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 2 3 M AY 2 0 1 9 D AY 9 7 20 23 MAY 2019 – DAY 97 P R O C E E D I N G S H E L D O N 2 3 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 s S e l l o , g o o d m o r n i n g e v e r y b o d y. A D V M A H L A P E S E L L O : G o o d m o r n i n g C h a ir. A D V M A H L A P E S E L L O : Th a n k y o u . ADV MAHLAPE SELLO: C h a ir b e f o r e w e c o n ti n u e w i t h t h e t e s ti m o n y o f M r C a ll a r d . C H A I R P E R S O N : J u s t o n e s e c o n d M s S e l lo . M s Z o n ic a c o u l d y o u t e l l t h e m t o m a k e s u r e th a t t h e c h a ir th a t I n o r m a lly u s e i s h e r e b y – y e s . ADV MAHLAPE SELLO: 10 T h a n k – t h a n k y o u C h a ir. Chair before we c o n ti n u e w i t h th e t e s ti m o n y o f M r C a ll a r d t h is m o r n i n g I w o u l d li k e t o r e fe r t h e C h a ir t o Ex h i b it B B 4 [ c ] I c a ll e d i t t h e b l a c k f o l d e r. CHAIRPERSON : Hm. A D V M A H L A P E S E L L O : A n d I w o u l d l ik e t o p o i n t o u t c e r t a i n t h i n g s in r e s p e c t o f th a t fo l d e r. C H A I R P E R S O N : Ye s . A D V M A H LA P E S E L L O : T h e C h a ir w il l r e c a l l t h a t w h e n w e p a r t e d o n M o n d a y t h a t f o l d e r h a d B B 4 [ c ] a n d B B 4 [ d ] . I n d e a li n g w i t h B B 4 [ d ] a n d a t p a g e – fr o m p a g e s 2 6 M r C a l la r d r e f e r r e d t o t h r e e d i ff e r e n t r e s p o n s e s b y C N R t o th e – a s r e g a r d s t h e q u e s t io n o f i m p a c t o f T E o n 20 t h e ir p r ic e . T h e C h a ir t h e n r e – w a n t e d t o f in d o u t i f t h e r e q u e s t f r o m Tr a n s n e t f o r c la r i fi c a t io n w a s in c l u d e d i n th e b u n d l e a n d M r C a ll a r d ’s r e s p o n s e w a s th a t i t w a s n o t in h i s b u n d l e . Over the two days Mr C a ll a r d h a s lo c a t e d t h e r e q u e s t , h a s fi le d a f u r th e r s u p p l e m e n ta r y a ffi – a s t a t e m e n t i n o r d e r t o in tr o d u c e th is r e q u e s t a n d t h a t C h a ir n o w h a s been tendered in as BB4[e]. Page 2 of 206 23 MAY 2019 – DAY 97 C H A I R P E R S O N : O k a y n o th a t i s f in e . A D V M A H L A P E S E L L O : Th a n k y o u C h a ir. C H A I R P E R S O N : T h a n k y o u . O k a y. ADV MAHLAPE SELLO: T h e n M r C a ll a r d i f w e m a y c o n ti n u e w e a r e u n d e r t i m e p r e s s u r e s t o d a y w e a r e e n c r o a c h i n g o n M r M o k o e n a ’s t i m e s o th e l e s s w e c a n i n c o n v e n i e n c e h i m a n d th e w i tn e s s a n d t h e C h a ir o f c o u r s e th e b e t t e r. T h a n k y o u . M R F R A N C I S Q U E N T I N C A L LA R D : U n d e r s t o o d . ADV MAHLAPE SELLO : Just to… 10 C H A I R P E R S O N : W e l l th e b o t t o m li n e i s y o u m u s t s t il l b e a b l e t o g i v e y o u r e v i d e n c e p r o p e r ly. O k a y. So yes there is that factor but make s u r e t h a t y o u a r e a b l e t o g i v e y o u r e v id e n c e p r o p e r ly a n d d o n o t – s o do not be under too much pressure. M R F R A N C I S Q U E N T I N C A L LA R D : T h a n k y o u C h a ir. CHAIRPERSON : D o n o t fe e l u n d e r to o m u c h p r e s s u r e . O k a y. Just m a k e s u r e th a t w e – w e – I h e a r e v e r y t h i n g t h a t is i m p o r t a n t t h a t y o u need to tell me. M R F R A N C I S Q U E N T I N C A L LA R D : T h a n k y o u C h a ir. C H A I R P E R S O N : O k a y. 20 A D V M A H LA P E S E L L O : Th a n k y o u C h a ir. W h e n w e p a r t e d a c c o r d i n g t o m y r e c o r d s M r C a ll a r d w e w e r e a t p a g e 4 9 o r y o u r s t a te m e n t a n d y o u had ta k e n the C h a ir through th e i n c o n s is t e n c i e s regarding the in t e r p r e t a ti o n o f B A F O a c r o s s t h e d i e s e l b i d d e r s . M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t . A D V M A H LA P E S E L L O : W e r o s e b e f o r e y o u d e a lt w i t h y o u r p a r a g r a p h Page 3 of 206 23 MAY 2019 – DAY 97 1 9 0 w h ic h is a c t u a l ly t h e c o n c l u s io n o f t h a t c h a p t e r. M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t . ADV MAHLAPE SELLO: S o i f w e c a n p i c k it u p fr o m t h e r e a n d t h e n o v e r l e a f y o u s t a r t o n a d i ff e r e n t is s u e w h ic h i s a n a ly s i n g t h e B A F O p r i c e i ts e l f a n d i ts r e f le c t i o n o f t h e r e a l c o s t o f t h e a c q u i s i ti o n o f th e lo c o m o t iv e . M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s c o r r e c t y e s c o r r e c t s o . A D V M A H L A P E S E L L O : T h e n i f y o u c a n t a k e u s t h r o u g h th a t . Ye s w e are now at your 190 at page 49. 10 M R F R A N C I S Q U E N T I N C A L LA R D : T h a n k y o u c o u n s e l . A D V M A H L A P E S E L L O : O r p e r h a p s y o u m i g h t w a n t t o s u m m a r is e fr o m 1 8 8 b e c a u s e I – ju s t t o m a k e – p l a c e th i n g s in p r o p e r c o n te x t. C H A I R P E R S O N : I t h in k t h e l a s t t h i n g I s a i d w h e n w e – j u s t b e f o r e w e a d j o u r n e d w a s t h a t t h is m o r n i n g h e w o u l d n e e d t o r e c a p o n t h e l a s t point he was making. A D V M A H L A P E S E L L O : Ye s C h a ir. CHAIRPERSON : Before we adjourned. A D V M A H L A P E S E L L O : Ye s C h a ir. C H A I R P E R S O N : S o I t h i n k th a t i s w h e r e w e s h o u l d s t a r t. 20 ADV MAHLAPE SELLO: paragraphs 181. A n d C h a ir o n m y n o t e s w e h a d d e a l t w i t h H e h a d s t a r t e d o n t h e in c o n s is t e n t in t e r p r e ta t io n o f B A F O a c r o s s t h e d i e s e l l o c o m o tiv e s . CHAIRPERSON : Hm. A D V M A H LA P E S E L L O : J u s t t o m a k e s u r e I a m o n th e s a m e p a g e w i t h t h e C h a ir. Page 4 of 206 23 MAY 2019 – DAY 97 C H A I R P E R S O N : U n f o r t u n a t e ly I d id n o t m a k e p o i n t – I d i d n o t n o t e t h e p o i n t t h a t t h e r e w a s a p o i n t h e w a s m a k in g w h ic h I h a d n o t u n d e r s t o o d o r h e m i g h t n o t h a v e fi n is h e d t o d e a l w i t h p r o p e r ly a n d t h a t is w h y I s a i d p l e a s e w h e n w e r e s u m e – s ta r t fr o m t h e r e r e fr e s h o u r m e m o r y b e c a u s e I h a d n o t h e a r d i t p r o p e r l y. S o I d i d n o t m a k e a n o t e w h a t t h e p o i n t w a s . Mr C a ll a r d d o y o u r e m e m b e r w h a t t h e p o i n t w a s ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s M r C h a ir. CHAIRPERSON : Hm. MR FRANCIS QUENTIN CALLARD : 10 If I m a y r e c a p v e r y b r i e fly g o i n g b a c k to 1 8 2 . C H A I R P E R S O N : Ye s , y e s . A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QUENTIN CALLARD : O f m y s t a te m e n t . This was a r e q u e s t o n t h e 2 0 D e c e m b e r 2 0 1 3 to C N R a n d o t h e r d i e s e l b id d e r r e q u e s t in g a n e x p la n a ti o n o f t h e c o s t p e r th e A n n e x u r e E . And I o u t li n e d i n 1 8 2 t h e b r e a k d o w n o f th e A n n e x u r e E c o s ts f o r C N R a n d t h e ir r e s p o n s e . N o t in g t h a t – a n d w i t h o u t r e f e r r in g to th e b u n d l e b u t ju s t l o o k in g a t th e t a b l e o n – u n d e r p a r a g r a p h 1 8 2 t h a t o n t h e fo u r t h li n e – s o r r y f o u r th – t h ir d l i n e i n th a t t a b l e , t h e t h i r d e l e m e n t i n th a t 20 t a b le , a d m i n , o v e r h e a d s , m a r k - u p , m a r k e ti n g , i n s u r a n c e , fi n a n c i n g , in t e r e s t e tc e te r a a n d t h a t a m o u n t s t o s o m e 5 . 2 b i ll io n w h ic h t h e y q u o t e in t h e ir A n n e x u r e E . I n b r i e fl y i n s u m m a r y t h e n o n t h e 4 J a n u a r y 2 0 C N R r e p l i e d t o t h is o n t h e 2 2 D e c e m b e r a n d t h a t is i n th e r e a n d t h e y ju s t g iv e a f u r t h e r e x p o s i ti o n o f t h a t . I d o n o t th in k it i s n e c e s s a r y t o g o b a c k to t h a t b u t t h e p o in t t h a t w e w e r e – th a t I w a s s e e k in g t o m a k e Page 5 of 206 23 MAY 2019 – DAY 97 w a s t h a t o n t h e 4 J a n u a r y t h e d i e s e l b i d d e r s w e r e i n v i te d t o s u b m i t t h e ir b e s t a n d fi n a l o ff e r s . Th e r e w a s a l e t t e r t o C N R th e r e s p o n s e w a s t h e d u e o n t h e 1 0 J a n u a r y C N R r e p li e d in t h e m e a n t i m e w i th t w o l e t te r s r e q u e s t in g a fo u r t e e n d a y e x t e n s i o n a n d th e n a 2 1 d a y e x t e n s i o n b u t o n t h e 1 0 J a n u a r y th e y r e p l ie d a n d h e r e I a m r e f e r r in g to p a r a g r a p h 1 8 7 o n 4 9 a n d I a m q u o t in g fr o m th a t p o in t – f r o m s u b - p a r a g r a p h 1 8 7 . 1 . “ We h a v e r e d u c e d o u r b a s e p r ic e i n t h e t o ta l c o s t o f ownership as referred to in your [as referred to in y o u r le t t e r o f 4 J a n u a r y 2 0 1 4 ] f r o m 3 9 m il li o n 10 r o u n d e d o r 3 9 . 7 m ill i o n r o u n d e d t o 2 7 .3 m il li o n rounded. This p r ic e r e la t e s to the cost of m a n u f a c t u r e a n d d o e s n o t in c l u d e tr a i n in g c o s ts , lo g i s t ic s , r o y a l t ie s , t e c h n ic a l support, service c h a r g e , fi n a n c e c o s t s a n d c o n ti n g e n c i e s e t c e t e r a .” A n d t h e p o in t w h ic h I w is h t o m a k e is th a t I b e l ie v e th is q u a li f ic a ti o n d o e s n o t c o n s ti t u t e a c o m p a r a t iv e b e s t a n d fi n a l o ff e r p r ic e w it h th a t w h ic h w e h e a r d fr o m G E . I n s u p p o r t o f t h is c o n t e n ti o n b e li e f i t s h o u l d b e n o te d t h a t t h e r e d u c t io n o f 1 2 . 3 m il li o n p e r lo c o m o t iv e r o u n d e d i f o n e m u l ti p li e s t h a t b y t h e 4 6 5 d i e s e l l o c o m o tiv e s fo r w h ic h t h e y b i d t h i s 20 e x c e e d s t h e a m o u n t o f th e 5 . – th is a m o u n ts t o s o m e 5 .7 b i ll io n w h i c h e x c e e d s t h e e n tir e a m o u n t i n th e ir A n n e x u r e E fr o m th e R F P a n d I t a k e o n e b a c k th e r e to t h e p a g e – to t h e p a r a g r a p h 1 8 2 fr o m w h ic h I w a s q u o ti n g p r e v i o u s ly. I n e s s e n c e w h a t t h e B A F O p u r p o r ts t o b e i s th is s ig n if ic a n t r e d u c ti o n o f o v e r R 1 2 m il li o n p e r lo c o m o t iv e t h a t r e d u c ti o n n e g a te s a l l th e e le m e n ts i n t h e ir A n n e x u r e E . A n d w h y I b e li e v e t h is Page 6 of 206 23 MAY 2019 – DAY 97 n o w t o b e p r o b l e m a t ic is i f w e c o u ld p l e a s e ju s t p ic k t h i s u p i n Annexure A 66. ADV MAHLAPE SELLO: A66? M R F R A N C I S Q U E N T I N C A L LA R D : A 6 6 w h ic h i s a t p a g e 5 8 3 . A D V M A H L A P E S E L L O : A n d th a t C h a ir w i ll b e i n B B 4 [ b ] . C H A I R P E R S O N : T h a n k y o u . T h e p a g e is 5 8 6 a n d th e d iv i d e r is ? A D V M A H L A P E S E L L O : Th e – i t is t h e A n n e x u r e 6 6 t h a t is d iv i d e r 6 6 . M R F R A N C I S Q U E N T I N C A L LA R D : A n n e x u r e 6 … A D V M A H L A P E S E L L O : W h ic h s ta r t s a t 5 8 3 . 10 M R F R A N C I S Q U E N T I N C A L LA R D : 3 . A D V M A H L A P E S E L L O : A n d y o u s p e c i fic a lly w a n t to t a k e u s t o p a g e ? MR FRANCIS QUENTIN CALLARD: I w o u l d li k e t o t a k e u s to p a g e please 589. 589… A D V M A H L A P E S E L L O : N o w f o r th e r e c o r d C h a ir it is 6 6 A , 5 8 9 is 6 A . M R F R A N C I S Q U E N T I N C A L LA R D : A . A D V M A H L A P E S E L L O : Yo u r e c a ll 6 6 is i n t w o p a r ts . M R F R A N C I S Q U E N T I N C A L LA R D : 6 6 i s i n t w o p a r ts . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : T h a n k y o u . 20 C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : 6 6 A is th e l e g i b l e c o p y. A D V M A H L A P E S E L L O : Ye s , y e s . C H A I R P E R S O N : O k a y. Ye s . ADV MAHLAPE SELLO: We are there. MR FRANCIS QUENTIN CALLARD: T h a n k y o u . T h a n k y o u C o u n s e l. Page 7 of 206 23 MAY 2019 – DAY 97 C h a ir th e p o in t is – I w i s h t o m a k e i s t h a t t h is q u a li f ie d B A F O d o e s n o t in c l u d e a ll t h e s e i t e m s , c o n t in g e n c i e s a n d t h e w o r d e tc e t e r a . If we lo o k a t p a g e 5 8 9 w h ic h is n o w t h is l e g i b l e c o p y a n d a t t h e b o t t o m j u s t a b o v e th e n o t e w e h a v e t h e la s t li n e is f o r e x d u e t o t h e d i ff e r e n c e . T h e y e x p l a in th e d i ffe r e n c e b e tw e e n th e fir s t a n d th e s e c o n d B A F O ’s a n d w e w i ll s e e t h e r e th e d i ff e r e n c e i s m a d e u p o f t h e w o r d s u s e d a r e d is c o u n t o n p r ic e . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : 10 S o t h is q u a li f ie d B A F O w i th a l l t h e s e q u a li fi c a t io n s is ta k e n fo r w a r d i n t o t h is e v a l u a ti o n d o c u m e n ts a s a d i s c o u n t . I t is m y b e li e f a n d c o n t e n t io n t h a t a q u a l i fic a t io n li k e t h is c a n n o t b e p r e s e n t e d o r s h o u ld n o t b e p r e s e n t e d a s a n u n q u a l i fi e d d is c o u n t is t h e p o i n t I w i s h t o m a k e o n th is o n e . ADV MAHLAPE SELLO: Mr Callard I do not know if you ar e able to a s s is t . I n r e a d i n g A n n e x u r e 9 8 w h ic h is C N R ’s r e s p o n s e o f t h e 1 0 J u n e 2 0 1 4 i n d ic a ti n g a d r o p i n p r i c e fr o m 3 9 to 2 7 a t – t h a t is y o u r p a r a g r a p h 1 8 7 y o u h a v e q u o te d i t t h e r e . M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . ADV MAHLAPE SELLO: 20 W o u ld o u r r e a d i n g b e c o r r e c t i f w e c o n c lu d e t h a t t o th e e x t e n t t h a t th a t is a r e s p o n s e t o t h e le t t e r – t h e i n v i t a ti o n b y Tr a n s n e t a s p e r p a r a – a s p e r A n n e x u r e 9 5 y o u w il l w i th t h is i s 1 8 4 . T h a t r e s p o n s e w e n t b e y o n d w h a t Tr a n s n e t r e q u ir e d o f t h e b i d d e r s t o do? M R F R A N C I S Q U E N T I N C A L L A R D : I n d e e d y e s t h a t is c o r r e c t. I t is a r e s p o n s e t o t h e a n n e x u r e in Page 8 of 206 23 MAY 2019 – DAY 97 ADV MAHLAPE SELLO: 95. M R F R A N C I S Q U E N T I N C A L LA R D : T h e l e t te r i n A n n e x u r e 9 5 a n d I w o u ld a ls o a g r e e t h a t i t g o e s b e y o n d – t h e r e s p o n s e is b e y o n d w h a t w a s r e q u e s t e d in t h e b a s e – i n th e le t t e r o f A n n e x u r e – in t h e l e t te r o f t h e 4 J a n u a r y. A D V M A H L A P E S E L L O : Th e 4 J a n u a r y. M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . ADV MAHLAPE SELLO: Now looking at the response and what CNR c la i m s t o h a v e b e e n d e d u c t e d t o r e d u c e t h e p r i c e t o 2 7 m i l l io n b a s e d 10 o n y o u r k n o w l e d g e a n d e x p e r i e n c e a r e th o s e c o s ts r e le v a n t to determining th e c o s ts that are deducted are they r e le v a n t to d e t e r m i n i n g t h e to t a l c o s t s t o b e i n c u r r e d b y Tr a n s n e t f o r th e a c q u is i ti o n o f t h e l o c o m o ti v e o r a r e t h e s e o p t io n s t h a t c a n b e i g n o r e d ? M R F R A N C I S Q U E N T I N C A L L A R D : T h e s e a r e n o t o p t io n s i n t h e s e n s e t h a t w e w o u ld n o r m a l ly u n d e r s t a n d t h e w o r d o p t io n s a s a p p li e d t o t h e lo c o m o t iv e o f m a k i n g it f it f o r p u r p o s e . A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QUENTIN CALLARD: T h e s e a r e e l e m e n ts o f a p r ic e to p r o v i d e a l o c o m o t iv e i f I m a y c a ll i t fr e e o n s i d i n g . 20 T h e r e is t h e lo c o m o t iv e f r e e – o r e x w o r k s . A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QUENTIN CALLARD: R e a d y fo r d e l iv e r y. I h ig h li g h t e d t h e p o i n t o n my p a r a g r a p h 1 8 2 . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L L A R D : T h a t w e h a v e n o w ta k e n o u t a l l o f Page 9 of 206 23 MAY 2019 – DAY 97 t h e m a n p o w e r c o s ts , fa c t o r y o v e r h e a d s , a d m i n o v e r h e a d s a n d i f th e w o r d in g is t o b e b e l ie v e d m a y I u s e t h a t p h r a s e , o v e r h e a d s a n d m a r k u p w h ic h w o u l d i m p ly t h a t w e l l t h a n k y o u I h a v e s a c r i fi c e d m y e n tir e mark-up by taking t h is out. What I – I cannot explain the in c o n s is t e n c i e s I o n ly s e e t h e i n c o n s is te n c ie s a n d th e u s e o f t h e w o r d e tc e t e r a a s I h ig h l i g h t e d e a r l ie r is – d o e s n o t c o n s ti t u t e a B A F O i t is a q u a li fi e d p r ic e w h ic h c a n n o t b e t a k e n i n to a d is c o u n t . ADV MAHLAPE SELLO: O k a y. Tr a n s n e t t h e n r e c e iv e s th is A n n e x u r e 9 8 w h ic h i s C N R ’s r e s p o n s e . 10 M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : To t h e r e q u e s t f o r c l a r i f ic a ti o n a s r e g a r d s t h e h e d g i n g a n d e s c a l a t i o n s , w h a t t h e n tr a n s p i r e s ? M R F R A N C I S Q U E N T I N C A L L A R D : I n o t t h is b e c a u s e a n d i t s t r u c k m e a s b e i n g u n u s u a l . I d o n o t s a y i t is i n c o r r e c t I o n l y s a y i t w a s u n u s u a l t h a t f o l lo w in g t h i s r e s p o n s e t h e n o n t h e 1 4 J a n u a r y a n d t h a t c o r r e c t – o n p a r a g r a p h 1 8 8 t h a t c o r r e c t i o n is n o t e d t h a t M r M o l e fe w r i te s t o C N R . A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QUENTIN CALLARD : U n d e r h is s i g n a t u r e th a t t h e 1 0 J a n u a r y r e s p o n s e i n te r a li a d id n o t in d ic a t e t h e f o r e i g n c u r r e n c y 20 a m o u n t p e r in d i v i d u a l c u r r e n c y a n d a m o u n t b o l d a n d u n d e r li n e d . In e s s e n c e h i g h li g h ti n g t h a t C N R d i d n o t f u ll y r e s p o n d t o t h e i r l e tt e r. C N R r e s p o n d s o n t h e 1 4 J a n u a r y o n t h e s a m e d a y r e f e r r i n g b a c k t o th e ir t e n d e r p r o p o s a l o f t h e 3 0 A p r i l th a t th is w a s – t h a t t h e r e a p p e a r s t o h a v e b e e n c o n s i d e r a b le p r e s s u r e o n th is b e c a u s e o n th e 1 5 J a n u a r y 2014 the and I am reading paragraph 190. Page 10 of 206 23 MAY 2019 – DAY 97 “ T h e c r o s s f u n c ti o n a n d e v a l u a ti o n t e a m fi n a n c e s u b m i t t h e r e s u l ts o f t h e ir b e s t a n d fi n a l o ff e r r e s p o n s e s t o t h e L o c o m o t iv e S t e e r i n g C o m m i t t e e .” A n d t h is i s o n – t h i s is A n n e x u r e 6 6 . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L L A R D : M r M o l e fe ’s l e t t e r m a y b e fo u n d a t A n n e x u r e 9 9 w h i c h is p a r a g r a p h – p a g e ADV MAHLAPE SELL O : Annexure 7. M R F R A N C I S Q U E N T I N C A L LA R D : 7 8 8 . 10 A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : H is l e t te r o f th e 1 4 J a n u a r y to C N R r e q u e s t in g a n d i t g o e s o u t u n d e r h i s p e r s o n a l s i g n a t u r e . A D V M A H LA P E S E L L O : How – if one has regard to the response of t h e 1 0 J a n u a r y w h i c h s t a t e s t h a t t h e p r ic e h a s n o w r e d u c e d t o 2 7 m il li o n p e r lo c o m o t iv e . M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : A n d th e n … M R F R A N C I S Q U E N T I N C A L LA R D : O r s o r r y b y 2 7 m i ll io n . A D V M A H L A P E S E L L O : N o r e d u c e d t o 2 7 m il li o n , 20 M R F R A N C I S Q U E N T I N C A L LA R D : O h s o r r y t o 2 7 m i ll io n . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : Ye s , s o r r y, s o r r y, a p o lo g ie s . A D V M A H L A P E S E L L O : A n d a t t h e s a m e ti m e i n r e s p o n s e t o a f u r th e r le t t e r fr o m Tr a n s n e t to C N R i n d i c a t in g t h a t i t d i d n o t in d ic a t e th e f o ll o w i n g c u r r e n c y a m o u n t p e r i n d iv i d u a l c u r r e n c y a n d a m o u n t w h e n Page 11 of 206 23 MAY 2019 – DAY 97 C N R r e f e r s Tr a n s n e t b a c k to th e ir t e n d e r p r o p o s a l o f 3 0 A p r i l 2 0 1 3 a s y o u s ta t e i n y o u r 1 8 9 . M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H LA P E S E L L O : Ar e w e t h e n n o t t a l k i n g a b o u t t w o d i ff e r e n t p u r c h a s e p r ic e s ? D i d th e 3 0 A p r i l 2 0 1 3 t e n d e r p r o p o s a l a ls o p r o p o s e a p r i c e o f 2 7 m il li o n ? I a m tr y i n g t o r e c o n c il e th a t r e s p o n s e to w h a t i s s t a te d i n th e ir l e tt e r o f 1 0 J a n u a r y r e d u c i n g t h e p u r c h a s e p r ic e b y 1 4 m il li o n – b y 1 2 m i ll io n ? M R F R A N C I S Q U E N T I N C A L L A R D : N o t h e b a s e p r ic e I w o u l d g o b a c k 10 to 187.1. A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L L A R D : T h e ir w o r d in g w e h a v e r e d u c e d o u r b a s e p r i c e in t h e T C O m o d e l a s r e f e r r e d to i n y o u r le t t e r fr o m 3 9 , 7 m il li o n r o u n d e d d o w n t o 2 7 . 3 . S o 3 9 .7 m ill i o n r e f e r s I d o n o t w a n t t o s a y e x a c t ly a t t h e m o m e n t w e c a n c h e c k t h a t u p t o t h e ir o ff e r o f t h e A p r il 2 0 1 3 . ADV MAH LAPE SELL O: 2013. M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . ADV MAHLAPE SELLO: 20 S o w h e n t h e y – t h e r e f e r Tr a n s n e t b a c k t o t h a t o ff e r w h e n t h e 3 9 h a s r e d u c e d to 2 7 d o e s th a t a d d r e s s th e q u e r y c o n ta in e d i n y o u r p a r a g r a p h 1 8 8 ? Because we are now talking two d i ff e r e n t p r ic e s . W e s ta r t e d a t 3 9 w h ic h i s w h a t w a s in th e i r p r o p o s a l in A p r i l 2 0 1 3 w h a t e i g h t m o n t h s l a t e r th e y s a y th a t p r ic e h a s r e d u c e d t o 2 7 m il li o n ? O n 1 4 J a n u a r y w h e n i t i s i n d ic a te d t h a t t h e y d o n o t in d i c a t e th e f o r e i g n c u r r e n c y a m o u n t p e r i n d iv id u a l c u r r e n c y a n d Page 12 of 206 23 MAY 2019 – DAY 97 a m o u n t t h e y r e f e r y o u b a c k t o t h e ir o r ig i n a l p r o p o s a l . M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t . W h e n a – s o r r y. A D V M A H L A P E S E L L O : Ye s . N o m y q u e s t io n i s c a n y o u a s s is t u s i n r e c o n c i li n g a ll t h e s e d o c u m e n t s ? MR FRANCIS QUENTIN CALLARD: When a l o c o m o ti v e b i d is s u b m i tt e d o n e is a s k e d fo r a n e ff e c ti v e ly a r a n d p r i c e . A D V M A H L A P E S E L L O : Ye s . M R FR A N C I S Q U E N T I N C A L L A R D : O n e i s a s k e d fo r th e l o c a l c o n t e n t . O n e a s k s t h e b i d d e r s to s p e c i fy th e ir lo c a l c o n t e n t . 10 One asks the b i d d e r s t o s p e c if y w h a t is th e i m p o r t e d c o n t e n t o f th e l o c o m o ti v e i n – a n d in t h e f o r e i g n c u r r e n c y a n d i t m a y b e i n o n e o r m o r e fo r e i g n c u r r e n c ie s . Th e r e w e r e – in th e 1 0 6 4 i t w a s g e n e r a ll y in d o ll a r b u t t h e r e w a s a ls o a b i d w h ic h h a d b o t h d o ll a r a n d e u r o s . O n e a ls o a s k s – t h e b i d d e r s a r e a ls o a s k e d t o s ta t e t h e d a t e o n w h ic h th e y h a v e a p p l i e d t h a t c u r r e n c i e s i n d e t e r m i n i n g t h e ir f in a l l o c o m o t iv e p r i c e . S o t h e – f o r C N R t h e d o ll a r c o m p o n e n t o f t h e ir lo c o m o tiv e p r i c e w h ic h w a s a s k e d f o r in t h e – in t h e le t t e r i f I m a y b e c o r r e c t t h e r e t h e y j u s t r e f e r b a c k t o t h e ir o r i g i n a l b i d . S o n o tw i th s ta n d i n g h a v in g r e d u c e d th e o r g iv e n a q u a li fi e d i f I m a y u s e t h e q u a l i fi e d B A F O p r ic e o f n o w s o m e 2 7 .3 m i ll i o n 20 p e r l o c o m o ti v e t h e y s a y t h a t t h e d o l l a r c o m p o n e n t o f t h e lo c o m o tiv e , t h e i m p o r te d c o m p o n e n t h a s n o t c h a n g e d . B y i m p l ic a t i o n o f t h is b y u s i n g i n v e r s e l o g i c i t w o u l d s e e m th a t th e t o t a l a m o u n t w h i c h t h e y h a v e t h e n d is c o u n t e d w o u ld h a v e b e e n a S o u t h A f r ic a n R a n d b y i m p l ic a ti o n , b y i n v e r s e lo g i c . A D V M A H L A P E S E L L O : O k a y. Ye s . T h a t c l a r i f ic a t i o n I w a n te d t o g e t Page 13 of 206 23 MAY 2019 – DAY 97 t h a n k y o u . A n d y o u d o i n d ic a t e th a t t h e n e x t d a y t h e n w h a t is r e f e r r e d t o a s th e b e s t a n d f in a l o ff e r r e s p o n s e s a r e th e n s u b m it t e d to t h e c r o s s f u n c t i o n e v a l u a ti o n t e a m ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s a l s o b y th e C F E T. ADV MAHLAPE SELLO: A n d t h a t is t h e fi g u r e t h a t f in d s it s w a y in t o page 589 Annexure B of 589? M R F R A N C I S Q U E N T I N C A L L A R D : Ye s m a y I s a y w h il e I – lo o k t h a t up. A D V M A H L A P E S E L L O : Th e ta b le 6 6 A . 10 MR FRANCIS QUENTIN CALLARD : Ta b l e 6 A . A n d th a t is t h e fi g u r e w h ic h fi n d s i ts w a y i n to 5 8 9 . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L L A R D : I t is a ls o t h e fi g u r e w h i c h fi n d s i t s w a y in t o p a g e 5 8 4 w h ic h is t h e t a b l e o n th e o p e n in g p a g e o f th e memorandum. ADV MAHLAPE SELLO: The memorandum yes. Okay then I think C h a ir w e th e n h a v e c la r i fi e d th e i s s u e s t h a t M r C a ll a r d w a n te d to d e a l w i t h o r d e a l t w it h a n d u n le s s th e r e a r e a n y c la r i ti e s r e q u ir e d t h a t w i ll bring… 20 CHAIRPERSON : Ja no you may proceed. A D V M A H L A P E S E L L O : Th a n k y o u . M R F R A N C I S Q U E N T I N C A L LA R D : M a y I j u s t m a k e o n e c o m m e n t . A D V M A H L A P E S E L L O : A b s o lu t e l y. M R F R A N C I S Q U E N T IN C A L L A R D : P le a s e M r – C o u n s e l ju s t t o b e q u i te s u r e . T h e t a b l e o n p a g e 5 8 9 Page 14 of 206 23 MAY 2019 – DAY 97 A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QUENTIN CALLARD: D e s c r i b e s h o w t h e d i ffe r e n c e is m a d e u p a n d i t a t tr i b u t e s th a t 1 2 . 3 m ill i o n a s a d is c o u n t . ADV MAHLAPE SELL O : As a discount? MR FRANCIS QUENTIN CALLARD : As a – made – the table on page 11 th e m a k e - u p a t t h a t p r i c e w h ic h in c o r p o r a te s t h a t 1 2 . 3 is t o b e f o u n d on page 589 so… A D V M A H L A P E S E L L O : W h a t d o y o u m e a n t a b l e a t p a g e 11 ? M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t t h e t a b le o n p a g e 8 4 . 10 A D V M A H L A P E S E L L O : Ye s o k a y. M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y it h a s a n e l e v e n o n i t . A D V M A H L A P E S E L L O : O h o k a y. Th e t a b l e a t 5 8 4 ? M R F R A N C I S Q U E N T I N C A L LA R D : 5 8 4 . A D V M A H L A P E S E L L O : Th a t fi g u r e s d is c o u n t e d b y 1 2 m i ll io n . M R F R A N C I S Q U E N T I N C A L LA R D : M il li o n t h e c o m p o s i t io n … ADV MAHLAPE SELL O : Is what now appears… M R F R A N C I S Q U E N T I N C A L L A R D : A n d m a k e u p o f t h a t i s o u t li n e d o n page 589. A D V M A H L A P E S E L L O : Ye s . A n d n o w i t is t h a t f ig u r e t h a t g o e s in t o 20 t h e m e m o r a n d u m f r o m th e C F E T ? M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t . ADV MAHLAPE SELL O : Okay at 584? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H LA P E S E L L O : Thank you. Yo u – y o u p r o c e e d to t h e n e x p r e s s a v i e w th a t t h e v e r y B A F O p r ic e s w h ic h a r e n o w s e t o u t i n – w e Page 15 of 206 23 MAY 2019 – DAY 97 k n o w i n th e m e m o r a n d u m a t p a g e 5 8 4 d o n o t r e fl e c t th e r e a l c o s t o f th e lo c o m o t iv e ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . ADV MAHLAPE SELL O : Can you explain why you so conclude? M R F R A N C I S Q U E N T IN C A L L A R D : T h e e s t i m a te d t o t a l c o s t o f a b u s i n e s s c a s e o r o f a m e m o r a n d u m li k e th is w o u ld b e s o t h a t t h e o r g a n i s a t io n c o u l d h a v e a n u n d e r s t a n d in g e ffe c t iv e l y o f t h e – w h a t i t i s g o i n g t o c o s t t h e m a n d o f t h e c a s h fl o w. T h e m e m o r a n d u m w h i c h h a v e s u b m i tt e d a r e n o t a r e fl e c t io n o f th e r e a l c o s t o f t h e l o c o m o tiv e s . T h e 10 – to il lu s tr a t e t h is t h e m a k e - u p o f a r e a l c o s t o f a lo c o m o t iv e i s s e t o u t in p a g e s 4 0 a n d 4 7 o f A n n e x u r e s 8 3 a n d 8 4 r e s p e c tiv e ly. May I just r e fe r t o th a t b r i e fly / A D V M A H L A P E S E L L O : O k a y. M R F R A N C I S Q U E N T I N C A L L A R D : L e t u s u s e o n e o f th e m p a g e 8 0 – Annexure 83 page 40. ADV MAHLAPE SELLO: T h a t w o u ld s t a r t a t p a g e 6 3 9 o f B B 4 [ a ] . Apologies BB4[e] my apologies. M R F R A N C I S Q U E N T I N C A L LA R D : J a . ADV MAHLAPE SELLO: BB4[b]. 20 M R F R A N C I S Q U E N T I N C A L LA R D : B B 4 [ b ] y e s . A D V M A H L A P E S E L L O : Ye s . A p o lo g i e s C h a ir. M R F R A N C I S Q U E N T I N C A L LA R D : A n d A D V M A H L A P E S E L L O : W e a r e a t B B 4 [ b ] a n d l o c a ti n g A n n e x u r e 8 3 . M R F R A N C I S Q U E N T I N C A L LA R D : A n n e x u r e 8 3 th a t f i n a l A D V M A H L A P E S E L L O : W h ic h s ta r t s a t p a g e 6 3 9 . 8 3 C h a ir. Page 16 of 206 23 MAY 2019 – DAY 97 CHAIRPERSON: That is where I was and you said sorry and then … A D V M A H L A P E S E L L O : Th a t i s w h e r e y o u w e r e . C H A I R P E R S O N : A n d th e n y o u … A D V M A H L A P E S E L L O : A n d it is b e c a u s e I g o t c o r r e c te d fr o m t h e s id e s o w h e n I c h e c k e d my fi l e s I g o t – s h e m is h e a r d – s h e t h o u g h t I h a d s a i d a ? S o C h a ir a p o l o g i e s . C H A I R P E R S O N : O k a y. A D V M A H L A P E S E L L O : W e w e r e r i g h t – i n t h e r i g h t f il e [b ] . C H A I R P E R S O N : O k a y, a lr i g h t . 10 ADV MAHLAPE SELL O : Annexure 83. CHAIRPERSON : Hm. A D V M A H L A P E S E L L O : Ye s . Ye s M r C a ll a r d w e a r e t h e r e . MR FRANCIS QUENTIN CALLARD: Thank you. I f I c o u ld t a k e y o u t h r o u g h t o p a g e 4 0 w h ic h – s o r r y t o p a g e 4 0 . A D V M A H L A P E S E L L O : Ty p e d 4 0 ? M R F R A N C I S Q U E N T I N C A L LA R D : T h e a n n e x u r e w h ic h is p a g e 6 7 9 . A D V M A H L A P E S E L L O : 6 7 9 . Ye s . CHAIRPERSON : What Annexure, w hat page? ADV MAHLAPE SELL O : Annexure 83 am I correct? 20 M R F R A N C I S Q U E N T I N C A L LA R D : A n n e x u r e 8 3 A D V M A H L A P E S E L L O : A n d a t t h a t a n n e x u r e y o u w o u ld l ik e u s t o t u r n to page 679? M R F R A N C I S Q U E N T I N C A L LA R D : 7 9 y e s . C H A I R P E R S O N : O k a y. Tr y a n d j u s t b e c o n s is t e n t a n d u s e t h e n u m b e r – p a g e n u m b e r s a t t h e t o p r i g h t h a n d c o r n e r. Page 17 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L LA R D : M y a p o l o g i e s . C H A I R P E R S O N : T h e o t h e r n u m b e r s w il l c o n f u s e u s . N u m b e r 6 7 9 . M R F R A N C I S Q U E N T I N C A L LA R D : 6 7 9 . A D V M A H L A P E S E L L O : O k a y. MR FRANCIS QUENTIN C ALLARD : A clear copy of that page because it is r e l a tiv e ly i n d is t in c t c a n b e fo u n d i n t h e s u p p l e m e n ta r y o n p a g e 2 3 o f t h e s u p p l e m e n ta r y A n n e x u r e 8 3 . T h a t h a s a c l e a r c o p y o f th a t p a g e . A D V M A H L A P E S E L L O : Ye s . C H A I R P E R S O N : A t w h a t p a g e o f t h e s u p p le m e n t a r y ? 10 M R F R A N C I S Q U E N T IN C A L L A R D : P a g e 2 3 o f th e s u p p l e m e n t a r y. Annexure 80. C H A I R P E R S O N : O h t h a t i s Ex h ib i t B B 4 ADV MAHLAPE SELLO : [c] CHAIRPERSON : [e]. A D V M A H L A P E S E L L O : [ c ] C h a ir. CHAIRPERSON : [c]? ADV MAHLAPE SELL O : [c]. Supplementary BB4[c]. C H A I R P E R S O N : O k a y. A D V M A H L A P E S E L L O : Th a n k y o u . 20 C H A I R P E R S O N : Ye s . A D V M A H L A P E S E L L O : Ye s M r C a l l a r d . MR FRANCIS QUENTIN CALLARD: W i th o u t g o i n g th r o u g h t h e d e t a i l C h a ir I ju s t w is h t o h i g h li g h t th a t t h e t a b l e a t th e t o p o f t h a t p a g e in d i c a t e s t h e e l e m e n ts w h ic h m a k e u p a l o c o m o t iv e p r ic e . C H A I R P E R S O N : Ye s . Page 18 of 206 23 MAY 2019 – DAY 97 MR FRANCIS QUENTIN CALLARD : A n d w e w il l – i f I t h e n m a y t a k e y o u t o a g a i n o n t h a t p a g e t o th e s e c o n d l a s t l in e a n d w e h a v e c o v e r e d t h is b u t I w is h to r e s t a t e t h e p o in t I w i ll t a k e i t fo r w a r d i n a m o m e n t . O n t h e s e c o n d l a s t l in e fr o m th e b o t t o m w e h a v e t h e i m p a c t o f n o t u s i n g T E a s a m a i n s u b - c o n tr a c to r a n d w i ll s e e i t is s u b tr a c te d fr o m t h a t b e c a u s e t h e l i n e b e l o w t h a t is t h e p r i c e u s e d fo r e v a l u a t io n . S o i f t h a t i s t h e p r ic e u s e d f o r e v a l u a t i o n I w o u l d n o w li k e t o – w it h t h is i m p a c t o f T E b e i n g e x c l u d e d fr o m t h i s p r i c e o n e c a n n o t u s e t h i s p r ic e f o r e v a l u a t io n n o w a s a d e te r m in a ti o n w e ll h o w m u c h d o e s th is 10 lo c o m o t iv e c o s t b e c a u s e I h a v e e x c l u d e d a n e l e m e n t o f t h e p r ic e ? So w i t h th e s e p r ic e s m a k i n g t h e ir w a y i n to t h e m e m o r a n d u m a s w e h a v e s e e n fr o m t h e C F E T g o i n g f o r w a r d w h ic h w e h a v e j u s t s p o k e n a b o u t t h e p r i c e g i v e n fo r w a r d a n d t a k e n f o r w a r d i n t o t h e o r g a n is a ti o n is n o t th e tr u e c o s t o f t h e l o c o m o ti v e . T h e r e a s o n o r in s u p p o r t o f t h i s i s a n d w e w i ll s h o w l a te r t h a t th is T E c o m p o n e n t p r ic e t h e i m p a c t o f T E is l a t e r a d d e d b a c k to t h is c o s t w h e n t h e y c o m e t o d e t e r m i n e th e a c t u a l c o s t t o t h e l o c o m o t iv e . S o b y n o t ta k i n g t h is f o r w a r d w h ic h e v e r h ie r a r c h y t h e s e m e m o r a n d u m s a r e p la y i n g th r o u g h t h e y a r e n o t i n d i c a t iv e o f t h e r e a l c o s t o f a l o c o m o ti v e a n d t h a t w a s th e k e y p o i n t w h i c h I m a k e h e r e . 20 ADV MAHLAPE SELLO: Huh-uh. M R F R A N C I S Q U E N T I N C A L LA R D : A n d I w o u l d g o b a c k to th is p o i n t w a s q u i te a d e e p o n e b e c a u s e I r e f e r i n 1 9 3 t h a t e v e n a n a ly s is w h ic h I d i d e a r li e r th e s e fi g u r e s w e r e ta k e n a t … C H A I R P E R S O N : Is th a t n o w 1 9 3 o f w h a t ? ADV MAHLAPE SELL O: Of your … Page 19 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L LA R D : 1 9 3 o f m y … C H A I R P E R S O N : P a r a g r a p h 1 9 3 o f y o u r s t a te m e n t . M R F R A N C I S Q U E N T I N C A L LA R D : P a r a g r a p h 1 9 3 o f t h e s ta t e m e n t. C H A I R P E R S O N : O k a y. M R F R A N C I S Q U E N T I N C A L LA R D : I h a d a ls o o n t h e fir s t r e a d i n g t h is a s s u m e d t h is p r ic e g o in g fo r w a r d is a r e a l c o s t o f a lo c o m o t iv e . I t w a s n o t a r e a l c o s t o f a l o c o m o tiv e . C a l c u la t io n s I p e r fo r m e d o n a r e a l c o s t o f a l o c o m o ti v e w e r e n o t o n th e r e a l c o s t o f a l o c o m o ti v e . W h e n o n e u n p a c k s t h is o n e s e e s th a t i n f a c t it w a s q u i te d i ff e r e n t b u t e q u a l ly t h e 10 p o i n t w a s m a d e th e l o c o m o tiv e s a r e th e n e v a lu a te d n o t o n th e ir r e a l c o s t b u t o n t h e i m p a c t o f T E . W e h a v e c o v e r e d t h a t. I h a v e s u b m i tt e d t h a t th e i m p a c t o f T E w a s n o t p a r t o f t h e e v a l u a t i o n p r o c e s s o r s h o u l d n o t h a v e b e e n p a r t o f t h e e v a l u a t io n p r o c e s s . CHAIRPERSON : W h e r e y o u a r e a b le t o d o a d d r e s s t h e q u e s t i o n o f w h e t h e r y o u t h i n k s o m e o f t h e s e t h i n g s w e r e d o n e d e l ib e r a t e ly b e c a u s e f o r p u r p o s e s o f t h e C o m m is s i o n i f c e r ta i n t h i n g s w e r e n o t d o n e r i g h t b u t it w a s j u s t g e n u i n e m is ta k e s i t m ig h t n o t b e i m p o r t a n t if y o u k n o w w h a t is i m p o r ta n t is w h e n s c h e m e s a r e d e v is e d in o r d e r t o a c h ie v e w r o n g o b j e c ti v e s . S o j u s t b e a r th a t i n m in d – y o u k n o w. T h e y c a n m a k e lo t s 20 o f m is t a k e s a n d s o o n a n d th a t is n o t g o o d b u t th a t m a y b e s o m e b o d y e ls e – e ls e ’s j o b t o d e a l w i t h i n t e r m - in t e r m s o f a n y c o m p e te n c e a n d so on. S o o u r f o c u s i s r e a ll y o n th i n g s t h a t m a y h a v e b e e n d o n e d e li b e r a t e ly o r t o d e c e iv e i n o r d e r to a c h i e v e c e r t a i n i ll e g a l o b j e c t iv e s . M R F R A N C I S Q U E N T I N C A L LA R D : Mr C h a ir … C H A I R P E R S O N : I a c c e p t t h a t y o u m i g h t n o t a l w a y s b e a b l e to – t o s a y Page 20 of 206 23 MAY 2019 – DAY 97 b u t I j u s t w a n t to r e m i n d y o u t h a t w h e r e y o u a r e a b le t o s a y th a t o n a p r o p e r ly a n a ly s is o f c e r t a i n d o c u m e n ts a n d t h e f a c ts t h is m u s t h a v e b e e n d e l ib e r a t e ly d o n e f o r c e r t a in u n a c c e p t a b l e o b j e c t iv e s b u t w h e r e y o u a r e n o t a b l e to s a y I k n o w t h a t y o u – y o u m i g h t n o t b e a b l e t o s a y in a l l t h e c a s e s . M R F R A N C I S Q U E N T I N C A L LA R D : Chair if I may answer you b y r e fe r r i n g to p a g e 1 5 6 o f m y s t a te m e n t – s o r r y – t o p a r a g r a p h 1 5 6 o f m y s t a te m e n t . C H A I R P E R S O N : Ye s . 