n a p p r o v e d t h e r e w a s n o t h i n g s e c r e t a b o u t th e t e n d e r. T h e te n d e r w o u l d b e d e a l t w i t h a s a c o n fi n e d te n d e r b u t n o t h i n g c o n fi d e n ti a l a t th a t s t a g e . 20 M R P E T E R S T E P H E N V O L M I N K : C o v e r in g t h e n o r m a l … CHAIRPERSON : Normal procedures? M R P E T E R S T E P H E N V O L M I N K : Ye s , y e s . T h a t i s c o r r e c t . CHAIRPERSON : S o – s o i t s e e m s t h a t t h e id e a w a s t o e n s u r e t h a t s u c h r e q u e s ts fo r – c e r ta i n r e q u e s ts f o r c o n f in e m e n t o f c e r t a i n t e n d e r s w e r e ta k e n o u t t h e n o r m a l s c r u t i n y o f m e c h a n is m s a n d b o d i e s w i t h i n Page 70 of 82 10 MAY 2019 – DAY 92 the company? MR PETER STEPH EN VOLMINK : Correct. C H A I R P E R S O N : O k a y. MR PETER STEPH EN VOLMINK : Correct. CHAIRPERSON : Thank you. M R P E T E R S T E P H E N V O L M I N K : A n d C h a ir t h e … C H A I R P E R S O N : Mr – Mr M o k o e n a . ADV PHILLIP MOKOENA SC: I t is a s tr a n g e c o n c e p t C h a i r v e r y c o m p lic a t e d a n d c o m p l e x . 10 C H A I R P E R S O N : Ye s . ADV PHILLIP MOKOENA SC: Fir s tly a c o n f in e m e n t i n i t s o w n m e a n s t h a t i t is n o t o p e n … CHAIRPERSON : Hm. ADV PHILLIP MOKOENA SC: I t is n o t a n o p e n c o m p e ti t iv e te n d e r. S e c o n d ly it is c o n f i d e n ti a l. C H A I R P E R S O N : J a , c o n fi d e n t i a l . MR PETER STEPH EN VOLMINK: I – I – ja , s o i t is a l m o s t a – y o u k n o w - a d e v i a ti o n w it h in a d e v i a t i o n . CHAIRPERSON : Hm. 20 M R P E T E R S T E P H E N V O L M I N K : C o n fi n e m e n t is a d e v i a t i o n . CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : W h y s ti ll h a v e a … CHAIRPERSON : Hm. MR PETER STEPH EN VOLMINK: A c o n fi d e n ti a l c o n f in e m e n t a n d t h e p o i n t t h a t I w a s m a k i n g is th a t a p a r t fr o m t h is a n o m a ly o f th e p r i n c i p l e Page 71 of 82 10 MAY 2019 – DAY 92 if o n e l o o k s a t t h e s u b s t a n c e o f t h e m o ti v a ti o n s t h e r e is n o t h i n g th a t s tr ik e s m e a s e v e n r e m o t e l y c o n f id e n t i a l a b o u t w h a t is c o n t a in e d i n these memoranda. F o r in s t a n c e it t a lk s – i t s a y s th a t t h e r e a r e d e c l in i n g r e v e n u e s a n d d e c l i n i n g v o l u m e s a n d ( i n d i s ti n c t) a n d a r is k a n d th a t M c K i n s e y i s id e a l ly p l a c e d t o h e l p u s t o i m p le m e n t v a r i o u s p r o j e c ts b u t w h y t h e y c o u ld n o t h a v e f o l lo w e d a n o r m a l c o n fi n e m e n t p r o c e s s – I m e a n t h a t – I th i n k o n a n y r e a s o n a b l e in t e r p r e t a ti o n a n d r e a d in g o f t h e s e c o n f in e m e n t m e m o s it c e r ta i n ly d o e s n o t a p p e a r t h a t t h e r e w a s a n y th i n g n o t e v e n a n io t a o f i n fo r m a t i o n is c o n t a i n e d t h a