10 M R F R A N C I S Q U E N T I N C A L LA R D : T h r o u g h a l e n g t h y p r o c e s s … ADV MAHLAPE SELL O: At page 37. M R F R A N C I S Q U E N T I N C A L LA R D : P a g e 3 7 . A D V M A H L A P E S E L L O : Th a n k y o u . M R F R A N C I S Q U E N T I N C A L LA R D : I s a i d : “ I w i ll c o v e r th e fo ll o w i n g t o s u p p o r t m y c o n t e n t i o n t h a t th e e v a l u a t io n p r o c e s s w a s fl a w e d . Fi r s t p r e s c r i b i n g t h e r o l e o f T E a s a s u b c o n tr a c t o r w h e n it was not S e c o n d ly, 20 supported u s in g the by the p r e s c r i p ti o n d o c u m e n ta t io n . of TE as a m e c h a n is m t o a d j u s t th e p r i c e f o r e v a l u a t io n . Th e t h ir d the e le m e n t , i n c o n s is t e n t ly a p p l y in g p r e s c r i p t i o n o f T E a c r o s s t h e b id d e r s .” I n a n s w e r t o y o u r q u e s t io n th o s e th r e e e l e m e n ts in m y o p in i o n d e m o n s t r a t e a p a t t e r n o f e v e n ts w h i c h f a v o u r e d c e r t a i n b i d d e r s . I do n o t b e l ie v e t h a t t h e y c a n b e c h a r a c t e r i s e d a s m is t a k e s . F o r m e – t o m e Page 21 of 206 23 MAY 2019 – DAY 97 a n d i n m y o p i n io n th e y d e m o n s tr a t e d a p a t t e r n o f e v e n ts . C H A I R P E R S O N : N o , th a n k y o u . A D V M A H L A P E S E L L O : A n d b e fo r e w e l e a v e t h a t t o p ic I i n t e r p r e t f r o m w h a t y o u h a v e s ta t e d t h a t w h a t is p r e s e n t e d i n t h e m e m o i s a m is r e p r e s e n t a ti o n of the a c tu a l cost of th e a c q u i s i t io n of the lo c o m o t iv e ? M R F R A N C I S Q U E N T I N C A L LA R D : A n d t h a t i s p o i n t f o u r t h a t I m a d e in t h a t o n e : “ As a c o n s e q u e n c e o f t h e a b o v e t h e B A F O p r ic e s 10 presented to the 1 064 L o c o m o t iv e S te e r i n g C o m m i t t e e a n d b y e x te n s io n w e h a v e s e e n h o w t h e y h a v e b e e n t a k e n f o r w a r d b u t t h e – t h e v a r io u s w e r e n o t a tr u e r e fl e c t io n o f th e r e a l c o s t o f t h e lo c o m o t iv e .” ADV MAHLAPE SELLO: A n d t h e e le m e n t th a t i s d e d u c te d fr o m t h e c o s t w h e t h e r in t h e B A F O o r i n t h e o r i g i n a l b id t o p r e s e n t a m i s s t a te d B A F O w i ll o n ly in t h e f u tu r e o r i n t i m e c r e e p b a c k in t o t h e c o s t f o r t h e r e a l c o s t o f t h e l o c o m o tiv e ? M R F R A N C I S Q U E N T I N C A L LA R D : 20 O n t h e e l e c tr i c l o c o m o t iv e s w h a t w a s r e m o v e d a s t h e B A F O – a s t h e i m p a c t o f T E is l a t e r a d d e d b a c k in t o t h e e v a l u a t io n – in t o t h e c o s t s tr u c tu r e o f th e l o c o m o tiv e . T h a t is t h e c a s e f o r t h e e l e c tr i c l o c o m o ti v e s . I d o n o t s e e t h e s a m e p a t te r f o r t h e d i e s e l lo c o m o t iv e s . ADV MAHLAPE SELLO: Noted. Thank you. Have you covered e v e r y t h i n g y o u – y o u w a n t e d t o te ll t h e C h a ir a b o u t a s r e g a r d s t h e Page 22 of 206 23 MAY 2019 – DAY 97 B A F O n o t r e fl e c ti n g t h e tr u e c o s t ? I s t h e r e a n y t h i n g o u ts t a n d i n g ? M R F R A N C I S Q U E N T I N C A L LA R D : I … A D V M A H L A P E S E L L O : Yo u h a v e ? M R F R A N C I S Q U E N T I N C A L LA R D : I a m c o m f o r ta b le , t h a n k y o u . ADV MAHLAPE SELLO: B e c a u s e y o u n o w j u m p t o 2 0 1 8 t h i s is a f te r 2014. M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . ADV MAHLAPE SELLO: B e f o r e w e g e t to 2 0 1 8 a f te r y o u r – a f t e r t h is p r o c e s s a n d th e s u b m i s s io n o f th e B A F O a n d b e f o r e J a n u a r y 2 0 1 8 d id 10 y o u h a v e a n y t h i n g f u r th e r t o d o w i t h t h is p r o c e s s o f a c q u is i t io n ? W e r e y o u e n g a g e d in t h e p r o c e s s o f a c q u is i t io n i n a n y f o r m o r m a n n e r ? M R F R A N C I S Q U E N T I N C A L LA R D : N o . ADV MAHLAPE SELLO: No? M R F R A N C I S Q U E N T I N C A L LA R D : N o . ADV MAHLAPE SELLO: A s y o u in d i c a t e d y o u r p a r a g r a p h 1 9 3 y o u p e r f o r m e d a f i n a n c ia l a n a l y s i s i n J a n u a r y 2 0 1 8 ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : A n d y o u e x p la i n w h a t in f o r m a t io n y o u h a d a t y o u r d is p o s a l a t t h e t i m e a n d th e a s s u m p ti o n s y o u h a d m a d e ? 20 M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t . A D V M A H L A P E S E L L O : Yo u d e a l w i t h t h e n fr o m 1 9 5 t h e J a n u a r y 2 0 1 8 p r i c e v a l i d a t io n a n d f ir s tl y is t h a t f lo w i n g fr o m t h e fi n a n c i a l a n a l y s i s you had performed? M R F R A N C I S Q U E N T I N C A L LA R D : N o , n o . I w a s a s k e d to p e r f o r m a fi n a n c i a l a n a ly s is i n J a n u a r y 2 0 1 8 . Page 23 of 206 23 MAY 2019 – DAY 97 A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : A n d i n t h a t p r o c e s s I u n c o v e r e d – a s I s a i d – p e r t i n e n t a n d a n o n y m o u s in f o r m a ti o n r e l a ti n g t o t h e f i n a l c o n tr a c t o n p r ic e a n d t h e in c o n s is t e n c ie s i n t h e m a k e - u p o f th e lo c o m o t iv e p r ic e . A D V M A H L A P E S E L L O : N o w w h a t I w a n t t o u n d e r s t a n d is t h e r e is a – y o u h a v e to l d t h a t y o u p e r f o r m e d a f in a n c ia l a n a l y s i s . What – when y o u h a v e a h e a d in g “ J a n u a r y 2 0 1 8 P r ic e Va l i d a t io n ” w e a r e – w e a r e b a s ic a lly ta lk in g a b o u t i n fo r m a ti o n y o u u n c o v e r e d in th e p r o c e s s o f t h e 10 fi n a n c i a l a n a ly s is ? M R F R A N C I S Q U E N T I N C A L LA R D : M a y I t a k e y o u t h r o u g h th a t p r o c e s s w h ic h r e a ll y s ta r t s t h e n a t 1 9 6 ? ADV MAHLAPE SELL O: Before you get to 196. M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y. A D V M A H L A P E S E L L O : Yo u u s e d t o c o n c e n tr e . Yo u s a i d y o u c o n d u c t a f i n a n c ia l a n a l y s i s a t 1 9 3 ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : O k a y. A t j u s t b e f o r e 1 9 5 y o u h a v e a h e a d i n g “ J a n u a r y 2 0 1 8 P r ic e Va l i d a t io n ” . 20 Th o s e a r e n o t t w o i n d e p e n d e n t p r o c e s s e s . It is th e s a m e p r o c e s s ? M R F R A N C I S Q U E N T I N C A L LA R D : It is t h e s a m e p r o c e s s . A D V M A H L A P E S E L L O : Yo u j u s t g iv e i t a d i ff e r e n t n a m e ? M R F R A N C I S Q U E N T I N C A L LA R D : T h e s a m e p r o c e s s . A D V M A H L A P E S E L L O : Th a n k y o u . M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y – t h e y h a v e a d i ffe r e n t Page 24 of 206 23 MAY 2019 – DAY 97 name. A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . ADV MAHLAPE SELLO: T h e n – th e n y o u m a y t a k e u s th r o u g h w h a t y o u d id in t h a t p r ic e – th a t fi n a n c i a l a n a ly s is a n d w h a t y o u u n c o v e r e d . M R F R A N C I S Q U E N T I N C A L LA R D : A n d I a m t a k in g y o u t h r o u g h m y r e p o r t fr o m p a r a g r a p h 1 9 6 t h i s is o n p a g e 5 1 . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : 10 Heading “January 2018” I was a p p r o a c h e d M s N o m f u y o G a l e n i a n d M r G a r r y P i t a t o i n s is t – to a s s is t in r e c o n c il in g t h e 3 8 . 6 b i ll i o n w h i c h w a s d e p o s i te d b y t h e b u s i n e s s c a s e t o t h e 4 9 . 5 5 b i ll io n w h i c h e x c lu d e d o p t i o n s a n d c o n t in g e n c i e s w h ic h w a s fi n a l ly c o n tr a c t e d f o r t h e 1 0 6 4 lo c o m o t iv e s a n d t h i s w a s s h o r tl y a ft e r th e p u b l ic a ti o n o f t h e W e r k s m a n s R e p o r t a n d Tr a n s n e t a s I understood it wanted to develop a for mal response. I think it is - being recorded e ls e w h e r e many ti m e s . The Werksmans Report was c o n s i d e r e d in c o n c l u s i v e . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : A n d t h e r e w e r e tw o p o i n t s to t h a t . 20 I w a s – w e l l I w a s p a r t o f a t e a m t h a t p r i m a r i l y c o m p r o m is e d M e s s i e u r s Yo u s u f L a h e r a n d M o h a m m e d M o o l a a n E x e c u t iv e M a n a g e r Fi n a n c e a n d o t h e r s p a r tic i p a t e d i n a s e c o n d a r y r o le . brief was tw o f o l d to show conclusively th a t f o r e x E ff e c t iv e l y o u r hedging and e s c a l a t io n w e r e i n c lu d e d i n t h e b u s in e s s c a s e a n d r e c o n c i l e – s e c o n d ly, r e c o n c i l e th e 3 8 . 6 b i ll i o n o f t h e b u s i n e s s c a s e t o t h e c o n tr a c t Page 25 of 206 23 MAY 2019 – DAY 97 a m o u n t o f 4 9 .5 . T h e f ir s t ta s k o f s h o w i n g th a t fo r e x a n d h e d g in g w e r e in c l u d e d i n t h e b u s i n e s s c a s e w a s e a s i ly c o m p l e te ly a n d w e h a v e covered that at some length. R e f e r e n c e s to th e n u m e r o u s i n s t a n c e s w h e r e i t i s m e n t io n e d a n d in c o r p o r a te d i n th e fi n a n c i a l m o d e ls . I j u s t c o m m e n t it w a s a p e r s o n a l o b s e r v a t i o n t h a t t h e b u s i n e s s c a s e m a y h a v e b e e n b e t t e r s e r v e d if w e h a d c l e a r ly in d ic a t e d i n t h e b u s i n e s s c a s e t h a t th e a s s u m p ti o n s a r o u n d f o r e x a n d h e d g i n g h a d b e e n c l e a r l y id e n t i fi e d r a t h e r th a n r e q u ir i n g a d e t a i le d r e a d in g o f t h e b u s i n e s s c a s e b u t t h a t i s p u r e l y a p e r s o n a l o b s e r v a ti o n . 10 ADV MAHLAPE SELLO: Huh-uh. M R F R A N C I S Q U E N T I N C A L LA R D : I – I m a k e n o te t h a t th e p r ic e s u s e d i n t h e l o c o m o t iv e s o f – I d e s c r ib e t h e p r o c e s s w h ic h I f o l l o w e d a n d I d o n o t k n o w t h a t I n e e d d e s c r i b e t h e w h o l e th in g i n th e r e c o r d . If I m a y j u s t t o t h e m – r e a lly t o th e c o n c l u s io n s . ADV MAHLAPE SELL O: Before you do so … M R F R A N C I S Q U E N T I N C A L LA R D : ( In t e r v e n e s ) . ADV MAHLAPE SELL O: With your reference to your 196 for the record y o u m a k e r e f e r e n c e to th e c o n t r a c t fi n a lly – t h e 4 9 . 5 b il li o n f in a l ly c o n tr a c te d fo r t h e 1 0 6 4 lo c o m o t iv e s . 20 Yo u c o n fir m t h a t t h a t c o n tr a c t was concluded in 2014 – March 2014? M R F R A N C I S Q U E N T I N C A L LA R D : T h a t w a s t h e M a r c h 2 0 1 4 . A D V M A H L A P E S E L L O : A n d t h e b u s i n e s s c a s e h a d s t a t e d 3 8 . 6 b il li o n a s a t o ta l c o s t – e s t i m a te d to t a l c o s t ? M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s a n E T C y e s . A D V M A H L A P E S E L L O : Th e c o n t r a c t s a r e c o n c l u d e d a t 4 9 .5 b i ll io n ? Page 26 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L LA R D : Ex c l u d in g o p ti o n s and c o n ti n g e n c ie s . A D V M A H L A P E S E L L O : E x c l u d in g o p t io n s a n d c o n t i n g e n c i e s ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : A n d t h e n y o u – y o u u n d e r ta k e th is e x e r c i s e to d e t e r m i n e w h e th e r t h e i n c r e a s e o f 4 9 . 5 b i ll io n w a s ju s t i fi e d i n t h e c ir c u m s ta n c e s ? M R F R A N C I S Q U E N T I N C A L LA R D : H o w c o u l d w e r e c o n c i le it ? A D V M A H L A P E S E L L O : Ye s . 10 M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . ADV MAHLAPE SELL O: Please go ahead. M R F R A N C I S Q U E N T I N C A L LA R D : W e – b e f o r e … C H A I R P E R S O N : B e fo r e y o u d o th a t . M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . C H A I R P E R S O N : C a n I j u s t a s k w h e th e r t h e 3 8 – t h e 3 8 b i ll i o n d o y o u move from the premise that that was in order itself before there was an in c r e a s e o r is t h a t s o m e t h i n g y o u d i d n o t l o o k i n to ? M R F R A N C I S Q U E N T I N C A L LA R D : W h a t w e w is h t o d e m o n s tr a t e C h a ir o r a n a ly s e w h a t w e r e t h e fa c to r s w h ic h c o u l d c a u s e t h e 3 8 . 6 t o 20 m o v e to a h i g h e r p r ic e w h e th e r i t r e a c h e d – w h a te v e r p r i c e i t r e a c h e d a n d th e r e w e r e a n u m b e r o f f a c t o r s w h ic h w e c o n s id e r e d . C H A I R P E R S O N : N o , I u n d e r s ta n d t h a t . ADV MAHLAPE SELLO: Ja. M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y. CHAIRPERSON : J a , b u t b e fo r e y o u g e t t h e r e I j u s t w a n t t o k n o w Page 27 of 206 23 MAY 2019 – DAY 97 w h e t h e r e v e n t h e 3 8 b i ll io n fr o m w h e r e th e a m o u n t m o v e d u p … M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . CHAIRPERSON : W h e t h e r y o u h a v e d o n e a n e x e r c is e w h e t h e r th a t w o u ld h a v e b e e n a r e a s o n a b le p r ic e ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s i n d e e d . CHAIRPERSON : Ja. M R F R A N C I S Q U E N T I N C A L LA R D : T h e 3 8 .6 w a s a f i g u r e w h i c h M c K in s e y d e v e l o p e d fr o m t h e ir m o d e l w h ic h w a s i n t h e – p u t fo r w a r d i n t h e A p r il 2 0 1 3 b u s i n e s s c a s e . I h a d s e e n t h a t m o d e l. I h a d c o m m e n t e d 10 o n t h a t m o d e l a n d w a s c o m f o r ta b le w i t h t h a t p r ic e . C H A I R P E R S O N : Yo u w e r e c o m f o r t a b l e w it h t h a t? M R F R A N C I S Q U E N T I N C A L LA R D : I t h a d fo ll o w e d v e r y m u c h t h e s a m e fi g u r e s … C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : W h i c h w e h a d s u b m i tt e d a - a y e a r … C H A I R P E R S O N : O k a y. M R F R A N C I S Q U E N T I N C A L LA R D : In ( in d is t in c t) o r s o . C H A I R P E R S O N : O k a y. N o th a t i s – th a t i s – th a t is f in e . 20 M R F R A N C I S Q U E N T I N C A L LA R D : I w a s c o m f o r t a b l e a t t h a t l e v e l. I had no reason to … C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : To d is p u t e th a t m o d e l f i g u r e . C H A I R P E R S O N : Ye s a n d w h a t w a s th e p e r io d th a t h a d l a p s e d b e tw e e n t h e t i m e w h e n t h a t w a s t h e p r ic e t h a t w a s g iv e n a n d t h i s 4 9 b il li o n – Page 28 of 206 23 MAY 2019 – DAY 97 o v e r w h a t p e r io d . I j u s t w a n t t o h a v e a n id e a w h a t m a y h a v e c h a n g e d d u r i n g t h a t in t e r v a l. M R F R A N C I S Q U E N T I N C A L LA R D : C e r t a i n l y. Tw o s i g n i fi c a n t t i m e la p s e s C h a ir. T h e o n e ti m e la p s e w a s t h e b u s in e s s c a s e w a s a p p r o v e d in A p r il 2 0 1 3 . I t w a s a w a r d e d i n M a r c h 2 0 1 7 s o th a t – s o r r y – March 2014. C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : T h a n k y o u . CHAIRPERSON : About a year later? 10 M R F R A N C I S Q U E N T I N C A L LA R D : A b o u t a y e a r la t e r. C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : T h e r e w e r e s i g n i fic a n t f o r e i g n e x c h a n g e fl u c t u a t io n s … C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : O v e r t h a t ti m e . C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : H o w e v e r th e r e q u e s t f o r p r o p o s a l h a d g o n e o u t – i f I r e c a ll t h e d a t e c o r r e c tl y - w a s i n J u ly 2 0 1 3 w i t h a c lo s u r e d a t e i n A p r i l 2 0 0 0 - s o r r y – I f o r g e t w h e n t h e c l o s u r e d a t e is . 20 CHAIRPERSON : Ja. M R F R A N C I S Q U E N T I N C A L LA R D : The business case went out in J u l y 2 0 1 3 . M a y o f t h e b i d d e r s p u t t h e ir b a s e p r ic e a r o u n d A u g u s t 2 0 1 3 w h ic h w a s e v e n s i x m o n th s p r e v io u s p r i o r t o th e b u s in e s s c a s e . So w h e n w e t a lk o f e s c a l a ti o n u p t o a w a r d a n d f o r e x c h a n g e u p to a w a r d fr o m t h e b i d d e r s p e r s p e c tiv e i t w a s n o t f r o m t h e ti m e w h ic h w e – th e Page 29 of 206 23 MAY 2019 – DAY 97 b u s i n e s s c a s e w a s a p p r o v e d b u t fr o m th e ti m e w h ic h t h e y d id th e i r in it i a l c a lc u l a ti o n s . S o w h i c h t a k e s i t b a c k e v e n s li g h t ly f u r t h e r t h a n the year of the business case. C H A I R P E R S O N : O k a y, th a n k y o u . ADV MAHLAPE SELLO: A n d w h il e w e a r e o n t h a t ju s t s o w e r e m in d o u r s e lv e s th e 3 8 . 6 b i ll io n th a t w a s d e p o s i t e d i n t h e b u s i n e s s c a s e a n d a s y o u c o n f ir m e d b y M c K in s e y i n t h e ir a s s e s s m e n t e x c l u d e d o n ly b o r r o w in g c o s ts ? M R F R A N C I S Q U E N T I N C A L LA R D : E x c l u d e d o n l y b o r r o w in g c o s t s . I t 10 in c l u d e d f o r e x a n d h e d g i n g . A D V M A H L A P E S E L L O : Th a n k y o u . A lr i g h t p le a s e p r o c e e d . M R F R A N C I S Q U E N T I N C A L LA R D : T h e p r o c e s s w h ic h w e f o l lo w e d w a s fir s t to t a k e t h e o r i g i n a l b u s in e s s c a s e . W e c r e a t e d a m o d e l w h ic h r e p l ic a t e d t h e M c K in s e y m o d e l w i th a h ig h d e g r e e o f c o r r e l a ti o n b e c a u s e t h e M c K i n s e y m o d e l d i d n o t l e n d i ts e l f t o t h is i n c r e m e n t a l a n a ly s is . We created a new model. Went through stages of in c r e m e n t a l a n a l y s is o f h e r e is th e b u s i n e s s c a s e . Let us delay the b u s i n e s s c a s e fo r a y e a r b e c a u s e it w a s d e l a y e d . S e e w h a t t h e i m p a c t o f t h e fo r e x o n t h a t w a s . H a v i n g d e l a y e d it fo r a y e a r w e t h e n s a id l e t 20 u s t h e n s h o r te n t h e d e li v e r y p e r i o d b e c a u s e fr o m t h e i n i t ia l s e v e n y e a r d e li v e r y p e r io d d e p o s it e d b y t h e b u s i n e s s c a s e i t c a m e t o t h r e e y e a r s – s h o r te n t h e d e l iv e r y p e r i o d . T h e n w e c h a n g e d i t t o w h a t w e r e t h e r e a l p r i c e s u s e d b y – t e n d e r e d b y t h e l o c o m o ti v e s . Then we changed the lo c a l c o n te n t n o t to r e fl e c t t h e 6 0 / 4 0 w h i c h w a s u s e d i n t h e b u s i n e s s c a s e b u t t o th e a c t u a l l o c a l c o n t e n t a s s ti p u l a t e d b y th e b i d d e r s to t r y Page 30 of 206 23 MAY 2019 – DAY 97 a n d a r r iv e a t a fi g u r e b u t l o n g s to r y s h o r t o n t h is i n r e tr o s p e c t – a n d I m a k e th is p o i n t – t h o s e c a lc u l a ti o n s w e r e fl a w e d b e c a u s e a s a g o in g i n p o s i ti o n I u s e d th e fi g u r e s w h ic h w e r e p r e s e n t e d i n t h e B A F O – in t h e s e m e m o r a n d u m s a n d h a v e j u s t i n d ic a te d t h a t th o s e w e r e n o t t h e r e a l p r i c e s o f th e l o c o m o t iv e s . a v a i la b le a t t h e t i m e . T h a t w a s t h e i n fo r m a t i o n w h ic h w e h a d S o th o s e c a l c u l a ti o n s o f J a n u a r y 2 0 1 8 w e r e fl a w e d b u t in t h a t a t th a t ti m e I b e c a m e a w a r e o f tw o s p r e a d s h e e ts . I c a l l t h e m t h e M a r c h 2 0 1 7 n e g o ti a ti o n s p r e a d s h e e t s . One deals with d i e s e l . O n e d e a ls w i t h e le c tr i c l o c o m o tiv e s . 10 A D V M A H L A P E S E L L O : N o w b e fo r e … M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y. A D V M A H L A P E S E L L O : B e f o r e w e g e t t o t h e s p r e a d s h e e ts … M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : A n d I – t h e C h a ir h a s n o te d th a t a t t h e t i m e y o u d id t h i s f in a n c ia l a n a l y s i s y o u w o r k e d o n t h e B A F O ? M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t . ADV MAHLAPE SELLO: But n o t w i t h s t a n d in g on your c a lc u l a ti o n in s o f a r a s e l e c tr ic l o c o m o tiv e s a r e c o n c e r n e d t h e E T C t a k in g in t o c o n s i d e r a ti o n f o r e x m o v e m e n t i n t h e p e r i o d b e t w e e n s u b m i s s i o n o f b i d 20 a n d c o n c lu s i o n o f t h e t e n d e r – o f t h e c o n tr a c t t h e e le c tr i c E T C h a d m o v e d to 4 0 . 4 5 b il li o n ? M R F R A N C I S Q U E N T I N C A L LA R D : 4 0 .4 5 t h a t w a s th e t o t a l e l e c tr i c a l and diesel. A D V M A H L A P E S E L L O : A g a i n s t a 4 9 .5 b i l li o n ? M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t . Page 31 of 206 23 MAY 2019 – DAY 97 ADV MAHLAPE SELL O: Contract amount? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s , y e s a n d I m a k e t h e fu r th e r p o i n t in 2 0 4 . 1 b o t t o m o f p a g e 5 2 … A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : T h a t I h a d u s e d t h e s a m e p r ic e s f o r d ie s e l a n d e l e c tr i c l o c o m o ti v e s w h e n I c o r r e c t e d th is th e E T C r e d u c e d t o 3 9 . 4 9 7 b u t I s t r e s s e d t h a t th o s e w e r e w r o n g p r i c e s u s e d i n t h is B A F O a n d w e h a d s o m e d e b a t e a t t h e ti m e o n th e i m p a c t o f T E a n d m y i n te r p r e t a t i o n t o t h e t e a m a t t h a t t i m e w a s t h e w a y th is w a s 10 presented. A TE price shoul d not make an impact of the – I was u n a w a r e o f t h e d e t a i l w h ic h I h a d - s u b s e q u e n tly I c o v e r e d t o s e e th a t t h e T E p r ic e s h o u ld m a k e a n i m p a c t . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : W h i c h l e a d s t h e n t o th e 2 0 5 t h a t t h is i n i t ia l a n a l y s is h o w e v e r a s c o m m e n t e d e a r li e r d o e s n o t i n c lu d e t h e p r e m iu m T E a s t h e B A F O p r ic e s u s e d w e r e n o t t h e tr u e b a s e p r ic e o f t h e lo c o m o t iv e . ADV MAHLAPE SELLO: Ye s . O k a y, y o u w a n t e d n o w t o t u r n t o t h e s p r e a d s h e e ts ? 20 M R F R A N C I S Q U E N T I N C A L LA R D : D u r in g a b i g p r e s e n t a t i o n I b e c a m e a w a r e o f t h e s e t w o s p r e a d s h e e ts . I w a s t o ld … CHAIRPERSON : And where are they? A D V M A H L A P E S E L L O : I th i n k M r C a ll a r d is n o w a t h i s p a r a g r a p h 2 0 6 p a g e 5 3 C h a ir. C H A I R P E R S O N : Ye s . Page 32 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L LA R D : I w il l h i g h l ig h t t h e s p r e a d s h e e t s i n about … C H A I R P E R S O N : O h y o u a r e s til l g o in g to g o … A D V M A H L A P E S E L L O : Ye s . C H A I R P E R S O N : To g o t h e r e ? M R F R A N C I S Q U E N T I N C A L LA R D : I w il l g o t h e r e . C H A I R P E R S O N : O k a y, a lr ig h t . M R F R A N C I S Q U E N T I N C A L LA R D : I w il l g o t h e r e . I w a s t o l d t h a t t h e s p r e a d s h e e ts w e r e r e s tr ic t e d a n d / o r c o n fi d e n t ia l a n d c o u l d n o t g a i n 10 a c c e s s t o t h e m . I s u b s e q u e n t ly a s k e d th e Fr e i g h t R a il C F O fo r a c c e s s t o t h e f il e s a n d ( in t e r v e n e s ) . C H A I R P E R S O N : I a m s o r r y. Yo u w e r e to l d t h a t … M R F R A N C I S Q U E N T I N C A L LA R D : T h e y w e r e … C H A I R P E R S O N : Yo u w e r e n o t t o h a v e a c c e s s t o t h e m ? M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t . C H A I R P E R S O N : O h a n d w h o t o l d th a t ? M R F R A N C I S Q U E N T I N C A L LA R D : H m . CHAIRPERSON : O h y o u c a n n o t r e m e m b e r b u t t h a t is w h a t y o u w e r e told? 20 M R F R A N C I S Q U E N T I N C A L LA R D : N o , I c a n r e m e m b e r. CHAIRPERSON : Oh. M R F R A N C I S Q U E N T I N C A L LA R D : Mr Yo u s u f L a h e r. C H A I R P E R S O N : O k a y. Ye s , a r e y o u a b l e t o t e l l m e ? M R F R A N C I S Q U E N T I N C A L LA R D : W e l l h e s a i d t h e y a r e r e s t r ic t e d … A D V M A H L A P E S E L L O : S o r r y M r C a l l a r d . I t h i n k th e C h a ir m i s s e d t h e Page 33 of 206 23 MAY 2019 – DAY 97 name. C H A I R P E R S O N : Ye s , t h e n a m e . A D V M A H L A P E S E L L O : Yo u p r o v id e t h e n a m e . M R F R A N C I S Q U E N T I N C A L LA R D : Mr Yo u s u f L a h e r. A D V M A H L A P E S E L L O : Th a n k y o u . C H A I R P E R S O N : O h o k a y, o k a y. T h a t is t h e o n e w h o h a d a s k e d y o u a t s o m e s t a g e t o w o r k o n s o m e m e m o r a n d u m o r s o m e th i n g ? M R F R A N C I S Q U E N T I N C A L LA R D : H e w a s p a r t o f th e t e a m w o r k i n g on the same memorandum. 10 C H A I R P E R S O N : Ye s , ja . M R F R A N C I S Q U E N T I N C A L LA R D : Th e t e a m i s – a s I m e n ti o n e d – e s s e n ti a l ly c o m p r o mi s e d Mr Yo u s u f L a h e r, M r M o h a m m e d M o o l a a n d m y s e l f a n d th e r e w e r e o th e r s in a s e c o n d a r y r o le . C H A I R P E R S O N : Ye s , y e s . M R F R A N C I S Q U E N T I N C A L LA R D : B u t t h a t w a s th e – t h e c o r e o f t h e … C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : T h e t h r e e o f u s fo r m e d th e c o r e o f the team. 20 C H A I R P E R S O N : Ye s . S o h e s a id th a t y o u m a y n o t h a v e a c c e s s to th e s p r e a d s h e e ts ? M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t . C H A I R P E R S O N : J a a n d w h a t w a s y o u r r e a c ti o n t o th a t ? M R F R A N C I S Q U E N T I N C A L LA R D : I s a id these are c r u c ia l s p r e a d s h e e ts . T h e y – t h e y a p p e a r t o h a v e t h e f ig u r e s r e le v a n t to t h e – Page 34 of 206 23 MAY 2019 – DAY 97 t h e p r ic e s a n d th e – th e i n fo r m a ti o n w e n e e d t o c o m e to t h is c o n c l u s i o n o f w h a t w a s t h e – h o w d o w e m o v e fr o m 3 8 .6 t o t h e 4 9 b il li o n o r th e 5 4 h o w e v e r w e w i s h t o i n te r p r e t i t a n d … C H A I R P E R S O N : T h i s is s t il l a t th a t t i m e ? M R F R A N C I S Q U E N T I N C A L LA R D : T h is is in January 2018 – January 2018. CHAIRPERSON : Oh. M R F R A N C I S Q U E N T I N C A L LA R D : Fe b r u a r y 2 0 1 8 . C H A I R P E R S O N : O h , o k a y a lr i g h t . 10 M R F R A N C I S Q U E N T I N C A L LA R D : Ja. T h is i s p a r t – w h e n I w a s c a l l e d b a c k t o d o th e a n a l y s i s . C H A I R P E R S O N : O h , o k a y ja , j a . A f t e r t h e e v e n t? M R F R A N C I S Q U E N T I N C A L LA R D : Wa y a f te r … C H A I R P E R S O N : Wa y a f te r t h e e v e n t . M R F R A N C I S Q U E N T I N C A L LA R D : I w a s c a l le d b a c k t o d o th e a n a ly s is . C H A I R P E R S O N : Ye s , o k a y a lr i g h t . M R F R A N C I S Q U E N T I N C A L LA R D : s o r r y. 20 I s e e t h e s e s p r e a d s h e e ts . I say I a p p r o a c h e d th e Tr a n s n e t C h i e f Fi n a n c i a l O ff ic e r a n d s a i d p l e a s e w e n e e d t h e s e s p r e a d s h e e ts . A f t e r s o m e d a y s I w a s g iv e n t h e s p r e a d s h e e ts . B y th a t ti m e … C H A I R P E R S O N : A n d w h o w a s t h e C h i e f F in a n c i a l O ff ic e r a t th e t i m e – 2018, January? M R F R A N C I S Q U E N T I N C A L LA R D : T h a t w a s Ms N o m f u y o G a l e n i . C H A I R P E R S O N : O k a y, a lr ig h t . S o y o u g o t th e s p r e a d s h e e t s ? Page 35 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L LA R D : G o t t h e s p r e a d s h e e ts . CHAIRPERSON : Ye s b u t b e fo r e y o u a p p r o a c h e d t h e C h i e f F i n a n c ia l O ff ic e r w h a t ju s t i fi c a t io n d i d M r L a h e r g iv e to y o u f o r s a y i n g y o u m a y n o t h a v e a c c e s s to t h e s p r e a d s h e e ts w h e n y o u w e r e p a r t o f t h e t e a m ? M R F R A N C I S Q U E N T I N C A L LA R D : I cannot r e c a ll that – what ju s t i fic a ti o n w a s g i v e n e x c e p t t h a t t h e y w e r e c o n f id e n ti a l . C H A I R P E R S O N : O k a y, a lr ig h t . M R F R A N C I S Q U E N T I N C A L LA R D : I f t h e r e w a s a f u r th e r ju s ti fi c a t io n … 10 C H A I R P E R S O N : Yo u a r e n o t a w a r e o f w h a t i t w a s ? M R F R A N C I S Q U E N T I N C A L LA R D : It e s c a p e s m e . C H A I R P E R S O N : Ye s . O k a y, t h a n k y o u . A D V M A H L A P E S E L L O : Th a n k y o u C h a ir. M R F R A N C I S Q U E N T I N C A L LA R D : W h e n I r e c e iv e d t h e s p r e a d s h e e ts a n d th e y a r e p u t h e r e . C o u l d I s k ip 2 0 7 p l e a s e … ? A D V M A H L A P E S E L L O : O k a y. M R F R A N C I S Q U E N T I N C A L LA R D : B u t g o t o 2 0 8 . ADV MAHLAPE SELL O: We are at 208 of your statement, yes. M R F R A N C I S Q U E N T I N C A L LA R D : 2 0 8 o f m y s ta t e m e n t. 20 C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : M a y I b a c k tr a c k . A p o l o g ie s . h a v e t o b a c k t r a c k to m y s t a te m e n t … CHAIRPERSON : Huh-uh. M R F R A N C I S Q U E N T I N C A L LA R D : A n d I n e e d t o g o t o … C H A I R P E R S O N : Ye s . Page 36 of 206 I 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L LA R D : C o u l d I g o t o 1 5 9 o f my s t a t e m e n t please? Page 39 paragraph 159. A D V M A H L A P E S E L L O : O k a y a n d t h a t is p a g e 3 9 . M R F R A N C I S Q U E N T I N C A L LA R D : P a g e 3 9 … A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : P a r a g r a p h 1 5 9 . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : I a m r e fe r r i n g n o w t o t h e s e fi l e s o f E x c e l s p r e a d s h e e ts a n d t h e y a r e c r u c i a l t o a n u n d e r s t a n d in g o f t h e 10 d e v e l o p m e n t o f t h e f in a l l o c o m o tiv e p r i c in g . O n e w a s fo r e le c t r ic lo c o m o t iv e s a n d t h e o t h e r w a s f o r d i e s e l l o c o m o tiv e s . I mov e to paragraph 159.2. CHAIRPERSON : ADV MAHLAPE SELL O: Before you do so. M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y. CHAIRPERSON : ADV MAHLAPE SELLO: Yo u r e c a ll w h e n y o u f ir s t m a d e r e fe r e n c e to t h e E x c e l s p r e a d s h e e ts t h e C h a i r w a n te d t o k n o w if t h e y a r e i n y o u r fi le . 20 M R F R A N C I S Q U E N T I N C A L LA R D : T h e y a r e i n t h e f il e . A D V M A H L A P E S E L L O : N o w c a n y o u – c a n w e i d e n t i fy … C H A I R P E R S O N : I w a n t u s t o i d e n ti fy t h e m s o t h a t … A D V M A H L A P E S E L L O : Th e y a r e a n n e x u r e s . M R F R A N C I S Q U E N T I N C A L LA R D : C e r t a i n ly, c e r t a i n l y. C H A I R P E R S O N : W e d o n o t k e e p o n t a lk i n g a b o u t s p r e a d s h e e ts . Page 37 of 206 23 MAY 2019 – DAY 97 A D V M A H L A P E S E L L O : I n d e e d C h a ir. CHAIRPERSON : W h o e v e r r e a d s t h e t r a n s c r i p ts w h e r e – w h e r e a r e they? M R F R A N C I S Q U E N T I N C A L LA R D : Fi n e . C h a i r c o u l d I t a k e y o u f ir s t t o th e d i e s e l l o c o m o t iv e s p l e a s e . I w i ll u s e t h e d i e s e l o n e s w h ic h a r e Annexure 77 … A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : I n t h e s e c o n d b u n d l e a n d t h e y a r e at page 622. 10 C H A I R P E R S O N : W e l l is i t B B … ADV MAHLAPE SELLO: BB … CHAIRPERSON : 4B. A D V M A H L A P E S E L L O : 4 B C h a ir. CHAIRPERSON : Not second bundle. M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y. C H A I R P E R S O N : T h a t w i l c o n f u s e . S o o k a y. D i d y o u s a y A n n e x u r e 7 ? M R F R A N C I S Q U E N T I N C A L LA R D : Can we start at Annexure 77 please? CHAIRPERSON : 20 Th a n k y o u . Is t h e r e – I d o n o t s e e m t o h a v e Annexure 77B. M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y. CHAIRPERSON : I only have 77. ADV MAHLAPE SELLO: 77. M R F R A N C I S Q U E N T I N C A L LA R D : A p o lo g i e s . CHAIRPERSON : I think he said 77B. Page 38 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L LA R D : A p o lo g i e s C h a ir. CHAIRPERSON : Ja. M R F R A N C I S Q U E N T I N C A L LA R D : 6 7 . CHAIRPERSON : 67. ADV MAHLAPE SELLO: 67. M R F R A N C I S Q U E N T I N C A L LA R D : 6 7 . C H A I R P E R S O N : O k a y. M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . C H A I R P E R S O N : A lr i g h t . 10 M R F R A N C I S Q U E N T I N C A L LA R D : T h e – t h e a n n e x u r e … C H A I R P E R S O N : Is th a t o n e o f th e s p r e a d s h e e t s ? M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s o n e o f t h e s p r e a d s h e e ts . C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : Th e r e a r e – t h e r e a r e – t h e d ie s e l lo c o m o t iv e s a r e c o v e r e d u n d e r 6 7 – A n n e x u r e s 6 7 , 6 8 , 6 9 , 7 0 a n d 7 1 b e c a u s e th e y h a v e v a r io u s w o r k s h e e ts in th e fil e a n d t h e v a r i o u s w o r k s h e e ts h a v e a – a s ig n i f ic a n c e to th e m . I f I c o u l d t a k e y o u t h r o u g h p l e a s e f ir s t to a n n e x u r e … ADV MAHLAPE SELL O: Sorry Mr Callard … 20 M R F R A N C I S Q U E N T I N C A L LA R D : J a . A D V M A H L A P E S E L L O : A n d a g a i n fo r r e c o r d p u r p o s e s . M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : N o w r e s p o n s e t o t h e q u e s t io n w h e t h e r o r n o t y o u h a v e th e E x c e l s p r e a d s h e e t s i n y o u r r e c o r d … M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . Page 39 of 206 23 MAY 2019 – DAY 97 ADV MAHLAPE SELLO: Yo u h a v e r e f e r r e d t h e C h a i r t o A n n e x u r e 7 7 a n d y o u s a y t h a t i t is i n r e s p e c t o f t h e d ie s e l l o c o m o t iv e s ? M R F R A N C I S Q U E N T I N C A L LA R D : A n n e x u r e … ADV MAHLAPE SELL O: 67 – my apologies. M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : Th a t i s i n r e s p e c t o f t h e d i e s e l l o c o m o tiv e s ? M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t . ADV MAHLAPE SELLO: Yo u t h e n j u s t m e n ti o n e d o t h e r a n n e x u r e s . S h o u l d w e n o te t h a t th e y a ls o a r e s p r e a d s h e e t s – E x c e l s p r e a d s h e e ts 10 a n d t h a t t h e y r e l a t e t o t h e d i e s e l l o c o m o ti v e s o r w h a t p o in t w e r e y o u s e e k i n g to m a k e ? M R F R A N C I S Q U E N T I N C A L LA R D : I w a s g o in g t o g o th r o u g h – l e t u s r e c o r d a ll t h e s p r e a d s h e e ts fir s t. ADV MAHLAPE SELL O: Okay (intervenes). M R F R A N C I S Q U E N T I N C A L LA R D : Then we h a v e e le c tr i c - th e s p r e a d s h e e ts f o r t h e e le c t r ic l o c o m o t iv e s w h ic h g o fr o m A n n e x u r e 6 0 – 70- sorry 67 to 72. CHAIRPERSON : But – but are we done with the spreadsheet for diesel lo c o m o t iv e s ? 20 MR FRANCIS QUENTIN CALLARD: N o I w a s j u s t g o i n g t o b r i n g th e m a l l i n t o th e r e c o r d b u t I w a n t e d t o ta k e y o u t h r o u g h t h e A n n e x u r e , t h r o u g h t h e s p r e a d s h e e ts t h e m s e l v e s . CHAIRPERSON : O k a y w h a t I th o u g h t y o u w o u ld d o is f ir s t t e ll – s a y t o u s th e s p r e a d s h e e t f o r d ie s e l l o c o m o tiv e s is f o u n d fr o m p a g e s o a n d s o t o p a g e s o a n d s o i f i t’s m o r e th a n o n e s p r e a d s h e e t y o u s a y th e y a r e Page 40 of 206 23 MAY 2019 – DAY 97 f o u n d – t h o s e fo r d i e s e l l o c o m o ti v e s a r e f o u n d fr o m t h a t t o t h a t a n d t h e n w e g o t o th e o n e s f o r e le c tr ic l o c o m o tiv e s , is th a t c o n v e n i e n t to y o u o r is th a t i n c o n v e n i e n t ? MR FRANCIS QUENTIN CALLARD : N o v e r y c o n v e n i e n t, I w ill tr y a n d f o ll o w th a t … ( i n te r v e n t io n ) . ADV MAHLAPE SELLO: Mr Callard perhaps if I may assist, you have d o n e p r e c is e l y w h a t t h e C h a ir r e q u e s t e d , y o u r p a r a g r a p h 1 5 9 1 i f I r e a d it c o r r e c t ly a t p a g e 3 9 . Yo u d o i n d i c a t e t h e r e t h a t y o u a r e a t t a c h A n n e x u r e 6 7 t h r o u g h to 7 2 a s w o r k s h e e ts f o r th e e l e c t r ic l o c o m o tiv e s 10 a n d fr o m A n n e x u r e 7 3 t h r o u g h t o 7 7 f o r d i e s e l , is th a t c o r r e c t ? M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: CHAIRPERSON : Correct. Ye s . O k a y i t is t h e r e i n th e s t a te m e n t w h a t – s o t h a t o n e – w h e n o n e g o e s th r o u g h t h e A n n e x u r e s , m a y b e o n e c a n m a k e a n o te s o y o u c a n – s o o n e c a n s e e th e m w it h o u t g o i n g to t h e s ta t e m e n t b u t o n e c a n f i n d t h e m , i t’s o k a y i t ’s n o t a p r o b l e m . ADV MAHLAPE SELLO: O k a y s o w e ’v e l o c a t e d w h ic h e x c e l s p r e a d s h e e ts r e l a te s t o w h ic h a c q u i s i t io n a s p e r y o u 1 5 9 1 . CHAIRPERSON : 20 Ye s . ADV MAHLAPE SELLO: O k a y. MR FRANCIS QUENTIN CALLARD : I w o u ld a l s o a d d t h a t I – a n d t h e n tu r n in g th r o u g h t o – I a d d e d t h r e e a d d i ti o n a l s p r e a d s h e e t s . ADV MAHLAPE SELLO: MR FRANCIS O k a y. QUENTIN CALLARD : d e s c r ib e d … ( i n te r v e n ti o n ) . Page 41 of 206 Which are 23 MAY 2019 – DAY 97 ADV MAHLAPE SELLO: D o y o u w a n t t o r e f e r to y o u r p a r a g r a p h 2 0 7 t h a t ’s w h e r e y o u s p e a k o f a d d i ti o n a l w o r k s h e e ts . M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Thank you. Thank you. MR FRANCIS QUENTIN CALLARD: Ye s o n p a r a g r a p h 2 0 7 I a d d e d t h r e e f u r th e r A n n e x u r e s . ADV MAHLAPE SELLO: Ye s . MR FRANCIS QUENTIN CALLARD: d i ff ic u l t 10 to interpret one has to B e c a u s e t h e s p r e a d s h e e ts a r e page through spreadsheet by s p r e a d s h e e t, I a d d e d th r e e f u r th e r s p r e a d s h e e t s w h ic h – w h e r e I e x tr a c t e d th e in f o r m a t i o n fr o m t h e e x is t i n g s p r e a d s h e e ts a n d p r e s e n t e d it o n a s id e b y s i d e b a s is f o r e a s y c o m p a r is o n . Th is w a s A n n e x u r e 7 8 , A n n e x u r e 7 8 f o r t h e d i e s e l lo c o m o t iv e s a n d A n n e x u r e s 7 9 f o r C S R lo c o m o t iv e s a n d A n n e x u r e 8 0 f o r B T s o m e t i m e s a ls o r e f e r r e d t o a s B o m b a r d i e r t h o s e a r e u s e d s y n o n y m o u s ly. ADV MAHLAPE SELLO: O k a y s o f o r u s n o t to g e t c o n f u s e d , w e k n o w 6 7 a n d 7 2 a r e t h e a c t u a l s p r e a d s h e e ts y o u r e c e iv e d , th e y a r e n o t your creation. M R F R A N C I S Q U E N T I N C A L LA R D : 20 A D V M A H LA P E S E L L O : Ye s n o t m y c r e a t i o n . A n d th a t is s o f a r a s t h e e l e c tr ic a l lo c o m o t iv e s i s c o n c e r n e d , 7 3 t o 7 7 a r e t h e d i e s e l s p r e a d s h e e ts ? M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Ye s . Yo u ta k e b o t h s e t s o f s p r e a d s h e e t s a n d then you create Annexure 78, 79 and 80. M R F R A N C I S Q U E N T I N C A L LA R D : Correct. Page 42 of 206 23 MAY 2019 – DAY 97 ADV MAHLAPE SELLO: A n d t h a t is j u s t fo r e a s e o f c o m p a r is o n . M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Correct. O k a y s o t h o s e 7 8 .7 9 , 8 0 a r e y o u r c r e a t i o n w h e r e a s th e fir s t l o t is o ffic ia l Tr a n s n e t d o c u m e n ta t io n ? M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: The – yes. Thank you. MR FRANCIS QUENTIN CALLARD: I m a y a d d t h a t o n t h e o ff ic i a l Tr a n s n e t d o c u m e n t a ti o n y o u m i g h t fi n d s o m e – o c c a s i o n a l ly s o m e a r r o w s w h ic h I h a v e p o in t e d t o h i g h l ig h t w h e r e s o m e fi g u r e s g o t o t h e 10 o th e r b u t t h e n u m b e r s a r e u n c h a n g e d . ADV MAHLAPE SELLO: O k a y, a lr i g h t w e f o u n d o u r – w e ’ v e g o t o u r b e a r in g s n o w y o u m a y t a k e u s t h r o u g h th e m . MR FRANCIS QUENTIN CALLARD: As an example of the – or for the d i e s e l o n e , a n d I w o u l d l ik e t o s t a r t w i th t h e d ie s e l fir s t p l e a s e . ADV MAHLAPE SELLO: O k a y. M R F R A N C I S Q U E N T I N C A L LA R D : CHAIRPERSON : W h i c h i s n o w …( i n t e r v e n ti o n ) . A r e y o u g o i n g to s p r e a d s h e e ts n o w ? M R F R A N C I S Q U E N T I N C A L L A R D : I ’ m g o i n g t o th e s p r e a d s h e e t a n d I w o u ld li k e , f i r s t j u s t to il l u s tr a t e w h y th e s p r e a d s h e e t is i m p o r t a n t a n d I 20 w o u ld lik e to t a k e u s p le a s e t o – m e d i a , m e d i a – to A n n e x u r e 7 6 . ADV MAHLAPE SELLO: T h a t ’s a t B B 4 ( b ) p a g e 6 2 0 . MR FRANCIS QUENTIN CALLARD: A n d – p a g e 6 2 0 a n d I ’ d l ik e u s t o t u r n t o p a g e 6 2 1 p l e a s e , i t is a A 3 p a g e . ADV MAHLAPE SELLO: 621? M R F R A N C I S Q U E N T I N C A L LA R D : 621. Page 43 of 206 23 MAY 2019 – DAY 97 ADV MAHLAPE SELLO: Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : T h e l e ft - h a n d t it l e o n t h e p a g e w h e r e I s a y m e d ia 1 7 t h o f M a r c h t h a t is m y c r e a t io n o n t h e p a g e f o r id e n t i fic a t io n p u r p o s e s , I e x tr a c t e d t h a t t o p r i n t . O n t h e l e f t - h a n d s id e o f t h e p a g e , t h e p r i n t n e g o ti a ti o n s , d ie s e l 1 7 t h o f M a r c h 2 0 1 4 , t h a t is a ls o m y c r e a ti o n o n t h e p a g e t o r e f e r e n c e i t, t o r e f e r e n c e th e p r i n to u t o f t h e p a g e b u t i m m e d i a t e ly b e l o w t h a t i t h a s a w a r d e d 4 6 5 d i e s e l lo c o m o t iv e c o n tr a c t. T h i s o n e is e n ti t le d , m e d i a , t h is w a s w h a t w a s g iv e n to t h e m e d ia a s th e r e s u l t f o r t h e a w a r d o f th e te n d e r. 10 ADV MAHLAPE SELLO: Yo u s a y t h i s o n e w a s t it l e d , m e d i a , w h e r e do we see media on that page? MR FRANCIS QUENTIN CALLARD : Yo u ’ ll s e e m e d ia o n t h e t o p r ig h t- h a n d s i d e … ( i n te r v e n t io n ) . ADV MAHLAPE SELLO: Yo u s a id th a t ’s y o u r a d d i t io n , t h a t ’s w h a t y o u i n s e r te d . M R F R A N C I S Q U E N T I N C A L LA R D : T h a t ’s m y id e n ti fi c a t io n o f t h e print page. ADV MAHLAPE SELLO: O k a y. MR FRANCIS QUENTIN CALLARD : 20 A s w e l l a s p r i n t n e g o t ia t io n s , d i e s e l is m y i d e n ti f ic a t i o n o f t h e p r i n t p a g e . ADV MAHLAPE SELLO: N o w w i th o u t y o u r a d d i ti o n s h o w is t h a t p a g e t o b e i d e n t if i e d ? MR FRANCIS QUENTIN CALLARD: I t w o u l d b e id e n ti fi e d i n t h e w o r k s h e e t – s o r r y i n t h e e x c e l s p r e a d s h e e t s a n d th e r e a r e m u l t ip l e s p r e a d s h e e ts , i t ’s s i m p ly c a ll e d m e d i a . Page 44 of 206 23 MAY 2019 – DAY 97 ADV MAHLAPE SELLO: Media, okay thank you. MR FRANCIS QUENTIN CALLARD: S o f t c o p i e s a r e a v a il a b l e a n d i t w a s j u s t to id e n ti fy th e p a g e – e x c e l s h e e ts h a v e m u lt i p l e p a g e s a n d t h is w a s to id e n ti fi e d t h e p a g e t h a t w a s b e i n g u s e d . ADV MAHLAPE SELLO: Ye s , y o u m a y p r o c e e d . MR FRANCIS QUENTIN CALLARD: T h a n k y o u , o n t h e l e f t - h a n d s id e it h a s , a w a r d o f t h e 4 6 5 d i e s e l l o c o m o t i v e c o n tr a c t a n d i t d e t a il s t h e r e t h e b e s t a n d fi n a l o ffe r p e r B o a r d ’s s u b m i s s i o n , w e s e e a g a i n th e C N R 2 3 – 2 7 .3 b i ll i o n r o u n d e d , w e s e e t h e G E a m o u n t a n d t h e n it h a s , 10 a d j u s te d fo r c h a n g e s , a n d t h e r e a r e fo u r l i n e s t h e r e w h ic h a r e b la n k . I t h a s a b e s t a n d f in a l o ff e r u p d a t e d t o th e 1 7 t h o f M a r c h th e n i t h a s v a r io u s a d j u s t m e n t li n e s w h ic h a r e b l a n k . ADV MAHLAPE SELLO: Ye s . M R FR A N C I S Q U E N T I N C A L L A R D : T h e n i t h a s n e w p r ic e i n c l u d in g T E s c o p e , w e h a v e t w o fi g u r e s t h e r e fo r c o s t t o f ix e s c a l a ti o n t o e n d o f c o n tr a c t, c o s t o f h e d g in g a n d w e h a v e t h e n a li n e c a ll e d t h e f in a l lo c o m o t iv e c o s t a n d tw o f u r th e r li n e s , e s t i m a te d t o t a l c o s t e x c l u d i n g h e d g i n g a n d e s c a l a ti o n a n d e s ti m a t e d to t a l c o s t i n c l u d i n g h e d g i n g a n d e s c a l a t io n . 20 Th e to t a l s f o r t h e d i e s e l s t h e r e , i n c l u d in g h e d g i n g a n d e s c a l a t io n w e ’l l s e e i s 1 8 . 3 7 5 b i ll io n . T h a t is th e c o m p o n e n t o f th e d i e s e l p r ic e t h a t w a s fi n a l ly a w a r d e d . ADV MAHLAPE SELLO: If we could take a step back. M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Ye s . It s ta r t s w i th a b e s t a n d f in a l o ff e r e n tr y le t ’s ta k e C N R a t 2 7 b i ll io n . Page 45 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Ye s . It th e n i n d ic a te s t h a t c e r ta i n a d j u s t m e n ts a r e m a d e a s l is te d t h e r e u n d e r b u t t h e d e t a il i s n o t p r o v i d e d . M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Correct. A n d i t j u s t r e f le c t s a n i n t e r e s t fr o m t h e 2 7 to 34. M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Correct. O k a y n o w f u r t h e r a d j u s t m e n ts a r e m a d e t o in c o r p o r a t e t h e T E s c o p e . 10 M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Ye s . A n d t h e T E s c o p e is th e n c o s te d a t 4 . 8 ? MR FRANCIS QUENTIN CALLARD: N o t h a t is c o s t t o fix e s c a l a ti o n t o e n d o f c o n tr a c t u n d e r th a t l in e . ADV MAHLAPE SELLO: O k a y a n d w h a t is t h e T E s c o p e th e r e ? M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: I t i s b l a n k i n t h is l in e . It ’s b l a n k a g a in . T h e n a ft e r f ix in g e s c a l a ti o n a n d c o s ts o f h e d g i n g , w e g e t a n e w p r i c e o f 4 2 ? M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: 20 T h a t ’s t h e f in a l l o c o m o t iv e c o s t? M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Ye s . Ye s . O k a y, y o u i n d ic a te – t h e n t h e n e x t li n e s u g g e s t s th a t e s t i m a te d t o t a l c o s t e x c lu d i n g h e d g i n g a n d e s c a la t io n is 1 4 , is th a t s o ? M R FR A N C I S Q U E N T I N C A L L A R D : M a y I ta k e th a t o n e s t e p f u r t h e r, w e h a v e a l o c o m o ti v e c o s t o f 4 2 . 8 7 5 0 2 0 m il li o n f o r 2 3 2 l o c o m o tiv e s Page 46 of 206 23 MAY 2019 – DAY 97 w h ic h w e ’l l s e e a t t h e t o p u n d e r C N R . ADV MAHLAPE SELLO: Ye s . MR FRANCIS QUENTIN CALLARD : M u l ti p ly 2 3 2 b y t h e 4 8 – 4 2 m i ll io n p o i n t 8 r o u n d e d . ADV MAHLAPE SELLO: Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: W e g e t 7 .8 8 8 b il li o n . O k a y. MR FRANCIS QUENTIN CALLARD: W it h a s i m il a r e x e r c is e fo r G E t h o s e t w o fi g u r e s a r e th e n a d d e d u p t o t h e 1 4 b i ll i o n , i f w e t a k e t h a t t o 10 t h e n e x t l i n e w h e r e t h e y i n c l u d e t h e h e d g i n g a n d e s c a l a ti o n , w e g e t t h e 1 8 b il li o n t o ta l a m o u n t f o r t h e d i e s e ls . ADV MAHLAPE SELLO: O k a y – o h t h a n k y o u C h a ir. We – final lo c o m o t iv e c o s ts , I’ m t r y i n g t o r e c o n c i l e t h e f in a l l o c o m o ti v e c o s t o f 4 2 b il li o n , is th a t 4 2 m il li o n ? M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: MR FRANCIS Q U E N T IN T h a t is 4 2 m il li o n p e r i t e m . M y a p o l o g i e s , y e s o k a y. CALLARD : 4 2 m il li o n ti m e s the…(intervention). ADV MAHLAPE SELLO: 20 Ti m e s t h e n u m b e r o f l o c o m o ti v e s . MR FRANCIS QUENTIN CALLARD: Ti m e s n u m b e r o f l o c o m o tiv e s t o g iv e u s th a t fi n a l c o s t . ADV MAHLAPE SELLO: O k a y. MR FRANCIS QUENTIN CALLARD: T h e r e a s o n I b r i n g t h i s – r e fe r to t h is s h e e t fir s t i s th a t th is w a s t h e m e d i a s t a t e m e n t a n d i t r e f l e c te d h o w t h e a m o u n t w a s m a d e u p , t h is is w h a t w e c o n tr a c te d o n . I f I m a y ta k e Page 47 of 206 23 MAY 2019 – DAY 97 u s … ( i n te r v e n t io n ) . A D V M A H LA P E S E L L O : I f I m a y u n d e r s ta n d , s o w h a t w a s c o m m u n ic a te d t o t h e m e d i a i s th a t t h e t o t a l c o s t o f a c q u is i ti o n o f t h e d i e s e l lo c o m o t iv e s i s 9 b i ll io n i s t h a t a c o r r e c t u n d e r s ta n d i n g o f t h a t … ( i n t e r v e n t io n ) . M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: T h a t ’s w h a t ’s c o m m u n ic a t e d t o t h e m e d i a ? M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: 10 9 b i ll io n fo r C N R . T h a t ’s w h a t w a s c o m m u n ic a t e d . O k a y. MR FRANCIS QUENTIN CALLARD: M a y I b e v e r y s p e c i f ic , I c a n n o t s t a te c a t e g o r ic a lly h o w i t w a s c o m m u n ic a t e d t o t h e m e d i a i t ’s c a ll e d th e m e d i a s h e e t b u t c e r t a i n ly, in t e r n a ll y t h i s w a s h o w w e r e c e iv e d t h e makeup. ADV MAHLAPE SELLO: O k a y, y e s . M R F R A N C I S Q U E N T I N C A L LA R D : If I may then go back one Annexure to Annexure 75. ADV MAHLAPE SELLO: S t il l i n B B 4 ( b ) . M R F R A N C I S Q U E N T I N C A L LA R D : CHAIRPERSON : 20 S t il l i n B B 4 ( b ) . W h a t p a g e a g a in ? ADV MAHLAPE SELLO: 6 1 6 C h a ir, th a t ’s w h e r e 7 5 s t a r ts . M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: And go to page 617. Okay and before you deal with the content a r e w e c o r r e c t t o s a y t o r ig h t - h a n d c o r n e r t h e w o r d n e g o ti a ti o n s is in s e r t e d b y y o u to a s s is t i n i d e n t i fy in g th e n a m e o f th e fi le ? M R F R A N C I S Q U E N T I N C A L LA R D : Correct. Page 48 of 206 23 MAY 2019 – DAY 97 A D V M A H LA P E S E L L O : A n d e q u a ll y s o t h e p r ic e p r i n t n e g o ti a ti o n d i e s e l 1 7 M a r c h is a l s o y o u r a d d it i o n f o r p u r p o s e s o f i d e n t i fic a ti o n ? M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Correct. Okay and can I accept that in the actual e x c e l s p r e a d s h e e ts , th a t p a r t ic u l a r fi le is c a l le d , n e g o t i a t i o n ? M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Correct. O k a y, w i ll d o t h a n k y o u , y o u m a y p r o c e e d . MR FRANCIS QUENTIN CALLARD: I f w e m a y lo o k a t th e t a b le a t th e b o t t o m r i g h t - h a n d – b o t t o m le f t - h a n d c o r n e r i t i s c a l le d , l a t e s t o ffe r s , 10 a n d y o u w il l s e e it h a s a li n e c a ll e d B A F O a n d w e h a v e v a r i o u s l in e s g o i n g d o w n t h e r e r ig h t t o th e v e r y la s t l i n e , c o l o u r e d in g r e e n , a n d i t h a s a p r i c e t h e r e u n d e r C S R o f 4 2 . 8 7 5 0 2 0 w h ic h a g r e e s w i t h t h e f ig u r e w h ic h w a s i n t h e m e d ia f il e w h ic h w e h a v e ju s t r e f e r r e d t o . ADV MAHLAPE SELLO: O k a y. MR FRANCIS QUENTIN CALLARD: A n d s i m i la r ly fo r t h e G e n e r a l E l e c tr i c l o c o m o ti v e . ADV MAHLAPE SELLO: O k a y t h e 3 6 ,1 7 4 a ls o . M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: 20 Correct. O k a y. MR FRANCIS QUENTIN CALLARD: What is now apparent from this o r w h a t c o m e s fr o m t h is , is w e n o w h a v e a n i n d ic a ti o n o f t h e b r e a k d o w n o f t h e p r ic e s . ADV MAHLAPE SELLO: O k a y. MR FRANCIS QUENTIN CALLARD: T h o s e e l e m e n ts t h a t w e r e m is s i n g f r o m t h e m e d ia s ta t e m e n t a r e n o w o n t h is s h e e t w h e r e t h e y t a lk Page 49 of 206 23 MAY 2019 – DAY 97 t o , a n d I r e a d fr o m t h e t o p , “ 1 ) w e h a v e B A F O , 2 ) th e e x c h a n g e r a t e i m p a c t o n t h e l o c o , e s c a l a t io n u p to s i g n a t u r e d a t e . Wa r r a n t y / S D b o n d c o s t r e m o v a l is t h e t h ir d l i n e , f ix e d c o s t F o r e x a d j u s t m e n t o n t h e o th e r i t e m s a n d b a tc h p r ic in g a d j u s t m e n t ” . ADV MAHLAPE SELLO: Ye s . MR FRANCIS QUENTIN CALLARD: R e c a l l – w e ’ll g o i n t o t h e b a tc h p r i c i n g i n a m o m e n t w e th e n g e t a n e w p r ic e , t h e n w e a d d c o s t o f n e w T E s c o p e s o w e h a v e a n o t h e r a d d i ti o n o f T E s c o p e h e r e . 10 ADV MAHLAPE SELLO: Ye s . MR FRANCIS QUENTIN CALLARD : A d is c o u n t , p r ic e t o f ix th e T E s c o p e i n c l u d in g e s c a l a t i o n a n d h e d g i n g g o i n g fo r w a r d a n d t h e n c o s t to fi x e s c a l a t i o n g o i n g f o r w a r d . ADV MAHLAPE SELLO: O k a y. M R F R A N C I S Q U E N T IN C A L L A R D : T h i s s h e e t n o w g iv e s u s a b r e a k d o w n o f h o w th e v a r i o u s e l e m e n t s o f t h e p r ic e a n d w o u ld e x p l a i n the makeup of the price. Th e – i f I m a y ju s t d r a w s o m e a t te n ti o n to s o m e a p p a r e n t a n o m a li e s o n … ( in t e r v e n ti o n ) . CHAIRPERSON : 20 B e f o r e y o u d o th a t M r C a l l a r d p l e a s e d o n ’ t f o r g e t t h e p o in t y o u w a n t e d t o s a y a t s o m e s t a g e – I d o n ’ t w a n t to fo r g e t t h i s , a t s o m e s t a g e te ll m e w h e t h e r, a f te r y o u h a d s e e n t h e c o n t e n t s o f t h e s p r e a d s h e e ts , w h e th e r y o u w e r e a b l e to d e u c e w h a t t h e r e a s o n w a s w h y M r L e h e r s a i d y o u s h o u ld n o t h a v e a c c e s s t o i t o r th a t i t w a s c o n fi d e n ti a l, y o u d o n ’ t h a v e t o d e a l w i th it n o w i f i t ’s n o t c o n v e n i e n t , a s lo n g a s a t s o m e s t a g e y o u d e a l w i th i t. Page 50 of 206 23 MAY 2019 – DAY 97 MR FRANCIS QUENTIN CALLARD: I ’ m h a p p y t o d e a l w i t h i t n o w Mr C h a ir. CHAIRPERSON : O k a y. MR FRANCIS QUENTIN CA LLARD: is o n e p o i n t I w il l m a k e n o w. Fr o m w h a t w e h a v e h e r e , th e r e T h i s g i v e s u s a n i n d i c a t io n o f th e b r e a k d o w n o f t h e p r ic e s w h ic h is w h a t in f a c t w e w e r e ta s k e d t o a c h i e v e , h o w d id w e a r r iv e a t th e s e f in a l p r i c e s . I w i ll j u m p t o a fi n a l p o i n t i n m y s t a t e m e n t t h a t I w a s d i s a p p o i n te d t h a t M r L e h e r d id n o t s h a r e th is b e c a u s e w i t h th is i n f o r m a t i o n , w h y d i d w e h a v e to g o t h r o u g h 10 a n e x e r c i s e b u t fr o m p e r u s a l o f t h e s e s p r e a d s h e e t s a n d p a r tic u la r ly h e r e o n e p ic k s u p a n u m b e r o f a n o m a li e s a n d I w o u l d t a k e o n e t h r o u g h t h o s e a n o m a li e s a n d p e r h a p s th o s e a n o m a li e s a r e p r o b l e m a tic . CHAIRPERSON : O k a y w e ll I w a s - I’ m in t e r e s te d i n h e a r i n g w h e t h e r t h e c o n c lu s i o n y o u a r e a b l e t o m a k e o r t h e c o n c l u s io n y o u a r e a b l e t o m a k e i s t h a t t h e r e a s o n w h y h e m a y h a v e n o t w a n t e d y o u t o s e e th e s p r e a d s h e e ts w a s s o m e i ll e g i ti m a t e r e a s o n b e c a u s e t h e s p r e a d s h e e t w o u ld g i v e y o u i n fo r m a ti o n t h a t h e d i d n ’ t w a n t y o u t o k n o w. S o – b u t a s I s a y y o u c a n d e a l w it h it l a t e r i f th a t’s c o n v e n i e n t b u t i f y o u w a n t t o d e a l w it h i t n o w it ’s f in e . 20 MR FRANCIS QUENTIN CALLARD : Yo u r q u e s t io n , Mr C h a ir, I w o u l d n o t l ik e t o s a y w h a t w a s i n h i s m i n d a s t o w h y h e d id n o t w a n t t o g iv e i t t o m e , w h a t I c a n c e r t a i n ly … ( i n te r v e n t io n ) . CHAIRPESON: T h a t ’s fi n e y e s . MR FRANCIS QUENTIN CALLARD: W h a t I c a n c e r t a i n l y s a y is t h a t t h e in f o r m a ti o n c o n t a i n e d i n t h e s e s p r e a d s h e e ts … ( i n t e r v e n t i o n ) . Page 51 of 206 23 MAY 2019 – DAY 97 CHAIRPERSON : Is h i g h l y r e le v a n t . MR FRANCIS QUENTIN CALLARD : Is h i g h ly r e l e v a n t a n d t h e w o r k i n g s th a t w e d e d u c e fr o m t h e s p r e a d s h e e ts – I ’v e b e e n w o r k i n g b a c k fr o m w h a t w a s n e g o ti a ti o n s – s o r r y fr o m t h e m e d i a s t a t e m e n t t o n e g o ti a ti o n s , t h e r e a r e e a r li e r s t a te m e n t s o f t h e d i e s e ls e x c lu d i n g T E and th e base cost and if one traces th e path through those s p r e a d s h e e ts th e y d e m o n s tr a te a p a tt e r n o f n u m b e r s w h i c h a r e c a u s e f o r c o n c e r n , th e y s h o w i n th e s p r e a d s h e e ts , e le m e n ts o r u n e x p la i n e d v a r ia t io n s in t h e f o r e i g n e x c h a n g e a m o u n t s w h i c h s h o w t h a t t h o s e 10 u n e x p la in e d v a r i a t i o n s in fo r e ig n e x c h a n g e a m o u n ts i n f l u e n c e t h e p r i c e s w h i c h h a v e b e e n r e f l e c te d , e q u a l ly i n t h e f in a l p r ic e o f t h is n e g o ti a ti o n – o f w h i c h w e h a v e s e e n h e r e , i f w e w e r e t o a c c e p t t h e f o r e i g n e x c h a n g e a m o u n ts w h ic h t h e y h a v e h e r e th e n t h e lo c a l c o n t e n t – th e a w a r d d o e s n o t m e e t t h e l o c a l c o n t e n t , i f t h e f o r e i g n e x c h a n g e a m o u n ts a r e r e f l e c te d h e r e b u t th e r e a r e – o n e c a n s e e h o w, i n a r e a s , t h e f o r e i g n e x c h a n g e a m o u n t s h a v e b e e n b r o u g h t i n t o t h e s e fi n a l e s c a l a t io n s . CHAIRPRERSON : Thank you. M R F R A N C I S Q U E N T I N C A L LA R D : 20 ADV MAHLAPE SELLO: M r C a l la r d ? M R F R A N C I S Q U E N T I N C A L LA R D : A D V M A H LA P E S E L L O : A n d if I m a y ju s t … ( in t e r v e n ti o n ) . Ye s . B e f o r e y o u g o i n t o th e d e ta il o f t h a t s p r e a d s h e e t i f I m a y f o ll o w - u p o n t h e C h a i r ’s q u e s t i o n a n d p e r h a p s a s k t h is q u e s ti o n , h a v i n g h a d a c c e s s t o t h e s p r e a d s h e e ts a n d b e in g a b l e t o a n a ly s e t h e m a n d u n d e r s t a n d th e m , a r e y o u o f th e v i e w t h a t y o u w e r e Page 52 of 206 23 MAY 2019 – DAY 97 o r i g in a l ly d e n i e d a c c e s s t h e r e t o b e c a u s e t h e r e w a s a n i n t e n t io n t o c o n c e a l p r e c is e ly th a t w h ic h y o u s u b s e q u e n tly e s t a b li s h e d ? M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Thank you. M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: T h a t is m y i n t e r p r e t a ti o n y e s . T h a t is m y i n t e r p r e t a ti o n . Yo u w a n t t o t a k e u s t o t h e d e t a i l o f th e t a b le t h e n ? M R F R A N C I S Q U E N T I N C A L LA R D : CHAIRPERSON : 10 I f I m a y j u s t …( i n t e r v e n ti o n ) . I ’ m s o r r y, y o u w o u ld n ’ t k n o w w o u l d y o u w h e t h e r t h a t y o u s h o u ld n ’ t h a v e a c c e s s to t h e s e s p r e a d s h e e ts w a s s i m p ly M r L e h e r ’s d e c i s i o n o r w h e th e r h e w a s j u s t c a r r y i n g o u t s o m e b o d y e l s e ’s in s t r u c t i o n t h a t c e r t a i n p e o p l e m u s tn ’ t s e e – c e r t a i n p e o p le i n c l u d i n g y o u , m u s tn ’ t s e e t h e s e s p r e a d s h e e ts ? MR FRANCIS QUENTIN CALLARD : I c a n n o t s a y w h e t h e r i t w a s h is d e c is i o n o r a n in s t r u c ti o n , I c a n ’ t s a y Mr C h a ir. CHAIRPERSON : Okay thank you. ADV MAHLAPE SELLO: T h a n k y o u M r C a l la r d . M R F R A N C I S Q U E N T I N C A L LA R D : I f I m a y, ju s t o n p a g e 6 1 – m a y I r e fe r t o t h e d i e s e ls w h e r e w e p u t t h e m a l l t o g e th e r a n d t a k e y o u p le a s e 20 t o t h e d ie s e l o n e s a s a r e le v a n t a n d th a t is th e … ( i n t e r v e n t io n ) . ADV MAHLAPE SELLO: P a r a g r a p h 2 0 7 , is th a t 2 0 7 .1 , y o u w a n t t o t a k e u s t h r o u g h t h a t s p r e a d s h e e t w h e r e y o u d o a c o m p a r is o n . MR FRANCIS QUENTIN CALLARD: Th e s p r e a d s h e e t w h e r e I d o t h e c o m p a r is o n . ADV MAHLAPE SELLO: P l e a s e c o n s i d e r y o u r 2 0 7 .1 p a r a g r a p h , i s Page 53 of 206 23 MAY 2019 – DAY 97 t h a t th e A n n e x u r e y o u a r e l o o k in g fo r ? MR FRANCIS QU ENTIN CALLARD: 2 0 7 .1 o f t h e d i e s e l lo c o m o t iv e s , Annexure 78. ADV MAHLAPE SELLO: Okay and that is BB42(b) at page 624. M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: 624? A n d I’ m l o o k i n g a t p a g e 6 2 5 . Okay you go overleaf to 625. MR FRANCIS QUENTIN CALLARD: 10 my c o m p il a ti o n , I have ta k e n T h e fir s t – t h is s p r e a d s h e e t is the f ig u r e s fr o m the previous s p r e a d s h e e ts a n d p u t th e m o n a b a s i s o f s id e b y s id e fo r p u r p o s e s o f c o m p a r is o n . T h i s s p r e a d s h e e t h a s b o t h C N R a n d G E th e f ir s t t h r e e c o l u m n s r e l a t e t o C N R t h e c o lu m n s 4 t o 6 r e l a t e t o G E o n th e r i g h t hand side. and I ’d l ik e t o t a k e u s th r o u g h t h e C N R th e r e a r e th r e e c o l u m n s . The c o l u m n s f ir s t p l e a s e fir s t o n e is h e a d e d , b a s e p r i c e … ( in t e r v e n ti o n ) . ADV MAHLAPE SELLO: Ar e w e a t 6 2 5 o r 6 2 6 ? M R F R A N C I S Q U E N T I N C A L LA R D : CHAIRPERSON : 20 Page 625. W e l l t h e f ir s t c o l u m n w o u l d i t n o t b e th e b ig o n e w h ic h d o e s n ’ t h a v e b e s t b a s e p r ic e a n d th e n – o r y o u ’ d s a y t h e fir s t o f t h e s m a l le r c o lu m n s ? M R F R A N C I S Q U E N T IN C A L L A R D : Th e fi r s t o f t h e s m a ll e r c o l u m n s on 625. CHAIRPERSON : O k a y, a lr i g h t . ADV MAHLAPE SELLO: P e r h a p s i t m i g h t h e lp t o i d e n ti fy i t t h is w a y, Page 54 of 206 23 MAY 2019 – DAY 97 t h e fir s t m a in c o lu m n lis t a ll t h e i t e m s ta k e n i n t o c o n s id e r a ti o n , numbered 1 to 27. M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Ye s . O k a y s o a l l t h a t w il l b e a p p lic a b l e a c r o s s t h e s p r e a d s h e e t. M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Across the spreadsheet, correct. T h e n w h e n y o u s p e a k o f fir s t c o lu m n i t’s t h is – a c tu a l ly p h y s ic a ll y t h e s e c o n d c o l u m n . CHAIRPERSON: 10 O r f ir s t s m a ll c o lu m n . A D V M A H LA P E S E L L O : Fi r s t s m a l l c o l u m n y e s , h e a d e d b a s e p r i c e , t h a t ’s y o u r fir s t c o lu m n . MR FRANCIS QUENTIN CALLARD : T h e fi r s t s m a ll c o lu m n is h e a d e d b a s e p r ic e , b i d d e r o n e , C N R . ADV MAHLAPE SELLO: Ye s w e h a v e f o u n d th a t . MR FRANCIS QUENTIN CALLARD: T h e s e c o n d s m a l l c o l u m n is h e a d e d b a s e p r ic e e x c l u d i n g T E , b i d d e r o n e , C N R . ADV MAHLAPE SELLO: Ye s . MR FRANCIS QUENTIN CALLARD : A n d t h e th ir d c o lu m n i s h e a d e d , n e g o ti a ti o n s , b id d e r o n e , C N R . 20 ADV MAHLAPE SELL O: O k a y. MR FRANCIS QUENTIN CALLARD: Yo u ’ ll s e e t h e s p r e a d s h e e t h a s v a r io u s c o l o u r s a n d s o m e o f t h e m a r e th e c e l ls – w o r k s h e e t c e lls a r e i n y e l l o w. A D V M A H LA P E S E L L O : Ye s , n o w b e f o r e y o u g o f u r t h e r y o u h a v e b a s e p r i c e , b id d e r o n e , C N R a n d i t’s in d i ff e r e n t c o l o u r s , g r e y, b lu e , Page 55 of 206 23 MAY 2019 – DAY 97 y e l l o w. M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Ye s . But after each column you have a clear and c o l o u r e d c o lu m n f o r a b e t te r – i f I m a y u s e th a t te r m , t h e w h it e o n e . M R F R A N C I S Q U E N T I N C A L LA R D : A D V M A H LA P E S E L L O : T h e w h i te o n e . Th e c le a r w h i t e c o l u m n w h i c h d o e s n ’ t h a v e a h e a d i n g , i t s e e m s t o fo ll o w, i t c o m e s a f t e r e a c h c o lu m n . M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: 10 CHAIRPERSON : W e ’v e g o t b a s e o n e , b id d e r o n e , C N R . Ye s . ADV MAHLAPE SELLO: CHAIRPERSON : Ye s . A n d i t is p o p u l a te d r i g h t t h r o u g h p e r i te m . Ye s . ADV MAHLAPE SELLO: I m m e d i a t e ly n e x t t o i t is a w h i te c o l u m n th a t h a s …( i n t e r v e n ti o n ) . CHAIRPERSON : O h a r e t h o s e c o l u m n s a s w e ll I t h o u g h t th e y w e r e s p a c e s ( in d i s ti n c t) . ADV MAHLAPE SELLO: I f t h e y ’ r e s p a c e s i n - b e t w e e n c o lu m n . M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: 20 CHAIRPERSON : C a l l th e m s p a c e s . O k a y. T h e y a r e s p a c e s ( i n d is ti n c t) . A D V M A H LA P E S E L L O : A n d t h e n to u n d e r s t a n d , h o w d o w e r e l a te t h e c o lu m n s t o t h e s p a c e s . M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Ye s . H o w d o w e r e la t e t h a t ? M R FR A N C I S Q U E N T I N C A L L A R D : W e l l w e r e l a te th e c o l u m n s t o Page 56 of 206 23 MAY 2019 – DAY 97 t h e s p a c e s a n d t h a t t h e y g e n e r a l ly a r e – s h o w s o m e i n fo r m a ti o n in th a t f o r e x a m p l e b e t w e e n t h e fir s t s m a l l c o l u m n a n d th e s e c o n d s m a l l c o l u m n i n t h a t w h i te s p a c e t h a t fir s t a m o u n t w e h a v e t h e r e is a mi n u s 1 2 3 7 5 8 3 1 w h ic h r e la t e s to th e d is c o u n t w h i c h w e h a v e b e e n t a l k i n g a b o u t e a r l ie r fr o m C N R a n d i t s h o w s a c h a n g e fr o m t h e – m a y I t a k e y o u th r o u g h t h a t – w e h a d t h a t li n e c a l le d o n e , b a s e p r ic e a s p e r t e c h n ic a l s p e c if ic a ti o n . ADV MAHLAPE SELLO: Ye s . MR FRANCIS QUENTIN CALLARD : 10 O n th e e x tr e m e l e f t - h a n d s id e , t a k e t h a t t h r o u g h th e b a s e p r i c e w a s i n i ti a lly g i v e n a s 3 9 . 7 m il li o n rounded. ADV MAHLAPE SELLO: Ye s . M R F R A N C I S Q U E N T IN C A L LA R D : We have been through the r e d u c t i o n w h i c h i s – a n d t h e B A F O p r ic e a n d w e ’v e s e e n th e – a p p r o x i m a te ly 1 2 m i ll io n r e d u c t io n t h e r e a n d t h e n e w f i g u r e is in th e r e o f 2 7 . 3 m il li o n r o u n d e d . Th e d i ff e r e n c e I h a v e h ig h li g h t e d i n t h a t w h it e space in-between. ADV MAHLAPE SELLO: So you i n s e r te d that d i ff e r e n c e … ( in t e r v e n ti o n ) 20 M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: O k a y in t h e w h i t e c o l u m n s . MR FRANCIS QUENTIN CALLARD: ADV MAHLAPE SELLO: I i n s e r t e d t h a t d i ff e r e n c e . Ye s I d i d . S o m y q u e s t io n w a s , c a n w e f o ll o w t h e s a m e p a t t e r n , t h e i n f o r m a t i o n in t h e w h i t e c o l u m n s f o r l a c k o f a b e tt e r t e r m a r e – i s w h a t is in tr o d u c e d b y y o u ? Page 57 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L LA R D : A D V M A H LA P E S E L L O : Correct, correct. O k a y, in c o m p a r in g t h e v a r i o u s m a i n columns? M R F R A N C I S Q U E N T I N C A L LA R D : A D V M A H LA P E S E L L O : Correct. O k a y, n o w t h e n i f w e d e a l w i t h – j u s t s o w e d o n ’t lo s e i t t o m o r r o w, t h a t b a s e p r ic e o f 3 9 m i ll io n a n d th e n t h e b a s e p r i c e e x c lu d in g T E o f 2 7 m i ll io n t h a t in f o r m a t io n a t l e a s t w e c a n g le a n fr o m th e r e s p o n s e b y T N R w h ic h i n d ic a t e d t h a t it h a d r e d u c e d it s p r ic e fr o m 3 9 t o 2 7 , th o s e a r e t h e t w o f ig u r e s . 10 M R F R A N C I S Q U E N T I N C A L LA R D : A D V M A H LA P E S E L L O : Correct. T h e fi g u r e t h a t y o u h a v e i n - b e t w e e n th e t w o c o l u m n s o f 1 2 m i ll io n r o u n d e d , t h a t i s t h e d i ff e r e n c e b e t w e e n t h e t w o ? M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Correct. Thank you, you may proceed. MR FRANCIS QUENTIN CALLARD: T h a n k y o u , I s p o k e o f a n o m a li s t v a r ia t io n s in t h e f o r e i g n e x c h a n g e c o m p o n e n t . ADV MAHLAPE SELLO: Ye s . MR FRANCIS QUENTIN CALLARD : Could we go down on the e x tr e m e le f t - h a n d s i d e w e h a v e th e li n e s 1 9 a n d 2 0 , i m p o r t c o n te n t , 20 f o r e i g n v a lu e fir s t r a t e a n d i m p o r t c o n t e n t f o r e i g n v a lu e s e c o n d r a t e . ADV MAHLAPE SELLO: Ye s . MR FRANCIS QUENTIN CALLARD: L e t ’s d e a l w i t h li n e 1 9 f ir s t p l e a s e , i m p o r t c o n t e n t f o r e i g n v a lu e , fir s t r a te . ADV MAHLAPE SELLO: Ye s . MR FRANCIS QUENTIN CALLARD: U n d e r t h e b a s e p r ic e w h ic h i s Page 58 of 206 23 MAY 2019 – DAY 97 n o w t h e f ir s t c o l u m n , t h a t is g iv e n a s U S D o ll a r s a n d I w o u l d r o u n d i t 484 000 rounded. ADV MAHLAPE SELLO: Ye s . MR FRANCIS QUENTIN CALLARD : I n t h e s e c o n d c o l u m n i t is y e l lo w a n d i t is n o w g iv e n a s 4 9 3 0 0 0 d o ll a r s r o u n d e d . ADV MAHLAPE SELLO: Ye s . MR FRANCIS QUENTIN CALLARD: S m a ll c h a n g e , s m a l l i n c r e a s e a n d I’ m n o t q u e s ti o n i n g t h a t i n c r e a s e b u t i f w e n o w g o t o t h e th ir d c o l u m n . ADV MAHLAPE SELLO: 10 Ye s . MR FRANCIS QU ENTIN CALLARD: W h i c h is c a ll e d , n e g o t i a t i o n s , w e w i ll s e e t h a t t h e U S D o ll a r c o m p o n e n t a s in t h i s s p r e a d s h e e t j u m p s to 9 1 8 0 0 0 d o ll a r s e ff e c ti v e ly – v i r t u a l ly d o u b l in g th e i m p o r t e d c o n t e n t i n U S D o ll a r t e r m s . ADV MAHLAPE SELLO: Ye s . M R FR A N C I S Q U E N T I N C A L L A R D : I f w e g o to th e s e c o n d li n e w h ic h is t h e i m p o r t c o n t e n t f o r e i g n v a l u e s e c o n d r a te , li n e 2 0 . ADV MAHLAPE SELLO: Ye s . MR FRANCIS QUENTIN CALLARD : U n d e r b id d e r p r ic e – u n d e r t h e b a s e p r ic e fo r b id d e r 1 t h a t is t h e fir s t s m a l l c o l u m n i t is 9 9 3 0 0 0 e u r o s 20 r o u n d e d . In t h e s e c o n d c o l u m n … A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QUENTIN CALLARD: When it comes to base cost e x c lu d in g T E t h a t e u r o d e c r e a s e s t o 3 2 5 0 0 0 . 668 000 euros. A D V M A H L A P E S E L L O : Ye s . Page 59 of 206 That is a drop of 23 MAY 2019 – DAY 97 M R FR A N C I S Q U E N T I N C A L L A R D : Th a t i s s u b s ta n ti a l . Ye t w h e n w e go to the negotiations column the euros now increase to 774. A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QUENTIN CALLARD : fr o m – s o r r y. I j u s t d r a w t h e b a c k t o t h e le t t e r T h e l e t te r fr o m C N R w h ic h s a id t h a t t h e ir f o r e i g n e x c h a n g e c o m p o n e n t r e m a i n s t h e s a m e a s i n th e i r A p r il 2 0 1 3 o ff e r a n d y e t w e s e e t h is v a r i a ti o n a c r o s s th e f o r e i g n c o m p o n e n t s h e r e . ADV MAHLAPE SELLO: Hm. M R FR A N C I S Q U E N T I N C A L L A R D : 10 T h e s e f o r e i g n c o m p o n e n ts b y m u l ti p ly i n g t h e – t h e m b y t h e e x c h a n g e r a te s o f t h e d a y c o u l d I ta k e y o u t o l ik e 2 6 p l e a s e ? A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L L A R D : L i n e 2 6 i n t h e fir s t s m a ll c o l u m n i n 2 .7 m i lli o n r o u n d e d . A D V M A H LA P E S E L L O : A n d j u s t f o r r e c o r d p u r p o s e l i n e 2 6 i s h e a d e d A d d i t io n a l c o s t t o a d d t o b a s e p r i c e . M R F R A N C I S Q U E N T I N C A L LA R D : A d d t o b a s e p r i c e . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L L A R D : T h a t 2 .7 m i ll i o n is a f u n c ti o n o f th e 20 U n i te d S t a te s D o l la r r a t e t i m e s th e e x c h a n g e r a t e o f t h e d a y w h i c h w e s e e u p th e r e a s f ir s t e x c h a n g e r a t e u s e d b y b i d d e r li n e 1 4 . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L L A R D : A d d e d t o t h e i m p o r t – th e l in e 2 0 the import content foreign value the euro value times the euro e x c h a n g e r a te a p p li c a b le w h i c h w a s in li n e 1 5 s e c o n d e x c h a n g e r a t e Page 60 of 206 23 MAY 2019 – DAY 97 used by bidder euro. A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L L A R D : E ff e c t iv e ly o n e ta k e s U n i te d S t a t e s D o l l a r s ti m e s it b y t h e e x c h a n g e r a t e , t h e e u r o s ti m e s it b y t h e e x c h a n g e r a te a d d t h e t w o to g e th e r a n d t h a t g iv e s u s t h e a d d i t io n a l c o s t t o a d d t o th e b a s e p r i c e . A D V M A H L A P E S E L L O : A n d w h a t li n e 1 4 t e l ls u s is t h a t t h e r a te , t h e U S e x c h a n g e r a t e a t th e t i m e a n d f o r b i d d e r 1 u s e d a 9 t o t h e d o l l a r exchange rate? 10 M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t a n d th a t i s … A D V M A H L A P E S E L L O : A n d a t li n e 1 5 i t g i v e s y o u t h e e x c h a n g e r a t e f o r t h e e u r o a t 11 . 8 6 ? M R F R A N C I S Q U E N T I N C A L LA R D : A n d t h e n i t c h a n g e s t o 1 2 a n d 1 2 . ADV MAHLAPE SELLO: A n d t h e n i t c h a n g e s d u r in g b a s e c o s t in c l u d i n g T E t o 9 t h e U S e x c h a n g e r e m a i n s t h e s a m e , t h e E U e x c h a n g e r a te c h a n g e s t o 1 2 ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : Th a t i s li n e s 1 4 a n d 1 5 . M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . 20 A D V M A H L A P E S E L L O : O k a y. C H A I R P E R S O N : W h e r e – w h e r e i n t h o s e c o l u m n s th e c u r r e n c y is n o t written what must we take it to be? M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y ? CHAIRPERSON : W h e r e – w h e r e t h e f ig u r e s d o n o t i n d i c a t e t h e c u r r e n c y. Yo u s e e s o m e o f th e fi g u r e s y o u h a v e g o t U S D o ll a r a n d s o Page 61 of 206 23 MAY 2019 – DAY 97 o n b u t o t h e r fi g u r e s d o n o t – s o m e o f t h e – a n d th e n y o u h a v e g o t E u r o a n d th e n o t h e r s y o u d o n o t h a v e t h e c u r r e n c y. W h ic h c u r r e n c y s h o u l d we be… M R F R A N C I S Q U E N T I N C A L LA R D : O th e r fi g u r e s a r e in r a n d M r C h a ir. C H A I R P E R S O N : R ig h t i n r a n d ? M R F R A N C I S Q U E N T I N C A L LA R D : In r a n d y e s . C H A I R P E R S O N : O k a y. M R FR A N C I S Q U E N T I N C A L L A R D : Ye s . S o t h e p u r p o s e o f t h i s w a s t o t a k e t h e i m p o r t e d c o n t e n t a n d c o n v e r t i t t o t h e c h a n g e i n t h e i m p o r te d 10 c o n te n t a n d c o n v e r t it t o r a n d . ADV MAHLAPE SELLO: Hm. M R F R A N C I S Q U E N T I N C A L L A R D : S o th e 2 . 7 m il li o n a n d I w o u l d ju s t lik e t o c o r r e c t t h e i m p r e s s i o n I g a v e e a r l i e r. I s ta k i n g th e – m a d e o f t h e 4 8 4 0 0 0 U S D o ll a r s t i m e s t h e d i ff e r e n c e i n t h e e x c h a n g e r a t e . ADV MAHLAPE SELLO: Hm. MR FRANCIS QUENTIN CALLARD : Si m il a r l y f o r t h e E u r o i t i s th e d i ff e r e n c e b e t w e e n t h e t w o e x c h a n g e r a te s . ADV MAHLAPE SELLO: Hm. MR FRANCIS QUENTIN CALLARD: 20 A n d t h a t g iv e s u s 2 . – t h e 2 . 7 m il li o n . ADV MAHLAPE SELLO: A n d t h e 2 . 7 a t l in e 1 6 t h e a d d i ti o n a l c o s t is t h e r a n d e q u iv a l e n t o f th e fo r e ig n e x c h a n g e ? M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t . A D V M A H L A P E S E L L O : Q u o te d o k a y. MR FRANCIS QUENTIN CALLARD: The impact of the Page 62 of 206 fo r e i g n 23 MAY 2019 – DAY 97 exchange. A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QUENTIN CALLARD: Ta k i n g f o r w a r d . I f w e t h e n ta k e t h a t to b a s e c o s t e x c l u d i n g T E . ADV MAHLAPE SELLO: Hm. M R FR A N C I S Q U E N T I N C A L L A R D : W h ic h is n o w th e s e c o n d c o lu m n a n d w e s e e t h a t t h e U S D o l la r r e m a i n s t h e s a m e b u t t h e E u r o h a s b e e n s ig n if ic a n tly r e d u c e d . A D V M A H L A P E S E L L O : Ye s . 10 M R F R A N C I S Q U E N T I N C A L L A R D : T h e b o tt o m li n e a r o u n d t h is is th a t t h e a d d i ti o n a l c o s t to a d d t o t h e b a s e p r i c e h a s c h a n g e d f r o m n o t a d d in g 2 . 7 m il li o n . ADV MAHLAPE SELLO: Hm. M R F R A N C I S Q U E N T I N C A L LA R D : B u t w e n o w a d d 1 . 3 . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : 1 . 3 m i lli o n . A D V M A H L A P E S E L L O : A t li n e 2 6 ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : Ye s . 20 MR FRANCIS QUENTIN CALLARD: I w o u l d s h o w l a te r h o w I b e l ie v e t h is fi g u r e is in f a c t ta k e n i n t o t h e e v a lu a ti o n c a lc u l a ti o n s p e r s e . A D V M A H L A P E S E L L O : O k a y. M R F R A N C I S Q U E N T I N C A L L A R D : B u t g o i n g to l ie – c o l u m n 3 w h e r e we now see t h is s i g n i fi c a n t increase in the fo r e ig n exchange c o m p o n e n ts . W e h a v e s e e n t h e U S D o l la r g o to 9 1 8 0 0 0 a n d t h e E u r o s Page 63 of 206 23 MAY 2019 – DAY 97 go to 774 000. ADV MAHLAPE SELLO: Hm. MR FRANCIS QUENTIN CALLARD: Th e a d d it i o n a l c o s t t o a d d t o th e b a s e p r ic e n o w i n c r e a s e s t o 3 .7 m i lli o n . A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QUENTIN CALLARD : Yo u w i ll s e e t h e r e is a n a r r o w t o u c h in g o n t h e 3 . 7 m i ll io n . A D V M A H LA P E S E L L O : N o w b e f o r e y o u g e t to th a t a r r o w l e t u s l o o k a t t h e a d d i t io n a l c o s t a s r e fl e c t e d in l i n e 2 6 ? B a s e p r ic e is 2 . 7 a n d w e 10 t a k e t h a t b a s e p r ic e to b e a s a t t h e d a t e o f s u b m is s io n o f t h e b i d ? M R F R A N C I S Q U E N T I N C A L L A R D : N o t h a t i s n o w th e f ir s t b a s e p r ic e is – w a s n o r m a li s e d t o t h e 11 Fe b r u a r y. T h e … A D V M A H L A P E S E L L O : 11 F e b r u a r y w h a t d a t e ? M R F R A N C I S Q U E N T I N C A L LA R D : 2 0 1 3 . A D V M A H L A P E S E L L O : Th is i s 11 Fe b r u a r y 2 0 1 3 . M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s t h e g r e e n c o lu m n . ADV MAHLAPE SELL O : 2013. M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : I f y o u l o o k a t th e – t h a t m o v e m e n t u n d e r b a s e 20 c o s t e x c l u d i n g T E a n d w h a t p e r i o d w a s th e – T E b e i n g e x c lu d e d ? Wa s that in… M R F R A N C I S Q U E N T I N C A L L A R D : T h a t o n e w o u ld h a v e b e e n J a n u a r y – the January 2014. ADV MAHLAPE SELL O : January 2014. M R F R A N C I S Q U E N T I N C A L LA R D : J a n u a r y 2 0 1 4 . Page 64 of 206 23 MAY 2019 – DAY 97 A D V M A H L A P E S E L L O : A n d th e n t h e n e g o ti a ti o n s c o l u m n ? M R F R A N C I S Q U E N T IN C A L L A R D : T h e n e g o t ia t io n s c o l u m n s h o u ld c o r r e c t ly b e a r o u n d t h e ti m e t h e n e g o ti a ti o n s M a r c h 2 0 1 4 . A D V M A H L A P E S E L L O : T h a n k y o u . Yo u w a n t e d to d e a l w i th th e 3 . 7 6 5 1 3 0 i t e m 2 6 u n d e r n e g o ti a ti o n s ? M R F R A N C I S Q U E N T I N C A L L A R D : Ye s . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : If w e t u r n o v e r t o p a g e 6 2 6 . A D V M A H L A P E S E L L O : Ye s . 10 MR FRANCIS QUENTIN CALLARD : 6 2 6 is th e s a m e w o r k s h e e t I h a d p r i n t e d o v e r tw o p a g e s . ADV MAHLAPE SELLO: Hm. M R F R A N C I S Q U E N T I N C A L LA R D : A n d w e w il l s e e … C H A I R P E R S O N : Yo u d id n o t fo r g e t th e p o in t y o u w a n t e d t o m a k e a b o u t the arrow? MR FRANCIS QUENTIN CALLARD: A h – y e s t h e p o i n t – i t is a n o b s e r v a t i o n M r C h a ir. CHAIRPERSON : Hm. MR FRANCIS QUENTIN CALLARD: 20 T h a t w h e r e w e h a v e c o lu m n s in y e l l o w h i g h l ig h t e d in y e ll o w. ADV MAHLAPE SELLO: Hm. MR FRANCIS QU ENTIN CALLARD: M y a n a ly s is o f t h i s i s th a t t h e c o l u m n s i n y e ll o w n e e d t o b e s c r u t i n is e d v e r y c a r e fu ll y. CHAIRPERSON : Hm. A D V M A H L A P E S E L L O : O k a y. Page 65 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L L A R D : A n d I w il l s h o w w h e r e t h i s c o m e s t h r o u g h n o w. C H A I R P E R S O N : O k a y. M R F R A N C I S Q U E N T I N C A L LA R D : In f a c t th is i s p a r t o f t h a t e x e r c is e . C H A I R P E R S O N : Ye s o k a y. A D V M A H L A P E S E L L O : Yo u – b e f o r e w e d a t e d o r w e p r o v i d e d d a te s t o t h e s e v a r io u s c o lu m n s y o u h a d i n d i c t e d t h e r e is a n a r r o w t h a t le a d s to that 3.3,65 odd at line 26. M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . 10 A D V M A H L A P E S E L L O : U n d e r N e g o ti a ti o n s . M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : A n d t h e C h a ir w a s j u s t r e m i n d i n g th a t y o u a r e m o v i n g o n t o th a t p o in t n o w. M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : Yo u h a v e n o t fo r g o tt e n i t p l e a s e ? M R F R A N C I S Q U E N T I N C A L LA R D : N o . A D V M A H L A P E S E L L O : Th a n k y o u . C H A I R P E R S O N : I t h i n k – I t h i n k h e h a s j u s t d e a lt w i t h i t . M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . 20 C H A I R P E R S O N : Ye s . A D V M A H L A P E S E L L O : O k a y. CHAIRPERSON : It was back – it was the arrow at page 625. ADV MAHLAPE SELL O : 625. C H A I R P E R S O N : J a a n d h e s a y s w h e r e t h e r e is y e ll o w i n th e c o l u m n s i t m e a n s th a t t h o s e fi g u r e s n e e d a l o t o f s c r u ti n y. Page 66 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L LA R D : In d e p t h i n t e r r o g a t i o n . C H A I R P E R S O N : I n d e p t h i n te r r o g a ti o n a n d w h a t w e a r e d o i n g is p a r t o f t h a t e x e r c is e . A D V M A H L A P E S E L L O : O k a y. I h o p e t h e C h a ir a n d M r C a ll a r d a r e n o t t a lk in g p a s t o n e a n o t h e r b u t i t s h a ll b e c o m e c l a r i fi e d s o o n . I have a sneaky suspicion that they are but… CHAIRPERSON : No no do not. M R F R A N C I S Q U E N T I N C A L LA R D : I t h i n k w e a r e C H A I R P E R S O N : I t h i n k w e u n d e r s t a n d e a c h o t h e r. 10 M R F R A N C I S Q U E N T I N C A L LA R D : W e u n d e r s ta n d . A D V M A H LA P E S E L L O : No as long as you understand each other C h a ir. C H A I R P E R S O N : B u t w e d o n o t w a n t t o l e a v e y o u b e h in d . A D V M A H L A P E S E L L O : I w il l tr y a n d c a t c h u p C h a ir. I w i ll p l a y c a tc h up. Mr Callard. M R F R A N C I S Q U E N T I N C A L LA R D : O k a y. S o to r e c a p . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : O n p a g e 6 2 5 . A D V M A H L A P E S E L L O : Ye s . 20 MR FRANCIS QUENTIN CALLARD: A t t h e – n e a r th e b o t t o m o f t h e p a g e w e h a v e a d d i ti o n a l c o s t t o a d d to b a s e p r ic e . A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QU ENTIN CALLARD: W i t h t h e to p o f t h a t a r r o w 3 .7 6 5 m il li o n . A D V M A H L A P E S E L L O : Ye s . Page 67 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L LA R D : If w e t u r n o v e r t o p a g e 6 2 6 . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T IN C A L LA R D : T h e r e a r e t w o c o lu m n s t h e r e o n e is h e a d e d C N R a n d th e o t h e r h e a d e d G E . T h e C N R o n e i s i n t h e c e n tr e of the page. A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QUENTIN CALLARD : T h e C N R c o lu m n a g a i n g iv e s t h e s a m e b r e a k d o w n o f t h e p r ic e a s w e h a v e s e e n e a r l ie r i n n e g o t ia t io n s a n d th e m e d i a a s s e t o u t in t h e t o ta l c o s t a t t h e b o tt o m w e h a v e 4 2 8 7 5 10 m il li o n f o r a C N R L o c o m o t iv e . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L L A R D : A t t h e t o p o f t h a t c o lu m n w e s e e t h a t a r r o w c o m i n g d o w n a g a in . ADV MAHLAPE SELLO: Hm. M R F R A N C I S Q U E N T I N C A L LA R D : A n d it c o m e s u p t o 3 7 6 5 . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L L A R D : A n d i f w e l o o k t o t h e le f t h a n d s id e w e w i ll s e e th a t is t h e e x c h a n g e r a t e i m p a c t o n lo c o m o t iv e s . A D V M A H L A P E S E L L O : Ye s . 20 MR FRANCIS QUENTIN CALLARD : T h a t is t h e e x c h a n g e r a t e i m p a c t o n t h e l o c o m o tiv e u p t o th e ti m e o f a w a r d . I f t h a t i s – e x c h a n g e r a t e i m p a c t o f th e lo c o m o t iv e a t 3 7 5 m i ll io n u p t o t i m e o f t h e a w a r d a n d i t i s n o w i n c lu d e d t h is t o t a l m a k e - u p o f th e p r i c e a n d w e t u r n b a c k o v e r t h e p a g e a n d I h a v e h i g h li g h t e d w h a t I b e li e v e t o b e u n e x p l a i n e d v a r i a ti o n s in t h e f o r e i g n c o n te n t . T h is b r i n g s t o m e t h is 3 7 5 in t o q u e s t io n . Page 68 of 206 23 MAY 2019 – DAY 97 ADV MAHLAPE SELLO: Hm. MR FRANCIS QU ENTIN CALLARD: M r C h a ir a s I u s e t h i s a s o n e e x a m p l e b e c a u s e I f in d t h i s ty p e o f i n c o n s is t e n c y a c r o s s m a n y o f th e s p r e a d s h e e t s b u t I h ig h li g h t t h is a s o n e k e y e x a m p l e o f t h is . May I t h e n r e tu r n b a c k to p a g e 6 2 6 ? A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QUENTIN CALLARD: A n d b y w a y o f i ll u s tr a ti o n i f w e w e r e to a s s u m e t h a t t h e G E N C a n d o u r l o c o m o ti v e s a r e r e la t iv e ly s i m il a r. 10 Th e y a r e b o th d i e s e l l o c o m o tiv e s w i th e q u i v a le n t p o w e r a n d o u t p u t . O n p a g e 6 2 6 y o u w i ll s e e c e lls m a r k e d i n b e ig e , a d e e p b e ig e , a li g h t b r o w n . ADV MAHLAPE SELLO: Hm. M R F R A N C I S Q U E N T IN C A L L A R D : A n d I h a v e p u t – h i g h l ig h t e d th a t a s a p e r c e n ta g e o f B A F O . A n d I m a k e t h e c o m m e n t ‘ th e r e i s a w id e v a r ia t io n i n p e r c e n t a g e i n c r e a s e s o n t h e B A F O p r i c e s w h ic h is unusual’. W e c o m p a r e a b a s e G E p r ic e o f 2 4 m i ll io n r o u n d e d w i th a b a s e C N R p r ic e o f 2 7 m i lli o n r o u n d e d a n d w e h a v e s e e n th a t . A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QUENTIN CALLARD: 20 Ye t o n e w o u l d o n t h e r e a s o n a b le a s s u m p t io n t h a t t h e l o c a l c o n te n t o r t h e fo r e ig n c o n t e n t o f th e lo c o m o t iv e m a y v a r y b y o n e o r t w o p e r c e n t . N o t t o s a y t h a t e v e r y b o d y w i ll b e e x a c tl y t h e s a m e . B u t t h e e x c h a n g e r a t e i m p a c t o n t h e B A F O o f C N R is o f t h a t 3 . 7 m il li o n w e h a v e b e e n ta l k in g a b o u t . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L L A R D : Th a t is 1 3 .8 % o f t h e B A F O p r i c e . Page 69 of 206 23 MAY 2019 – DAY 97 S i m il a r ly f o r G e n e r a l El e c t r ic i t i s 8 . 2 3 % . T h a t i s I c o n t e n d – a n d t h a t is q u i te a v a r i a ti o n . I f w e l o o k a t t h e e s c a l a ti o n u p t o s i g n a t u r e d a t e . N o w e s c a l a ti o n is t h e S o u t h A f r ic a n e s c a l a ti o n w i t h – w it h th e i m p o r t e d e s c a l a t io n . B u t g iv e n t h e i m p o r t e d e s c a l a ti o n a s w e h a v e m e n ti o n e d i n t h e b u s i n e s s c a s e a n d e ls e w h e r e th a t is p r e t t y s ta b le a n d f l a t a n d w e h a v e s a i d 2 % . T h e e s c a la t io n u p t o s ig n a t u r e d a t e f o r C N R o f t h a t 3 . 4 m il li o n is 1 2 . 8 % . ADV MAHLAPE SELLO: Hm. M R F R A N C I S Q U E N T IN C A L LA R D : 10 B y c o m p a r i s o n t h e G E e s c a la t io n a s r e c o r d e d h e r e a n d p le a s e I a m m a k in g n o a s s u m p ti o n s t h e s e f i g u r e s a r e c o r r e c t . I a m p u r e ly s a y i n g w h a t is r e c o r d e d a n d w h a t is s h o w n a s – m a k e s u p t h e p r ic e . T h e G E e s c a la t io n i s 1 . – i s 2 % e ffe c tiv e ly th a t d i ff e r e n c e is s ig n if ic a n t . A D V M A H L A P E S E L L O : Ye s . C H A I R P E R S O N : Yo u – y o u s a id y o u m a k e n o a s s u m p ti o n I t h o u g h t y o u a c t u a ll y d o m a k e t h e a s s u m p ti o n t h a t t h e y a r e c o r r e c t? M R F R A N C I S Q U E N T I N C A L LA R D : T h e y … C H A I R P E R S O N : O t h e r w is e y o u c a n n o t – y o u c a n n o t d o t h i s e x e r c is e . M R F R A N C I S Q U E N T I N C A L L A R D : T h e f ig u r e s a r e w h a t a r e r e f le c t e d 20 in t o t h e f i n a l p r ic e s b e c a u s e t h e s e f in a l – t h e s e a r e th e fi n a l p r ic e s . C H A I R P E R S O N : Ye s b u t w h a t y o u m e a n is y o u h a v e n o t g o n e b e h i n d t h a t to c h e c k i f t h e y a r e c o r r e c t? M R F R A N C I S Q U E N T I N C A L LA R D : I h a v e n o t g o n e b e h i n d . CHAIRPERSON : S o y o u a c t u a ll y a s s u m e th a t th e y a r e c o r r e c t ? Yo u s a i d y o u d o n o t a s s u m e i f t h e y a r e c o r r e c t . Yo u s a i d y o u m a k e n o Page 70 of 206 23 MAY 2019 – DAY 97 a s s u m p t io n th a t th e y a r e c o r r e c t . M R F R A N C I S Q U E N T I N C A L LA R D : I h a v e n o t – CHAIRPERSON : Ja. M R F R A N C I S Q U E N T IN C A L L A R D : M r C h a ir w e h a v e n o t b e e n a b le to g e t b e h in d th e s e fi g u r e s . C H A I R P E R S O N : Ye s s o y o u a s s u m e t h a t t h e y a r e c o r r e c t ? M R F R A N C I S Q U E N T I N C A L LA R D : J a . CHAIRPERSON : O r a m I m is u n d e r s t a n d i n g y o u ? If you have not c h e c k e d w h e th e r th e y a r e c o r r e c t y o u – b u t y o u w o r k o n th e b a s is t h a t 10 t h e y a r e c o r r e c t w e w o u l d s a y y o u a s s u m e t h a t t h e y a r e c o r r e c t , is i t n o t o r a m I mi s s in g s o m e t h i n g in w h a t y o u s a i d ? M R F R A N C I S Q U E N T I N C A L L A R D : L e t m e j u s t s a y th is M r C h a ir m a n . T h e f ig u r e s a s p r e s e n t e d . C H A I R P E R S O N : Ye s . ADV MAHLAPE SELLO : Ja. M R F R A N C I S Q U E N T I N C A L LA R D : S h o w s i g n i f ic a n t v a r ia t i o n s a n d u n e x p la in e d v a r i a ti o n s . C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s t h e p o i n t I w o u ld … 20 C H A I R P E R S O N : O k a y, y e s , y e s y o u m a k e a c o n c lu s i o n o n t h e b a s is o f t h e fi g u r e s a s th e y a r e p r e s e n te d . M R F R A N C I S Q U E N T I N C A L LA R D : A r e p r e s e n t e d y e s . CHAIRPERSON : Whether they are correct or not you do not know but y o u – w h a t y o u c a n j u s t i fy i f y o u r c o n c l u s i o n ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . Page 71 of 206 23 MAY 2019 – DAY 97 CHAIRPERSON : Ja. M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : S o t h e n if … C H A I R P E R S O N : I t h i n k w e u n d e r s t a n d e a c h o t h e r Mr C a l la r d . ADV MAHLAPE SELLO : When we deal – when you deal with that page t h e t w o c o lu m n s a n d I t a k e i t n o w w e u n d e r s t a n d t h e t w o c o l u m n s a r e t h e r e . O n e h e a d e d C N R a n d t h e o th e r h e a d e d G E o n t h e r i g h t? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : Th o s e c o l u m n s a n d t h e … 10 C H A I R P E R S O N : A n d th e w h i te s p a c e i n b e tw e e n M s S e l l o . A D V M A H L A P E S E L L O : Th e w h i te s p a c e s d o e s n o t c o u n t – n o C h a ir. T h i s t i m e i t is n o t a c o l u m n I c a n t e l l. T h e in f o r m a t io n c o n ta in e d i n t h e r e s p e c ti v e c o lu m n s i s d e r iv e d fr o m t h e d o c u m e n t a ti o n . Yo u h a v e u p li f t e d i t a s i t is ? MR FRANCIS QUENTIN CALLARD : T h is i s a s i t c o m e s f r o m t h e s p r e a d s h e e t. A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : W h a t I h a v e a d d e d t o t h is i s … A D V M A H L A P E S E L L O : Th e c o m m e n t i n t h e c e n tr e ? 20 M R F R A N C I S Q U E N T I N C A L LA R D : T h e c o m m e n t i n th e c e n t r e . ADV MAHLAPE SELLO: W h e r e y o u e x p r e s s a v ie w t h a t y o u fi n d t h e in c r e a s e i s u n u s u a l ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . ADV MAHLAPE SELLO: What you also have added are the beige p o r t i o n s o n e i th e r s i d e o f t h e c o l u m n ? Page 72 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t . ADV MAHLAPE SELLO: W h ic h is a c a lc u la t io n o f t h e p e r c e n ta g e a d j u s t m e n t t h a t e a c h f ig u r e r e p r e s e n ts r e l a tiv e to t h e B A F O ? M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t . ADV MAHLAPE SELLO: O k a y. B u t w h e t h e r o r n o t t h e a c tu a l fi g u r e s in p u t t e d th e r e a r e c o r r e c t y o u h a v e n o t d o n e t h a t c a lc u l a ti o n , th a t d e t e r m i n a t io n ? M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t . A D V M A H L A P E S E L L O : O k a y. 10 M R F R A N C I S Q U E N T I N C A L LA R D : A n d … A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QUENTIN CALLARD : I h a v e t o a d d t h is b e c a u s e i t c a n n o t fi n d t h e – th e lo g i c t h a t w o u l d s u p p o r t s o m e o f t h e s e fi g u r e s . ADV MAHLAPE SELLO: Hm. MR FRANCIS QUENTIN CALLARD: W e h a v e n o t f o u n d th e l o g ic t h a t w o u ld s u p p o r t s o m e o f t h e s e – m a n y o f t h e s e f ig u r e s . T h a t – I u s e t h a t t o s h o w t h e i n c o n s i s te n c y i n t h e d ie s e ls . ADV MAHLAPE SELLO: Ye s . A n d b e f o r e y o u m o r e o ff t h a t e n tr y 3 e s c a l a t io n u p t o s i g n a t u r e d a te y o u h a v e 3 4 9 8 o d d fo r C N R , r i g h t ? 20 M R F R A N C I S Q U E N T I N C A L LA R D : 3 … A D V M A H L A P E S E L L O : A n e s c a l a ti o n u p t o s i g n a t u r e d a te ? M R F R A N C I S Q U E N T I N C A L LA R D : Es c a l a ti o n u p t o s ig – y e s 3 4 9 . A D V M A H L A P E S E L L O : A n d t h a t is w h a t t h e e s c a l a ti o n w o u l d b e fo r CNR? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . Page 73 of 206 23 MAY 2019 – DAY 97 ADV MAHLAPE SELL O : For GE under the same item you have 484 ? M R F R A N C I S Q U E N T I N C A L L A R D : T h a t i s w h a t is s h o w n o n t h e p i e c e of paper? A D V M A H L A P E S E L L O : A b s o lu t e l y. M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : I a c c e p t. M R F R A N C I S Q U E N T I N C A L LA R D : I d o n o t w a n t t h e w o r d y o u t h e r e . A D V M A H L A P E S E L L O : N o , n o . A lr ig h t i t – 4 8 4 is r e fl e c t e d ? M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t . 10 A D V M A H L A P E S E L L O : A s a n e s c a l a ti o n u p t o s i g n a t u r e d a t e ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s , y e s . ADV MAHLAPE SELLO: R e g a r d b e i n g h e a r d t o th e – b e f o r e I s a y – y o u r a n a l y s i s o f t h a t is th a t fo r G E t h e e s c a l a ti o n w o u l d r e p r e s e n t 1 .9 9 % o f B A F O ? M R F R A N C I S Q U E N T I N C A L LA R D : O f B A F O p r i c e y e s . A D V M A H L A P E S E L L O : F o r C N R it w o u l d r e p r e s e n t 1 2 . 8 % ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . ADV MAHLAPE SELLO: N o w r e g a r d b e in g h a d to t h e f a c t t h a t th e c lo s i n g d a te w a s th e s a m e . 20 M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . ADV MAHLAPE SELLO: T h e b id s c a m e in m o r e o r l e s s o n t h e s a m e dates? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . ADV MAHLAPE SEL LO : And that signature date would have been the same? Page 74 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H LA P E S E L L O : C a n y o u e x p l a i n w h y t h e i m p a c t o f e s c a l a ti o n f o r t h e o n e w o u l d b e 1 .9 9 % a n d f o r t h e o th e r w o u l d b e 1 2 . 8 % . M R F R A N C I S Q U E N T I N C A L LA R D : I c a n n o t e x p la in i t. A D V M A H L A P E S E L L O : O h o k a y. Th a n k y o u . MR FRANCIS QU ENTIN CALLARD: And that is why I described e l e m e n ts o f t h e s e fi g u r e s a s b e i n g a n o m a lo u s a n d d e s e r v in g o f f u r t h e r in t e r r o g a ti o n a n d in v e s t i g a t io n . I b e li e v e t h e s e f ig u r e s c a n n o t b e e x p l a i n e d o r I c e r ta i n ly c a n n o t e x p l a i n th e [i n d is t in c t] o f th e s e fi g u r e s . 10 A D V M A H L A P E S E L L O : Ye s . A n d C N R a n d G E w e r e c o m p e t i to r s f o r – in t h is b i d ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s , y e s . A D V M A H LA P E S E L L O : A n o th e r g l a r i n g o n e c o r r e c t m e i f I a m w r o n g is i t e m 6 b a tc h p r i c i n g a d j u s t m e n t . F o r C N R i t is 1 % , fo r G E o h n o t h e y h a v e r e v e r s e r o l e s i t is n o w 1 2 . 9 8 % . Now and I take it you cannot e x p l a i n th a t a s w e ll ? M R F R A N C I S Q U E N T I N C A L LA R D : C a n n o t e x p l a i n i t . ADV MAHLAPE SELLO: I f y o u w e r e t o g u i d e t h e C h a ir w h o m u s t b e t u r n t o f o r a n e x p la n a ti o n ? 20 MR FRANCIS QUENTIN CALLARD: I m a k e th e p o in t l a te r in m y s t a te m e n t . CHAIRPERSON : Is that other than GE and CNR? ADV MAHLAPE SELLO: O t h e r t h a n G E a n d C N R i t is – t h e y – t h o s e w h o i n p u t te d t h e s e fi g u r e s i n t o t h e e x c e l s p r e a d s h e e ts to t r y a n d e x p l a i n to u s w h y th is a n o m a ly. To w h o m w o u ld y o u s u g g e s t w e t u r n ? Page 75 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L L A R D : M a y I r e fe r t o p a r a g r a p h 2 .11 . 1 o f m y s ta t e m e n t . A D V M A H L A P E S E L L O : S a y t h e n u m b e r a g a i n p le a s e ? M R F R A N C I S Q U E N T I N C A L LA R D : 2 . 11 . 1 ADV MAHLAPE SELL O : Okay M R F R A N C I S Q U E N T I N C A L LA R D : To p o f p a g e 5 6 . ADV MAHLAPE SELL O : We at 56 at the top paragraph. M R FR A N C I S Q U E N T I N C A L L A R D : S o r r y I – l e t m e g o t o 2 .11 . 2 . 11 p l e a s e b o t to m o f p a g e 5 5 . 10 A D V M A H L A P E S E L L O : O k a y. MR FRANCIS QUENTIN CALLARD: M r J o o s t e L a h e r is t h e p r i m a r y a u t h o r o f t h e s e t w o e x c e l s p r e a d s h e e ts . A D V M A H L A P E S E L L O : Ye s . C H A I R P E R S O N : I a m s o r r y f ir s t y o u s a i d 2 .11 .1 ? M R F R A N C I S Q U E N T I N C A L LA R D : 2 . 11 . C H A I R P E R S O N : A n d th e n ? A D V M A H L A P E S E L L O : A n d th e n w e b a c k tr a c k e d a b i t . CHAIRPERSON : Oh. M R F R A N C I S Q U E N T I N C A L LA R D : B o t to m o f th e p a g e . 20 C H A I R P E R S O N : B o t t o m t o 2 . 11 . M R F R A N C I S Q U E N T I N C A L L A R D : C h a ir y o u a s k e d m e w h o s h o u l d w e turn to? ADV MAHLAPE SELLO : Ja. MR FRANCIS QUENTIN CALLARD : Sorry Counsel you asked me who s h o u l d w e t u r n t o ? I s a y t h a t M r L a h e r i s t h e p r i m a r y a u th o r o f t h e s e Page 76 of 206 23 MAY 2019 – DAY 97 t w o e x c e l s p r e a d s h e e ts . A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QUENTIN CALLARD : H e w a s a l s o a s i g n a t o r y to t h e B A F O e v a l u a ti o n o f t h e 1 5 J a n u a r y 2 0 1 4 a n d h e w a s f u r th e r m o r e a m e m b e r o f th e n e g o ti a ti o n t e a m f o r th e 1 0 6 4 l o c o m o ti v e s c o m p r is i n g in t e r a li a M r M o l e fe , M r S in g h , M r G a m a , M r P i t a , Mr G ia n i, M s M d le t s h e a n d M r N d i p h i w e Si li n g a w h o w a s t h e g e n e r a l m a n a g e r G r o u p L e g a l S e r v ic e s . B u t w i t h k n o w l e d g e o f t h i s s p r e a d s h e e ts a n d v ie w p o i n t a n d th is w a s – I tu r n o v e r to p a g e 5 6 . I w a s d i s a p p o i n t e d th a t t h e … 10 CHAIRPERSON : I am sorry turn over to? M R F R A N C I S Q U E N T I N C A L LA R D : To p a g e 5 6 . C H A I R P E R S O N : O h o k a y. M R F R A N C I S Q U E N T I N C A L LA R D : 2 . 11 . 1 . CHAIRPERSON : Okay but you – have you just made the point in r e g a r d to p a r a g r a p h 2 .11 th a t i t is M r L a h e r a s t h e a u t h o r o f th e tw o s p r e a d s h e e ts th a t w e s h o u ld t e n d t o ? M R F R A N C I S Q U E N T I N C A L LA R D : Fo r t h e d e ta il e d e x p l a n a ti o n y e s . C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : I s e e a t t h a t p o i n t . 20 CHAIRPERSON : Ye s . Is Mr L a h e r s ti ll w i th Tr a n s n e t o r is h e [i n d is t in c t] ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s h e is . C H A I R P E R S O N : H e is s t il l th e r e ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . C H A I R P E R S O N : O k a y a lr ig h t . Page 77 of 206 23 MAY 2019 – DAY 97 A D V M A H L A P E S E L L O : Ye s C h a ir. C H A I R P E R S O N : O k a y. A D V M A H L A P E S E L L O : Th a n k y o u C h a ir. M R F R A N C I S Q U E N T I N C A L LA R D : A n d … C H A I R P E R S O N : I s h e o n e o f th e w i t n e s s e s c o m i n g o r n o t ? A D V M A H L A P E S E L L O : Th e e n g a g e m e n ts h a v e … C H A I R P E R S O N : N o t i n t h e l is t . A D V M A H L A P E S E L L O : H a v e b e e n h a d w it h M r L a h e r. C H A I R P E R S O N : Ye s . 10 A D V M A H L A P E S E L L O : W e w il l a d d r e s s t h e C h a i r a s to h o w … C H A I R P E R S O N : Ye s o k a y. ADV MAHLAPE SELLO: W h e n a n d – to p r e s e n t M r L a h e r b e f o r e y o u C h a ir. C H A I R P E R S O N : O k a y a lr ig h t . M R F R A N C I S Q U E N T I N C A L LA R D : In m y p a r a g r a p h 2 .11 .1 . A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QUENTIN CALLARD: A t th e t o p o f p a g e 5 6 . W it h t h is k n o w l e d g e w h ic h I h a v e g le a n e d fr o m t h e s p r e a d s h e e t a n d s i mi l a r t h r o u g h th e e le c t r ic s I w a s d i s a p p o i n t e d t h a t th e e x e r c is e u n d e r t a k e n i n 20 J a n u a r y 1 8 i n g o o d f a i t h to d e t e r m i n e t h e i n c r e a s e s . I t w a s u n d e r t a k e n in g o o d f a i t h b u t M r L a h e r w i t h fu ll k n o w le d g e o f th e p r ic i n g , d e t a i l a n d n e g o ti a ti o n s chose not to share this k n o w le d g e in c l u d i n g the s p r e a d s h e e ts a n d e v a l u a ti o n r e p o r ts w it h t h e m e m b e r s o f th e t e a m t o a r r iv e a t a n h o n e s t a n d a c c u r a te a s s e s s m e n t o f t h e i n c r e a s e i n t h e E T C fr o m 3 8 . 6 b il li o n t o a r o u n d 4 9 .5 5 b il li o n o r 5 4 b il li o n i f t h e o p t i o n s a r e Page 78 of 206 23 MAY 2019 – DAY 97 in c l u d e d . T h a t is … A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QUENTIN CALLARD: W e c o u ld e x p l o r e fu r t h e r t h e e l e c tr ic s a n d t h e lik e b u t I m a k e th e p o in t i n t h e d ie s e ls . A D V M A H L A P E S E L L O : [ M u m b l in g } . CHAIRPERSON : O k a y I a m s o r r y I a m tr y i n g t o u n d e r s t a n d t h e r e fe r e n c e to in g o o d fa i th in t h e s e c o n d l in e . M R F R A N C I S Q U E N T I N C A L LA R D : I w a s c o n tr a c te d i n … A D V M A H L A P E S E L L O : H e w a s a c t in g i n … 10 CHAIRPERSON : W h a t y o u m e a n i s t h e e x e r c i s e in w h ic h y o u w e r e in v o lv e d . M R F R A N C I S Q U E N T I N C A L LA R D : T h e e x e r c is e i n J a n u a r y 2 0 1 8 C H A I R P E R S O N : Wa s i n g o o d f a it h th a t e x e r c is e ? MR FRANCIS QUENTIN CALLARD: I c a m e t h e r e in g o o d f a it h to c o n d u c t t h is e x e r c is e . C H A I R P E R S O N : Ye s . MR FRANCIS QUENTIN CALLARD: W e h a d t h i s te a m o f w h i c h M r M u ll e r a n d Mr L a h e r w e r e p a r t o f th e t e a m . H e h a d f u l l k n o w l e d g e o f t h e s p r e a d s h e e t a n d I in d i c a t e d t h a t h e … 20 C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : D id n o t w i s h t o s h a r e t h is s p r e a d s h e e t. C H A I R P E R S O N : Ye s . MR FRANCIS QUENTIN CALLARD: W h e n I e v e n t u a l ly g a i n e d a c c e s s to the spreadsheet. Page 79 of 206 23 MAY 2019 – DAY 97 C H A I R P E R S O N : Ye s . MR FRANCIS QUENTIN CALLARD : And was able to undertake this e x e r c is e a n d s e e w h a t w a s h a p p e n i n g . C H A I R P E R S O N : Ye s . MR FRANCIS QUENTIN CALLARD : I w a s d is a p p o i n t e d th a t t h e spreadsheet was not shared. C H A I R P E R S O N : Ye s . H a d n o t . Ye s , n o , n o t h a t is fi n e . M R F R A N C I S Q U E N T I N C A L L A R D : T h a t is t h e p o i n t I w a s m a k in g Mr C h a ir. 10 C H A I R P E R S O N : O k a y th a n k y o u . ADV MAHLAPE SELLO: So if we understand c o r r e c tl y th e s p r e a d s h e e ts d o d e m o n s tr a t e h o w t h e p r ic e m o v e s fr o m 3 8 b il li o n to 4 9 b i ll io n ? M R F R A N C I S Q U E N T I N C A L L A R D : Ye s . A D V M A H L A P E S E L L O : O k a y. C H A I R P E R S O N : W h ic h is w h a t y o u w e r e t r y i n g t o e s t a b l is h ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . C H A I R P E R S O N : Ye s . A D V M A H L A P E S E L L O : O k a y. 20 C H A I R P E R S O N : A n d th a t is w h y y o u c a n n o t u n d e r s t a n d w h y h e d i d n o t s h a r e t h e s p r e a d s h e e ts w i t h y o u ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . CHAIRPERSON : Hm. ADV MAHLAPE SELLO: M i n e is s l ig h tl y d i ff e r e n t C h a ir is if t h e s p r e a d s h e e ts . Page 80 of 206 23 MAY 2019 – DAY 97 C H A I R P E R S O N : Ye s . A D V M A H L A P E S E L L O : Es t a b li s h e d p r e c is e ly t h a t p o i n t w h a t w a s th e p o i n t o f u n d e r ta k i n g t h e e x e r c i s e b e c a u s e i t ju s t t a k e s r e f e r e n c e b y M r L a h e r t o th e v e r y s p r e a d s h e e t s a t h is d is p o s a l a n d h e w i ll h a v e a k e y u n d e r s t a n d in g o f h o w 4 9 b il li o n is a r r iv e d a t, is th a t n o t th e c a s e ? M R F R A N C I S Q U E N T I N C A L LA R D : T h a t s h o u ld h a v e b e e n t h e c a s e yes. ADV MAHLAPE SELLO: S o t h e r e is – t h e r e a r e – t h e r e i s n o f u r t h e r in v e s t i g a t io n o r c a l c u la t io n y o u h a d t o d o t o e x p la i n t h e j u m p fr o m 3 8 10 t o 4 9 b il li o n ? A ll th a t i n fo r m a ti o n is i n t h e s p r e a d s h e e ts a lr e a d y ? M R F R A N C I S Q U E N T I N C A L LA R D : W i t h t h e … ADV MAHLAPE SELLO: May I paraphrase? C a n I – I w o u ld l ik e t o rephrase that please? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H LA P E S E L L O : I f Mr L a h e r h a d r e g a r d t o th e s p r e a d s h e e t s a t h is d is p o s a l w o u l d h e h a v e h a d a c le a r u n d e r s t a n d i n g o f h o w t h e E T C m o v e s fr o m 3 8 t o 4 9 b i ll i o n w h ic h i s t h e q u e s ti o n h e h a d p o s e d to y o u ? MR FRANCIS QUENTIN CALLARD: I – i f I m a y a n s w e r i n a s li g h t ly c o n v o l u te d m a n n e r. 20 A D V M A H L A P E S E L L O : O k a y. M R F R A N C I S Q U E N T IN C A L LA R D : T h e e l e m e n ts o f t h e p r i c e m o v e m e n t o r m a k e u p fr o m 3 9 t o 4 9 o r 5 4 w h ic h e v e r f i g u r e y o u w a n t … A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : A r e s e t o u t i n h e r e . A D V M A H L A P E S E L L O : Ye s . Page 81 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L LA R D : I m a d e t h e p o in t e a r l ie r t h a t t h e r e a r e a n o m a li e s h e r e th a t I c a n n o t e x p l a in a n d I b e li e v e i t v e r y d i ff ic u l t t o explain. I t is p o s s i b l e th a t Mr L a h e r d i d n o t s h a r e t h e s p r e a d s h e e t b e c a u s e h e d id n o t w is h t o e x p la in th e a n o m a ly o r d i d n o t w is h t o b e q u e s t io n e d o n th e a n o m a l y a n d th a t is p o s s ib ly w h y t h e s p r e a d s h e e t w a s r e s tr i c t e d . C H A I R P E R S O N : J u s t t o r e m i n d m e h e w a s t h e o n e t h a t – w a s h e th e o n e th a t a s k e d t h a t t h e e x e r c is e b e d o n e ? MR FRANCIS QUENTIN CALLARD: 10 N o i t w a s M r G a r r y P i ta a n d M r N o m f u y o G a le n i w h o a s k e d th a t th e e x e r c i s e b e d o n e . CHAIRPERSON : Ye s . A n d d o y o u k n o w w h e th e r t h e y w e r e a w a r e o f t h e e x i s te n c e o f th e s e s p r e a d s h e e t s a t t h e t i m e th a t y o u w e r e a s k in g to s e e t h e s p r e a d s h e e ts ? M R F R A N C I S Q U E N T I N C A L LA R D : I do not know if they were aware. C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L L A R D : I d o n o t – i t i s my i m p r e s s i o n a n d r e c o l l e c ti o n fr o m t h e i n te r a c t io n s w e h a d t h a t t h e y w e r e n o t a w a r e . C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L L A R D : B e c a u s e m y r e c o l le c ti o n is t h a t i n 20 m y e n g a g e m e n t w it h M r N o m f u y o G a le n i f o r a c c e s s t o t h e s p r e a d s h e e t s h e w a s n o t a w a r e – s h e g a v e t h e – I w a s u n d e r t h e i m p r e s s i o n fr o m m y i n t e r a c ti o n s h e w a s n o t a w a r e o f t h e e x is te n c e o f th is p a r tic u la r s p r e a d s h e e t. CHAIRPERSON : Yo u m e a n e v e n t h e C h i e f F in a n c ia l O ff ic e r w a s n o t aware? Page 82 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L LA R D : O f … C H A I R P E R S O N : T h a t is th e i m p r e s s i o n y o u g o t? M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s t h e i m p r e s s i o n I g o t y e s . C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : B e … CHAIRPERSON : Ye s j u s t t o g o b a c k t o M s S e l l o ’s q u e s t i o n . As I u n d e r s t a n d i t I t h i n k w h a t s h e w a n t e d to fi n d o u t b u t i f – if h e i s n o t t h e o n e th a t a s k e d t h a t t h e – th e e x e r c is e b e d o n e m a y b e th a t is … A D V M A H L A P E S E L L O : Ye s . 