t 10 w o u ld c o n v i n c e a r e a s o n a b l e r e a d e r t h a t t h e r e w a s g r o u n d s f o r c o n fi d e n ti a l – c o n fi d e n ti a li ty. CHAIRPERSON : Th e y c o u ld h a v e s i m p ly s a i d c e r t a i n c o n tr a c ts – c e r t a i n t e n d e r s t h a t r e q u ir e c o n f in e m e n t w ill n o t g o t h r o u g h t h e n o r m a l r o u t e b e f o r e r e a c h in g th e a p p r o v in g a u t h o r i ty. T h e y w il l g o fr o m th e o r i g in a to r s tr a i g h t t o t h e – t o t h e a p p r o v in g a u t h o r i ty. I n e ffe c t t h e y c o u l d h a v e s a i d th a t . Is i t n o t b e c a u s e t h e r e w a s n o t h i n g – i f t h e r e w a s n o t h i n g c o n fi d e n t i a l a b o u t th e s e t h in g s t h e n a ll – a l l t h e y w a n te d t o a c h i e v e is s i m p ly th a t fr o m t h e o r i g i n a to r i t s h o u ld c o m e s tr a ig h t t o th e a p p r o v in g a u t h o r i ty. I t s h o u l d n o t b e s u b j e c t e d t o … 20 M R P E T E R S T E P H E N V O L M I N K : Ye s . C H A I R P E R S O N : Sc r u t in y b y o t h e r p e o p le . MR PETER STEPH EN VOLMINK: C h a ir t h e y c o u l d h a v e s a i d t h a t b u t t h e d i ffi c u l ty w o u l d h a v e b e e n t h a t th e s a m e r is k s t il l e x is ts w h e r e i t g o e s fr o m t h e o r ig in a t o r to t h e fi n a l a p p r o v e r w h e t h e r y o u c a ll i t c o n fi d e n ti a l o r n o t w i t h o u t t h a t c r i ti c a l m id d l e l a y e r o f r e v i e w. Page 72 of 82 10 MAY 2019 – DAY 92 CHAIRPERSON : N o , n o , I a c c e p t t h a t. W e a r e o n th e s a m e p a g e . I a m s i m p ly s a y i n g i f o n e a c c e p ts th a t t h e r e w a s – t h e r e w a s n o b a s is fo r c la s s if y i n g t h e m a s c o n f i d e n ti a l … MR PETER STEPH EN VOLMINK: Ja. CHAIRPERSON : A n d th a t t h e w h o l e p o in t w a s t h a t t h e s e – t h e s e r e q u e s ts f o r c o n fi n e m e n t s h o u l d n o t b e s u b j e c t e d t o n o r m a l s c r u ti n y b y v a r io u s b o d i e s b e c a u s e t h e y w a n te d t o o n ly c e r ta in p e o p le o r c e r t a in b o d ie s t o a p p r o v e th e m . T h e n a l l th e y n e e d e d t o d o i s t o s a y c e r t a i n r e q u e s ts f o r c o n f in e m e n t w i ll c o m e s tr a i g h t t o u s o r t o th e G C E O o r to 10 the B … MR PETER STEPH EN VOLMINK: BADC. CHAIRPERSON : BADC. MR PETER STEPH EN VOLMINK: DC. C H A I R P E R S O N : B A D C . T h e n w e w o u ld h a v e h a d t h e s a m e t h in g . MR PETER STEPH EN VOLMINK: Ja. C H A I R P E R S O N : N a m e ly t h e r e i s n o s c r u t i n y … MR PETER STEPH EN VOLMINK: Ja. C H A I R P E R S O N : A n d t h e y d e c id e th e m s e l v e s . M R P E T E R S T E P H E N V O L M I N K : Ye s . 