10 C H A I R P E R S O N : T h e e x p l a n a t i o n t o h e r q u e s ti o n is … ADV MAHLAPE SELL O: (Intervenes). CHAIRPERSON : I s th a t i t w a s s o m e b o d y e l s e t h a t a s k e d th a t t h e q u e s t io n – t h e e x e r c is e b e d o n e b u t m a y b e t o fo ll o w u p o n t h a t q u e s t io n if Mr Laher understood the s p r e a d s h e e ts the way you u n d e r s t o o d t h e m a f te r y o u h a v e h a d a c c e s s t o t h e m t h e n e x c e p t f o r t h e is s u e o f c o n f id e n t i a l it y th a t I u n d e r s t a n d h e r a is e d th e n h i s r e s p o n s e w h e n h e h e a r d t h a t t h is e x e r c is e w a s b e i n g d o n e s h o u l d h a v e b e e n – t h e r e i s a s p r e a d s h e e t t h a t e x p la in s a n d s h a r e it w i t h e v e r y b o d y. M R F R A N C I S Q U E N T I N C A L LA R D : T h a t … 20 C H A I R P E R S O N : S o e x c e p t f o r t h e f a c t t h a t h e m i g h t n o t h a v e w a n te d y o u a n d m a y b e t h e o t h e r s to k n o w a b o u t t h e s p r e a d s h e e t s t h a t i s w h a t – th a t i s t h e r e a c ti o n o n e w o u l d h a v e e x p e c t e d i f h e w a s a w a r e o f th e s e a n d h e u n d e r s t o o d t h e c o n t e n t s o f t h e s p r e a d s h e e ts t h e w a y y o u understand them. M R F R A N C I S Q U E N T I N C A L LA R D : And that was the essence of my Page 83 of 206 23 MAY 2019 – DAY 97 p o i n t in 2 0 11 .1 M r C h a ir. C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . C H A I R P E R S O N : Ye s , y e s . A D V M A H L A P E S E L L O : B u t M r C a l la r d I t h i n k i t g o e s f u r th e r t h a n t h a t if I m a y. A t 1 9 7 h a v i n g b e e n r e q u e s t e d b y G a le n i a n d P i t a to d o t h is t h r o u g h r e c o n c il ia t io n a t y o u r p a r a g r a p h 1 9 6 … M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : Yo u s ta t e a t 1 9 7 a n d I q u o te : “ I w a s p a r t o f a t e a m t h a t p r i m a r i ly c o m p r is e d 10 Yo u s u f L a h e r a n d M o h a m m e d M o o la … ” M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . ADV MAHLAPE SELLO: “ … E x e c u t iv e Manager Fi n a n c e Fr e i g h t … ” M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . ADV MAHLAPE SELLO: “ … a n d th e p u r p o s e w a s t o s h o w c o n c l u s iv e l y t h a t f o r e x h e d g i n g a n d e s c a la ti o n w e r e in c l u d e d i n t h e b u s i n e s s c a s e .” M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t . 20 ADV MAHLAPE SELLO: A n d i n o r d e r t o u n d e r t a k e th a t e x e r c is e r e fe r e n c e to is in f o r m a ti o n . then had th e spreadsheets w h ic h S o i t c o m e s b a c k to t h e s a m e p o i n t . c o n t a in th a t so although the r e q u e s t w a s n o t fr o m M r L a h e r, M r L a h e r p a r ti c i p a t e d i n a p r o c e s s to a n s w e r a q u e s ti o n th a t c o u l d v e r y w e ll h a v e b e e n a n s w e r e d b y p r o v i s i o n o f th e … Page 84 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L LA R D : J a , t h e s p r e a d s h e e ts . A D V M A H L A P E S E L L O : S p r e a d s h e e ts . Is th a t a f a ir s u m m a t i o n ? M R F R A N C I S Q U E N T I N C A L LA R D : Fa ir s u m m a t io n . A D V M A H L A P E S E L L O : O k a y. CHAIRPERSON : D o y o u k n o w o f a n y r e a s o n w h y M r L a h e r d e s p it e k n o w i n g o f t h e e x is t e n c e o f t h e s e s p r e a d s h e e ts h e m i g h t n o t h a v e u n d e r s t o o d th e – t h e s p r e a d s h e e ts . I n o th e r w o r d s – I m e a n - fo r e x a m p l e my q u e s t io n g o e s to i f s o m e th i n g r e a lly r e q u ir e s n u m b e r s i f – if s o m e b o d y i s a n a c c o u n t a n t y o u w o u ld – h e w o u ld k n o w th a t o r s h e 10 w o u ld k n o w t h a t q u i t e e a s i ly. Th e r e f o r e y o u c a n e x c l u d e la c k o f u n d e r s t a n d in g o f t h o s e fi g u r e s b u t i f i t is s o m e b o d y m a y b e th a t r e q u ir e s k n o w l e d g e o f n u m b e r s a n d t h e y a r e n o t g o o d a t n u m b e r s y o u m i g h t s a y o k a y m a y b e h e d i d h a v e t h e m b u t d i d n o t u n d e r s ta n d t h e m . M R F R A N C I S Q U E N T I N C A L LA R D : I t i s my u n d e r s t a n d i n g M r C h a ir t h a t M r L a h e r is a q u a li f ie d c h a r te r e d a c c o u n t a n t . CHAIRPERSON : S o – s o t h a t e x p la n a t i o n c a n b e e x c l u d e d t h a t h e m i g h t n o t h a v e u n d e r s to o d n u m b e r s h e r e . O k a y, t h a n k y o u . A D V M A H L A P E S E L L O : T h a n k y o u C h a ir. Yo u r s t a t e m e n t t h e n f u r t h e r d e a ls w i th t h e s a m e – s i m il a r e x e r c is e d o n e f o r t h e e l e c tr ic s ? 20 M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : A n d i t fo ll o w s th e s a m e l o g i c ? M R F R A N C I S Q U E N T I N C A L LA R D : I t f o ll o w s th e s a m e l o g i c a n d t h e s a m e ( in t e r v e n e s ) . ADV MAHLAPE SELLO: A n d t h e s a m e a n o m a l ie s t h a t y o u h a v e id e n t i fi e d i n r e s p e c t o f d ie s e l y o u fi n d i n e l e c tr ic a s w e l l ? Page 85 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . N o t e v e r y f ig u r e is a b s o l u t e ly tr a c e a b le t h r o u g h fr o m t h e t o p t o th e b o t t o m a s I – a s I h a v e d o n e h e r e b u t t h e y a r e o f s u c h a s i m il a r i ty t h a t th e y a d d to th a t . I w o u ld l ik e t o a d d o n e fu r t h e r p o in t … A D V M A H L A P E S E L L O : Ye s s ir. M R F R A N C I S Q U E N T I N C A L LA R D : To th e s e s p r e a d s h e e t s h o w e v e r. C H A I R P E R S O N : B e fo r e y o u a d d i t - a n d p l e a s e d o n o t f o r g e t th e p o i n t - b e fo r e y o u a d d i t a f t e r y o u h a d h a d a c h a n c e to a n a l y s e t h e s p r e a d s h e e ts a n d r e a lis e d th a t Mr L a h e r m u s t h a v e k n o w n o r k n e w … 10 M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . C H A I R P E R S O N : T h a t – y o u k n o w – y o u w e r e e n g a g in g in a n e x e r c is e t h a t r e a l ly w a s n o t n e c e s s a r y. D i d y o u b y a n y c h a n c e c o n fr o n t h i m a n d s a y w h y d i d y o u n o t t e l l u s a b o u t th is a n d w h y d id y o u a ll o w th is e x e r c is e t o h a p p e n b e c a u s e o t h e r w is e i f – if h e d i d n o t w a n t y o u to k n o w – to k n o w t h e i n fo r m a ti o n i n t h e s p r e a d s h e e t s h e c o u l d h a v e s a i d w e ll I k n o w h o w t h e p r i c e h a s c h a n g e d . There is no need to do the e x e r c is e b u t I c a n n o t s h a r e t h e in f o r m a t io n w i th y o u . M a y b e I w il l s h a r e i t w i th w h o e v e r h a s a r ig h t to k n o w a b o u t i t . M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . I w o u l d l ik e to … 20 C H A I R P E R S O N : M y q u e s ti o n is w h e th e r y o u w e r e a b le a t a n y s ta g e t o a s k h i m w h y – w h y d o y o u w a s te o u r ti m e . M R F R A N C I S Q U E N T I N C A L LA R D : C o u ld I a n s w e r t h a t p e r h a p s l a te r M r C h a ir ? C H A I R P E R S O N : T h a t is fi n e , y e s . M R F R A N C I S Q U E N T I N C A L LA R D : I w o u l d j u s t l ik e t o c o v e r th a t . Page 86 of 206 23 MAY 2019 – DAY 97 CHAIRPERSON : Because … M R F R A N C I S Q U E N T I N C A L LA R D : I w il l c e r t a i n l y a d d r e s s t h a t p o in t . C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : ( In t e r v e n e s ) . C H A I R P E R S O N : A s l o n g a s y o u d e a l w i t h it . T h a t is fi n e j a . M R F R A N C I S Q U E N T I N C A L LA R D : H m . ADV MAHLAPE SELLO: Yo u w a n t e d t o p o i n t o u t o n e o th e r th i n g in r e s p e c t o f th e s p r e a d s h e e ts ? M R F R A N C I S Q U E N T I N C A L LA R D : 10 Ye s . I j u s t w h ic h t o tu r n u p a n e l e c tr ic s p r e a d s h e e t . A D V M A H L A P E S E L L O : O k a y. A c c o r d i n g t o y o u r 2 0 7 th a t s h o u l d b e – m y a p o lo g ie s – y o u r 2 0 1 I t h i n k . T h e y s h o u l d s t a r t a t 6 7 t o 7 2 . Is t h a t – a r e y o u l o o k i n g f o r t h a t a n n e x u r e – a n n e x u r e s in t h a t r a n g e ? M R F R A N C I S Q U E N T I N C A L LA R D : H m . C H A I R P E R S O N : W h e r e a r e w e g o in g n o w ? A D V M A H L A P E S E L L O : H e is f ir s t tr y in g t o l o c a te … M R F R A N C I S Q U E N T I N C A L LA R D : I f I c o u l d t a k e y o u to – to A n n e x u r e 7 0 p le a s e “ N e g o ti a ti o n s ” ? ADV MAHLAPE SELL O: 7-0? 20 CHAIRPERSON : 7-0? A D V M A H L A P E S E L L O : O k a y. M R F R A N C I S Q U E N T I N C A L LA R D : A n n e x u r e 7 - 0 p a g e 6 0 6 . A D V M A H L A P E S E L L O : Ye s . C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : We Page 87 of 206 have been asked – th e 23 MAY 2019 – DAY 97 in c r e a s e in t h e p r ic e o f th e 1 0 6 4 fr o m t h e 3 8 . 6 t o th e 5 4 b il li o n a n d th e p r i c e – in c r e a s e i n th e p r ic e p e r l o c o m o tiv e u p t o 5 4 b il li o n - m il li o n p e r lo c o m o t iv e h a s a lr e a d y b e e n e x t e n s i v e ly a i r e d . ADV MAHLAPE SELLO: Hm. M R F R A N C I S Q U E N T I N C A L LA R D : Page 606 and it is t i tl e d “ N e g o ti a ti o n s ” a n d i t i s f r o m t h e N e g o t ia t i o n s El e c tr ic s S h e e t 1 7 M a r c h … A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : It is a s id e b a r c a lc u l a ti o n . 10 ADV MAHLAPE SELLO: Hm. M R F R A N C I S Q U E N T I N C A L LA R D : A n d y o u w i ll s e e t h e r e – t h e r e i s a ls o a p r ic e o f m a k e - u p f o r l o c o m o tiv e s f o l lo w i n g t h e s i m i la r fo r m a t to w h a t w e h a v e s e e n b e f o r e h a n d - B A F O , n e w p r ic e a n d fi n a l c o s t . A D V M A H L A P E S E L L O : O k a y. M R F R A N C I S Q U E N T I N C A L LA R D : O n t h e s e n e g o t ia t io n s h e e ts I w o u ld j u s t l ik e t o d r a w t h e fi n a l fi g u r e s t h e r e . W e s e e a fi n a l f ig u r e a t c o s t a ft e r T E s c o p e . ADV MAHLAPE SELLO: Huh-uh. M R F R A N C I S Q U E N T I N C A L LA R D : 20 B o m b a d ie r 60 m il li o n per lo c o m o t iv e . ADV MAHLAPE SELLO: Huh-uh. M R F R A N C I S Q U E N T I N C A L LA R D : C S R 5 5 m i ll io n p e r l o c o m o tiv e m o v i n g l a te r o n t o 5 9 m i lli o n p e r lo c o m o ti v e a n d 5 5 m i l li o n p e r lo c o m o t iv e . I t is a n o m a l o u s t h a t t h e n e g o ti a ti o n s p e r lo c o m o t iv e w o u l d t a k e u s u p t o t h a t p r ic e p e r l o c o m o t iv e a n d th e lo g ic t h a t w o u l d ta k e u s Page 88 of 206 23 MAY 2019 – DAY 97 t o t h a t p r ic e is m is s i n g . ADV MAHLAPE SELLO: Huh-uh. M R F R A N C I S Q U E N T I N C A L LA R D : A n d f o r m e i t – fr o m t h i s i t b e g s t h e q u e s t i o n a s to h o w t h e n e g o ti a ti o n s w e r e c o n d u c t e d . ADV MAHLAPE SELLO: S o i f – i f I m a y. L e t u s t a k e th e – t h e f ir s t t a b le o r b o x . I s t h a t – w h a t d o e s t h a t b o x r e p r e s e n t ? I s t h a t t h e p r ic e a s a t w h ic h p o i n t ? M R F R A N C I S Q U E N T I N C A L LA R D : cannot 10 in t e r p r e t those figures I cannot say at which point and I 20/7 – those fi g u r e s above th e Bombadier box … A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : B u t y o u w il l s e e th a t th e c o s t a t the bottom of that column … ADV MAHLAPE SELLO: I see it is 60. M R F R A N C I S Q U E N T I N C A L LA R D : 6 0 m il li o n p e r l o c o m o ti v e . A D V M A H L A P E S E L L O : A n d a s I g o in t o t h e s e c o n d b o x d o I i n t e r p r e t t h e – t h e n u m b e r a g a i n s t c o s t a f t e r T E s c o p e o f 5 9 a s a r e d u c ti o n a f t e r 60? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . 20 A D V M A H L A P E S E L L O : I s t h e r e a c o r r e l a ti o n b e t w e e n t h e t w o ? M R F R A N C I S Q U E N T I N C A L LA R D : I c a n n o t t a lk to a n y p o s s i b le c o r r e la t io n . I m e r e ly h i g h li g h t t h a t t h i s a s id e b a r c a lc u l a ti o n . A D V M A H L A P E S E L L O : O k a y. M R F R A N C I S Q U E N T I N C A L LA R D : O f a c o s t p e r l o c o m o tiv e w h ic h i s o u t o f t h e o r d i n a r y to a n y t h in g w h ic h w e h a d b e e n d e a l in g w i th a n d i t i s Page 89 of 206 23 MAY 2019 – DAY 97 c o n s i d e r a b ly h i g h e r t h a n t h a t w h ic h w e h a v e – w e q u e s t io n in g t h e p r ic e u p to 5 4 b il li o n i n t h e p r i c e i n c r e a s e p e r l o c o m o tiv e . So a side bar c a l c u l a ti o n w h ic h h a s a p r i c e o f 6 0 m il li o n p e r lo c o m o t iv e o r 5 9 m il li o n p e r l o c o m o tiv e I d o n o t u n d e r s t a n d . A D V M A H L A P E S E L L O : Ye s . C H A I R P E R S O N : To t h e e x t e n t t h a t w h a t y o u h a v e b e e n a b l e to p i c k u p h e r e w i t h r e g a r d to th e i n c r e a s e o f t h e p r i c e f r o m 3 8 t o 5 0 , 4 9 , 5 0 , 5 4 t o t h e e x te n t th a t y o u h a v e p i c k e d u p f i g u r e s th a t a r e i n e x p li c a b le a s f a r a s y o u a r e c o n c e r n e d w h ic h m a y m e a n t h a t Tr a n s n e t w a s p u t a t a 10 r is k . It s i n te r e s t s w e r e n o t p r o p e r l y l o o k e d a f te r b y p e o p l e w h o w e r e s u p p o s e d t o p ic k t h e s e t h i n g s u p . W h o u l ti m a t e ly a t Tr a n s n e t s h o u l d h a v e p i c k e d u p t h e s e th i n g s a n d w h o u l ti m a te ly – w h e n I s a y u l t i m a te ly – i t m i g h t b e s o m e b o d y q u i t e h i g h u p . Th e r e m a y b e - b u t t h e r e m a y b e o th e r s w h o b e lo w t h a t b o d y o r t h a t p e r s o n s h o u l d h a v e p ic k e d t h e s e t h i n g s u p b e c a u s e p a r t o f t h e ir jo b w a s t o c h e c k th e s e t h i n g s a n d b e c a u s e i f i t w a s p a r t o f t h e ir j o b to c h e c k t h e s e th in g s p r o p e r ly a n d p ic k th e s e t h i n g s u p a n d th e y d id n o t d o t h a t. O n e w it h in t h e c o n t e x t o f w h a t w e a r e d e a li n g w i t h i t m a y b e t h a t fo r s o m e i t w a s g r o s s n e g li g e n c e b u t f o r m a y b e o th e r s i t m a y b e t h a t i t w a s m u c h m o r e . 20 It w a s n o t j u s t n e g l ig e n c e . I t w a s p a r t o f a s c h e m e . S o – s o i t b e c o m e s i m p o r t a n t to – t o p i n d o w n t h e p e o p l e w h o m a y h a v e b e e n p a r t o f t h e s c h e m e a n d m a y h a v e p u t Tr a n s n e t a t r is k b y a ll o w i n g a n d a p p r o v i n g fi g u r e s w h ic h s h o u l d n o t h a v e b e e n a p p r o v e d b e c a u s e th e y w e r e u n j u s ti fi e d . M R F R A N C I S Q U E N T I N C A L LA R D : I d e s c r i b e d t o Mr C h a ir th a t th e Page 90 of 206 23 MAY 2019 – DAY 97 p r o c e s s f o l l o w e d tw o p h a s e s . T h e f ir s t p h a s e w a s t h e s e l e c t io n o f th e b i d d e r s a n d I h a v e d e s c r i b e d w h y my c o n c e r n s r e g a r d i n g t h e s e l e c t io n o f t h e b i d d e r s . Th e s e c o n d p h a s e w a s t h e n e g o t ia t io n p h a s e w i th t h e selected OEMs. Th e n e g o t i a t i o n p h a s e t o o k p l a c e o r u n d e r t h e a u s p ic e s o f a N e g o t ia t io n Te a m w h ic h t h e m e m b e r s w e r e m a n d a te d w it h s ig n e d mandates by M r Br i a n M o le f e the Chief E x e c u t iv e . The N e g o ti a ti o n Te a m c o ll e c ti v e ly – i n d i v i d u a l ly a n d c o ll e c ti v e ly d i d t h e n e g o ti a ti o n s . I c a n n o t t a l k t o t h e r o le t h a t e a c h o n e p la y e d i n d i v i d u a lly w i t h i n th e N e g o ti a ti o n Te a m b u t … 10 C H A I R P E R S O N : B u t t h e l e a d e r o f t h e N e g o ti a ti o n Te a m w a s … ? M R F R A N C I S Q U E N T I N C A L LA R D : It is m y u n d e r s t a n d i n g t h a t it w a s – I t h i n k t h e le a d e r – t h e – I k n o w o n e o f th e j o i n t C h a ir s . I know M r J i y a n e w a s a j o i n t C h a ir o f th e N e g o t i a t io n Te a m . C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : I c a n n o t s a y w h o t h e … C H A I R P E R S O N : W h o t h e o t h e r. M R F R A N C I S Q U E N T I N C A L LA R D : I c a n n o t r e c a ll w h o t h e le a d e r w a s . C H A I R P E R S O N : J a , o k a y, o k a y. M R F R A N C I S Q U E N T I N C A L LA R D : I n e e d a m o m e n t o r tw o f o r t h a t. 20 CHAIRPERSON : Hm. M R F R A N C I S Q U E N T I N C A L LA R D : But the Negotiation Te a m c o l l e c ti v e ly w e r e o p e r a ti n g u n d e r o r s h o u l d h a v e o p e r a t e d u n d e r a m a n d a t e t o a c h i e v e t h e b e s t p o s s i b l e p r i c e f o r Tr a n s n e t w h e th e r t h e y d i d I t h i n k i t is m y – i n a n s w e r t o y o u r q u e s t io n – t h e N e g o ti a ti o n Te a m s h o u l d a n s w e r f o r t h e p r ic e i n c r e a s e . Page 91 of 206 23 MAY 2019 – DAY 97 CHAIRPERSON : O k a y, t h a n k y o u . O t h e r t h a n t h e N e g o ti a ti o n Te a m t h e r e w o u l d b e s o m e b o d y e l s e p r o b a b l y w h o h a d to s i g n o ff t o s a y t h is is f i n e w h o w o u ld n o t b e i n t h e N e g o t i a t i o n Te a m ? M R F R A N C I S Q U E N T I N C A L LA R D : N o i t – n e g o ti a ti o n – l e t te r s s i g n e d b y M r M o l e f e a p p o i n te d M r S in g h a n d M r G a m a a s m e m b e r s o f th e N e g o ti a ti o n Te a m a s w e ll a lt h o u g h I u n d e r s t a n d t h e y w e r e n o t t h e r e f u ll ti m e … C H A I R P E R S O N : Ye s , y e s . M R F R A N C I S Q U E N T I N C A L LA R D : 10 But th e y were part of that N e g o ti a ti o n Te a m . CHAIRPERSON : B u t i n t h e e n d M r Br i a n M o le f e w o u ld h a v e b e e n t h e o n e to s a y w h e t h e r a p a r ti c u la r p r ic e w a s a c c e p t a b l e . So in other w o r d s t h e N e g o t ia t i o n Te a m i f t h e y t h o u g h t a p r ic e w o u l d b e – i s a c c e p ta b l e t h e y w o u l d h a v e to r e p o r t t o h i m ? M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t . CHAIRPERSON : And if he thought the price was not right then he w o u ld s a y n o b u t i f h e t h o u g h t i t w a s r i g h t t h e n h e w o u l d – h e w o u l d approve? M R F R A N C I S Q U E N T I N C A L LA R D : 20 Correct. It is my u n d e r s t a n d in g t h a t t h a t is – w a s t h e c h a i n o f c o m m a n d . N e g o ti a ti o n Te a m . absolute We had a T h e N e g o t i a t i o n Te a m r e p o r te d o n a fa ir ly r e g u l a r b a s is . I b e l ie v e i t w a s o n a d a i ly b a s i s - I b e li e v e i t w a s a d a ily b a s is t o M r S in g h . C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : H o w h e t o o k i t fu r t h e r o n a d a i ly Page 92 of 206 23 MAY 2019 – DAY 97 b a s is … C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : I a m n o t s u r e . CHAIRPERSON : Ja. M R F R A N C I S Q U E N T I N C A L LA R D : But the end result of th e n e g o ti a ti o n s fr o m t h e N e g o t i a t i o n Te a m r e s u l t e d in t h e s e p r ic e s . CHAIRPERSON : Ye s , o k a y t h a n k y o u . May we take the tea a d j o u r n m e n t a n d w e w i ll r e s u m e a t h a l f p a s t 11 ? W e a d jo u r n . A D V M A H L A P E S E L L O : Th a n k y o u C h a ir. 10 REGISTRAR: All rise. 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 : Ye s , y o u m a y p r o c e e d M s S e ll o . A D V M A H LA P E S E L L O : Th a n k y o u C h a ir. W e h a v e d e a l t w i th y o u r p a r a g r a p h u n d e r a n a ly s is o f M a r c h 1 7 n e g o ti a ti o n s p r e a d s h e e t , M r C a ll a r d a n d y o u ’ v e t a k e n u s t h r o u g h y o u r A n n e x u r e 7 8 , 7 9 , 8 0 , th e c o m p a r is o n s y o u m a d e b a s e d o n t h e w o r k s h e e t s y o u a c t u a l ly r e c e iv e d . B e f o r e w e l e a v e t h a t to p i c , y o u s t a t e a t y o u r p a r a g r a p h 2 0 8 .7 a t p a g e 5 5 t h a t s o m e fo r m u l a s u s e d i n t h e n e g o ti a ti o n w o r k s h e e ts h a v e 20 h a ll m a r k s o f r e v e r s e e n g in e e r i n g t o a c h i e v e a d e s ir e d r e s u l t, d o y o u s e e t h a t? M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Ye s . A n d i n t h e l a s t li n e o f t h a t p a r a g r a p h y o u s t a te , “ T h i s p a r ti c u la r ly a p p li e s t o t h e f o r e i g n e x c h a n g e c o m p o n e n t Page 93 of 206 23 MAY 2019 – DAY 97 a n d c e l ls c o lo u r e d i n y e ll o w ” , N o w I n e e d y o u t o e x p l a in t o th e C h a ir w h a t y o u m e a n b y r e v e r s e e n g i n e e r i n g a n d fo r t h a t p u r p o s e p e r h a p s i t m ig h t a s s i s t i f w e u s e a n A n n e x u r e w e ’v e a lr e a d y u s e d in t h e h e a r i n g A n n e x u r e 7 8 a t page 625. N o w w i th r e f e r e n c e to t h a t A n n e x u r e c o u ld y o u e x p la i n e x a c tl y w h a t y o u m e a n b y r e v e r s e e n g i n e e r i n g t o a c h i e v e a d e s i r e d r e s u l t a n d w h a t y o u – c a u s e o f th e d e s ir e d r e s u l t w a s ? 7 8 is th e n e g o ti a ti o n s p r e a d s h e e t fo r d i e s e ls . CHAIRPERSON : 10 I’ m s o r r y fr o m w h i c h p a r a g r a p h M s S e l l o d i d y o u start? ADV MAHLAPE SELLO: I’ m r e a d in g a t 2 0 8 . 7 C h a i r a t p a g e 5 5 , t o p o f page 55. CHAIRPERSON : O k a y. ADV MAHLAPE SELLO: A t th a t p a r a g r a p h M r C a l la r d i n tr o d u c e s a c o n c e p t o f r e v e r s e e n g i n e e r in g t o a c h ie v e a d e s ir e d r e s u lt . CHAIRPERSON : Ye s . ADV MAHLAPE SELLO: c e l ls c o lo u r e d i n y e l lo w. A n d t h e n h e d o e s s o w i t h r e fe r e n c e to t h e I t h e n w a n t h i m t o e x p l a i n w h a t e x a c tly h e m e a n s in t h a t p a r a g r a p h , b y r e v e r s e e n g i n e e r in g , fi r s tl y a n d t o e x p l a i n 20 w h a t d e s ir e d r e s u l t h e s a i d a p p li e d a n d t o d o s o w i t h a r e f e r e n c e t o a n A n n e x u r e t h a t w e ’v e w o r k e d o n a lr e a d y, w h ic h is A n n e x u r e 7 8 t h e n e g o ti a ti o n s w o r k s h e e t fo r d i e s e ls . CHAIRPERSON : Ye s , th a n k y o u . MR FRANCIS QUENTIN CALLARD: ADV MAHLAPE SELLO: T h e … ( i n te r v e n t io n ) . J u s t a s e c o n d t h e C h a ir s h o u l d – t o l o c a te Page 94 of 206 23 MAY 2019 – DAY 97 t h e A n n e x u r e , A n n e x u r e 7 8 C h a ir a t p a g e 6 2 5 . CHAIRPERSON : I ’v e g o t i t . ADV MAHLAPE SELLO: Ye s Mr C a ll a r d . MR FRANCIS QUENTIN CALLARD: O k a y, i f I m a y i ll u s tr a te t h e concept of reverse engineering by using, perhaps a – an example, if we h a v e a – w e a r e g i v e n a p r ic e o f a l o c o m o ti v e a n d w e k n o w t h e e s c a l a t io n g o in g fo r w a r d , w e ta k e C P I g o in g fo r w a r d f o r e x a m p le a n d o v e r a t w o y e a r p e r i o d t h e n t h e f in a l p r i c e w e w o u l d p a y is a s tr a ig h t fo r w a r d 10 c a lc u l a ti o n , fr o m h e r e ’s th e base p r ic e of the lo c o m o t iv e , a p p ly t h e C P I fo r w a r d a n d I g e t t h e fi n a l p r ic e o f t h e lo c o m o t iv e . R e v e r s e e n g i n e e r i n g w o u ld a p p ly w h e n I h a v e a b a s e p r i c e o f a lo c o m o t iv e b u t I f o r e x a m p l e , I ’ m n o w n e g o ti a ti n g o n t h e f in a l o u t c o m e p r ic e , I c h o o s e a f in a l o u tc o m e p r ic e a n d t h e n I r e v e r s e e n g in e e r t o d e te r m i n e t h e e ffe c t o f th e e s c a l a t io n . So where is the e s c a l a t io n a n d f o r w a r d F o r e x h e d g i n g s h o u ld b e d e r i v e d q u a n t i ti e s b a s e d o n k n o w n fo r m u l a t h a t a r e d e r iv e d . R e v e r s e e n g i n e e r i n g w o u l d a p p ly w h e n o n e c h o o s e s a f in a l p r i c e a n d t h e n w o r k s b a c k w a r d s t o a c h i e v e s o m e f i g u r e s w h ic h w o u l d te n d t o ju s ti fy t h a t p r i c e , t h a t w o u ld – i t ’s i ll u s tr a tiv e o f t h e c o n c e p t r e v e r s e e n g i n e e r i n g . 20 I t i s n o t v is i b le i m m e d ia t e l y fr o m t h e s p r e a d s h e e ts h e r e b u t i f o n e e x a m i n e s t h e e x c e l s p r e a d s h e e t s in th e ir r a w fo r m a t a n d o n e lo o k s a t t h e fo r m u l a s o n t h o s e e x c e l s p r e a d s h e e ts o n e c a n s e e t h a t a n u m b e r o f fi g u r e s h a v e b e e n r e v e r s e e n g i n e e r e d w h e r e a fi g u r e y o u w o u l d e x p e c t to b e th e o u t c o m e o f a c a lc u l a ti o n i s g iv e n a s t h e r e s u l t a n d i t i s u s e d to d e r iv e w h a t s h o u l d h a v e b e e n a g i v e n lik e C P I fo r e x a m p l e a n d Page 95 of 206 23 MAY 2019 – DAY 97 w e h a v e s e e n e s c a l a ti o n f i g u r e s u s e d h e r e th a t h a v e b e e n q u i t e h i g h . I n r e f e r e n c e t o t h i s s h e e t a n d o t h e r s w e ’v e a lr e a d y h ig h li g h t e d t h e v a r ia t io n s i n t h e m o v e m e n t o f t h e e x c h a n g e r a te , w h a t I’v e s a i d w e r e a n o m a lo u s m o v e m e n ts i n th e e x c h a n g e r a te a c r o s s t h e C N R d i e s e ls fr o m t h e U S D o ll a r s , w e ’v e h i g h l ig h te d t h a t a lr e a d y, t h e fir s t t h r e e c o l u m n s w h e r e i t g o e s fr o m 4 8 4 0 0 0 t o 4 9 3 0 0 t h e n to U S D o ll a r s 9 1 8 – t h e E u r o s , a p o lo g i e s i f I ’ m g o i n g to o f a s t t h e E u r o s a r e o n l i n e 2 0 g o fr o m 9 9 3 d o w n to 3 2 5 u p t o 3 7 4 . CHAIRPERSON : 10 774, 374 or 774? M R F R A N C I S Q U E N T I N C A L LA R D : CHAIRPERSON : 774. J a o k a y I th i n k I h e a r d 3 7 4 b u t m a y b e I d i d n ’ t h e a r c o r r e c t ly. MR FRANCIS QUENTIN C A L LA R D : I’m s o r r y, p o s s i b ly I w a s … ( i n te r v e n ti o n ) . CHAIRPERSON : O k a y. M R F R A N C I S Q U E N T IN C A L L A R D : I f o n e w i s h e s to i n fl u e n c e th e p r i c e a t t h e b o t to m o f t h o s e t w o c o l u m n s i n y e ll o w. ADV MAHLAPE SELLO: Ye s . MR FRANCIS QUENTIN CALLARD: 20 T h e n o n e w o u l d c h o o s e to u s e t h o s e p r ic e s t o a c h i e v e a d e s ir e d e n d r e s u l t p r ic e a n d t h a t is a n e x a m p l e o f w h a t I m e a n b y r e v e r s e e n g i n e e r in g to a c h i e v e a d e s i r e d price. S o i f o n e w a n t e d t o a c h i e v e , a t th e b o t t o m o f c o lu m n 2 , 3 0 . 4 m il li o n r o u n d e d t h e n a w a y o f a c h i e v in g t h a t lo w p r i c e a n d s e e t h e r e i s a s i g n i fic a n t r e d u c ti o n i n t h a t p r ic e . ADV MAHLAPE SELLO: Ye s . Page 96 of 206 23 MAY 2019 – DAY 97 MR FRANCIS QUENTIN CALLARD: W o u l d b e t o a r ti f ic ia ll y l o w e r t h e f o r e i g n c o n t e n t b e c a u s e t h a t w o u l d t h e n r e s u l t i n t h e l o w e r p r ic e a n d t h a t w o u ld b e a n e x a m p l e o f r e v e r s e e n g i n e e r i n g . CHAIRPERSON : Can one explain your concept of reverse e n g in e e r i n g i n t h i s w a y, t h a t y o u fir s t d e c i d e w h a t th e f in a l a m o u n t is o r should be that you want to achieve and then once you know what that a m o u n t is th e n y o u g o b a c k t o th e v a r io u s c o m p o n e n ts t h a t m a k e u p t h e a m o u n ts a n d f i n d o n e o r m o r e c o m p o n e n t s th a t m i g h t b e e a s y t o p la y a r o u n d w i th a n d t h e r e f o r e – a n d th e n i n c r e a s e o n e o r m o r e o f t h o s e in 10 o r d e r t o a c h i e v e t h e r e s u l t t h a t y o u h a v e a lr e a d y i d e n t i fi e d ? MR FRANCIS QUENTIN CALLARD: T h a t i s e x a c tl y t h e e x a m p l e I ’ m tr y i n g t o il l u s tr a t e M r C h a ir, e x a c t ly t h a t e x a m p l e . CHAIRPERSON : O k a y a lr i g h t t h a n k y o u . MR FRANCIS QU ENTIN CALLARD: I w a s tr y in g t o il lu s t r a t e it a t a s in g le le v e l , y o u h a v e t a k e n i t t o th e f u ll l o c o m o t iv e p r ic e . CHAIRPERSON : N o , n o t h a t’s f i n e I w a s – I w a n te d t o c h e c k w h e t h e r I u n d e r s to o d i t c o r r e c tl y s o t h a t o n e c o u ld a p p l y i t t o a n y o th e r i t e m if n e e d a r is e s t o s a y w h a t ’s t h e g e n e r a l p r in c i p l e o r e x p l a n a t i o n f o r i t , o k a y. 20 ADV MAHLAPE SELLO: A n d M r C a l la r d y o u s a y t h a t t h i s r e v e r s e e n g in e e r i n g is n o t v is i b l e i n t h e P D F f o r m a t o f y o u r A n n e x u r e s ? M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: No, no. S o i n o r d e r f o r t h e C h a ir t o s a tis f y h i m s e l f t h a t t h e r e h a s b e e n a c a s e o f r e v e r s e e n g in e e r i n g y o u s u g g e s t t h a t w e lo o k a t t h e a c t u a l e x c e l s p r e a d s h e e t s o r t h e s p r e a d s h e e ts t h a t m a k e u p Page 97 of 206 23 MAY 2019 – DAY 97 t h e n e g o t i a t i o n s f o r d ie s e l a n d / o r l o c o m o ti v e a s t h e c a s e – a n d e le c t r ic a s th e c a s e m a y b e . MR FRANCIS QUENTIN CALLARD: I f o n e l o o k s a t th e a c tu a l e x c e l fi le s o n a c o m p u t e r w h ic h th e n d e m o n s t r a te s h o w t h e f o r m u la s a r e m a d e u p a n d t h a t is w h a t i ll u s tr a t e s th e r e v e r s e e n g in e e r i n g . ADV MAHLAPE SELLO: I d o n ’ t k n o w i f y o u a r e a b le to h e lp u s n o w t h a t – y o u c a n n o t b e c a u s e y o u d o n ’ t h a v e t h e d o c u m e n ts b e f o r e y o u , o n c e a g a in a r e y o u a b l e t o a d v i s e w h o w e m a y t u r n t o s o t h e C h a ir m a y s a ti s f y h i m s e l f th a t t h e r e i s s o m e e l e m e n t o f r e v e r s e e n g i n e e r i n g , t o 10 a s s is t u s t o w o r k th r o u g h t h o s e s p r e a d s h e e ts ? M R FR A N C I S Q U E N T I N C A L L A R D : Ex c u s e m e a r e y o u l o o k i n g f o r a n a m e o f a p e r s o n o r a n e n ti ty ? ADV MAHLAPE SELLO: Ye s , w h o m a y g u i d e u s , t h e y w o n ’ t s h o w u s r e v e r s e e n g i n e e r in g b u t i f w e w e r e to p u r s u e y o u r c o n c e p t w h o d o y o u s u g g e s t w e s it d o w n w it h , w o r k i n g th r o u g h t h e e x c e l s p r e a d s h e e ts t o s a ti s f y o u r s e lv e s t h a t t h e c o n c e p t t h a t y o u n o w r e f e r r e d t o i s a p p l ic a b l e in s o m e o r o t h e r r e g a r d ? MR FRANCIS QUENTIN CALLARD: I c o u l d s h o w y o u p e r s o n a ll y b u t a ls o t h e a c t u a r i e s t h a t w e r e e n g a g e d b y M N S w o u l d a ls o b e a b l e t o 20 d e m o n s t r a t e th e s a m e c o n c e p ts y e s . ADV MAHLAPE SELLO: CHAIRPERSON : O k a y. B u t t h e s ta r t i n g p o i n t m a y w e l l b e p e o p l e w h o p u t in t h e f i g u r e s , i f t h e y c a n ’ t e x p l a in t o s a y, w h a t’s y o u r e x p l a n a t io n f o r t h i s in t h e li g h t o f y o u r e v id e n c e . M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . Page 98 of 206 23 MAY 2019 – DAY 97 CHAIRPERSON : A n d t h e y m a y o r m a y n o t b e a b l e t o e x p l a in i t b u t t h a t ’s o n e w a y o r a c o m p o n e n t o f fi n d i n g o u t. MR FRANCIS QUENTIN CALLARD: C e r t a i n l y, i t w o u ld h a v e to b e – t h e y w o u ld h a v e to b e a s k e d s p e c i f ic a l ly o n t h i s s p r e a d s h e e t , p l e a s e h a v e a l o o k a t th is fo r m u l a e c a n y o u e x p l a i n t h is f o r m u l a e , h o w i t w a s d e r iv e d , w h a t w a s t h e m a k e u p o f th is fo r m u la e , w h e r e d i d y o u g e t t h e fi g u r e s p l e a s e s h o w – g e t t h e f i g u r e s fr o m , p le a s e i n d ic a te d t h e tr a c e a b il it y o f t h o s e fi g u r e s th r o u g h w h a te v e r d o c u m e n t a ti o n t o c o m e t o t h a t fi g u r e , t h a t w o u ld b e t h e e x e r c i s e t o b e f o ll o w e d . 10 CHAIRPERSON : Ye s o k a y. ADV MAHLAPE SELLO: Ye s th a n k y o u v e r y m u c h , w e w il l c e r t a i n l y pursue that. CHAIRPERSON : S o , i t m ig h t b e a g o o d t h i n g t o h a v e a n o t a r y a s y o u s a y … ( in t e r v e n ti o n ) . ADV MAHLAPE SELLO: A c tu a r y C h a ir, s o r r y a c tu a r y y o u s a id n o t a r y. CHAIRPERSON : Oh, see they both end with a “ary”. ADV MAHLAPE SELLO: CHAIRPERSON : 20 A b s o l u te ly. N o t h a n k y o u , I m e a n t a c t u a r y , n o t a r y is s o m e b o d y e ls e . O n e w a y is t o b r in g i n a n a c t u a r y b u t i t m a y w e ll – I m e a n a s I s e e i t e v e n t h e a c t u a r y m i g h t ju s t b e a b l e t o e x p l a i n h o w m u c h i t i s – h o w m u c h d i ff ic u l t i t is t o e x p la i n t h e j u m p fr o m t h a t f i g u r e t o t h a t fi g u r e b u t in t h e e n d , o n e m i g h t j u s t h a v e t o m a k e a n i n fe r e n c e to a c e r t a i n – i n r e g a r d t o a c e r t a i n c o m p o n e n t th e fi g u r e s w e r e i n f l a t e d o r s o m e t h i n g li k e t h a t . Page 99 of 206 23 MAY 2019 – DAY 97 MR FRANCIS QUENTIN CALLARD: Ye s I th in k w h a t o n e w o u ld a s k a n a c tu a r y t o d o w o u ld b e t o p le a s e s h o w m e th e l o g ic a l p r o g r e s s i o n a n d c h a n g e in t h e p r ic e s a n d d e m o n s tr a te th a t t h e y fo ll o w e d a r e a s o n e d s e q u e n c e o f e v e n ts a n d /o r t r a c e a b l e d o c u m e n ta t io n to a r r iv e a t t h e f in a l p r ic e , i f t h a t … ( i n te r v e n ti o n ) . CHAIRPERSON : J a I t h in k t h a t i t g o e s t o th e q u e s t io n o f w h e t h e r t h e r e ’s a l o g ic a l e x p la n a ti o n o r w h e t h e r t h e r e ’s – i f i t c a n b e e x p l a i n e d in a n y r a t io n a l w a y th a t t h e j u m p a n d w h a t m ig h t a p p e a r t o b e in c o n s is t e n c y a n d s o o n . 10 M R F R A N C I S Q U E N T I N C A L LA R D : CHAIRPERSON : Correct. J a o k a y, a lr i g h t . ADV MAHLAPE SELLO: T h a n k y o u C h a i r. M R F R A N C I S Q U E N T I N C A L LA R D : M ay I just – because we have n o t g o t it in t o th e r e c o r d 2 0 8 . 2 … ( i n t e r v e n t i o n ) . ADV MAHLAPE SELLO: M a y b e d e a l w i t h t h e e n ti r e 2 0 8 . M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Entire 208? Ye s . MR FRANCIS QUENTIN CALLARD: Th i s is r e a l ly a s u m m a r y o f w h a t I h a v e s t a te d b e f o r e – w h a t w e h a v e c o v e r e d b e f o r e . 20 ADV MAHLAPE SELLO: Ye s . MR FRANCIS QUENTIN CALLARD: B u t o n e x a m i n a t i o n I c o u ld n o t c r e d i t t h a t th e fi g u r e s i n t h e s p r e a d s h e e t w e r e a t r u e r e f l e c ti o n o f th e r e a l c o s t to t h e l o c o m o tiv e s f o r th e fo ll o w i n g r e a s o n s . ADV MAHLAPE SELLO: At page 54? M R F R A N C I S Q U E N T I N C A L LA R D : At page 54. Page 100 of 206 23 MAY 2019 – DAY 97 ADV MAHLAPE SELLO: Ye s . MR FRANCIS QUENTIN CALLARD: 2 0 8 . 1 , “ Th e e s c a la t io n c o s t s w e r e i n fl a te d a n d I c o u ld n o t c o r r e l a t e t h e s e w it h a n y o f th e l o c o m o tiv e m o d e l li n g I ’d p r e v i o u s ly d o n e . 