20 CHAIRPERSON : Ja. A D V P H I L L I P M O K O E N A S C : Yo u c o n c l u d e M r Vo l m i n k o n t h is c o n c e r n t h a t y o u a r e r a i s i n g h o w M c K i n s e y w a s t r e a t e d t h r o u g h o u t . Yo u d o s o in p a r a g r a p h s 1 5 1 a n d 1 5 2 . MR PETER STEPH EN VOLMINK: Ye s C h a ir I – I t h e n j u s t c o n c l u d e t h a t p o r t io n b y s a y in g th a t t h e a d d e d d i ff ic u l ty w i t h u s in g c o n f id e n ti a l it y Page 73 of 82 10 MAY 2019 – DAY 92 is t h a t i t w a s s o m e ti m e s q u o t e d a s a g r o u n d fo r c o n fi n e m e n t i t s e l f w h e r e a s o u r r u l e s o n c o n f i n e m e n t o n ly r e c o g n is e f o u r g r o u n d s – u r g e n c y, s o l e s u p p li e r, s ta n d a r d is a ti o n a n d w h a t I r e fe r to e a r l i e r a s th e s c h o o l f e e s c l a u s e w h e r e t h e r e i s h i g h ly s p e c i a l is e d th i n g s a n d – t h o s e a r e th e f o u r g r o u n d s o f c o n f i n e m e n t . C o n fi d e n t ia li t y c a n b e c i t e d a s a r e a s o n n o t to ta k e it t h r o u g h t h e r e v ie w i n g p r o c e s s b u t w e s e e t h a t s o m e t i m e s c o n f i d e n ti a l i ty i s e v e n q u o t e d a s a f u r th e r g r o u n d f o r c o n fi n e m e n t w h ic h I – I t h in k w a s in c o r r e c t . C h a ir I a m … C H A I R P E R S O N : I a m s o r r y. Yo u s a i d t h a t y o u h a d to in c o r p o r a te h i s 10 n e w p r o c e d u r e o r r e q u ir e m e n t o f c o n fi d e n ti a l it y i n to t h e p o l ic y ? M R P E T E R S T E P H E N V O L M I N K : Ye s . CHAIRPERSON : d e l e g a ti o n . A f te r t h e B o a r d h a d p u t i t i n t o a d e l e g a t e d – W h e n y o u p u t it in t o y o u r p o lic y d o c u m e n ts w h a t d id y o u p u t a s t h e g r o u n d s o n w h ic h i t c o u l d b e i n i ti a t e d . I n o t h e r w o r d s w h a t d i d – w h a t d o y o u d o ? D id y o u p u t i n s o m e g r o u n d s o r d i d y o u j u s t d o w h a t th e B o a r d h a d d o n e . MR PETER STEPH EN VOLMINK: W e l l C h a ir w e h a d s o m e d e b a te s a b o u t - a b o u t th a t a n d if m e m o r y s e r v e s m e c o r r e c t ly t h e d e b a t e w a s r e s o l v e d t h a t o n t h e b a s is t h a t t h e g r o u n d s a s s t a t e d i n t h e d e le g a ti o n 20 o f a u th o r i ty w o u ld b e i n c o r p o r a t e d i n to t h e p o l ic y. There was some c o n c e r n – if m e m o r y s e r v ic e s m e c o r r e c tl y – a b o u t o v e r r e g u l a ti n g o r o v e r p r e s c r i b i n g w h a t m a y b e c o n s i d e r e d a s c o n f id e n ti a l g r o u n d s o r n o c o n fi d e n ti a l g r o u n d s . S o i t w a s – i t w a s l e f t s o m e w h a t o p e n e v e n i n t h e p a s t. C H A I R P E R S O N : B u t y o u s a i d i n t h e d e le g a t e d a u th o r i ty th e r e w e r e n o Page 74 of 82 10 MAY 2019 – DAY 92 grounds. M R P E T E R S T E P H E N V O L M I N K : Ye s . S o th e o n ly g r o u n d … CHAIRPERSON : Hm. MR PETER STEPH EN VOLMINK: I s c o n fi d e n t ia l – is t h a t i f i t is c o n fi d e n ti a l … CHAIRPERSON : Ja. No there cannot be a ground. MR PETER STEPH EN VOLMINK: Ja. So … CHAIRPERSON : Ja. MR PETER