2 ) T h e r e w e r e u n e x p la i n e d v a r ia t io n s i n t h e f o r e i g n e x c h a n g e c o m p o n e n t a ffe c t i n g t h e l o c o m o t iv e p r ic e a s a c h a n g e b e t w e e n t h e w o r k s h e e t s o f b a s e c o s t , b a s e c o s t e x c lu d in g o p t io n s , b a s e c o s t s e x c l u d i n g T E a n d n e g o ti a ti o n s ” . C H A I R P E R S O N : B u t w e d o n ’t n e e d t o g o t h r o u g h th a t i f w e ’ v e a lr e a d y 10 c o v e r e d i t , s o o n ly t h a t w h ic h w e m i g h t h a v e l e f t o u t . MR FRANCIS QUENTIN CALLARD: Only that which we have not c o v e r e d M r C h a ir, is 2 0 8 .6 , th e d ie s e l p r ic e c o n t a i n s – s o r r y it w a s t h e lo c a l c o n t e n t v e r s i o n t h a t I w a s l o o k i n g f o r, 2 0 8 .4 if I m a y. CHAIRPERSON : Ye s . MR FRANCIS QU ENTIN CALLARD: “ T h e f o r e ig n e x c h a n g e c o m p o n e n ts a m o u n ts u s e d i n t h e fi n a l n e g o t ia t io n s s p r e a d s h e e t w o u l d c a u s e s o m e l o c o m o t iv e s , C S R a n d B o m b a r d i e r n o t t o m e e t t h e l o c a l c o n te n t r e q u i r e m e n ts ” . ADV MAHLAPE SELLO: 20 P le a s e e x p l a i n . MR FRANCIS QUENTIN CALLARD: T h e p o i n t I ’ m m a k i n g h e r e is t h a t if th e fo r e ig n e x c h a n g e a m o u n t s a r e c o r r e c t o r i f t h e y a r e c o r r e c t t h e n t h e l o c a l c o n t e n t d o e s n o t m e e t r e q u i r e m e n ts . I f I m a y g o b a c k p l e a s e t o t h e – l e t ’s g o t o t h e d i e s e ls a s i t ’s a f a m il i a r o n e a n d t h a t w o u ld b e … ( in t e r v e n ti o n ) . CHAIRPERSON : Is that Annexure 67? Page 101 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: 7 8 … ( in t e r v e n ti o n ) . M R F R A N C I S Q U E N T I N C A L LA R D : CHAIRPERSON : A n n e x u r e 6 2 … ( i n te r v e n t io n ) . Annexure 78 page 625 please. O k a y, y e s . MR FRANCIS QUENTIN CALLARD: An nexure 78 page 625, and I’m lo o k in g i m m e d ia t e l y t o th e r i g h t o f t h e t h ir d s m a l l c o l u m n w h ic h i s n e g o ti a ti o n s , b id d e r o n e , C N R a n d w e ’l l s e e th e r e i s s o m e b e i g e w o r k i n g s i n th a t w h i te s p a c e . ADV MAHLAPE SELLO: 10 Ye s . MR FRANCIS QUENTIN CALLARD: A n d if w e lo o k t h e r e , w e w i ll s e e – i f w e lo o k a c r o s s fr o m l in e 1 9 i t h a s – li n e 1 9 – s o r r y l in e 1 8 m y a p o lo g i e s , t o ta l i m p o r t c o n t e n t p e r c e n ta g e p e r d e c l a r a t i o n a n d t h e fi g u r e g iv e n in t h e t h ir d c o l u m n t h e r e is 3 8 . 9 p e r c e n t. ADV MAHLAPE SELLO: Ye s . M R FR A N C I S Q U E N T I N C A L L A R D : A c r o s s a ll t h e v a r i a t i o n s o f f o r e i g n e x c h a n g e , t h a t fi g u r e o f 3 8 .9 p e r c e n t h a s n o t c h a n g e d , th a t i s w h a t w a s d e c la r e d . I f w e lo o k a t t h e t w o li n e s a b o v e i t w e s e e t h a t t h o s e fi g u r e s h a v e c h a n g e d i n – t h o s e f i g u r e s h a v e c h a n g e d b u t t h e n a t u r e o f t h a t c h a n g e d o e s n o t a p p e a r t o r e f le c t th e v a r i a ti o n s in th e 20 f o r e i g n e x c h a n g e a m o u n ts . ADV MAHLAPE SELLO: Ye s . MR FRANCIS QUENTIN CALLARD : s ig n if ic a n t increase in the foreign In f a c t , i f a n y t h in g , d e s p i te t h e exchange a m o u n ts in the n e g o ti a ti o n ’s c o l u m n , t h a t is t h e t h ir d c o l u m n , w e w i ll s e e th a t th e i m p o r t c o n t e n t p e r f ir s t d e c la r a ti o n a n d s e c o n d d e c l a r a t io n r e m a i n s t h e Page 102 of 206 23 MAY 2019 – DAY 97 s a m e , n o w c h a n g i n g th e f o r e ig n c o m p o n e n t o n e w o u ld r e a s o n a b ly e x p e c t b y v ir t u e o f th e s e fo r m u l a e t o c h a n g e t h e f o r e i g n c o m p o n e n t a n d w e s e e t h e r e t h a t it d o e s n o t c h a n g e . A s i d e - b a r c a l c u l a t i o n , a n d t is i s m y c a lc u l a ti o n i n t h e b e i g e – i n t h e w h i t e s p a c e u s in g t h e fi g u r e s p r e s e n t e d i n t h e t h ir d c o l u m n t h e i m p o r t e d c o n t e n t m o v e s u p t o 6 4 % , 6 4 . 2 % w h i c h is o u ts i d e t h e l o c a l c o n t e n t s ti p u l a ti o n s o f t h e D e p a r t m e n t o f Tr a d e a n d In d u s tr ie s a n d o n t h a t b a s is s h o u ld h a v e d i s q u a l i fi e d t h e m . I p r e s e n te d o n t h e b a s e o n t h e s e fi g u r e s a s p r e s e n t e d w h i c h m a k e u p – a n d w e s e e h o w t h e y g o – f e e d t h r o u g h t o t h e f in a l e l e m e n ts 10 t h a t l o c a l – t h a t i m p o r te d c o n t e n t d o e s n o t h o ld , s i m il a r a r g u m e n ts h o ld f o r t h e e l e c tr i c s a s w e ll . ADV MAHLAPE SELLO: Th a n k y o u . T h a t t h e n b r in g s y o u to t h e e n d o f th e is s u e s y o u w a n te d t o a d d r e s s r e g a r d i n g th e e v a lu a ti o n s a n d th e B A F O n e g o t i a t i o n o n b o th t h e d i e s e ls a n d e l e c tr ic s . M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Ye s . Yo u p r o c e e d t h e n f r o m y o u r p a r a g r a p h 2 9 t o s h a r e c e r t a i n o b s e r v a ti o n s a n d d r a w c o n c lu s i o n s fr o m p a r a g r a p h 2 0 9 , m y a p o l o g i e s C h a ir, p a g e 5 5 . Yo u m a k e c e r ta i n o b s e r v a ti o n s a n d y o u r d r a w c o n c l u s i o n s w h ic h y o u lis t t h e r e , y o u d o n ’ t h a v e t o r e a d v e r b a ti m 20 w h a t i s s e t o u t in t h a t p a r a g r a p h b u t p e r h a p s y o u m i g h t w a n t t o h i g h l ig h t k e y o b s e r v a ti o n s a n d w h a t c o n c l u s i o n s a r e t o b e d r a w n f r o m t h e e v id e n c e y o u h a v e p r o v id e d . MR FRANCIS QUENTIN CALLARD : T h a n k y o u , th e e s s e n t ia l c o m p o n e n t i s t h a t a d d in g b a c k t h e T E c o m p o n e n t a s w e w il l s e e w a s d o n e i n th e – h a s b e e n d o n e in t h e e le c t r ic l o c o m o ti v e s w e h a v e n o t Page 103 of 206 23 MAY 2019 – DAY 97 d e m o n s t r a t e d th a t h e r e b u t i t ’s v i s i b l e in t h e s p r e a d s h e e t s , s ig n if ic a n t ly in c r e a s e s th e b a s e p r ic e o f t h e l o c o m o t iv e a n d w e s e e h o w it w a s in it i a l ly t a k e n o u t. W e ’v e m e n ti o n e d e a r l ie r t h a t t h e B A F O p r ic e s o f t h e 1 5 t h J a n u a r y m e m o r a n d u m f r o m t h e C F E T Fi n a n c e c a n n o t b e u s e d a s a b a s is f o r d e t e r m i n i n g t h e t o ta l e s t i m a t e d c o s t b e c a u s e o f w h a t h a s been – what is omitted. ADV MAHLAPE SELLO: Ye s . MR FRANCIS QUENTIN CALLARD: A n d I s u b m i t t h a t w i th o u t t h e d e t a i l e d k n o w l e d g e a n d u n d e r s t a n d in g a n d i n - d e p t h a n a l y s is o f th is , 10 t h a t a r e a d e r w i t h o u t a c c e s s t o t h e s e d o c u m e n ts , t h e a v e r a g e r e a d e r w o u ld i n t e r p r e t th e B A F O p r ic e s o f th e 1 5 t h o f J a n u a r y a n d t h e m e m o t o t h e l o c o S te e r i n g C o m m i t t e e a s a r e a s o n a b l e b a s is f o r c o m p a r i s o n a n d it ’s a n o p e n q u e s ti o n w h e th e r t h e e v a lu a ti o n – t h e e le c t r ic l o c o m o tiv e s o r w h a t t h e e v a lu a ti o n o f t h e e l e c tr ic l o c o m o ti v e s w o u l d h a v e b e e n i f t h e b a s e p r ic e i . e . b e f o r e t h e T E a d ju s t m e n t h a d b e e n u s e d a s a b a s is f o r p r ic e e v a l u a t io n . A D V M A H LA P E S E L L O : Is i t p o s s i b l e t h o u g h to c o n c lu d e t h a t a s a b a r e m i n i m u m C S R w o u l d h a v e c o m e i n a t a h ig h e r p r ic e ? MR FRANCIS QUENTIN CALLARD: 20 B o m b a r d i e r, o n that e v a l u a t io n would C e r ta in ly b o t h C S R a n d have had a h ig h e r p r ic e c o m p a r a b l e t o w h a t w a s s u b tr a c t e d fr o m th e ir p r ic e b y th e i m p a c t – v ir t u e o f th e i m p a c t o f T E . S o h a d t h a t b e e n p u t i n a s a b a s i s f o r e v a l u a t i o n o n t h e r e a l c o s t to t h e l o c o m o t iv e , t h e o u t c o m e o f t h e e v a l u a t i o n m a y h a v e b e e n d i ff e r e n t. ADV MAHLAPE SELLO: Ye s . Page 104 of 206 23 MAY 2019 – DAY 97 MR FRANCIS QUENTIN CALLARD : I’ v e a lr e a d y c o v e r e d t h e m e m b e r o f t h e n e g o ti a ti o n te a m . I w o u l d j u s t a d d o n e o t h e r p o i n t w h ic h is a n a n o m a ly th a t w h e n w e s h o w e d t h e b r e a k d o w n o f th e l o c o m o ti v e p r i c e s , t h is in c l u d e d t h e n e c e s s a r y o p ti o n s t o d e v e l o p a lo c o m o t iv e w h ic h w a s fi t f o r p u r p o s e , r e a d y fo r u s e , e x - w o r k s b u t in th e E T C i n c r e a s e r e q u e s t e d b y M r M o l e fe t o t h e B A D C a n d th a t w a s fr o m th e 3 8 t o t h e 5 4 b il li o n , t h e r e w a s t h is a m o u n t i n th e r e o f – a n d I r e a d fr o m 2 1 2 . 1 , “ it i n c lu d e d c o n t in g e n c i e s o f 4 . 9 m i ll io n w h ic h w o u ld i n c l u d e o p t io n s a n d h e – I q u o t e fr o m t h a t d o c u m e n t , e l e c tr o n i c a ll y 10 c o n tr o ll e d p n e u m a t ic b r e a k i n g a n d w i r e d is tr i b u te d p o w e r e tc e t e r a ” . N o w t h o s e o p t i o n s w e r e p r e v i o u s l y i n c l u d e d in th e n e g o ti a ti o n s – s o r r y i n t h e e v a l u a ti o n p r i c i n g . O n e w o u l d r e a s o n a b ly h a v e e x p e c t e d t h a t t h o s e w o u ld h a v e b e e n p a r t o f t h e c o n s id e r a ti o n o f t h e f i n a l c o s t o f t h e lo c o m o t iv e b e c a u s e t h a t is w h a t m a k e s i t fi t f o r p u r p o s e . ADV MAHLAPE SELLO: N o w o n t h i s c o n s tr u c ti o n a r e y o u s u g g e s t in g t h a t i t w o u ld a p p e a r th a t t h e o p ti o n s w e r e c o s t e d t w i c e ? M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: 20 I t i s … ( i n te r v e n t io n ) . I f t h e y c o n s t i t u t e p a r t o f t h e 4 .9 b i ll i o n a s part of contingencies and yet were part of the makeup of the original – o f th e a c t u a l c o s t o f t h e l o c o m o t iv e , d o e s t h a t c o n s t i tu t e c o u n t i n g t h e o p t io n s tw ic e o r a c c o u n ti n g f o r t h e m t w i c e o r w o u ld th a t b e t o o s i m p l is t ic a n a p p r o a c h ? MR FRANCIS QUENTIN CALLARD: Um, I – to answer that one s p e c i f ic a l ly I j u s t n e e d t o r e f e r b a c k to Mr M o l e fe ’s m e m o r a n d u m b u t if Page 105 of 206 23 MAY 2019 – DAY 97 t h e – i f th e b a s e p r ic e w h ic h is u s e d f r o m t h e m e m o w h i l e it e x c lu d e d TE i n c lu d e d t h o s e o p t io n s a n d th a t w e h a v e s e e n a lr e a d y i t i n c lu d e d t h o s e o p ti o n s w h i le i t e x c l u d e d t h e i m p a c t o f T E i s c a r r i e d f o r w a r d , y e t w e h a v e t h e o p t io n s c o u n te d a g a i n , a s e c o n d t i m e in t h is – y e s t h a t i s s o . T h e o p ti o n s w e r e d e fi n it e ly i n t h e r e i n th e b a s e p r ic e w h ic h w e ’v e s e e n o n t h e 1 5 t h o f J a n u a r y. ADV MAHLAPE SELLO: Ye s . MR FRANCIS QUENTIN CALLARD: Th e o p ti o n s w e r e i n t h e r e , w h i le it e x c l u d e d th e i m p a c t o f T E b u t o p ti o n s w e r e i n t h e r e y e s a n d w e a r e 10 n o w a d d in g a f u r t h e r a m o u n t h e r e f o r o p t io n s . ADV MAHLAPE SELLO: Okay thank you. MR FRANCIS QUENTIN CALLARD: And my point – I go back to 2 1 2 . 3 i n e x p li c a b ly t h e s e r e q u ir e d o p ti o n s w e r e o m i t te d d u r i n g t h e n e g o ti a ti o n s t a g e a n d th e y w e r e a n e x te n s i v e p a r t o f t h e e v a l u a ti o n s t a g e , th e y w e r e o mi t t e d d u r i n g t h e n e g o ti a ti o n s t a g e a n d l e ft t o b e a d d e d l a t e r u n d e r c o n t i n g e n c ie s . ADV MAHLAPE SELLO: Can you explain – well you did say in e x p l ic a b ly, j a , I w it h d r a w t h e q u e s ti o n , y e s p l e a s e c o n ti n u e . MR FRANCIS QUENTIN CALLARD: 20 N o I t h i n k t h a t’s w h a t i s f o r th e record. ADV MAHLAPE SELLO: A lr ig h t y o u t h e n h a v e a fo ll o w i n g c h a p t e r headed, Report to Gama and others. MR FRANCIS QUENTIN CALLARD : W i t h o u t d e t a i li n g t h e w h o l e r e p o r t c o u n s e l , w h e n I b e c a m e a w a r e o f t h e i m p o r t a n d c o n t e n t o f t h is – t h e s e tw o s p r e a d s h e e ts I c o n t a c t e d M r G a m a , s a i d p l e a s e c o u l d I Page 106 of 206 23 MAY 2019 – DAY 97 m e e t w i th h i m , h e a s k e d , p l e a s e s e n d m e a r e p o r t o n w h a t I w a n t e d t o m e e t a b o u t , I e x p l a i n e d t h e n a t u r e o f my c o n c e r n s . I p r e p a r e d a r e p o r t w h ic h I s e n t t o h i m , w e m e t , I m e t w i t h h i m a n d Mr D i p i w e S a li n c a ? , i n M r G a m a ’s o ffic e s , I’ d s e n t th e r e p o r t e a r li e r, t h e e m a i l tr a c e o f t h o s e – w h e r e I s e n t t h o s e r e p o r ts i s in t h e fi l e , a f te r t h e m e e ti n g I t h e n f o r w a r d e d t h e s a m e r e p o r t s to M r S a li n c a , I th e n j u m p e d b a c k to i te m i n m y p a r a g r a p h 2 1 7 th a t M r G a m a u n d e r t o o k to ta k e u p th is m a t te r w i t h t h e C h a i r o f t h e A u d i t C o m m i t t e e , t h e f o ll o w i n g d a y I e m a il e d M r S a li n c a c o p ie s o f t h e m e m o r a n d u m t h a t I ’ d e m a i l e d M r G a m a b u t I 10 h e a r d n o t h i n g f u r t h e r fr o m Tr a n s n e t o n t h e m a t te r i t w e n t q u i e t . ADV MAHLAPE SELLO: these are the r e p o r ts And you reference Annexure 86 and 87, in respect of th e e l e c tr i c s and d ie s e ls r e s p e c ti v e ly. M R F R A N C I S Q U E N T I N C A L LA R D : ADV MAHLAPE SELLO: Correct. A n d i n th e r e p o r t d o y o u h i g h li g h t t h e is s u e s t h a t y o u a r e n o w s h a r in g w it h t h e C h a ir, t h e a n o m a li e s a n d t h e f a c t t h a t y o u c a n n o t j u s t if y t h e ju m p fr o m t h e b u s i n e s s c a s e e s t i m a t e d to t a l c o s t o f 3 8 b il li o n t o 4 9 b ill i o n o r 5 4 b ill i o n o r a s t h e c a s e m a y b e . M R F R A N C I S Q U E N T I N C A L LA R D : 20 That was the essence of my r e p o r t s , m y r e p o r ts a t th e t i m e w e r e c r a f t e d a n d d r a f t e d o n t h e b a s is o f w h a t I k n e w t h e n a n d o n ly fr o m a n a n a ly s is o f th e s p r e a d s h e e ts , I d id n o t h a v e a c c e s s t o a l l th e in f o r m a t io n t h a t I h a v e p r e s e n t e d n o w. S o , t h e y a r e i n c o m p l e t e in s o m e r e s p e c ts i n t e r m s o f th e y c a n n o t b e d ir e c t ly c o m p a r e d t o h e r e b u t th e y i n d ic a te t h e o v e r a l l th r u s t o f t h e p o i n t th a t , h e r e th e s p r e a d s h e e ts g i v e t h e f u ll s t o r y a n d t h e r e a r e t h e s e Page 107 of 206 23 MAY 2019 – DAY 97 u n e x p la in e d a n o m a l i e s i n th e s p r e a d s h e e t s , t h a t w a s t h e th r u s t o f my reports. A D V M A H L A P E S E L L O : O k a y th a n k y o u . Yo u m a y p r o c e e d . M R F R A N C I S Q U E N T I N C A L LA R D : To c o n c l u d e i n r e m a r k s ? A D V M A H L A P E S E L L O : Ye s . W e l l b e fo r e y o u g e t t o g o – if t h a t w a s a l l y o u r c o n v e r s a ti o n s . M R F R A N C I S Q U E N T I N C A L LA R D : T h a t w a s … A D V M A H L A P E S E L L O : O r e n g a g e m e n t s w i t h Mr G a m a a n d o t h e r s . M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . 10 ADV MAHLAPE SELLO: I see you r e fe r e n c e Mr Gama and c o m m u n ic a ti o n w it h M r Si li n g a – i t i s a M r r ig h t ? Ye s M r S i li n g a . M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . ADV MAHLAPE SELLO: Yo u r e c a l l t h e C h a ir I t h i n k a s k e d y o u a b o u t t h e e x c e l s p r e a d s h e e ts ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : Yo u h a d in d ic a t e d th a t Mr L a h e r h a d b e e n o f t h e v i e w th a t y o u c a n n o t h a v e a c c e s s t o th e m b e c a u s e t h e y a r e c o n fi d e n ti a l b u t y o u n o n e th e le s s s u c c e e d e d ? M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t . 20 ADV MAHLAPE SELLO: D id y o u a f t e r w o r k i n g o n th e s p r e a d s h e e ts h a v e – e v e r h a v e o c c a s io n to e n g a g e M r L a h e r o n t h e s e s p r e a d s h e e ts ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s I d i d . ADV MAHLAPE SELLO: In w h a t f o r m a n d w h a t w a s t h e o u t c o m e o f that engagement? M R F R A N C I S Q U E N T I N C A L L A R D : I a n d o t h e r s m e t w it h M r L a h e r a t Page 108 of 206 23 MAY 2019 – DAY 97 t h e o ffi c e s o f M N S A t t o r n e y s . I c a n n o t r e c a l l th e e x a c t d a y b u t i t w a s t o d is c u s s t h e s p r e a d s h e e ts in p a r tic u l a r. C H A I R P E R S O N : G iv e u s a n e s t i m a t e o f a r o u n d a b o u t w h e n y o u t h i n k i t w a s w h e n y o u m e t h i m ? M id - y e a r, l a s t y e a r o r l a te r ? M R F R A N C I S Q U E N T IN C A L L A R D : It would have been towards the e n d o f la s t y e a r a n d m y. CHAIRPERSON : 2018. MR FRANCIS QUENTIN CALLARD : And my estimate it was about O c t o b e r / N o v e m b e r o f l a s t y e a r. 10 C H A I R P E R S O N : 2 0 1 8 ja . M R F R A N C I S Q U E N T I N C A L LA R D : 2 0 1 8 y e s . C H A I R P E R S O N : O k a y. A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QUENTIN CALLARD: T h e e s s e n c e o f th a t c o n v e r s a ti o n w a s t h a t M r L a h e r c o u ld n o t e x p l a i n t h e a n o m a l i e s w h ic h I h a d o r – h i g h l ig h te d h e r e b e c a u s e w e d is c u s s e d th e s a m e a n o m a li e s o n a – t h a t I h a v e d is c u s s e d h e r e a n d h e – j a h e c o u ld n o t e x p l a i n t h e a n o m a l i e s o r c o u l d n o t – w o u ld n o t . I – d i d n o t e x p l a i n t h e a n o m a l i e s . CHAIRPERSON : 20 D i d y o u – d i d h e o ff e r s o m e e x p l a n a t i o n t h a t y o u f o u n d i m p o s s i b l e o r h e j u s t k e p t q u i e t? MR FRANCIS QUENTIN CALLARD: T h e e x p l a n a t io n t h a t h e o ffe r e d w h e n w e – a n d w e h i g h l ig h t e d t h a t h e w a s a m e m b e r o f t h e n e g o t ia t io n t e a m a n d t h e e x p l a n a ti o n t h a t h e h i g h li g h t e d w a s h e w a s j u s t in p u t t in g the numbers. C H A I R P E R S O N : H e w a s ju s t? Page 109 of 206 23 MAY 2019 – DAY 97 M R F R A N C I S Q U E N T I N C A L L A R D : I n p u t ti n g th e n u m b e r s . C a p t u r i n g the numbers. C H A I R P E R S O N : J u s t p lu c k i n g t h e m fr o m t h e tr e e o r w h a t ? M R F R A N C I S Q U E N T I N C A L L A R D : I – a n d r e p e a t in g a s c l o s e a s I c a n t o h is w o r d s , h e w a s j u s t th e r e i n p u t t in g t h e n u m b e r s , i m p ly in g th a t h e w a s ta k i n g d ir e c ti o n o n p u t ti n g th e n u m b e r s in t o th e s p r e a d s h e e t. I a s k e d h i m s p e c i f ic a l l y d id y o u n o t q u e s ti o n t h e n u m b e r s a n d h e s a i d no? T h e e x a m p l e w h ic h I h a v e g i v e n o n t h e f o r e i g n e x c h a n g e c o m p o n e n t i f I r e m e m b e r – r e c a l l c o r r e c tl y a n d p l e a s e – t h i s is n o t 10 w r i t t e n h e s a i d w a s – it w a s n o t h i s r o l e t o q u e s t io n t h e lo c a l o r f o r e i g n c o n te n t . W e CHAIRPERSON : Did he – did he – did you ask him and I do not know if I a m r e p e a t i n g t h is q u e s t io n , d i d y o u a s k h i m w h y d i d y o u s a y t h is w a s c o n fi d e n ti a l t h i s s p r e a d s h e e t – t h e s e s p r e a d s h e e t s w e r e c o n f id e n ti a l b e c a u s e t h is w a s i n fo r m a ti o n th a t i n t h e e x e r c is e w e w e r e d o i n g w e n e e d e d t o s e e ? W h a t t h e b a s is w a s o r f o r e s e e i n g . In o th e r w o r d s d id y o u a s k h i m t h e b a s is f o r h i m s a y in g th e s e s p r e a d s h e e ts w e r e c o n fi d e n ti a l? MR FRANCIS QUENTIN CALLARD: 20 I cannot recall that I asked – we a s k e d h i m t h a t q u e s t io n , w h y h e s a i d t h a t M r C h a ir. CHAIRPERSON : Hm. MR FRANCIS QUENTIN CALLARD : The others did not – I cannot recall t h e o th e r s i n t h e p a r ty a t t h a t m e e t in g . CHAIRPERSON : Hm. MR FRANCIS QUENTIN CALLARD: Knew Page 110 of 206 th e d e t a il of th a t 23 MAY 2019 – DAY 97 background. C H A I R P E R S O N : Ye s . MR FRANCIS QUENTIN CALLARD: I d o n o t b e li e v e I a s k e d h i m t h a t q u e s t io n . C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : S p e c i f ic a ll y. CHAIRPERSON : And you never heard why it was thought the spread s h e e t s w e r e c o n f id e n ti a l ? M R F R A N C I S Q U E N T I N C A L LA R D : C o n fi d e n ti a l. 10 CHAIRPERSON : So even in other words even if you did not ask him y o u d i d n o t b y a n y c h a n c e h e a r fr o m a n y b o d y w h a t th e b a s i s m a y h a v e b e e n fo r – f o r h i m s a y i n g th a t i t w a s c o n fi d e n t ia l – t h e y w e r e c o n fi d e n ti a l? M R F R A N C I S Q U E N T I N C A L LA R D : N o . CHAIRPERSON : No. M R F R A N C I S Q U E N T I N C A L LA R D : N o . C H A I R P E R S O N : O k a y. M R FR A N C I S Q U E N T I N C A L L A R D : I – w e p a s s e d o n t h a t I w a n t e d t o g e t – w e w a n t e d t o g e t a n u n d e r s t a n d in g . 20 C H A I R P E R S O N : Ye s . MR FRANCIS QUENTIN CALLARD: H o w d o y o u u n d e r s ta n d t h e s p r e a d s h e e ts a n d p l e a s e e x p l a i n to u s a n d w e d id n o t g e t a s a tis f a c t o r y e x p l a n a t io n . C H A I R P E R S O N : Ye s . W e ll M s S e l lo m a y o r m a y n o t k n o w b u t i t w o u ld b e i m p o r t a n t t o e s t a b li s h h is b a s i s fo r s a y i n g t h e y w e r e c o n fi d e n t ia l . Page 111 of 206 23 MAY 2019 – DAY 97 Wa s i t b e c a u s e s o m e b o d y h ig h e r u p h a d s a i d t h e y – c e r t a i n p e o p l e m u s t n o t s e e th e m e v e n w i t h i n t h e – w it h in – p e o p le w e r e t r y i n g t o h e l p Tr a n s n e t o r w a s i t h is o w n d e c is io n a s t o – t o – a s t o w h o s h o u l d o r c o u l d o r c o u ld n o t s e e th e m ? M R F R A N C I S Q U E N T I N C A L L A R D : C e r t a in ly b e c a u s e t h e i f I m a y M r C h a ir b e c a u s e th e s p r e a d s h e e t d o c o n t a i n th e c o n f i d e n ti a l i n f o r m a t i o n o f t h e b id d e r s in t e r m s o f th e ir p r ic in g . CHAIRPERSON : Hm. M R F R A N C I S Q U E N T I N C A L L A R D : Th a t w o u ld b e o n e e x p la n a ti o n t h a t 10 c o u l d b e o ffe r e d fo r n o w w a n t in g to s h a r e t h e m . CHAIRPERSON: Hm. M R F R A N C I S Q U E N T I N C A L LA R D : It … CHAIRPERSON : B u t t h a t is i f o n e is t a lk i n g a b o u t p e o p le , o u ts id e p e o p l e n o t t o i f o n e is t a lk i n g a b o u t p e o p l e fr o m w i t h i n Tr a n s n e t o r p e o p l e a s k e d b y Tr a n s n e t to lo o k i n t o th e i s s u e s . M R F R A N C I S Q U E N T I N C A L L A R D : T h e r e w a s – t h e r e w a s a v e r y s tr ic t w a ll – f ir e w a l l a r o u n d t h e in f o r m a t io n r e la ti n g t o th e t e n d e r s a t t h a t ti m e . I n f a c t c o n s is t e n tly. I t w a s j u s t fo r t u n a t e th a t o n e I c o u l d a c c e s s t h is s p r e a d s h e e t w h i c h b r o u g h t t o li g h t I b e l ie v e t h e in c o n s is t e n c i e s . 20 CHAIRPERSON : Ye s b u t w h a t I a m s a y i n g is t h e – t h e i s s u e o f n o t w a n ti n g to e x p o s e t h e p r ic in g a s I u n d e r s t a n d i t . M R F R A N C I S Q U E N T I N C A L LA R D : J a . C H A I R P E R S O N : C a n n o t a p p ly t o t h e g r o u p t h a t y o u w e r e p a r t o f t h a t w a s g i v e n a s I u n d e r s t a n d th e p o s i ti o n b y Tr a n s n e t th e t a s k o f l o o k in g a t t h i s , c o u ld it ? Page 112 of 206 23 MAY 2019 – DAY 97 MR FRANCIS QUENTIN CALLARD : I – w h il e I a g r e e w i t h y o u r s e n ti m e n ts . C H A I R P E R S O N : D o fe e l fr e e t o s a y w h a t e v e r i t is t h a t m a y l e a d y o u t o e x p l a i n h is c o n d u c t i f y o u t h in k t h e r e m a y b e r o o m . I j u s t w a n t t o s e e i f – I a m k e e n to u n d e r s ta n d i f t h e l a b e ll i n g t h e w o r d s – these s p r e a d s h e e ts . M R F R A N C I S Q U E N T I N C A L LA R D : J a . C H A I R P E R S O N : A s c o n fi d e n t ia l m a y h a v e b e e n j u s t a g e n u i n e th in g o r m a y h a v e b e e n p a r t o f a c e r t a in s c h e m e ? 10 MR FRANCIS QUENTIN CALLARD : J a . A n y a n s w e r t o t h a t M r C h a ir b e c a u s e t h e s p r e a d s h e e t s c o n ta in o r c o n t a i n e d fi g u r e s w h ic h a r e u n e x p la in e d I b e l i e v e i t w a s k e p t th a t w a y b e c a u s e d o n o t w a n t t o b e a s k e d t o e x p l a i n fi g u r e s w h i c h a r e g e n e r a ll y u n e x p la i n e d . C H A I R P E R S O N : Ye s , y e s . M R F R A N C I S Q U E N T I N C A L L A R D : C e r t a in ly w i th t h e b e s t [i n d is ti n c t ] in t h e w o r l d . C H A I R P E R S O N : Ye s . MR FRANCIS QUENTIN CALLARD: M y s e lf a n d o t h e r s c a n n o t e x p l a i n t h e v a r ia t io n s in t h e s e f ig u r e s . 20 CHAIRPERSON : Ye s , y e s . And on the face of it if that was the r e a s o n i t w a s a n il le g i t i m a te r e a s o n t o s a y t h e le a s t ? M R F R A N C I S Q U E N T I N C A L LA R D : W e l l y e s . I a m h e s i t a n t t o … C H A I R P E R S O N : I t is j u s t t h a t i t d o e s n o t – y o u s e e m r e l u c ta n t to s a y yes. MR FRANCIS QUENTIN CALLARD : But yes. Page 113 of 206 L e t m e g o s o f a r a s to 23 MAY 2019 – DAY 97 a g r e e w i t h y o u C h a ir. I e x p r e s s e d t h a t a s s a y in g I w a s d i s a p p o i n t e d t h a t th e s p r e a d s h e e ts w e r e n o t s h a r e d . C H A I R P E R S O N : Ye s . MR FRANCIS QU ENTIN CALLARD: But I – I am perhaps reluctant to a tt r i b u t e t h e r o o t c a u s e to a n i n d iv id u a l b u t c e r t a i n l y w i t h t h e in c o n s is t e n c i e s a n d a n o m a li e s w h ic h t h e s p r e a d s h e e t s e x p o s e d . C H A I R P E R S O N : Ye s MR FRANCIS QU ENTIN CALLARD: I could appreciate some people w a n ti n g to k e e p t h e m n o t m a k e t h e m a v a il a b l e t o o t h e r s . 10 CHAIRPERSON : Ja. Well we – we are not closing the door to a le g i t i m a te e x p l a n a t i o n f o r t h e c o n f id e n ti a l i t y. M R F R A N C I S Q U E N T I N C A L LA R D : I d o n o t w a n t … C H A I R P E R S O N : W e le a v e t h e d o o r o p e n b u t t o t h e e x t e n t t h a t c e r t a i n r e a s o n s m i g h t b e t h e r e a s o n s w e lo o k i n g a t w h e t h e r t h e y w o u ld b e le g i t i m a te r e a s o n s o r ill e g i t i m a te r e a s o n s . B u t if i t is o t h e r r e a s o n s w e d o n o t k n o w w e w i ll h e a r w h e n t h e r i g h t p e o p l e c o m e a n d e x p la in . MR FRANCIS QUENTIN CALLARD : I may be wrong in my assessment here. C H A I R P E R S O N : Ye s , y e s . 20 MR FRANCIS QUENTIN CALLARD : And I would accept that but I present wh at I… C H A I R P E R S O N : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : H a v e s e e n fr o m t h i s t h i n g . C H A I R P E R S O N : J a a n d y o u g iv e y o u r o p i n i o n . M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . Page 114 of 206 23 MAY 2019 – DAY 97 C H A I R P E R S O N : O r b a s e d o n th e a n a l y s i s y o u h a v e d o n e . M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . CHAIRPERSON: Thank you. ADV MAHLAPE SELLO: A n d i f I m a y j u s t f o l lo w u p o n t h e C h a ir ’s q u e s t io n t h e n . Yo u g a i n a c c e s s t o th e s e d o c u m e n t s i n J a n u a r y 2 0 1 8 ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A D V M A H L A P E S E L L O : D u r i n g th e fi n a n c ia l a n a ly s is e x e r c is e ? M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . ADV MAHLAPE SELLO: 10 Th is w a s f o u r y e a r s a ft e r t h e c o n tr a c t s w e r e concluded? M R F R A N C I S Q U E N T IN C A L L A R D : Ye s c o n tr a c ts c o n c l u d e d M a r c h 20? ADV MAHLAPE SELL O : 14? M R F R A N C I S Q U E N T I N C A L LA R D : 1 4 . ADV MAHLAPE SELLO: Ye s . So there could not have been any potential prejudice to any bidders? There were no longer – there was n o lo n g e r a n i s s u e o f b id d e r s , th e d e c is i o n h a d b e e n m a d e ? MR FRANCIS QUENTIN CALLARD : N o , n o , t h is i s p o s t – w a y p o s t event yes. 20 ADV MAHLAPE SELLO: B e f o r e w e le a v e th a t a n d I k n o w y o u w o u ld lik e t o g e t t o y o u r c l o s in g r e m a r k – c o n c lu d i n g r e m a r k s . T h e r e is a n – p a r a g r a p h w e s k ip p e d w h ic h I th i n k i s i m p o r t a n t a n d i n p a r t ic u l a r fo r h o w th e c o m m i s s io n g o e s fo r w a r d o n s o m e o f t h e is s u e s y o u h a v e r a i s e d a t p a r a g r a p h 2 1 4 p a g e 5 6 a t t h e b o t t o m i t s t a r ts . M R F R A N C I S Q U E N T I N C A L L A R D : Ye s . A s s o o n a s I – a s I b e c a m e Page 115 of 206 23 MAY 2019 – DAY 97 a w a r e o f t h is – t h e s e s p r e a d s h e e ts a n d I t h e n e m a i le d – w e a r e t a lk i n g of 214 paragraph 214? ADV MAHLAPE SELL O : 214 yes. MR FRANCIS QUENTIN CALLARD: Ye s . So on 27 February 2018 I e m a i l e d M s N o m f u y o G a l e n i a n d I c o p ie d h e r o n my e m a ils t o M r G a m a b u t I a ls o r e q u e s t e d t h a t i f s h e c a n p l e a s e tr a c e a n d fr e e z e t h e l a p t o p w i t h th e fi le r e c o n c il i a t i o n o f i n fl a ti o n fo r e x a n d T E s c o p e 2 6 F e b r u a r y 2 0 1 4 .x l x . M a y I j u s t e x p la in th a t t h i s i s o n e o f t h o s e fi le s t h a t is e m b e d d e d o r n o t e m b e d d e d b u t l i n k e d t o t h e s e e x c e l s p r e a d s h e e t fi le s 10 a n d I b e li e v e i t – i t w o u l d h a v e g iv e n a n in d ic a t i o n o f h o w s o m e o f t h o s e fo r e ig n e x c h a n g e fi g u r e s a n d e s c a l a ti o n fi g u r e s w e r e d e r iv e d a t a n d I w a s tr y i n g t o tr a c e t h a t f il e . S o I a s k e d p le a s e c a n y o u tr a c e a n d fr e e z e th e l a p t o p w i t h t h e fi l e – w i t h t h is f il e n a m e . I b e li e v e i t s h o u l d form part of the forensic audit. S o m e o n e in S u p p ly C h a in S e r v i c e s s h o u l d h a v e t h i s fi le a n d i t is o f te n r e f e r e n c e d i n th e t w o fi le s th a t t h e la d y i n fi n a n c e s e n t to u s . ADV MAHLAPE SELLO: Hm. M R F R A N C I S Q U E N T I N C A L L A R D : A n d t h e t w o f il e s r e f e r r e d to w e r e in M a r c h s p r e a d s h e e ts . 20 A D V M A H L A P E S E L L O : Ye s . MR FRANCIS QUENTIN CALLARD: A n d la t e r I w a s r e a d y t o – I w a s r e a l ly d is a p p o i n t e d t o l a te r h e a r t h a t t h e l a p to p o f M s M d l e ts h e h a s g o n e m is s i n g . T h is is r e f e r e n c e i n t h e M N S R e p o r t . I believe it c o n ta in e d th e fi le s r e f e r r e d t o a b o v e . ADV MAHLAPE SELLO: Ar e y o u n o t a w a r e o f a n y o t h e r fi le h a v i n g Page 116 of 206 23 MAY 2019 – DAY 97 c o n ta in e d th o s e s p r e a d s h e e t s ? MR FRANCIS QUENTIN CALLARD: T h e r e m a y h a v e b e e n o th e r fi l e s b u t t h a t w a s a p a r t ic u l a r o n e a s I w a s g o in g th r o u g h t h e s o f t c o p y o f t h e s p r e a d s h e e t s t h e r e w a s a c o n ti n u o u s r e fe r e n c in g li n k i n g d a t a t o t h a t fi le a n d t h a t is w h y I w a n te d t o tr a c e t h a t fi le to s e e w h a t w a s t h e s o u r c e m a te r i a l fo r s o m e o f t h o s e i n fl a ti o n f o r e x a n d T E s c o p e n u m b e r s t h a t w e w e r e d e a li n g w i th h e r e . A D V M A H L A P E S E L L O : Ye s I a m p o s i n g a s l i g h t ly d i ff e r e n t q u e s t i o n i f I m a y tr y a g a in ? 10 M R F R A N C I S Q U E N T I N C A L LA R D : S u r e s o r r y. A D V M A H L A P E S E L L O : N o w t h a t t h e c a l a m i ty h a s b e fa ll e n u s a n d th e la p to p h a s g o n e m i s s i n g t h a t p a r ti c u l a r fi l e i s i t y o u r v ie w t h a t i t c o u l d o n ly b e lo c a t e d i n t h a t l a p t o p a n d w h a t is t h e l ik e li h o o d o f i t b e i n g a v a i la b le fr o m a n o t h e r c o m p u t e r o r l a p t o p ? M R F R A N C I S Q U E N T I N C A L LA R D : I t h i n k r e m o te . ADV MAHLAPE SELL O : Remote. M R F R A N C I S Q U E N T I N C A L L A R D : It i s m y u n d e r s t a n d i n g a n d i t w a s common talk that there were s ix la p to p s that were stored in s a f e k e e p i n g w h ic h w e r e t h e l a p t o p s t h a t t h e n e g o t ia t io n s – t h a t t h e 20 e v a l u a t i o n t e a m w e r e w o r k i n g o n . I s tr e s s e v a l u a ti o n t e a m . It is a ls o m y u n d e r s t a n d in g t h r o u g h w h a t w e h a v e h e a r d t h a t a ll o f th o s e la p t o p s have gone missing. The last laptop that was remaining was the one of M s M d l e t s h e a n d i t is my u n d e r s t a n d in g fr o m t h e M N S R e p o r t t h a t w h e n t h e y w e n t t o r e tr i e v e t h is l a p t o p t h a t i t to o w a s m is s in g w h ic h … ADV MAHLAPE SELLO: D o y o u k n o w i f Tr a n s n e t h a s b e e n l u c k y Page 117 of 206 23 MAY 2019 – DAY 97 e n o u g h t o a t l e a s t l o c a te a n y o f t h e s ix m i s s i n g l a p t o p s ? M R F R A N C I S Q U E N T I N C A L LA R D : I d o n o t k n o w. A D V M A H L A P E S E L L O : O k a y. CHAIRPERSON : So the other day I heard evidence that about 1000 la p to p s o r c o m p u te r s d is a p p e a r e d a t Tr a n s n e t a n d t h e y w e r e n e v e r tr a c e d a n d it w a s n e v e r tr a c e d w h o – w h a t h a p p e n e d t o t h e m a n d w h o was responsible. S o t h is i s – to d a y I h e a r o f a n o t h e r s ix a n d i n t h i s c a s e w e a r e ta lk in g a b o u t c o m p u t e r s , la p t o p s t h a t w e r e s a i d to h a v e in f o r m a ti o n t h a t c o u ld h e l p w i th – h e l p w i t h s o m e i n v e s ti g a ti o n in t o 10 s o m e o f t h e s e t h in g s . M R F R A N C I S Q U E N T I N C A L LA R D : I b e l i e v e s o . CHAIRPERSON : A n d t h o s e tw o fr o m w h a t y o u u n d e r s t o o d w e r e n o t tr a c e d ? M R F R A N C I S Q U E N T I N C A L L A R D : J a . I b e l ie v e s o M r C h a ir. I n t h e C F E T R e p o r t o f t h e 1 0 J a n u a r y i t d e s c r i b e s i n t h e in tr o d u c ti o n t o th a t r e p o r t m a n y o f t h e s e c u r it y m e a s u r e s w h i c h t h e y p u t i n p la c e t o s a f e g u a r d t h e ir i n fo r m a ti o n i n t h a t r e p o r t a n d h o w t h e y w e r e n o t a l lo w e d to t a k e l a p to p s h o m e o r i t – t h e y d e s c r i b e i n f u ll t h e s e c u r i ty m e a s u r e s s o it w a s r a th e r a s I s a y d is a p p o i n ti n g t o h e a r th a t th e la p t o p s h a d g o n e 20 m is s i n g . CHAIRPERSON : Thank you. ADV MAHLAPE SELLO: D i d y o u e v e r g e t to k n o w h o w a n y o f t h e la p to p s o r M s M d l e ts h e ’s l a p t o p c a m e u p m is s i n g ? M R F R A N C I S Q U E N T I N C A L LA R D : N o , n o . ADV MAHLAPE SELLO: Yo u d id n o t k n o w t h e c ir c u m s t a n c e s t h a t le d Page 118 of 206 23 MAY 2019 – DAY 97 to that? MR FRANCIS QUENTIN CALLARD: I d o n o t k n o w th e c ir c u m s t a n c e s no, no. A D V M A H L A P E S E L L O : W e – y o u a r e n o w a t fr o m p a g e 5 8 t h e n y o u d e a l w it h y o u r c o n c l u d i n g r e m a r k s . M R F R A N C I S Q U E N T I N C A L LA R D : T h a n y o u . A D V M A H L A P E S E L L O : Ye s . M R F R A N C I S Q U E N T I N C A L LA R D : I w il l p a r a p h r a s e . A D V M A H L A P E S E L L O : Ye s p l e a s e . 10 MR FRANCIS QUENTIN CALLARD: W h a t is in h e r e r a t h e r t h a n r e a d t h e m d ir e c t ly b u t t h e p r o g r a m m a t i c r e p l a c e m e n t o f t h e g e n e r a l fr e ig h t lo c o m o t iv e f le e t w a s necessary and because th e l a s t b a tc h of lo c o m o t iv e s fo r G e n e r a l Fr e ig h t h a d b e e n b o u g h t i n 1 9 9 2 a n d t h e g r e a t e r p a r t o f th e f le e t w a s w a y b e y o n d it s e c o n o m ic l if e a n d w e h a d exhausted a ll the upgrade programmes we needed to get new lo c o m o t iv e s to k e e p t h e f l e e t r u n n i n g . A n d c e r t a i n l y t h e m a r k e t d e m a n d s tr a t e g y w a s t h e c a t a l y s t f o r th is a n d t h e c h a n g e i n s tr a te g y o r r e s p o n d i n g fr o m c r e a ti n g c a p a c i ty t o a b s o r b i n g d e m a n d c o u l d h a v e worked. 