STEPH EN VOLMINK : So the ground … 10 CHAIRPERSON : Ja. M R P E T E R S T E P H E N V O L M I N K : F o r b y p a s s in g a l l o f t h e s e d e l e g a t e d b o d ie s … CHAIRPERSON : Ja. M R P E T E R S T E P H E N V O L M I N K : W o u ld b e i f s o m e – i f i t is c l a s s i fi e d a s a c o n fi d e n t i a l … CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : C o n fi n e m e n t . C H A I R P E R S O N : J a . S o y o u j u s t to o k w h a t w a s ( i n t e r v e n e s ) a u t h o r i t y ? M R P E T E R S T E P H E N V O L M I N K : I t h i n k in e s s e n c e i t w a s – i t w a s … 20 CHAIRPERSON : Ja. M R P E T E R S T E P H E N V O L M I N K : C o m p le t e d a s s u c h . C H A I R P E R S O N : O k a y. ADV PHILLIP MOKOENA SC : And paragraph 152? MR PETER STEPH EN VOLMINK : I think it is – I (intervenes). ADV PHILLIP MOKOENA SC : (Intervenes). Page 75 of 82 10 MAY 2019 – DAY 92 MR PETER STEPH EN VOLMINK : The sam e point in 152. ADV PHILLIP MOKOENA SC: Yo u a r e d e a li n g w i th a f u r t h e r c o n c e r n w h ic h is t h e g a p a n a l y s is . C a n y o u e x p la i n i t t o t h e C h a ir a n d ta k e u s t h r o u g h w h a t y o u s o u g h t t o c o n v e y i n r e l a t io n to t h a t c o n c e r n ? MR PETER STEPH EN VOLMINK: C h a i r I p o in t o u t in p a r a g r a p h 1 5 3 a n d f o l l o w in g u n d e r t h e h e a d i n g “ g a p a n a ly s is ” – I s a y th a t a N a t io n a l Tr e a s u r y is s u e d a n i n s tr u c t io n w h i c h w o u l d h a v e b e e n a p p l ic a b l e t o s o m e o f t h e s e Mc K i n s e y c o n tr a c ts a n d t h e i n s tr u c ti o n I h a v e a n n e x e d a s A n n e x u r e P V 4 8 w h ic h y o u w i ll fi n d o n p a g e 1 3 8 9 a n d w h a t th is 10 in s t r u c t i o n s a y s C h a ir is t h a t a c o n s u lt a n t m a y o n l y b e a p p o i n t e d a f t e r a p r o p e r b u s in e s s c a s e h a s b e e n d o n e a n d a – w h a t is r e f e r r e d to a s a g a p a n a ly s i s – h a s b e e n d o n e to c o n f ir m t h a t Tr a n s n e t d o e s n o t h a v e t h e r e q u is i t e s k il ls o r t h e r e s o u r c e s i n p l a c e t o p e r f o r m t h is w o r k . In o th e r w o r d s i t m u s t b e c o n fi r m e d th a t i n t h e – th e r e is n o o n e a m o n g t h e 5 0 0 0 0 e m p l o y e e s w h o w o r k fo r Tr a n s n e t t h a t t h e r e is e x p e r tis e o f t h is n a t u r e a n d t h a t – a n d t h e r e n e e d s t o b e a p r o p e r m o ti v a t io n fo r that. T h e r e i s a p a s s i n g r e f e r e n c e to t h a t i n s o m e o f th e M c K i n s e y c o n fi n e m e n ts b u t n o p r o p e r g a p a n a l y s is w a s d o n e to s h o w – a n d th a t is a m a n d a t o r y r e q u i r e m e n t . 