20 I t i s u n fo r t u n a t e I c a n b e l i e v e th a t t h e a g g r e s s i v e m a r k e t d e m a n d s tr a t e g y w a s n o t b a c k e d u p b y a r i g o r o u s e v a l u a t i o n a n d a d j u s t m e n t a s t h e m a r k e t d ic t a te d . A n d th is is w i th p a r t ic u l a r r e f e r e n c e t o t h e 1 0 0 l o c o m o ti v e s S u p p ly C h a in S e r v ic e s I b e li e v e fa il e d Fr e i g h t R a il in i t s lo c o m o t iv e p r o c u r e m e n t p r o c e s s . W i t h g o o d i n t e n t io n i t w a s to create a mechanism s e p a r a ti n g te c h n ic a l interests fr o m the p r o c u r e m e n t p r o c e s s . B u t i t fa il e d F r e ig h t R a il a n d t h a t i t p r e s u m e d t o Page 119 of 206 23 MAY 2019 – DAY 97 b e t h e fi n a l a r b i t e r o f w h a t F r e ig h t R a i l n e e d e d i n i ts lo c o m o t iv e s r a t h e r than a custodian of due process. M y b e l ie f . I t f a i le d t o c r e a t e th e m e c h a n is m i n t h e 1 0 6 4 l o c o m o t iv e s f o r p r o g r a m m a t i c p r o c u r e m e n t a d j u s ti n g d e l iv e r y t o c h a n g i n g m a r k e t c o n d i ti o n s . It did have some c la u s e s r e le v a n t t o th a t th o u g h . I t fa il e d t o i n c l u d e e s s e n ti a l o p t i o n s i n t h e p r o c u r e m e n t o f lo c o m o t iv e s a s w e h a v e s e e n h e r e t h a t i n th e f in a l a w a r d o p t io n s w e r e n o t i n c l u d e d it w a s t o b e a d d e d a s v a r ia t io n o r d e r s la t e r. A n d f o r w h a te v e r r e a s o n i t d e c id e d o n t h e ty p e o f lo c o m o t iv e t o b e p r o c u r e d a n d t h i s is i n t h e r e la t io n t o t h e 1 0 0 w i th o u t t e c h n ic a l 10 c o n s u l t a ti o n . I add that I do not know of anyone in Supply Chain S e r v ic e s e v e r r e a d t h e 1 0 6 4 l o c o m o t iv e b u s in e s s c a s e . T h e a g g r e s s i v e p r o c u r e m e n t a n d t h e s h o r t e n in g o f d e l iv e r y fr o m t h e 7 y e a r s t o t h e 3 years… C H A I R P E R S O N : O f c o u r s e t e c h n ic a l c o n s u l t a ti o n r e f e r s t o c o n s u l ta t i o n w i t h t h e t e c h n i c a l te a m ? M R F R A N C I S Q U E N T I N C A L LA R D : W i t h t e c h n ic a l t e a m . CHAIRPERSON : Ja. M R F R A N C I S Q U E N T I N C A L L A R D : Ye s t h e r e w a s n o c o n s u lt a ti o n w i h t h e t e c h n ic a l t e a m t h a t I w a s a w a r e o f . 20 C H A I R P E R S O N : J a o k a y. M R F R A N C I S Q U E N T I N C A L L A R D : N o n e o f m y c o ll e a g u e s w e r e a w a r e o f – i t w a s a s u r p r is e to a l l o f t h e m . T h e a g g r e s s i v e p r o c u r e m e n t o f th e lo c o m o t iv e s a n d th e s h o r t e n i n g o f th e d e l i v e r y fr o m t h e 7 t o t h e 3 y e a r s a ls o severely impacted Tr a n s n e t and Fr e i g h t R a i l. Tr a n s n e t E n g i n e e r i n g w a s n e v e r g o in g to b e r e a d y t o b e o r a b l e to d e li v e r t h e Page 120 of 206 23 MAY 2019 – DAY 97 lo c o m o t iv e s i n t h e a c c e l e r a te d t i m e fr a m e w h ic h w e h a v e d e s c r ib e d a n d Fr e i g h t R a il i ts e l f d id n o t h a v e t h e c a p a c i ty t o a b s o r b t h e a c c e le r a t e d d e li v e r y a n d th e f in a n c ia l i m p a c t w a s m a s s iv e w i t h Tr a n s n e t a l m o s t tr a n s g r e s s i n g i ts c a s h in t e r e s t c o v e r a n d h a v i n g t o i n c r e a s e i t s f o r e i g n b o r r o w in g s . Th e p r e m is e o f th e b u s i n e s s c a s e – o f th e b u s i n e s s c a s e t h a t l o c o m o ti v e p e r f o r m a n c e w o u l d i m p r o v e w it h n e w m o r e r e l i a b l e a n d more powerful l o c o m o t iv e s th a t was th e p r e m is e . It is my u n d e r s t a n d in g th a t th e l o c o m o t i v e p e r f o r m a n c e n o w a s m e a s u r e d i n t e r m s o f g r o s s to n n e k il o m e tr e s is n o w w o r s e t h a n b e f o r e th e 10 a c q u is i ti o n p r o c e s s s t a r te d . W e s h a r e d a v is io n , m y c o ll e a g u e s a n d I o f r e c r e a ti n g a s u s t a i n a b l e , v i a b le l o c o m o t iv e i n d u s tr y s u p p ly i n g b e t w e e n 6 0 0 – s o r r y b e tw e e n 6 0 a n d 1 0 0 l o c o m o t iv e s a n n u a lly t o Fr e i g h t R a i l. S a d ly t h a t v is io n w a s n o t r e a l is e d a n d f r o m w h e r e w e a r e n o w i t m a y w e l l b e a d e c a d e o r m o r e b e fo r e t h a t o p p o r tu n it y m a y a r is e a g a in . Th a n k y o u f o r th e o p p o r t u n i ty t o p r e s e n t w h a t I k n o w fr o m t i m e a n d i n v o lv e m e n t a n d m y th a n k s a n d g r a ti t u d e t o m y c o ll e a g u e s a n d c o workers. CHAIRPERSON : Ta k e y o u r t i m e M r C a l la r d i f y o u n e e d – if y o u n e e d m e t o a d j o u r n f o r fi v e m i n u t e s ? 20 M R F R A N C I S Q U E N T I N C A L LA R D : C o u l d I h a v e a m i n u te p l e a s e ? C H A I R P E R S O N : F iv e m in u t e s ? M R F R A N C I S Q U E N T I N C A L LA R D : Fi v e m i n u t e s p l e a s e ? C H A I R P E R S O N : L e t u s a d j o u r n f o r fiv e m i n u t e s . REGISTRAR: All rise. I N Q U I RY A D J O U R N S Page 121 of 206 23 MAY 2019 – DAY 97 I N Q U I RY R E S U M E S C H A I R P E R S O N : Ye s M r C a l l a r d . M R F R A N C I S Q U E N T IN C A L L A R D : T h a n k y o u M r C h a ir a n d m y a p o lo g i e s f o r th e i n t e r r u p t io n . C H A I R P E R S O N : N o , n o th a t is f in e i t i s u n d e r s t a n d a b l e . MR FRANCIS QUENTIN CALLARD : I w o u l d j u s t l ik e t o c o n c l u d e th a t m y t h a n k s a n d g r a t it u d e a l s o g o t o my c o l le a g u e s a n d m y c o - r a i lw a y w o r k e r s w i t h [ in d is ti n c t ] d u s t o n t h e ir s h o e s a n d m a y t h e y k e e p t h e w h e e l s t u r n in g . If I m a y b e p e r m i tt e d a q u o t e fr o m C h a r l e s D ic k e n s i n 10 t h e Ta l e o f Tw o C i ti e s ? “ I t w a s t h e b e s t o f t i m e s , i t w a s t h e w o r s t o f ti m e s . It was an age of wisdom. f o o lis h n e s s . I t w a s t h e e p o c h o f b e li e f. e p o c h o f i n c r e d u li ty. It w as the It w a s t h e s e a s o n o f l i g h t . w a s th e s e a s o n o f d a r k n e s s . hope. It was the age of It I t w a s t h e s p r in g o f I t w a s th e w i n t e r o f d e s p a ir. We had everything before us. We had nothing before us. We w e r e a ll g o i n g d ir e c t t o h e a v e n . W e w e r e a l l g o in g d ir e c t t h e o th e r w a y.” 20 Thank you. A D V M A H L A P E S E L L O : Th a n k y o u C h a ir. CHAIRPERSON : That concludes? A D V M A H L A P E S E L L O : Th a t w o u l d c o n c l u d e th e t e s ti m o n y o f … CHAIRPERSON : YEs. ADV MAHLAPE SELLO: Mr C a ll a r d u n le s s t h e C h a i r h a s g o t a n y Page 122 of 206 23 MAY 2019 – DAY 97 q u e s t io n s f o r M r C a l la r d ? CHAIRPERSON : Ja no, no we are done. I am concerned that I do not s e e Mr M o le f e fo r t h e n e x t w i t n e s s . A D V M A H L A P E S E L L O : M r M o le f e ? CHAIRPERSON : Mr Mokoena? A D V M A H L A P E S E L L O : N o Mr M o k o e n a i s ju s t a r o u n d th e c o r n e r. CHAIRPERSON : I s e e M s M o l e f e – M s M o le f e is r e s p o n s i b l e fo r t h a t s li p o f t h e t o n g u e . ADV MAHLAPE SELLO: 10 H e i s i n t h e b u il d in g . Oh. C h a ir a s t o r e g a r d s M r C a ll a r d w e h a v e i s s u e d a s i g n i fi c a n t n u m b e r o f 3 3 ’s a r is in g fr o m h i s t e s t i m o n y a n d h is s t a te m e n t . CHAIRPERSON : Hm. A D V M A H LA P E S E L L O : W e a r e s o f a r i n r e c e i p t o f o n e r e s p o n s e a n d I a m – p e r h a p s it is a p p r o p r i a t e I p la c e it o n r e c o r d f r o m M r Yu s a f Mohammed. CHAIRPERSON : Hm. A D V M A H L A P E S E L L O : Mr Yu s a f h a s n o t a p p li e d t o c r o s s - e x a m i n e Mr C a ll a r d b u t h e s e e k s to a d v a n c e h is v e r s io n o n s o m e a s p e c ts o f Mr C a ll a r d ’s te s t i m o n y. 20 Th is w a s r e c e iv e d Tu e s d a y a n d s h a r e d w i th M r C a ll a r d y e s t e r d a y. H e h a s n o t h a d o p p o r t u n i ty t o c o r r e c t ly – p r o p e r ly a p p ly h is m i n d t h e r e t o . W e r e q u e s t t h e r e f o r e C h a ir t h a t I d o n o t c lo s e t h e e v id e n c e o f M r C a ll a r d . H e w i ll c o m e b a c k a t a ti m e t o b e d e t e r m i n e d b y th e C h a i r t o d e a l w i t h Mr M o h a m m e d ’s v e r s i o n a n d a n y o th e r t h a t w e m a y i n t h e i n te r i m r e c e iv e . C H A I R P E R S O N : W e ll w e c a n c lo s i n g o r n o t c l o s in g i s n e i t h e r h e r e n o r Page 123 of 206 23 MAY 2019 – DAY 97 t h e r e . W e c a n le t h i m g o . A D V M A H L A P E S E L L O : Ye s C h a ir. C H A I R P E R S O N : H e w il l a p p l y h is m i n d a n d I t a k e it h e w o u ld s u p p l y you. A D V M A H L A P E S E L L O : I n d e e d C h a ir. C H A I R P E R S O N : W i t h a s t a te m e n t th a t d e a ls w it h . . A D V M A H L A P E S E L L O : I n r e s p o n s e to t h a t. C H A I R P E R S O N : To t h a t v e r s i o n a n d w h e t h e r h e n e e d s to c o m e b a c k t o d e a l w it h t h a t m a y d e p e n d o n w h a t h is r e s p o n s e i s . 10 A D V M A H L A P E S E L L O : Ye s C h a ir. C H A I R P E R S O N : I f h is r e s p o n s e is I h a v e n o is s u e s w it h t h i s v e r s io n o r I a g r e e w it h i t th e r e m ig h t b e n o n e e d fo r h i m t o c o m e b a c k . If there a r e is s u e s t h e n t h e r e m a y b e a n e e d . S o I t h i n k it w o u l d j u s t b e o n t h e b a s is t h a t h e w il l d e a l w it h th a t a n d a s s o o n a s h e h a s r e v e r te d t o y o u w i t h h is r e s p o n s e th e n i f t h e r e is a n e e d f o r h i m t o c o m e a n d d e a l w it h it in t h e w i t n e s s s t a n d t h e n a r r a n g e m e n ts w i ll b e m a d e . A D V M A H L A P E S E L L O : M a y I i n d i c a t e C h a ir t h a t i n t h e c o u r s e o f h is t e s ti m o n y. CHAIRPERSON : Hm. 20 ADV MAHLAPE SELLO: M r C a l la r d e x p a n d e d o n s o m e a v e r m e n t s h e h a d m a d e w h ic h r e a d o n t h e ir o w n in th e s t a t e m e n t d i d n o t s e e m to i m p l ic a t e c e r ta in p e r s o n s w h ic h h e e x p o u n d e d o n in o r a l t e s ti n g [i n d is t in c t] a n d t h a t h a s r e s u l t e d in u s is s u in g fu r t h e r 3 3 ’s . CHAIRPERSON : Ja. A D V M A H L A P E S E L L O : S o w e a r e s t ill i n r e s p e c t o f s o m e i m p l ic a te d Page 124 of 206 23 MAY 2019 – DAY 97 p e r s o n s w it h in t h e f o u r te e n d a y p e r i o d . CHAIRPERSON : Ja. A D V M A H LA P E S E L L O : W e w ill r e v e r t i n a b o u t te n d a y s o r s o t o in d i c a t e w h e t h e r w e h a v e r e c e i v e d a n y o th e r r e s p o n s e s a n d w e w i ll t a k e g u i d a n c e fr o m t h e C h a ir o n h o w t o d e a l w i t h i t . C H A I R P E R S O N : J a n o t h a t is fi n e . A D V M A H L A P E S E L L O : Th a n k y o u C h a ir. C H A I R P E R S O N : T h a n k y o u v e r y m u c h M r C a ll a r d fo r c o m i n g fo r w a r d t o a s s is t . 10 We appreciate it and chances are that you may be asked to come back. M R F R A N C I S Q U E N T I N C A L LA R D : U n d e r s t o o d . CHAIRPERSON : A n d I h a v e n o d o u b t y o u w i ll b e a g r e e a b l e t o t h a t . Thank you very much you are excused. M R F R A N C I S Q U E N T I N C A L LA R D : T h a n k y o u C h a ir. CHAIRPERSON : Thank you. A D V M A H L A P E S E L L O : T h a n k y o u C h a ir. M r M o k o e n a h a d r e q u e s t e d a b o u t th r e e , f iv e m in u t e s f o r a c h a n g e o f t h e g u a r d . I d o n o t k n o w i f t h e C h a ir w a n t s t o s i t h e r e w h il e h e d o e s s o o r ? Ev e r y b o d y is r e a d y i t is ju s t – s o I r e m o v e d m y f il e s a n d t h e n h e c a n s t e p u p to t h e … 20 C H A I R P E R S O N : O h I s a w t h a t h e w a s n o t h e r e s o I t h o u g h t h e m ig h t n o t b e r e a d y. S o [ in d i s ti n c t ] . A D V M A H L A P E S E L L O : N o h e i s r e a d y. C H A I R P E R S O N : O h o k a y. A D V M A H L A P E S E L L O : H e is r e a d y to p r o c e e d C h a ir. C H A I R P E R S O N : O k a y s h a ll w e r e s u m e i t is t w e n ty to s h a ll w e r e s u m e Page 125 of 206 23 MAY 2019 – DAY 97 a t t w e n ty – a t q u a r t e r t o ? ADV MAHLAPE SELL O : Quarter to one? CHAIRPERSON : Ja. A D V M A H L A P E S E L L O : Ye s C h a ir I w i ll le t h i m k n o w. C H A I R P E R S O N : O k a y. A D V M A H L A P E S E L L O : Th a n k y o u C h a ir. C H A I R P E R S O N : W e w i ll a d j o u r n a n d r e s u m e i n fi v e m i n u t e s w h ic h w il l be quarter to one. A D V M A H L A P E S E L L O : Th a n k y o u C h a ir. 10 CHAIRPERSON : We adjourn. 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 : I w a s n ic e ly s u r p r i s e d M r M o k o e n a t o h e a r t h a t it is n o t t h a t y o u a r e n o t a v a i la b le . Yo u a r e a r o u n d . A D V P H I L L I P M O K O E N A S C : I a m C h a ir. CHAIRPERSON : I t h o u g h t – I t h o u g h t m a y b e y o u th o u g h t w e w o u l d take too long … A D V P H I L L I P M O K O E N A S C : N o C h a ir. C H A I R P E R S O N : W i t h th e p r e v i o u s w i t n e s s . 20 A D V P H I L L I P M O K O E N A S C : I a m h e r e C h a ir. CHAIRPERSON : O k a y, a lr i g h t . T h a n k y o u . I s e e t h a t w e w il l ta k e a s h o r t t i m e a n d th e n w e w i ll h a v e t o a d j o u r n . I t i s o k a y b u t l e t u s s t a r t . ADV PHILLIP MOKOENA SC: Ye s C h a ir. C h a ir t h e n e x t w i tn e s s th a t w e a r e c a l li n g is M r R o b e r t G o n s a l v e s a n d in l e a d i n g … C H A I R P E R S O N : Is i t R o b e r t o r R o b e r t o ? Page 126 of 206 23 MAY 2019 – DAY 97 M R R O B E R TO G O N S A LV E S : R o b e r to , j a . C H A I R P E R S O N : R o b e r to . M R R O B E R TO G O N S A LV E S : T h a t is g o o d C h a ir. C H A I R P E R S O N : O k a y. ADV PHILLIP MOKOENA SC: R o b e r t o G o n s a lv e s a n d in le a d i n g h is t e s ti m o n y C h a ir w e w il l b e r e f e r r i n g to a fi le w h i c h w e h a v e t a k e n t h e li b e r t y o f m a r k i n g i t a s E X H I B I T B B 3 – B B 5 C h a ir. C H A I R P E R S O N : O h , ja . I w a s w o n d e r i n g . ADV PHILLIP MOKOENA SC: It is BB5. 10 C H A I R P E R S O N : Ye s . A D V P H I L L I P M O K O E N A S C : I a m h a v i n g B B 3 h e r e b e c a u s e I w ill b e r e fe r r i n g t o i t j u s t in p a s s in g . CHAIRPERSON : Hm. ADV PHILLIP MOKOENA SC: A n d M r C h a ir i n o r d e r t o c o n t e x t u a li s e h is e v i d e n c e it m a y b e i m p o r ta n t f o r u s t o r e m i n d o u r s e lv e s o f th e t e s ti m o n y o f Mr M a h o m e d y w h ic h h e t e s ti fi e d o n th e s a m e i s s u e s b u t fr o m a p e r s p e c ti v e o f a Tr a n s n e t w it n e s s . H e w i ll b e t e s ti f y i n g o n t h e s a m e is s u e s b u t b e i n g o n e o t h e r m in o r i ty s h a r e h o l d e r s o f a c o m p a n y t h a t b e n e fi t te d fr o m th a t s i m i l a r tr a n s a c t io n . S o h i s t e s t i m o n y b e c o m e s 20 q u i te c r u c i a l i n t h a t – i n t h a t r e g a r d b e c a u s e t h e m i n o r i ty s h a r e h o ld e r s o p p o s e d a n d o b j e c te d to t h o s e m o n i e s b e in g p a i d to t h a t e n t it y. May w e – C h a ir I d id n o t e v e n p u t b e f o r e y o u th e f il e o f M r M a h o m e d y b e c a u s e I j u s t w a n t t o – t o d e a l w it h it in p a s s i n g s o t h a t I c a n c o n te x t u a l is e Mr G o n s a lv e s t e s ti m o n y a n d s i m p l y t o r e mi n d y o u t h a t o n p a g e 3 C h a ir c a n s i m p l y m a k e a n o t e a t p a r a g r a p h 3 .1 M r M a h o m e d y Page 127 of 206 23 MAY 2019 – DAY 97 in f o r m e d t h e C h a ir in t h e f o l l o w in g t e r m s . H e s a id t h a t : “ W h il e t h e b e n e f i t o f h i n d s i g h t a n d in ( i n d is t in c t) I now understand that there was a system where a s e t o f k e y r o le p la y e r s b o t h i n t e r n a l a n d e x t e r n a l a n d Tr a n s n e t E x e c u tiv e s , Board Mem bers and c e r t a i n c o m p a n ie s a c t e d i n c o n c e r t to th e d e tr i m e n t o f Tr a n s n e t ’s b e s t i n t e r e s t c a u s i n g p e c u n i a r y l o s s e s t o t h e c o m p a n y.” A n d a t 3 .2 h e s a i d : 10 “ Al t h o u g h m u c h i s d e t a i le d l a t e r i n m y s u b m is s io n I d r a w t h e C o m m i s s i o n ’s a tt e n ti o n t o t h e fo ll o w i n g in s t a n c e s o f w h a t I c o n s i d e r t o b e t h e m o s t s u c c in c t ill u s tr a ti o n o f t h e s y s t e m .” A m o n g t h o s e C h a ir is t h e o n e o f t h e r e lo c a ti o n w h e r e a t p a r a g r a p h 3 .2 . 5 Mr M o h a m e d y i n fo r m e d t h e C h a ir a s f o ll o w s : “ T h e D u r b a n r e lo c a t io n p r o c e s s s i m i la r ly f o l lo w e d a p r o c e s s o f b e i n g a p p r o v e d b y i n d iv i d u a ls w it h in Tr a n s n e t without any C o m m i t te e review or a p p r o v in g t h e p r o c e s s .” 20 A n d h e t h e n r e f e r r e d u s t o A n n e x u r e s 2 , t h r e e a n d f o u r w h e r e th e y c o n ta in a m e m o r a n d u m a n d d e m o n s tr a ti n g t h a t a n a m o u n t o f r e l o c a t i o n t o t h e v a l u e o f R 6 4 7 m i ll io n w a s a c tu a lly a d v a n c e d to t h e e n ti t y w h ic h M r G o n s a lv e s w i ll be ta lk i n g about. M r G o n s a lv e s e v i d e n c e M r C h a ir. C H A I R P E R S O N : ( In t e r v e n e s ) . Page 128 of 206 Th a t is the context of 23 MAY 2019 – DAY 97 ADV PHILLIP MOKOENA SC: In a s f a r a s t h e R u l e 3 . 3 N o t ic e s a r e c o n c e r n e d C h a ir w e h a v e c o m p li e d w i t h s a m e . I a m i n f o r m e d t h a t th e r e is C o u n s e l f o r t h e C N R a n d fo r Mr Wa n g w h o m w e w i ll a ll o w th e o p p o r t u n i ty to p l a c e th e m s e lv e s o n r e c o r d . CHAIRPERSON : Ja, thank you. A D V Z I YA A D M I N T Y : T h a n k y o u v e r y m u c h C h a ir. G o o d a f t e r n o o n to you. CHAIRPERSON : Good afternoon. A D V Z I YA A D M I N T Y : M y n a m e i s Zi y a a d M i n ty fr o m t h e J o h a n n e s b u r g 10 Bar … CHAIRPERSON : Huh-uh. A D V Z I YA A D M I N T Y : O n b e h a l f o f C N R a n d M r J e ff Wa n g i n s tr u c t e d b y T h o m s o n W i lk s . CHAIRPERSON : Thank you. A D V Z I YA A D M I N T Y : T h a n k y o u C h a ir. CHAIRPERSON : Thank you. ADV PHILLIP MOKOENA SC: M r C h a ir w e a r e th e n r e a d y to p r o c e e d w i t h t h e e v i d e n c e o f M r G o n s a lv e s . M a y t h e w i t n e s s b e s w o r n i n ? CHAIRPERSON : 20 there I say Ye s , t h a n k y o u . this fo r the W h il e t h e R e g i s tr a r i s p r o c e e d in g benefit of Ms M o l e f e I think M r M o h a m m e d M o h a m e d y is o n e o f t h e w i t n e s s e s w h o m a y h a v e d e a l t w i t h t h e is s u e t h a t – r e la t i n g t o t h e w i tn e s s a f te r t h i s w it n e s s . R E G I S T R A R : P le a s e s t a te y o u r fu ll n a m e s f o r th e r e c o r d . M R R O B E R TO G O N S A LV E S : R o b e r to G o n s a l v e s . REGISTRAR: D o y o u h a v e a n y o b je c ti o n s t o t a k in g t h e p r e s c r i b e d Page 129 of 206 23 MAY 2019 – DAY 97 oath? M R R O B E R TO G O N S A LV E S : N o , I d o n o t . REGISTRAR: D o y o u c o n s i d e r t h e o a th t o b e b in d in g o n y o u r conscience? M R R O B E R TO G O N S A LV E S : Ye s , I d o . R E G I S T R A R : D o y o u s w e a r th a t t h e e v id e n c e t h a t y o u w i ll g iv e w ill b e t h e tr u t h , th e w h o l e t r u t h a n d n o th i n g b u t t h e tr u t h ? I f s o p le a s e r a is e your right hand and say so help me God. M R R O B E R TO G O N S A LV E S : S o h e lp m e G o d . 10 M R R O B E R TO G O N S A LV E S : ( d u l y s w o r n , s t a t e s ) A D V P H I L L I P M O K O E N A S C : M r G o n s a lv e s y o u w il l s e e t h a t t h e r e i s a fi le t h a t h a s b e e n p l a c e d b e f o r e y o u a n d i t is m a r k e d a s E X H I B I T B B 5 . I f y o u o p e n t h e fil e y o u w i ll s e e t h a t i t c o n t a i n s a fo l d e r a n d i m m e d i a t e ly a f te r t h e fo l d e r i t m u s t b e a n i n d e x a n d t h a t i n d e x w ill a s s is t y o u to n a v i g a t e t h r o u g h t h e v a r i o u s d o c u m e n ts th a t y o u w il l b e c a n v a s s i n g d u r i n g y o u r e v id e n c e . N o w c o u l d y o u p l e a s e tu r n t o a d o c u m e n t i m m e d i a te ly a f t e r th e i n d e x a n d p l e a s e i d e n t i fy s a m e f o r t h e C h a ir. M R R O B E R TO G O N S A LV E S : 20 I s th a t t h e s ta t e m e n t t h a t y o u a r e r e fe r r i n g t o C o u n s e l ? ADV PHILLIP MOKOENA SC: Ye s . Yo u w ill l e t m e k n o w is t h a t a s t a te m e n t th a t y o u f in d t h e r e . M R R O B E R TO G O N S A LV E S : C o r r e c t C o u n s e l . A D V P H I L L I P M O K O E N A S C : Ye s a n d i f y o u c o u l d p l e a s e t u r n t o p a g e 1 7 – 1 - 7 . Is th a t y o u r s i g n a t u r e a p p e a r i n g t h e r e ? Page 130 of 206 23 MAY 2019 – DAY 97 M R R O B E R TO G O N S A LV E S : Ye s i t is C o u n s e l . ADV PHILLIP MOKOENA SC: Ye s a n d w h e n w a s t h a t s t a t e m e n t s ig n e d ? M R R O B E R TO G O N S A LV E S : O n 1 4 A p r i l 2 0 1 9 . A D V P H I L L I P M O K O E N A S C : A n d d o y o u c o n f ir m t h e c o n t e n t s o f y o u r s t a te m e n t to b e b o t h tr u e a n d c o r r e c t? M R R O B E R TO G O N S A LV E S : Ye s , I d o . ADV PHILLIP MOKOENA SC: Ye s . M a y y o u t h e n p r o c e e d to s h a r e w i t h u s y o u r q u a li f ic a t i o n s ? 10 M R R O B E R TO G O N S A LV E S : C o u n s e l I a m C h a r t e r e d A c c o u n t a n t . I – if y o u w a n t s o m e m o r e b a c k g r o u n d a b o u t … A D V P H I L L I P M O K O E N A S C : Ye s . C a n y o u a l s o g i v e u s b a c k g r o u n d ? M R R O B E R TO G O N S A LV E S : O k a y. A D V P H I L L I P M O K O E N A S C : Ye s . M R R O B E R TO G O N S A LV E S : O k a y. C h a ir m y n a m e is R o b e r t o G o n s a lv e s b u t I a m k n o w n a s R o b b i e G o n s a l v e s t h r o u g h o u t t h e fi le y o u w i ll s e e . I a m a C h a r te r e d A c c o u n t a n t. C H A I R P E R S O N : O h , I a m s o r r y. Is t h e s p e l li n g c o r r e c t? M R R O B E R TO G O N S A LV E S : T h e s p e l li n g i s c o r r e c t . 20 C H A I R P E R S O N : B u t – b u t th e w a y y o u p r o n o u n c e th e s u r n a m e is y o u do not pronounce the V? M R R O B E R TO G O N S A LV E S : G o n s a lv e s . N o y o u p r o n o u n c e it . CHAIRPERSON : Oh you pronounce it. G o n s a lv e s , o k a y t h a n k y o u . O k a y. M R R O B E R TO G O N S A LV E S : C h a ir I a m a C h a r te r e d Ac c o u n ta n t . Page 131 of 206 I 23 MAY 2019 – DAY 97 jo in e d C a d i z C o r p o r a t e S o lu t io n s i n – t o w a r d s t h e e n d o f 1 9 9 8 . Pr i o r to t h a t I w a s w it h P r ic e w a t e r h o u s e a n d I le f t P r ic e w a t e r h o u s e C o o p e r s a s a Partner in 1998. I h a v e b e e n w it h – I w a s w i th t h e C a d iz G r o u p fo r over 20 years. Th e M a n a g i n g D ir e c to r o f t h e C o r p o r a t e A d v is o r y B u s i n e s s c a l le d C a d iz C o r p o r a te S o lu t io n s a n d th e n i n J a n u a r y t h is y e a r C a d iz C o r p o r a t e S o l u ti o n s w a s a c q u ir e d b y th e M e r g e n c e G r o u p a n d w e a r e k n o w n a s M e r g e n c e C o r p o r a t e S o l u ti o n s t o d a y b u t y o u w il l see throughout the evidence the reference to C a d iz Corporate S o lu t io n s . 10 A D V P H I L L I P M O K O E N A S C : Ye s . M r G o n s a lv e s th e C h a ir h a s h e a r d t e s ti m o n y o f v a r i o u s w i t n e s s e s fr o m Tr a n s n e t w h o d e a l t w i th th e a c q u is i ti o n o f t h e 1 0 6 4 lo c o m o t i v e s a n d fr o m t h e – y o u r e m p lo y m e n t h is t o r y i t is q u i te c l e a r t h a t y o u w e r e n e v e r a t a n y s ta g e e m p l o y e d b y Tr a n s n e t. A m I c o r r e c t ? M R R O B E R TO G O N S A LV E S : T h a t is a b s o lu t e ly 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 . Yo u w i ll b e a d d u c i n g t h e e v id e n c e b e f o r e t h e C h a i r a s o n e o f th e m i n o r i t y D ir e c to r s o f a n e n t it y t h a t b e n e fi t e d fr o m Tr a n s n e t ? M R R O B E R TO G O N S A LV E S : T h a t is c o r r e c t C h a ir. 20 A D V P H I L L I P M O K O E N A S C : Ye s . N o w y o u p r e f a c e y o u r e v i d e n c e i f y o u m a y g o t o p a g e 1 w i t h p a r ti c u l a r r e f e r e n c e to p a r a g r a p h 4 . Yo u p r e f a c e y o u r e v id e n c e b y th e e v e n t s o f J u ly 2 0 1 2 p e r t a i n i n g to t h i s a c q u is i ti o n o f t h e l o c o m o t iv e s . C o u l d y o u p l e a s e i n y o u r o w n w o r d s t e ll t h e C h a i r h o w y o u w e r e i n v o l v e d o r t h e e n ti ty t h a t y o u b e lo n g e d to w a s in v o lv e d in t h i s tr a n s a c ti o n ? Page 132 of 206 23 MAY 2019 – DAY 97 M R R O B E R TO G O N S A LV E S : S u r e . C h a i r I t h i n k i t is w e l l k n o w n t h a t in J u ly 2 0 1 2 Tr a n s n e t i s s u e d a n o p e n t e n d e r f o r t h e 1 0 6 4 l o c o m o t iv e s – 1 0 6 4 lo c o m o t iv e s – a n d th a t w a s s p li t i n t o 4 6 5 d ie s e l l o c o m o ti v e s a n d 5 9 9 e le c t r ic l o c o m o tiv e s . W e f o r m e d – C a d i z C o r p o r a te S o l u t i o n s f o r m e d p a r t o f a c o n s o r ti u m w i t h C h i n a N o r th R a il w a y s – C N R . I m u s t ju s t c la r i fy o n e t h i n g . C N R a n d C S R s u b s e q u e n t ly m e r g e i n C h in a a n d a r e k n o w n a s C R R C b u t a t t h a t ti m e i t w a s C N R . S o t h e c o n s o r t iu m w a s m a d e u p o f C N R , C a d iz , G l o b a l R a i l – a n o t h e r e n ti ty – a n d t h e n E n d i n a m ix w h ic h w a s t h e B E E s h a r e h o ld e r. 10 ADV PHILLIP MOKOENA SC: C h a ir t h i s i s a q u i te in t e r e s ti n g ti m e t o s t a r t w i t h a w it n e s s a n d m a y b e i t i s th e ti m e w h e n I a m s a y i n g t h a t i t i s a t i m e to a d j o u r n f o r l u n c h a s w e l l . CHAIRPERSON: W e l l I w a s w o n d e r i n g w h e t h e r w e s h o u ld a d j o u r n a t o n e o r w e s h o u ld ju s t g o o n m a y b e u n ti l q u a r t e r p a s t a n d t h e n – j u s t s o that we … ADV PHILLIP MOKOENA SC : We had (intervenes). CHAIRPERSON : Pardon. A D V P H I L L I P M O K O E N A S C : W i th th e fr e s h l e g s o n h is fo o d . W e a r e p r e p a r e d t o p r o c e e d C h a ir. 20 CHAIRPERSON : J a , l e t u s g o o n u n ti l q u a r t e r p a s t o n e . with you? M R R O B E R TO G O N S A LV E S : G o C h a ir, p r o c e e d . C H A I R P E R S O N : Ye s . A D V P H I L L I P M O K O E N A S C : Ye s . C H A I R P E R S O N : J a , o k a y. Page 133 of 206 I s t h a t fi n e 23 MAY 2019 – DAY 97 ADV PHILLIP MOKOENA SC: s tr u c t u r e o f t h is C N R R S S A . Yo u a l s o o u t li n e f o r t h e C h a ir t h e C o u l d y o u p le a s e p r o c e e d d o i n g s o f r o m p a r a g r a p h 6 a n d t h e fo ll o w i n g p a r a g r a p h s ? M R R O B E R TO G O N S A LV E S : C h a i r p e r h a p s le t m e s t a r t o ff w i t h t h e s h a r e h o l d in g . A D V P H I L L I P M O K O E N A S C : Ye s . M R R O B E R TO G O N S A LV E S : S o t h e e n t it y i s – w a s k n o w n a s C N R R o ll i n g S t o c k S o u t h A fr ic a . I t is q u i t e a m o u th f u l – C N R R S S A . W h e n t h e m e r g e r h a p p e n e d b e tw e e n C N R a n d C S R i n C h i n a i t b e c a m e k n o w n 10 a s C R R C S A R o l li n g S t o c k . a n o t h e r m o u th f u l . S o t h a t w a s C R R C S A R S w h ic h is a ls o I a m p r o b a b ly g o i n g t o r e fe r to i t a s C R N S o u t h A fr ic a . A D V P H I L L I P M O K O E N A S C : Ye s . M R R O B E R TO G O N S A LV E S : S o t h a t w e k n o w t h a t t h a t is th e l o c a l e n t i ty th r o u g h w h ic h C N R o p e r a te d i n S o u t h A f r ic a . A D V P H I L L I P M O K O E N A S C : O k a y. M R R O B E R TO G O N S A LV E S : I f y o u l o o k a t t h e s h a r e h o ld in g i n C N R S o u th A f r ic a 6 6 p e r c e n t is h e ld b y C N R w h i c h i s n o w C R R C . 30 p e r c e n t h e l d b y E n d i n a m ix th e B E E s h a r e h o ld e r, 2 p e r c e n t b y G l o b a l 20 R a il w a y A fr ic a a n d t h e o t h e r 2 p e r c e n t b y C a d iz C o r p o r a te S o lu t io n s . I n te r ms o f t h e B o a r d o f D ir e c t o r s o f t h a t c o m p a n y. Th e r e a r e s e v e n D ir e c t o r s . E n d i n a m i x h a s o n e D ir e c t o r a n d a g e n tl e m a n b y t h e n a m e o f L u l a m il e X a t e . D ir e c t o r. H e i s a D ir e c t o r o n t h a t B o a r d a s a N o n - E x e c u tiv e R o w l e n v o n G e r i c k e a N o n - Ex e c u tiv e D ir e c t o r r e p r e s e n ts G lo b a l a n d t h e n I r e p r e s e n t C a d i z C o r p o r a te S o l u ti o n s . T h e o t h e r fo u r Page 134 of 206 23 MAY 2019 – DAY 97 D ir e c t o r s a r e J e ff Wa n g . H is C h i n e s e i s J u n ( ? ) Wa n g , b u t h i s E n g lis h n a m e is J e ff Wa n g . Th e r e i s a n o t h e r g e n t l e m a n b y th e n a m e o f Ta u Yu . To n y Yu i s h is E n g l is h n a m e a n d t h e n F e n g Yu a n d J u n ( ? ) C h o w. F e n g Yu a n d G a n g C h o w a r e b a s e d i n C h i n a . S o t h e y h a v e n e v e r e v e r a tt e n d e d m e e ti n g s . T h e y h a v e d i a l le d i n fo r a l l B o a r d M e e ti n g s . J e ff Wa n g i s th e M a n a g i n g D ir e c t o r a n d To n y Yu w a s t h e F in a n c i a l D ir e c t o r. I understan d that he is about to be replaced or has been replaced. ADV PHILLIP MOKOENA 10 SC: Ye s . Yo u a ls o deal w i th the s h a r e h o l d in g i n E n d i n a m ix a n d g iv e u s t h e s tr u c t u r e . M R R O B E R TO G O N S A LV E S : C N R S o u t h A fr ic a . owns 20 percent, S o C h a ir E n d i n a m i x o w n s 3 0 p e r c e n t i n T h e s h a r e h o l d e r s i n E n d in a m ix a r e : K o p a n o K e M a tl a owns 20 Linotando p e r c e n t, Makana I n v e s t m e n t C o r p o r a ti o n o w n s 2 0 p e r c e n t, Az o n R a il o w n s 1 3 . 3 3 p e r c e n t , L a n e t t a ( ? ) I n v e s t m e n ts o w n s 6 . 6 7 p e r c e n t , G l o b a l R a i lw a y A fr ic a o w n s 1 0 p e r c e n t a n d C a d iz C o r p o r a t e S o l u ti o n s o w n s 1 0 p e r c e n t . ADV PHILLIP MOKOENA SC: Ja. Now in terms of the day to day r u n n in g o f a n e n t i ty – y o u k n o w – w h o w a s r e s p o n s i b l e fo r t h o s e a c ti v i ti e s ? 20 M R R O B E R TO G O N S A LV E S : S o C h a ir t h e c o m p a n i e s o p e r a t e d t h r o u g h J e ff Wa n g w h o is a M a n a g i n g D i r e c to r a n d To n y Yu a s a Fi n a n c i a l D ir e c t o r. Rowlen von Gericke, N o n - E x e c u tiv e D ir e c to r s . L u l a m il e X a t e and myself are S o w e a r e n o t in v o lv e d i n t h e o p e r a ti o n s w h a ts o e v e r. W e h a v e - w e a t t e n d B o a r d M e e t in g s o n ly a n d m a y b e h a v e d o n e o n e o r t w o s i t e v i s i ts a s p a r t – p a r t o f th a t B o a r d M e e ti n g . Page 135 of 206 23 MAY 2019 – DAY 97 ADV PHILLIP MOKOENA SC: Ye s . N o w fr o m p a r a g r a p h 11 y o u s t a r t n o w d e a li n g w it h t h e e v e n ts c o m m e n c i n g fr o m 9 A u g u s t 2 0 1 2 d ir e c tly r e l e v a n t t o t h e s u b je c t a t h a n d . C a n y o u p l e a s e p r o c e e d t o d e a l w i th same onwards? M R R O B E R TO G O N S A LV E S : Sure. C h a ir s o o n 9 A u g u s t 2 0 1 2 t h e C N R C o n s o r t iu m - a t t h a t s t a g e it w a s in c o r p o r a te d . It was an u n i n c o r p o r a t e d jo i n t v e n t u r e . I t w a s o n l y in c o r p o r a t e d o n c e t h e t e n d e r was awarded. S o t h a t w a s m a d e u p o f C N R , G l o b a l R a il , E n d i n a m i x a n d C a d i z . T h e y i n fo r m e d Tr a n s n e t th a t t h e y w o u l d t e n d e r f o r b o th t h e 10 e l e c tr ic a n d t h e d i e s e l l o c o m o ti v e s . I u n d e r s ta n d t h a t C N R w a s p r o b a b ly o f t h e f o u r O E M s p r o b a b ly t h e o n ly p a r t y c a p a b l e o f m a n u f a c t u r in g b o t h t h e d i e s e l a n d th e e l e c tr ic l o c o m o ti v e s . Then on 3 0 A p r il 2 0 1 3 C h a ir C N R C o n s o r ti u m s u b m it t e d a t e n d e r to Tr a n s n e t f o r b o t h d i e s e l a n d t h e e l e c tr ic lo c o m o t iv e s a n d t h e n o n – I t h in k – i t is 1 7 A p r il t h e t e n d e r w a s a c t u a l ly a w a r d e d t o – t o C N R S o u t h A f r i c a f o r 2 3 2 d ie s e l lo c o m o t iv e s . I t h in k i n m y s ta t e m e n t i n p a r a g r a p h 1 3 t h a t i s a s l ig h t e r r o r C h a ir. W h e r e i t s a y s … 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. D i d y o u s a y 1 7 A p r i l ju s t n o w o r w a s i t 3 0 A p r il ? I s e e 1 7 M a r c h in t h e s t a te m e n t . S o I a m tr y i n g t o 20 see if … M R R O B E R TO G O N S A LV E S : I t h in k i t i s p r o b a b ly 1 7 M a r c h 2 0 1 4 C h a ir. C H A I R P E R S O N : J a , o k a y. M R R O B E R TO G O N S A LV E S : C o r r e c t , 1 7 M a r c h 2 0 1 4 . C H A I R P E R S O N : O k a y. Page 136 of 206 23 MAY 2019 – DAY 97 A D V P H I L L I P M O K O E N A S C : Yo u w a n te d to e ffe c t a mi n o r c h a n g e o n paragraph 13? M R R O B E R TO G O N S A LV E S : Ye s , ( i n t e r v e n e s ) . ADV PHILLIP MOKOENA SC : (Intervenes)? M R R O B E R TO G O N S A LV E S : Ye s . I j u s t w a n te d t o i n fo r m t h e C h a ir t h a t o f th e 4 6 5 d ie s e l lo c o m o tiv e s 2 3 2 w e r e a w a r d e d to C N R S o u th A fr ic a . Th e o t h e r 2 3 3 w e n t to G e n e r a l E l e c tr ic . A D V P H I L L I P M O K O E N A S C : Ye s . M R R O B E R T O G O N S A LV E S : I n p a r a g r a p h 1 3 it s a y s B o m b a r d ie r. S o 10 t h a t i s a n e r r o r. B o m b a r d i e r w a s b a s e d in B a y h e a d w i th C N R . Th a t is w h e r e th e c o n f u s i o n c a m e in . A D V P H I L L I P M O K O E N A S C : S o w h e r e t h e r e is a w o r d B o m b a r d i e r i t s h o u l d b e r e p la c e d b y w h a t? M R R O B E R TO G O N S A LV E S : G e n e r a l E l e c tr ic . ADV PHILLIP MOKOENA SC: G e n e r a l E l e c tr ic . C h a ir w e w il l a ff e c t the necessary amendment and make sure that we replace your page a c c o r d i n g ly. C H A I R P E R S O N : Ye s . N o t h a t is fi n e . ADV PHILLIP MOKOENA SC : Now … 20 C H A I R P E R S O N : W e d o n o t - I d o n o t k n o w if y o u w e r e h e r e . W e d o n o t k n o w w a n t a n y t h i n g s i m il a r t o w h a t w e h a d a b o u t a f e w d a y s a g o . 