20 I t is n o t n i c e t o h a v e . I t s a y s th a t t h e o r g a n o f S t a t e m u s t c o n d u c t s u c h a g a p a n a ly s is b e f o r e i t c a n p r o c e e d t o a p p o in t a c o n s u lt a n t a n d I c o u l d n o t fi n d e v id e n c e o f s u c h g a p a n a ly s is . ADV PHILLIP MOKOENA SC: Ye s a n d y o u c o n c l u d e y o u r s t a t e m e n t w i t h t h e l a s t c o n c e r n t h a t is th e r e m u n e r a t i o n m o d e l . MR PETER STEPH EN VOLMINK: Th a t i s c o r r e c t C h a ir. Page 76 of 82 Th e l a s t 10 MAY 2019 – DAY 92 a s p e c t w h ic h I d e a l w i t h in m y s t a te m e n t r e l a t e s to th e r e m u n e r a ti o n m o d e l t h a t M c K i n s e y s o u g h t t o i m p l e m e n t a n d t h e M c K in s e y c o n tr a c ts m a d e p r o v i s i o n f o r t w o k i n d s o f f e e s C h a ir. T h e f ir s t is th e s o c a ll e d fi x e d f e e c o m p o n e n t . S o t h e y w o u l d s a y t o d o p r e p a r a to r y w o r k o r to d o w h a t e v e r th e r e i s - o u r fix e d fe e i s t h a t a n d t h e n t h e y w o u l d h a v e w h a t i s r e f e r r e d to a s a c o n t in g e n t f e e c o m p o n e n t. T h is w a s u s u a l ly r e l a t e d t o M c K i n s e y s h a r i n g a p e r c e n ta g e o f a n y i n c r e a s e in r e v e n u e w h ic h w o u l d c o m e a b o u t a s a r e s u l t o f t h e i r e ffo r t s . S o i f I t a k e – l e t u s s a y – t h e c o a l o r th e m a n g a n e s e c o n tr a c t i f i t c o u ld b e e s ta b lis h e d t h a t 10 a s a r e s u l t o f th e ir i n te r v e n ti o n s t h a t r e v e n u e h a d i n c r e a s e d b y a c e r t a i n a m o u n t t h e r e w o u ld b e a p r e d e t e r m i n e d p e r c e n t a g e t h a t w o u l d b e a ll o c a te d t o th e m o v e r a n d a b o v e th e fi x e d fe e t h a t t h e y h a d s ig n e d u p f o r. C H A I R P E R S O N : S o i t w a s lik e a p e r f o r m a n c e b o n u s ? I f t h e y – i f t h e y h a d d o n e s u c h a g o o d j o b t h a t t h e r e w a s a n in c r e a s e i n r e v e n u e th e n they would get extra … M R P E T E R S T E P H E N V O L M I N K : Ex tr a . C H A I R P E R S O N : Ex tr a p a y m e n t ? M R P E T E R S T E P H E N V O L M I N K : J a . I s u p p o s e o n e c o u l d r e g a r d it a s 20 a p e r f o r m a n c e b o n u s o f – o f s o r ts . C H A I R P E R S O N : O k a y. ADV PHILLIP MOKOENA SC: A n d t h e y w e r e p a i d t h o s e c o n ti n g e n c y fees? MR PETER STEPH EN VOLMINK: Ye s . N o w – n o w o n th e fa c e o f i t C h a ir I w a s c o n c e r n e d t h a t t h i s c o n t in g e n t f e e a r r a n g e m e n t w a s n o t Page 77 of 82 10 MAY 2019 – DAY 92 a l ig n e d t o N a ti o n a l Tr e a s u r y ’s i n s tr u c ti o n o n c o s t c o n t a i n m e n t w h ic h i n f a c t t h e r e i s a n in s tr u c ti o n th a t d ir e c ts t h a t f e e s f o r c o n s u l ta n ts w i ll b e s u b j e c t t o c e r t a in p r e s c r ip ts . Yo u c a n n o t – a c o n s u l t a n t c a n n o t c h a r g e y o u w h a te v e r a n d I th i n k I m a y e v e n h a v e a t t a c h e d a c o p y o f th a t - o f t h a t i n s tr u c t io n . A D V P H I L L I P M O K O E N A S C : I t i s p a g e 1 3 9 8 C h a ir. W o u l d th a t b e th e o n e M r Vo l m in k ? M R P E T E R S T E P H E N V O L M I N K : 1 3 9 8 if y o u j u s t b e a r w it h m e . I th in k it i s a li t tl e b i t e a r l ie r. 10 C h a ir i f y o u t u r n t o p a g e 1 3 8 9 y o u w i ll f i n d a c o p y o f t h e c o s t c o n t a i n m e n t in s tr u c ti o n … C H A I R P E R S O N : Ye s . MR PETER STEPH EN VOLMINK: And if you turn the page to page 1390 … CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : A n d i f y o u l o o k a t p a r a g r a p h 4 .2 . C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : It s t a t e s th e fo ll o w i n g : “ C o n s u l ta n ts m a y o n ly b e r e m u n e r a t e d a t t h e r a t e s …” 20 A n d t h e n i t l is ts th r e e c a te g o r i e s . “ A, d e t e r m in e d i n t h e g u i d e l i n e f o r f e e s i s s u e d b y S I C A .” W h i c h is a S o u t h A f r ic a n In s t i tu t e o f C h a r t e r e d A c c o u n ta n ts . “ B, s e t o u t in t h e g u id e o n h o u r l y f e e r a t e s fo r c o n s u l t a n t s b y t h e D e p a r t m e n t o f P u b l ic S e r v ic e s Page 78 of 82 10 MAY 2019 – DAY 92 a n d A d m in is tr a ti o n … ” T h e s e a r e c a l le d D P S A r a t e s . “ …o r prescribed by the body r e g u la ti n g the p r o f e s s i o n o f th e c o n s u l t a n t .” S o t h e s e a r e r e g u l a t e d r a t e s a n d a c o n c e r n w h ic h w e h a d a t t h e t i m e is t h a t t h e – t h e c o n t i n g e n t f e e m o d e l d i d n o t a l ig n w e l l w i t h w h a t s e e m e d to be r egulated rates. CHAIRPERSON : Hm. M R P E T E R S T E P H E N V O L M I N K : C h a ir th e d i ffic u l t y t h e n – w e l l l e t m e 10 s a y th a t w e t h e n e n g a g e d w i t h N a ti o n a l Tr e a s u r y o n w h e t h e r t h e u s e o f c o n ti n g e n c y f e e s c o u l d b e a b a s i s fo r r e m u n e r a ti n g c o n s u l ta n ts a n d t h e Accountant General responded in a letter to 2 5 J u n e 2 0 1 4 a n d p e r h a p s I s h o u l d tu r n t o i t C h a ir. Tr a n s n e t dated It is Annexure P V 4 9 w h ic h i s t h e l a s t a n n e x u r e in t h e – i n m y b u n d le a n d … ADV PHILLIP MOKOENA SC : Page 1398? MR PETER STEPH EN VOLMINK : 1398. C H A I R P E R S O N : Ye s . M R P E T E R S T E P H E N V O L M I N K : A n d h e r e s p o n d s t o v a r io u s q u e s ti o n s t h a t w e h a d p o s e d t o h i m a n d u n d e r t h e – in p a r a g r a p h 7 u n d e r t h e 20 h e a d i n g “ U s e o f C o n s u l ta n ts ” t h e A c c o u n t a n t G e n e r a l q u o t e s th a t p a r a g r a p h 4 . 2 o f th e in s tr u c ti o n w h ic h I h a v e ju s t r e a d w h i c h s a y s w h a t t h e p r e s c r ip t io n s a r e fo r r e m u n e r a t io n a n d t h e n C h a i r h e s a y s t h e – h e s a i d t h e f o l lo w i n g . “ T h e a b o v e m e n ti o n e d d o c u m e n ts m e r e l y p r o v i d e t h e t a r i ff s t h a t P F M A c o m p l ia n t i n s t it u ti o n s m a y p a y Page 79 of 82 10 MAY 2019 – DAY 92 c o n s u l t a n t s a n d t h e s e ta r i ffs a r e n o t r e l a te d t o a d d it i o n a l r e v e n u e o r e a r n i n g s – i f a n y – t h a t e n t i ti e s may r e a li s e or benefit fr o m t h e ir a p p o i n t m e n t. ” A n d i t s e e m e d to o p e n t h e d o o r t o t h e p o s s i b i li ty o f a c o n t in g e n c y f e e a r r a n g e m e n t a n d I th in k o n – o n th e b a s i s o f t h is l e t te r Tr a n s n e t p r o c e e d e d t o i m p le m e n t t h e c o n ti n g e n c y f e e a r r a n g e m e n t . ADV PHILLIP MOKOENA SC: Ye s . d e a lt w i t h a n u m b e r o f tr a n s a c ti o n s . 10 N o w fi n a l ly M r Vo l m in k y o u h a v e T h e N e o t e l N e t w o r k S e r v ic e s , c o n fi n e m e n t o f t h e C C T V, t h e a w a r d o f t h e I T D a t a S e r v ic e C o n tr a c t t o T- S y s te m s , t h e 1 0 0 lo c o m o t iv e s tr a n s a c ti o n t o C h i n a S o u t h R a i l a n d th e M c K in s e y c o n s u l ti n g t h e c o n f in e m e n t t h a t y o u h a v e t a k e n u s s o e l o q u e n tly t h r o u g h . W h a t d o y o u m a k e a b o u t t h e s e c o n tr a c t s ? What d o y o u m a k e a b o u t t h e c o n d u c t g iv in g r is e t o th e is s u e s th a t y o u h a v e r a i s e d t o – b e f o r e th e C h a ir p e r s o n ? C o u ld y o u a s c r ib e t h is a s s h e e r in c o m p e t e n c e o r l a c k o f u n d e r s t a n d in g o f t h e a p p li c a b l e p r e s c r i p t s ? M R P E T E R S T E P H E N V O L M I N K : C h a ir I h a v e s o u g h t t o g iv e a c a n d i d v ie w o n th e c o m p l i a n c e w i t h p r e s c r i p ts th a t – t h a t w a s f o ll o w e d a n d i f t h e – i f t h e r u l e t h a t w a s n o fo ll o w e d if i t w a s a n o b s c u r e h ig h l y 20 c o m p lic a t e d d i ff ic u l t t o u n d e r s ta n d p r o v is i o n th e n I – I w o u l d b e m o r e in c li n e d to th i n k t h a t t h e r e c o u l d b e ju s t i n n o c e n t b u n g l in g b u t C h a ir i f w e l o o k a t t h e r u l e s a r o u n d h o w c o n f in e m e n t s a r e s u p p o s e d to b e d o n e t h e p r i n c i p l e th a t y o u c a n n o t p a y s o m e o n e b e f o r e y o u a w a r d a te n d e r t o t h e m - a ll t h e o th e r b r e a c h e s t h a t I h a v e d e a l t w i t h o v e r t h e l a s t t w o d a y s C h a i r i t is n o t d e e p ly c o m p le x p r in c i p le s t h a t w e r e n o fo ll o w e d a n d Page 80 of 82 10 MAY 2019 – DAY 92 it – i t s u g g e s t s i n m y v i e w a n – a n e l e m e n t o f e i t h e r g r o s s n e g l ig e n c e o r w il f u l n e s s in – i n n o t fo ll o w i n g t h e t r a n s a c ti o n s . ADV PHILLIP MOKOENA SC: C h a ir t h a t is – t h a t c o n c lu d e s t h e q u e s t io n s f o r M r Vo l m in k . CHAIRPERSON : N o , t h a n k y o u . T h a n k y o u v e r y m u c h M r Vo l m i n k f o r c o m i n g fo r w a r d t o c l a r if y t h e e x p e r i e n c e s t h a t y o u f o u n d a t Tr a n s n e t w i t h r e g a r d t o th e s e p a r ti c u la r tr a n s a c t i o n s a n d y o u r u n d e r s t a n d in g o f t h e p r o c u r e m e n t p r e s c r i p ts a p p li c a b l e t o Tr a n s n e t d u r in g t h e t i m e s o f t h e s e tr a n s a c t i o n s a n d i f a n e e d a r is e s y o u w i ll b e a s k e d t o c o m e b a c k , 10 thank you very much you are release. MR PETER STEPH EN VOLMINK : CHAIRPERSON : T h a n k y o u C h a ir. Th a n k y o u . ADV PHILLIP MOKOENA SC: T h a n k y o u C h a ir, M r P r e to r i u s w i ll address you. A D V PA U L J O SE PH PR ETO R IU S S C : C ha ir th e n e x t w itn es s fo r Tr a ns n e t is Mr Mo h o me d y h e w o n’t giv e e v ide n c e to d ay b ec a u s e w e ar e a djo ur n in g ea rly to d ay. C H A IR PER S O N : Ja . A D V PA U L J O SE PH PR ETO R IU S SC : 20 An d I u n d e rs ta n d th a t Mo n d a y a s w ell a s Tu e s da y th e C ha ir a n d o th er s ar e o th e rw i se e n ga g e d an d th a t u nle ss y o u d e cid e o th er w is e C h a ir w e w ill b e gin o n We d n e sd a y o nc e mo r e a t 1 0a m w ith Mr Mo h a m me d , h is ev id en c e fo r Tra n s n e t. C H A IR PER S O N : Ye s w e w ill n o t sit o n Mo n d a y an d Tu e s d a y w e will re s u me o n We d n e s d ay. I w as thin kin g tha t we s h o u ld try, n ex t we e k to sta r t e ar lier th a n no r ma l to tr y a n d – if w e c a n r ec o u p s o me o f th e time Page 81 of 82 10 MAY 2019 – DAY 92 th a t w e will h a v e lo s t. We mig h t n o t b e a b le to r e co u p a ll o f it, d o yo u – ar e y o u a ble to in d ic a te wh e th er th er e w ill b e a ny d iffic ulties fro m th e leg a l te a m if w e s tar t e a rly o n We d n e s d ay ? A D V PA U L J O SE PH PR E TO R IU S SC : We ll th e re ’s tw o is s u es th e av a ila b ility o f th e witn e ss a n d the ev id e n ce le a d er th a t ca n alw a ys b e ar ra n g e d . C H A IR PER S O N : Ye s . A D V PA U L J O S EPH PR E TO R IU S SC : T h e o th er, h o w ev er, is th a t t h e leg a l tea m a r e in v olv e d in o th er tas ks s o it r e d uc e s th a t time b u t if th e 10 pr o gr a mme p e r mits , th e n c er ta in ly o ur pr e fe re n ce w o uld b e for the n or ma l h o urs b u t if y o ur c o nc er n is to ma k e u p time , th e n w e s h a ll jus t h a v e to sta r t a t 9 . C H A IR PER S O N : D o w e h a ve a n ide a h o w lo n g th e n ex t w itn e ss is lik e ly to b e o n n e x t w e e k ? A D V PA U L J O S EPH PR E TO R IU S SC : Tw o d ay s a n d I’m in for me d b y Mr Mo k o e na th a t if w e s tar t a t 1 0 o n We d n es d ay a n d Th ur s da y w e w ill finis h Mr Mo h o ma d y in two d a ys . C H A IR PER S O N : In tw o d a y s , o ka y ma y b e le t’s s tar t a t 1 0 o ’c lo ck o n We d n e sd a y if we n e e d to c h a n g e w e ’ll a n n o u nc e . So o n We d n es d a y w e ’ll 20 sta r t a t 1 0 . A D V PA U L J O S EPH PR E TO R IU S SC : C H A IR PER S O N : Th a nk y o u C h a ir. Ye s , w e ’ll th e n ad jo ur n fo r to d ay, w e a djo u rn . I N Q U I RY A D J O U R N S TO 1 5 M AY 2 0 1 9 Page 82 of 82