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 : Ye s . C H A I R P E R S O N : In r e g a r d t o m i x i n g u p n a m e s . A D V P H I L L I P M O K O E N A S C : W e u n d e r s t a n d C h a ir. Page 137 of 206 23 MAY 2019 – DAY 97 CHAIRPERSON: Hm. A D V P H I L L I P M O K O E N A S C : M a y I n o w r e fe r y o u t o f o l d e r o n e C h a ir a n d w e le a v e A n n e x u r e 1 – i t is o n p a g e 1 9 . Ar e y o u t h e r e ? C H A I R P E R S O N : Ye s . A D V P H I L L I P M O K O E N A S C : C o u ld y o u p l e a s e i d e n ti fy t h a t d o c u m e n t f o r u s M r G o n s a lv e s ? M R R O B E R TO G O N S A LV E S : C h a ir th is t h e l o c a l – L o c o m o ti v e S u p p ly Agreement - the LSA - that was executed on 17 March 2014. A D V P H I L L I P M O K O E N A S C : Ye s a n d m a y I r e f e r y o u t o p a g e 1 7 8 a n d 10 if y o u c o u l d p l e a s e i d e n ti f y f o r u s t h e r e s p e c ti v e in d iv i d u a ls w h o a p p e n d e d t h e ir s i g n a tu r e s o n t h a t d o c u m e n t a n d a l s o r e f e r t o th e d a t e a s to w h e n th o s e s ig n a tu r e s w e r e a p p e n d e d ? M R R O B E R TO G O N S A LV E S : L o c o m o t iv e Supply Chair the agreement was signed – the Agreement – was signed by Tr a n s n e t on 17 March 2014 and it was signed by Bria n Molefe as the Chief E x e c u t iv e O ffi c e r a n d i t w a s s i g n e d b y C N R b y J e ff Wa n g / Wa n g G a n g on 17 March 2014. A D V P H I L L I P M O K O E N A S C : Ye s . W h i l e w e a r e s ti ll d e a li n g w i th t h a t d o c u m e n t I k n o w th a t i t w i ll b e c o m e p a r a m o u n t a t a l a t e r s t a g e o f y o u r 20 e v i d e n c e m a y I th e n r e f e r y o u t o p a g e 2 7 ? N o w y o u h a v e a d e fi n i t io n o f a c o n tr a c t f a c i li ty. I f y o u c a n r e a d s a m e i n to t h e r e c o r d a n d g iv e u s y o u r u n d e r s t a n d i n g o f s a m e a n d w h y i t w i ll b e i m p o r ta n t t o t h e e v id e n c e t h a t y o u w il l b e a d d u c i n g b e fo r e t h e C h a ir. M R R O B E R TO G O N S A LV E S : Sure. C h a ir w h e n t h e p r i c e w a s b e i n g b u il t u p f o r th e – f o r th e t e n d e r i n r e s p e c t o f t h e 2 3 2 d i e s e l lo c o m o t iv e s Page 138 of 206 23 MAY 2019 – DAY 97 it h a s a lw a y s b e e n d o n e o n t h e b a s i s t h a t t h e l o c o m o tiv e s w e r e g o i n g t o b e a s s e m b l e d a n d m a n u f a c t u r e d i n K o e d o e s p o o r t in P r e t o r i a a n d y o u w i ll s e e t h e c o n tr a c t o r fa c i li ty d e f i n i ti o n i n t h e a g r e e m e n t m e a n s : “ T h e f a c ili t y a t K o e d o e s p o o r t G a u te n g o r B a y h e a d D u r b a n a s n o ti fi e d i n w r i ti n g b y t h e c o n tr a c t o r t o t h e c o m p a n y.” B y t h e t i m e w e h a d – w e s ig n e d th is o n 1 7 M a r c h 2 0 1 4 C N R k n e w t h a t t h e y w e r e g o i n g t o b e m a n u f a c t u r in g i n B a y h e a d D u r b a n . They had a lr e a d y b e e n i n f o r m e d a n d a s a m a tt e r o f fa c t t h e r e w a s a n a m e n d e d 10 a n d r e i n s t a t e d L o c o m o ti v e S u p p ly A g r e e m e n t . W e n e v e r e v e r s a w t h e s ig n e d c o p y o f th a t . W e j u s t s a w d r a f t s o f i t a n d in th e d r a f ts th a t w e s a w t h a t c o n tr a c t o r fa c i li ty d e f in i ti o n w a s a m e n d e d to s a y : “ I t m e a n s B a y h e a d D u r b a n a s n o ti f ie d i n w r i t in g b y t h e c o m p a n y t o t h e c o m p a n y. S o b y th e c o n tr a c to r t o t h e c o m p a n y.” S o t h e i m p o r ta n t t h i n g i s w h e n t h i s w a s s i g n e d th e f a c il it y – t h e c o n tr a c to r f a c il it y w a s B a y h e a d in D u r b a n . A D V P H I L L I P M O K O E N A S C : Ye s . M a y I t h e n r e f e r y o u to p a g e 3 - 0 – 3 0 ? Yo u w il l s e e a l s o t h e r e th a t th e r e is a d e f in i ti o n o f d e l iv e r y p o i n t . 20 C a n y o u p l e a s e a ls o r e a d t h a t i n to th e r e c o r d a n d g iv e t h e C h a ir y o u r o w n u n d e r s t a n d in g a n d s ig n if ic a n c e o f th a t d e f in i ti o n ? M R R O B E R TO G O N S A LV E S : C h a i r I w i ll r e a d i t . “ D e l iv e r y p o i n t m e a n s t h e d e l iv e r y p o i n t i n r e l a ti o n t o t h e lo c o m o t iv e s , s p a r e s , t o o l o r te s t e q u ip m e n t a s a p p li c a b l e n a m e l y th e d e p o t a t K o e d o e s p o o r t Page 139 of 206 23 MAY 2019 – DAY 97 Gauteng, the depot at Bayhead Durban or such o th e r lo c a t io n i n S o u th A fr ic a a s m a y b e a g r e e d b e t w e e n t h e c o n tr a c to r a n d t h e c o m p a n y fr o m t i m e t o t i m e .” S o C h a ir m y u n d e r s t a n d i n g o f t h a t is w h e n y o u d e li v e r c o m p l e t e d lo c o m o t iv e s y o u h a v e g o t t o d e li v e r i t s o m e w h e r e th a t i s g o in g t o b e in r e l a ti o n t o w h e r e t h e c o n tr a c to r fa c i li ty w a s . S o m y u n d e r s t a n d i n g is t h a t b e c a u s e t h e c o n tr a c t o r fa c il i ty h a d b e e n m o v e d to B a y h e a d d e li v e r y t o – o f t h o s e l o c o m o t iv e s w a s g o i n g t o t a k e p l a c e a t D u r b a n a s 10 w e ll – B a y h e a d D u r b a n . A D V P H I L L I P M O K O E N A S C : Ye s . N o w m a y I r e f e r y o u b a c k t o y o u r s t a te m e n t w i t h p a r t ic u l a r r e fe r e n c e t o p a g e 4 Mr G o n s a l v e s ? Fr o m p a r a g r a p h 1 5 y o u c o m m e n c e a d d r e s s in g a n e w t o p ic w h ic h is t h e p r o p o s e d r e lo c a t io n t o D u r b a n . Yo u m a y p r o c e e d t o d e a l w i t h th o s e r e l e v a n t f a c ts . M R R O B E R TO G O N S A LV E S : S o C h a i r I t h in k I a m r e p e a t in g w h a t I s a y i n t h e L o c o m o ti v e S u p p ly A g r e e m e n t – t h e L S A – s t i p u la t e d th a t t h e c o n tr a c to r f a c i li ty w a s g o i n g t o b e e i t h e r K o e d o e s p o o r t o r B a y h e a d . H o w e v e r w e k n e w t h a t w h e n – b y t h e ti m e t h a t t h e L S A w a s s i g n e d t h a t 20 t h e c o n tr a c t o r fa c il i ty w a s g o in g t o b e a t B a y h e a d a n d I t h in k t h e i m p o r t a n t t h i n g is t h a t a l l t h e c a lc u la t io n s h a d b e e n d o n e o n t h e b a s i s in it i a l ly th a t th e c o n tr a c to r f a c il i ty w a s g o i n g t o b e a t K o e d o e s p o o r t . In e a r ly M a r c h s o ju s t a c o u p l e o f d a y s o r t w o w e e k s o r s o e v e n le s s t h a n t w o w e e k s b e f o r e t h e L o c o m o tiv e S u p p ly A g r e e m e n t w a s s i g n e d Tr a n s n e t in d i c a t e d t h a t w e h a d t o g i v e th e m a n i m p a c t o f m a n u f a c t u r i n g Page 140 of 206 23 MAY 2019 – DAY 97 a n d a s s e m b li n g in – i n B a y h e a d D u r b a n a s o p p o s e d t o K o e d o e s p o o r t i n P r e t o r i a a n d w e o b v io u s ly s a t d o w n w it h C N R C o n s o r ti u m t o c a lc u l a te w h a t th e i m p a c t w a s o n t h e p r ic e t h a t w a s s u b m i t t e d f o r m a n u f a c t u r i n g a n d a s s e m b l in g i n B a y h e a d D u r b a n a s o p p o s e d t o K o e d o e s p o o r t Pretoria. ADV PHILLIP MOKOENA SC: Ye s . N o w a t th e t i m e w h e n y o u w e r e a p p r o a c h e d b y Tr a n s n e t to – f o r t h e c o m p a n y t o p r o v i d e t h e m w i th a r e l o c a ti o n c o s t w o u ld I b e c o r r e c t t h a t a t t h a t ti m e th e r e w e r e n o p h y s i c a l a c tiv i ti e s o r o p e r a ti o n s a t a l l i n K o e d o e s p o o r t ? 10 M R R O B E R TO G O N S A LV E S : C h a ir t h a t i s a b s o l u t e ly c o r r e c t . I m e a n w e w e r e n o t e v e n a t th e s ta g e – t h is is p r io r to 1 7 M a r c h – w e h a d n o t even signed the tender documents yet. So the company had not even b e e n i n c o r p o r a t e d . S o t h e r e w e r e n o p h y s ic a l p r e m is e s . W e w e r e n o t based in Koedoespoort. W e w e r e n o t b a s e d a n y w h e r e . W e w e r e s t il l p r e p a r in g th e te n d e r d o c u m e n ts . ADV PHILLIP MOKOENA SC: I n s i m p l e t e r m s t h e r e w a s n o th i n g t o relocate? M R R O B E R TO G O N S A LV E S : A b s o l u te ly c o r r e c t . P h y s ic a l ly t h e r e w a s nothing to relocate. 20 ADV PHILLIP MOKOENA SC: Ye s . N o w m a y I r e f e r y o u to fo l d e r n u m b e r t w o w h i c h y o u w il l fi n d fr o m p a g e 1 8 0 ? C H A I R P E R S O N : T h a t is A n n e x u r e R G 2 ? ADV PHILLIP MOKOENA SC: I t i s C h a i r a n d w it h in t h e tw o m i n u t e s t h a t is r e m a in in g b e fo r e t h e l u n c h a d j o u r n m e n t c o u l d y o u p l e a s e id e n t i fy th a t d o c u m e n t ? Page 141 of 206 23 MAY 2019 – DAY 97 M R R O B E R TO G O N S A LV E S : CNR Consortium C h a i r t h is d o c u m e n t i s w r i t t e n b y t h e Unincorporated J o in t Ve n t u r e and s ig n e d by R o w le n v o n G e r ic k e o n b e h a l f o f t h e C N R C o n s o r ti u m a n d i t is a d d r e s s e d t o M s L i n d i w e M d l e ts h e a t th e C o m m o d i ty M a n a g e r S u p p l y C h a in a t T F R a n d i n s h o r t w h a t i t s a y s is t h a t : “ W i th r e f e r e n c e t o t h e T FR r e q u e s t r e l a ti n g t o C N R ’s r e s p o n s e f o r t h e c o s t i m p a c t o f b u il d i n g th e lo c o m o t iv e s in D u r b a n w e w o u ld li k e t o p o i n t o u t t h a t o u r o r i g i n a l q u o t a ti o n is b a s e d upon the lo c o m o t iv e s i n K o e d o e s p o o r t o r G e r m is t o n . ” 10 A n d i t i s a r e q u e s t b y R o w l e n v o n G e r ic k e o n b e h a lf o f t h e c o n s o r t i u m . “ C a n y o u p l e a s e r e c o n s i d e r u s r a th e r b u i ld i n g i n Koedoespoort as opposed to Bayhead in Durban?” A D V P H I L L I P M O K O E N A S C : S o i t is q u i t e a p p a r e n t f r o m r e a d i n g th is a n n e x u r e th a t i t w a s t h e c o n s o r ti u m ’s v ie w t h a t i t is f a r b e t t e r t o d o t h e o p e r a ti o n s i n K o e d o e s p o o r t r a t h e r t h a n to l o c a te i t to D u r b a n . Is t h a t m y – is th a t m y … ? M R R O B E R TO G O N S A LV E S : C o r r e c t ly C h a ir. T h e o ffic e s a r e h e r e . A lo t o f t h e s u p p l i e s a r e b a s e d u p in J o h a n n e s b u r g . 20 Th e p r e f e r e n c e w o u ld h a v e b e e n K o e d o e s p o o r t a s t o – a s s u p p o s e d to B a y h e a d Durban. ADV PHILLIP MOKOENA SC: Ye s . C h a ir w o u ld i t b e th e a p p r o p r i a t e ti m e t o a d jo u r n ? CHAIRPERSON : Ye s . Let us adjourn. W e w il l a d j o u r n u n ti l q u a r t e r past two. We adjourn. Page 142 of 206 23 MAY 2019 – DAY 97 REGISTRAR: All rise. 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 C H A I R P E R S O N : Ye s M r M o k o e n a y o u m a y p r o c e e d . ADV PHILLIP MOKOENA SC : T h a n k y o u C h a ir. M r G o n s a lv e s ju s t b e f o r e th e l u n c h a d j o u r n m e n t y o u w e r e s t ill in f o r m i n g t h e C h a ir a b o u t t h e r e q u e s t w h ic h w a s m a d e t o y o u r c o n s o r ti u m e m a n a t i n g fr o m Tr a n s n e t, i f y o u c a n s i m p ly s u m m a r is e w h a t y o u w e r e in f o r m i n g th e C h a ir. 10 M R R O B E R TO G O N S A LV E S : Ye s C h a ir in s u m m a r y t h e C N R C o n s o r t iu m m a d e u p o f C N R , E n d i n a m ic s , G l o b a l a n d K a y d e e ’s a p p l i e d o r t e n d e r e d f o r t o m a n u fa c t u r e b o t h D i e s e l a n d E l e c t r ic l o c o m o ti v e s , t h e y w e r e u l t i m a te ly a w a r d e d a c o n t r a c t f o r 2 3 2 d ie s e l l o c o m o ti v e s . P r i o r to s u b m i tt i n g t h e fi n a l te n d e r p r ic e T F R r e q u e s te d th a t w e g iv e t h e m a n a n a ly s is o f t h e in c r e a s e i n c o s ts f o r u s m a n u f a c tu r i n g a t B a y h e a d i n D u r b a n a s o p p o s e d to K u d u s p o o r t i n P r e t o r ia w h e r e w e h a d o r i g in a l ly a s s u m e d w e w e r e g o i n g t o b e m a n u f a c tu r i n g a s s e m b li n g a n d b a s e d o u r i n i ti a l t e n d e r p r i c e s o n . ADV PHILLIP MOKOENA SC : 20 Ye s . C H A I R P E R S O N : Yo u g a v e e v i d e n c e b e f o r e lu n c h t o th e e ff e c t t h a t y o u h a d a d v is e d o r y o u r c o n s o r t i u m h a d a d v i s e d th a t t h i s r e lo c a t io n s h o u l d n o t h a p p e n b e c a u s e e v e r y t h i n g w o u ld b e – i t w o u l d b e b e tt e r i f everything was done in Gauteng, is that right? Am I mixing up something? M R R O B E R TO G O N S A LV E S : N o C h a ir t h a t i s c o r r e c t , t h e p r e f e r e n c e Page 143 of 206 23 MAY 2019 – DAY 97 o n th e C N R C o n s o r ti u m w a s t o m a n u fa c t u r e a t K u d u s p o o r t r a th e r th a n B a y h e a d in D u r b a n . C H A I R P E R S O N : Ye s , a n d w h a t w a s t h e r e a s o n g iv e n f o r n o t a c c e p ti n g t h a t s u g g e s t io n o r a d v ic e ? M R R O B E R TO G O N S A LV E S : they w a n te d to split th e C h a ir I t h i n k t h a t th e r e f o u r O E M ’s a n d m a n u fa c t u r i n g b e tw e e n tw o lo c a t io n s , K u d u s p o o r t a n d D u r b a n , s o tw o O E M ’s h a d t o g e t D u r b a n , B a y h e a d i n D u r b a n a n d w e w e r e s e l e c t e d a s o n e o f t h e p a r ti e s , t o g e t h e r w i t h B o m b a r d i e r, t o m a n u fa c tu r e a n d a s s e m b l e a t B a y h e a d i n D u r b a n a n d 10 t h e o th e r t w o C S R a n d G e n e r a l E l e c tr ic g o t K u d u s p o o r t. ADV PHILLIP MOKOENA SC : N o w fu n d a m e n t a lly a t t h a t ti m e w h e n t h is r e q u e s t w a s m a d e w a s t h e r e a n y t h i n g t h a t h a d t o b e a l lo c a t e d , w e r e t h e r e a n y o p e r a t i o n s t a k i n g p l a c e a lr e a d y in K u d u s p o o r t ? M R R O B E R TO G O N S A LV E S : C h a ir w e w e r e a t t h a t s t a g e w h e r e w e w e r e ju s t t e n d e r in g , s o w e h a d n ’ t c o m m e n c e d o p e r a t i o n s a t a ll . ADV PHILLIP MOKOENA SC: Ye s , n o w le t ’s p r o c e e d t o g i v e m o r e fl e s h i n t o t h a t e v i d e n c e b y r e f e r r in g i t t o R G 3 , t h a t is fo l d e r n u m b e r t h r e e C h a ir, o n p a g e 1 8 2 . If y o u m a y M r G o n s a lv e s id e n ti fy t h a t d o c u m e n t f o r u s a n d t a k e u s t h r o u g h th a t d o c u m e n t . 20 M R R O B E R TO G O N S A LV E S : T h a n k y o u c o u n s e l . C h a ir p a g e 1 8 2 is a l e t te r fr o m C N R C o n s o r ti u m s i g n e d b y R o w l e n v o n G e r ic k e , t h i s i s n ’ t a s ig n e d v e r s io n b u t i t w a s s i g n e d b y R o w l e n v o n G e r i c k e , th is is j u s t p r i n t e d o ff a n e m a il a n d i t ’s a d d r e s s e d t o T FR a n d i t ’s i n c o n n e c ti o n w i t h t h e ir r e q u e s t a n d t h e in tr o d u c ti o n t o i t s a y s : “ F u r t h e r to o u r p r e v i o u s e m a il i n t h i s r e g a r d f o l l o w i n g t h e Page 144 of 206 23 MAY 2019 – DAY 97 r e q u e s t fr o m T F R f o r e s e e i n g o u r c o n s o r ti u m t o c o n s id e r D u r b a n f a c i li t ie s fo r m a n u f a c t u r e o f l o c o m o t iv e s t h e f o ll o w i n g c a l c u l a ti o n s w e r e m a d e .” A n d th e r e ’s a h e a d i n g “ i m p a c t o f m a n u fa c t u r in g in D u r b a n v e r s u s J o h a n n e s b u r g a n d i n . .. ( i n te r v e n t io n ) ADV PHILLIP MOKOENA SC: Yo u d o n ’ t h a v e t o t a k e u s – y o u c a n j u s t take us to the summary as to what was the amount arrived at. M R R O B E R TO G O N S A LV E S : S o C h a ir w h a t w e d i d is w e c a lc u l a t e d t h e a d d i ti o n a l c o s t o f m a n u f a c t u r in g i n 10 Bayhead as opposed to K u d u s p o o r t a n d t h e t o t a l a m o u n t w a s R 9 . 7 m il li o n , th e e x a c t a m o u n t is R 9 7 5 5 6 0 0 , s o w h a t w e in f o r m e d T FR th e a d d it i o n a l c o s t f o r t h e f u l l 2 3 2 l o c o m o t iv e s , n o t p e r lo c o m o t iv e , w o u l d b e R 9 . 7 m il li o n f o r u s h a v i n g t o n o w m a n u f a c tu r e a n d a s s e m b le i n B a y h e a d D u r b a n a s o p p o s e d t o K u d u s p o o r t , Pr e to r i a . ADV PHILLIP MOKOENA SC : M a y w e r e q u e s t t h e C h a ir t o m a k e a b i g n o t e o n th a t a m o u n t o f R 9 .7 b e c a u s e fl o w in g fr o m t h e e v id e n c e o f th is w i t n e s s th a t a m o u n t c h a n g e s d r a s t ic a l ly. N o w o f i m p o r t a n c e M r G o n s a lv e s i s w h a t is b e i n g r e c o r d e d i m m e d i a t e ly a f te r t h e a m o u n t o f R 9 . 7 , i f y o u c a n r e a d a n d c o m m e n t o n 20 w h a t i s w r i tt e n th e r e i n . M R R O B E R TO G O N S A LV E S : O k a y C h a ir i t s a y s t h e a b o v e c o s t s o n ly r e l a t e t o t h e m e a s u r a b l e fi n a n c i a l i m p li c a ti o n s . t h a t th e r e w i ll a l w a y s be P l e a s e b e a r i n m in d considerable amount of immeasurable fi n a n c i a l l o s s e s t h a t m a y b e – th a t w il l b e i n c u r r e d d u e t o t h e r e lo c a t io n to Durban. Furthermore it w il l be Page 145 of 206 very i n c o n v e n ie n t and 23 MAY 2019 – DAY 97 c o u n t e r p r o d u c t iv e to s p li t o u r r e s o u r c e s b e t w e e n J o h a n n e s b u r g a n d D u r b a n . Fo r t h e s e r e a s o n w e r e q u e s t t h a t t h e m a n u fa c tu r i n g s h o u l d b e d o n e a t K u d u s p o o r t , k n o w i n g t h e K u d u s p o o r t f a c i li ty I w a s w o n d e r, t h i s is R o w le n v o n G e r ic k e , I w a s w o n d e r in g w h e t h e r i t w il l b e p o s s i b l e t o u til is e t h e o l d K u d u s p o o r t E a s t F o u n d r y F a c i li ty. T h e C N R C o n s o r ti u m is o f th e o p i n i o n th a t t h e p r o je c t c a n b e b e tt e r m a n a g e d a n d e x e c u t e d in t h e K u d u s p o o r t fa c i li ty g i v e n i ts p r o x i m it y t o t h e e x is t in g o ffic e s . ADV PHILLIP MOKOENA SC : A n d th is a c c o r d w i t h w h a t y o u h a v e in f o r m e d t h e C h a ir e a r l ie r o n a b o u t th e v i e w a lr e a d y t a k e n b y t h e 10 C o n s o r t iu m . M R R O B E R TO G O N S A LV E S : ADV PHILLIP MOKOENA SC : T h a t ’s c o r r e c t c o u n s e l . Ye s . C H A I R P E R S O N : B u t – I ’ m s o r r y – w a s t h i s a s e c o n d p r e fe r e n c e t o s a y m a n u f a c t u r in g s h o u ld h a p p e n in K u d u p o o r t o n l y, t h e f ir s t o n e w a s – o h t h a t w a s t h e fir s t p r e fe r e n c e j a , o h , D u r b a n w a s n o t t h e p r e fe r e n c e , i t w a s t h e G a u t e n g p r e f e r e n c e , o k a y. M R R O B E R TO G O N S A LV E S : ADV PHILLIP MOKOENA SC: C o r r e c t C h a ir. Ye s C h a ir. N o w e v e n t h o u g h y o u h a v e s a i d t o t h e C h a ir t h e r e w a s n o t h i n g to b e a l l o c a t e d , b u t w e n o w k n o w 20 fr o m h a v in g l o o k e d a t t h i s d o c u m e n t t h a t i f t h e r e w a s a n y a m o u n t t o b e p l a c e d o n w h a t is t e r m e d th e r e l o c a ti o n w a s n o th i n g m o r e th a n R 9 . 7 m il li o n a s r e f le c t e d i n th is d o c u m e n t ? M R R O B E R TO G O N S A LV E S : T h a t ’s c o r r e c t C h a ir. ADV PHILLIP MOKOENA SC : N o w y o u m a y p r o c e e d , m a y I r e fe r y o u t o b a c k to y o u r s t a t e m e n t , p a g e fo u r a n d b e g i n t o p le a s e s u m m a r is e fo r Page 146 of 206 23 MAY 2019 – DAY 97 u s th e c o n t e n ts o f p a r a g r a p h 8 a n d w h a t f o ll o w s t h e r e a f t e r. M R R O B E R TO G O N S A LV E S : Paragraph 18? ADV PHILLIP MOKOENA SC : 18 yes. M R R O B E R TO G O N S A LV E S : O k a y, s o w e s a i d t h e c a l c u l a t i o n . . .( i n te r v e n t io n ) C H A I R P E R S O N : A r e y o u g o i n g b a c k t o t h e s ta t e m e n t? ADV PHILLIP MOKOENA SC : To th e s t a t e m e n t y e s . C H A I R P E R S O N : Ye s o k a y. M R R O B E R TO G O N S A LV E S : 10 J a C h a ir I t h in k i t’s p a r a g r a p h 1 8 , t h e c a l c u l a ti o n o f th e e x tr a c o s t r e l a t i n g to r e l o c a ti o n fr o m K u d u s p o o r t t o B a y h e a d w a s p e r f o r m e d b y u s a s th e c o n s o r ti u m m e m b e r s , t h a t is C N R , E n d i n a m ic s , G l o b a l a n d K a y d e e s , w e to o k th e c o s t li k e tr a n s p o r t a ti o n , fl i g h ts , o ffi c e a n d a c c o m m o d a t io n e tc e te r a i n t o c o n s i d e r a t io n . The r e v is e d c o s ts a ls o to o k i n t o c o n s id e r a ti o n t h e s a v i n g s th a t w o u l d a r i s e , t h a t i s i m p o r t a n t t o D u r b a n a n d n o t P r e t o r i a m e a n t l e s s tr a n s p o r t c o s ts . CHAIRPERSON : S o th e s e w o u l d b e c o s t s th a t w o u l d b e , a l l o f w h i c h w o u ld b e s a v e d i f t h e m a n u f a c t u r i n g h a p p e n e d i n K u d u s p o o r t , i n Gauteng. M R R O B E R TO G O N S A LV E S : 20 C h a ir t h a t ’s c o r r e c t , c e r ta i n c o s ts w o u l d b e s a v e d s o t h e tr a n s p o r t a ti o n c o s ts f r o m D u r b a n t o P r e to r i a w o u ld b e saved. C H A I R P E R S O N : J a , a n d th is i s t h e a m o u n t o r th is i s t h e li s t t h a t c o u l d be saved. M R R O B E R TO G O N S A LV E S : C h a i r t h a t 9 . 7 is th e t o t a l a d d i t io n a l c o s t s o t h e r e w e r e s o m e a d d i ti o n a l c o s ts a n d t h e r e ’s s o m e s a v in g s . S o w e Page 147 of 206 23 MAY 2019 – DAY 97 t o o k th e a d d i ti o n a l c o s ts , fl i g h t s , a c c o m m o d a t i o n , e tc e t e r a , e t c e t e r a , t h e s a v i n g s o n tr a n s p o r t a ti o n w e d e d u c t e d fr o m t h a t , to a r r iv e a t a n e t in c r e a s e i n c o s t o f 9 . 7 m il li o n w h i c h w e to o k in t o a c c o u n t in d e t e r m i n i n g o u r f in a l b id p r ic e . C H A I R P E R S O N : O k a y. ADV PHILLIP MOKOENA SC : N o w if w e m a y p r o c e e d to d e a l w i t h a n e w to p ic , t h e a g r e e m e n t w i th B E X a n d p l e a s e t a k e u s t h r o u g h w h a t i s s t a te d i n y o u r p a r a g r a p h 1 9 C h a ir o n p a g e 5 . M R R O B E R TO G O N S A LV E S : 10 O k a y, i n s u m m a r y C h a ir o n t h e 2 3 r d o f A p r il 2 0 1 5 C N R S A , t h a t ’s th e S o u th A fr i c a n e n ti ty, s i g n e d a c o n tr a c t w i t h a c o m p a n y c a l le d B E X a n d t h a t c o m p a n y, th a t c o m e s l a t e r o n a s A n n e x u r e 8 , s o I d o n ’ t k n o w i f c o u n s e l y o u w a n t m e to g o i n t o t h a t a lr e a d y. ADV PHILLIP MOKOENA SC: N o , n o w e w il l d e a l w i th i t i n d u e course. M R R O B E R TO G O N S A LV E S : O k a y s o o n 2 3 r d o f A p r i l 2 0 1 5 a s ig n e d c o n tr a c t w it h B E X , r e g is tr a ti o n n u m b e r 2 0 0 9 / 0 2 8 4 2 0 / 0 7 t o a c t a s a n in t e r m e d i a r y to n e g o t i a te a c la i m f r o m Tr a n s n e t fo r th e r e l o c a t i o n fr o m K u d u s p o o r t to B a y h e a d . 20 ADV PHILLIP MOKOENA SC : N o w w h a t I w a n t t o k n o w is th a t a t th is ti m e w h e n n o w t h e n a m e o f B E X a l l o f a s u d d e n e m e r g e s d o w e k n o w w h e t h e r a t t h e ti m e w h e n y o u r c o n s o r ti u m s u b m i t te d a t e n d e r w h e t h e r B E X a s a n e n t i ty w a s i t p a r t o f t h a t c o n s o r t iu m ? M R R O B E R TO G O N S A LV E S : C h a ir B E X w a s n o t k n o w n t o u s a t a ll u n t il A p r i l 2 0 1 5 , i t w a s th e fi r s t t i m e w e h e a r d t h e n a m e . Page 148 of 206 23 MAY 2019 – DAY 97 ADV PHILLIP MOKOENA SC : Ye s , a n d a t th e ti m e w h e n y o u s u b m i tt e d t h e r e l o c a ti o n c o s t o f R 9 . 7 w a s B E X f a c to r e d i n a t a l l ? M R R O B E R TO G O N S A LV E S : C h a ir n o t a t a ll , B E X w a s n ’ t i n v o l v e d w h a ts o e v e r. ADV PHILLIP MOKOENA SC: A n d d o y o u k n o w w h e th e r y o u k n o w y o u r c o m p a n y o r t h e c o n s o r ti u m d i d h a v e a n y p r e v i o u s d e a li n g s w it h B E X p r i o r t o t h e m n o w e m e r g in g o n t h e 2 3 r d o f A p r il a s s ta t e d in y o u r s t a te m e n t . M R R O B E R TO G O N S A LV E S : 10 ADV PHILLIP MOKO ENA SC: C h a ir n o t w h a ts o e v e r n o . Ye s , n o w m a y I r e fe r y o u t o f o ld e r n u m b e r s ix , C h a ir i t w il l b e R R G 6 , o n p a g e 2 0 3 . I f y o u c a n i d e n ti fy t h e d o c u m e n t . .. ( i n te r v e n t io n ) C H A I R P E R S O N : Ye s . ADV PHILLIP MOKOENA SC : . . . a n d p l e a s e s u m m a r is e f o r u s t h o s e a s p e c ts w h ic h y o u b e li e v e a r e p a r a m o u n t t o y o u r e v id e n c e . M R R O B E R TO G O N S A LV E S : Sure, Chair so what happened is on the – w e r e c e iv e d a n e m a i l f r o m t h e d ir e c t o r s o f t h e – th e e x e c u tiv e d ir e c t o r s i f y o u li k e o f C N R S o u th A f r ic a w it h a r e s o lu t io n t h a t t h e y h a d a lr e a d y s ig n e d d a t e d 8 t h o f A p r i l 2 0 1 5 a n d th a t r e s o l u ti o n r e q u ir e d t h e 20 m i n o r i ty d i r e c t o r s , t h a t’s R o w l e n v o n G e r ic k e , L u la m i l e X a te a n d m y s e l f t o s i g n a r e s o l u t i o n a p p o i n ti n g e ff e c ti v e l y B E X a s a n a g e n t f o r th e c o m p a n y to n e g o ti a te t h e c o n tr a c t , t h e r e l o c a ti o n c l a i m w i t h Tr a n s n e t . ADV PHILLIP MOKOENA SC : Did you support that memorandum or w h a t w a s t h e r e t o b e a c h i e v e d t h r o u g h th a t d o c u m e n t ? M R R O B E R TO G O N S A LV E S : C h a ir w e a b s o l u t e ly e x p r e s s e d t h a t w e Page 149 of 206 23 MAY 2019 – DAY 97 w e r e d i s s e n t in g d ir e c t o r s , w e h a v e n ’ t s i g n e d t h e r e s o lu t io n , r e f u s e d to s ig n t h e r e s o l u ti o n a n d a t c o u n tl e s s b o a r d m e e ti n g s w e r a is e d th e s a m e is s u e a n d r e m i n d e d t h e m t h a t w e h a d n ’ t a p p r o v e d t h a t r e s o l u ti o n t o a p p o i n t B E X a s t h e ir a g e n t . ADV PHILLIP MOKOENA SC : Ye s , b u t I m e a n w h a t i s s u r p r is in g w h a t w a s t o b e d i s c u s s e d a t t h e ti m e i f a lr e a d y th e r e w a s a n a m o u n t a r r iv e d a t a s a r e l o c a ti o n f e e , w h a t w a s B E X s u p p o s e d t o d o a t t h e ti m e ? M R R O B E R TO G O N S A LV E S : 10 S o C h a i r t h a t’s p r e c i s e ly o n e o f th e r e a s o n s w h y w e r e f u s e d t o a p p o i n t B E X o r s ig n a n y r e s o l u t i o n b e c a u s e in o u r mi n d s w e h a d a lr e a d y b e e n r e m u n e r a t e d o r r e i m b u r s e d f o r t h e r e l o c a ti o n , a d d i ti o n a l r e l o c a ti o n c o s ts i n v o lv e d i n m a n u f a c t u r in g a t B a y h e a d a s o p p o s e d t o K u d u s p o o r t, w e c o u l d n ’ t s e e a n y b a s is fo r a n y c la i m fr o m Tr a n s n e t f o r a r e lo c a t io n a ll o w a n c e o r r e lo c a t io n c l a i m . ADV PHILLIP MOKOENA SC : Ye s C h a ir b a c k t o t h e s ta t e m e n t o f t h e w i t n e s s o n p a g e f iv e , f r o m p a r a g r a p h 2 2 y o u s e t o u t t h e p e r t in e n t b a c k g r o u n d f a c ts i n r e la t io n t o t h e a p p o i n t m e n t o f B E X , c o u ld y o u p l e a s e s u m m a r is e t h o s e fo r u s . M R R O B E R TO G O N S A LV E S : 20 S o r r y c o u n s e l w h ic h p a r a g r a p h ? A D V P H I L L I P M O K O E N A S C : P a g e 5 fr o m p a r a g r a p h 2 2 . M R R O B E R TO G O N S A LV E S : From paragraph 22, ja, sure. So as I m e n ti o n e d C h a ir w e w e r e e m a i le d a d r a f t B E X a g r e e m e n t w h ic h w a s d a t e d t h e 8 t h o f M a r c h 2 0 1 5 a n d th a t ’s A n n e x u r e 5 in th e f il e . I w o u l d lik e to p o i n t o u t C h a ir t h a t t h e . . .( i n t e r v e n t io n ) C H A I R P E R S O N : W e l l y o u s a i d 8 M a r c h a n d I s e e t w o 8 A p r i ls , a r e y o u Page 150 of 206 23 MAY 2019 – DAY 97 s u r e 8 M a r c h is t h e r i g h t d a t e ? M R R O B E R TO G O N S A LV E S : C h a ir t h e a g r e e m e n t w a s 8 t h o f M a r c h b u t w e r e c e iv e d it o n t h e 8 t h o f A p r il , y e s . C H A I R P E R S O N : O h o k a y, o k a y. ADV PHILLIP MOKOENA SC : Ye s y o u w e r e ju s t a b o u t t o r e fe r – y o u w a n t e d t o s a y s o m e th i n g a b o u t .. .( i n t e r v e n ti o n ) M R R O B E R TO G O N S A LV E S : S u r e , I t h i n k C h a i r t h e i m p o r t a n t t h i n g is if y o u l o o k a t A n n e x u r e 5 a n d t h a t d r a f t a g r e e m e n t t h a t i s p r e s e n t e d t o u s i t w a s w i th a n e n ti ty c a ll e d B E X S t r u c tu r e d P r o d u c t s . 10 A D V P H I L L I P M O K O E N A S C : C h a ir th a t i s o n p a g e 1 9 0 . CHAIRPERSON : Thank you. A D V P H I L L I P M O K O E N A S C : W o u ld t h a t b e c o r r e c t M r G o n s a lv e s ? M R R O B E R TO G O N S A LV E S : T h a t is a b s o lu t e ly c o r r e c t C h a ir. ADV PHILLIP MOKOENA SC : Ye s , c o u l d y o u p l e a s e r e p e a t w h a t y o u w a n t e d t o h ig h li g h t t o t h e C h a ir in r e la t io n t o t h o s e n a m e s . M R R O B E R TO G O N S A LV E S : S u r e , s o C h a ir i t ’s i m p o r t a n t t o n o te th a t it s a y s B e c k S t r u c tu r e d P r o d u c ts P t y L i m i t e d a n d i t’s g o t a r e g is tr a t i o n n u m b e r o f 2 0 0 0 , w e w i ll s e e l a t e r i n A n n e x u r e 8 t h a t t h e a c t u a l a g r e e m e n t s i g n e d w i th a n o th e r e n t it y, n o t t h e s a m e e n ti ty, v e r y s i m il a r 20 n a m e , h a d a 2 0 0 9 r e g is tr a ti o n n u m b e r a n d w e b e li e v e d t h a t th e r e ’s a r e a l B E X c o m p a n y t h a t e x is ts a n d w e w e r e g iv e n fo ld e r s a n d f il e s o f w o r k t h a t t h e y h a d d o n e , b u t t h e B E X a g r e e m e n t t h a t t h e y a c t u a ll y s ig n e d w a s a d o r m a n t c o m p a n y w h ic h w e w i ll c o v e r l a t e r o n i n m y t e s ti m o n y. CHAIRPERSON : Mmm, mmm. Page 151 of 206 23 MAY 2019 – DAY 97 ADV PHILLIP MOKOENA SC : Ye s , a n d l e t’s g o b a c k th e n t o y o u r p a r a g r a p h 2 2 . 1 a n d j u s t s u m m a r i s e w h a t y o u c o n v e y t h e r e in . M R R O B E R TO G O N S A LV E S : S o C h a ir w h e n w e w e r e p r e s e n t e d w i th t h is y o u w i ll s e e w h y w e c o u l d n ’ t ’ s u p p o r t i t. I n t h i s a g r e e m e n t w i th B E X t h e r e ’s a p a r a g r a p h 7 .2 a n d if I m a y r e a d i t o u t, th e f e e t h a t B E X requested for providing these s e r v ic e s in te r m s of the agency a g r e e m e n t w a s th e c o m p a n y a g r e e s t h a t B E X w il l b e e n ti tl e d fo r a n A g e n c y c o m m i s s io n e q u iv a l e n t t o t h e d i ff e r e n c e b e t w e e n th e p r ic e e x c lu d in g 10 VAT a w a r d e d t o t h e c o m p a n y b y T F R a n d t h e p r ic e b e n c h m a r k o f R 2 1 8 m il li o n e x c l u d i n g VAT, a n d t h i s is i m p o r t a n t: “ F o r e x a m p l e [ th e y s a y ] i f th e p r i c e a w a r d e d is R 6 5 0 m il li o n then B E X w il l b e e n ti t le d t o an a g e n c y c o m m i s s io n o f R 3 7 0 m il li o n . ” ADV PHILLIP MOKOENA SC : Sjoe! C H A I R P E R S O N : ( L a u g h i n g ) I m e a n t h a t’s a b o u t h a l f . . .( i n te r v e n t io n ) M R R O B E R TO G O N S A LV E S : M o r e t h a n h a l f . CHAIRPERSON : More than half. M R R O B E R TO G O N S A LV E S : M o r e t h a n h a l f j a . ADV PHILLIP MOKO ENA SC : But even more we know that at the back 20 o f t h is in f o r m a ti o n is th e a lr e a d y a ffe c te d a m o u n t o f R 9 .7 m i ll i o n , n o w w e n o w s e e w h a t i s n o w b e i n g e n v is a g e d i n t h e p a r a g r a p h th a t y o u h a v e ju s t r e a d t o t h e C h a ir. A lr i g h t , y o u m a y p r o c e e d th e n w it h w h a t y o u a r e t e ll i n g t h e C h a ir fr o m p a r a g r a p h 2 2 .2 o n o n w a r d s . M R R O B E R TO G O N S A LV E S : S o i n p a r a g r a p h 2 2 . 2 i t ’s w h a t I a l r e a d y r e p e a t e d t h a t w e r e c e iv e d t h i s p a r ti a l ly s i g n e d R o u n d R o b in r e s o lu t io n Page 152 of 206 23 MAY 2019 – DAY 97 s ig n e d b y th e C R C d ir e c t o r s r e q u e s ti n g t h a t w e s ig n i t , t h e m i n o r i t y d ir e c t o r s s i g n i t a n d t h e r e s o l u ti o n i s “ i n o r d e r t o e n t e r t h e a g e n c y a g r e e m e n t i n r e l a t i o n t o t h e r e l o c a ti o n o f t h e m a n u fa c tu r i n g f a c i li ty.” ADV PHILLIP MOKOENA SC : Ye s . N o w w h a t h a p p e n e d a f te r y o u h a v i n g r e c e iv e d t h i s d o c u m e n t? M R R O B E R TO G O N S A LV E S : W e w e a b s o l u te ly r e fu s e d t o s i g n i t a n d in a n u ts h e l l t h e c o m p a n y w e n t a h e a d a n d s ig n e d a n a g r e e m e n t w i t h B E X o n th e b a s is th a t t h e y h a d f o u r d ir e c t o r s o n t h e B o a r d a n d c o n tr o ll e d t h e B o a r d . 10 ADV PHILLIP MOKOENA SC : Ye s , m a y I r e f e r y o u t o R G 7 , th a t is f o l d e r n u m b e r s e v e n C h a ir, a n d if y o u m a y g o t o p a g e 2 0 7 th a t ’s w h e r e y o u l o c a te it a n d p l e a s e i d e n t if y t h a t d o c u m e n t f o r t h e C h a ir. M R R O B E R TO G O N S A LV E S : C h a ir w h a t I w a s a t te m p t in g to il lu s tr a t e h e r e w a s t h a t o n ly o n th e m e e t i n g , a t th e m e e t i n g o f t h e 1 0 t h o f A p r i l 2 0 1 5 b u t I ’v e g o t e x t r a c ts o f m i n u t e s o f t h e m e e t in g o n t h e 8 t h o f O c t o b e r 2 0 1 5 a n d a l s o o n t h e 6 t h o f M a y 2 0 1 6 , a n d p e r h a p s I c o u ld ju s t m a y b e r e a d o u t s o m e p a r t s o f i t to d e m o n s tr a t e h o w w e f e l t a b o u t t h is . Fr o m t h e m i n u te s a n d t h a t ’s o n p a g e C h a ir 2 0 9 .. .( i n t e r v e n ti o n ) A D V P H I L L I P M O K O E N A S C : Is i t p a r a g r a p h 5 .2 ? 20 M R R O B E R TO G O N S A LV E S : 5 . 2 o n p a g e 2 0 9 . A D V P H I L L I P M O K O E N A S C : Ye s , i f y o u m a y t h e n r e a d f o r u s . M R R O B E R TO G O N S A LV E S : Ye s . :” G W [ t h a t ’s G e o ff Wa n g ] i n tr o d u c e d t o t h e B o a r d t h e p r o g r e s s o f D u r b a n r e lo c a t io n , w i th a s s is t a n c e b y B E X t o a n e g o ti a ti o n w i t h T F R , t h e c o m p a n y fi n a ll y n e g o t i a t e d f o r R 6 4 7 m il li o n t o b e Page 153 of 206 23 MAY 2019 – DAY 97 p a i d b y T F R . H a l f h a s b e e n r e c e i v e d a n d t h e o t h e r h a l f w i ll b e r e c e i v e d a s a n d w h e n lo c o m o t iv e s a r e d e l iv e r e d t o T F R . B E X h a s b e e n p a id a f e e o f R 6 7 m i ll io n fo r t h e s e r v i c e s p r o v id e d p l u s VAT. S W [ a n d S W i s S t a n W h i ti n g w h o w a s t h e p r o x y f o r R o w le n v o n G e r ic k e ] , R G [ t h a t ’s m y s e l f ] a n d L L X [ w h ic h L u l a m il e X a t e ] r e q u e s t e d t h a t it b e n o te d t h a t t h e y d id n o t s i g n t h e r e s o l u ti o n f o r th e B E X m a n d a te . G W, G e o ff Wa n g , t o p r o v i d e t h e B o a r d m e m b e r s w i th a c o p y o f t h e v a r i a ti o n o r d e r b y T FR . 10 S W, R G a n d L L X [ t h a t ’s S t a n W h i ti n g , R o b b i e G o n s a lv e s a n d L u l a m il e X a t e ] r e i te r a t e d t h e ir c o n c e r n s w i t h t h e B E X c o n tr a c t . G W p r o v id e d t h e r e l e v a n t d o c u m e n ts o f B E X t o t h e d ir e c to r s .. .” A n d w e w i ll c o v e r th a t n o w a n d t h e y g a v e u s t h e C I P C d o c u m e n t s a n d B E E c e r ti f ic a t e , a n d B E E c r e d e n t ia l c e r t i fi c a t e . A ls o t h e e s t i m a te d c o s t f o r D u r b a n r e lo c a t io n , th e B E X p r o p o s a l a n d r e a s o n f o r s e l e c t in g B E X h a v e a lr e a d y b e e n p r o v i d e d t o t h e d ir e c t o r s i n A p r i l. T h a t i s G e o ff Wa n g s a y in g t h a t h e h a s a lr e a d y p r o v i d e d u s w i t h a l l th e in f o r m a t io n t h a t w e c o u l d p o s s i b ly h a v e r e q u e s t e d s o w e s h o u l d b e h a p p y. ADV PHILLIP MOKOENA SC : 20 N o w t h is a m o u n t t h a t w e s e e h e r e a s 6 4 7 m i lli o n o n e c a n tr a c e i t b a c k f r o m t h e a m o u n t 9 .7 w h ic h y o u s a y it w a s a lr e a d y e ff e c t e d w h e n t h e c o m p a n y y o u k n o w c o n c e d e d to t h e r e q u e s t o f t h e r e lo c a t i o n . M R R O B E R TO G O N S A LV E S : C h a ir t h a t ’s c o r r e c t, s o t h e a m o u n t 9 . 7 w h ic h w e h a d a lr e a d y r e c e i v e d e ff e c t i v e l y i n t h e p r ic i n g f o r th e lo c o m o t iv e s h a d n o w b a l l o o n e d t o 6 4 7 m ill i o n a n d w h a t i s q u i t e ir o n ic I Page 154 of 206 23 MAY 2019 – DAY 97 t h i n k i s th a t th a t th e R 6 4 7 m il li o n is v e r y c lo s e t o t h e R 6 5 0 m il li o n th a t B E X , t h e f ir s t d r a f t B E X a g r e e m e n t r e f e r r e d t o a s a n e x a m p l e fo r t h e ir f e e w h e r e th e y s a i d R 6 5 0 m il li o n m i n u s R 2 8 0 m i ll io n b e n c h m a r k g i v e s u s a R 3 7 0 m i ll io n f e e . ADV PHILLIP MOKOENA SC : A n d t h e m a j o r it y s h a r e h o l d e r s h o w d id t h e y j u s ti fy r e c e i v i n g t h i s m o n e y fr o m Tr a n s n e t in t h e li g h t o f w h a t y o u a c t u a ll y t o l d th e C h a ir. M R R O B E R TO G O N S A LV E S : W e ll C h a i r t h e y j u s t c o u l d n ’ t g iv e u s s a ti s f a c t o r y a n s w e r s a n d n e i t h e r c o u l d Tr a n s n e t a n d y o u w i ll s e e l a te r 10 o n w h y w e r e p o r t e d t h is to t h e H a w k s . A D V P H I L L I P M O K O E N A S C : Ye s n o w C h a ir b a c k to t h e s t a te m e n t o f t h e w it n e s s , i f y o u m a y p r o c e e d M r G o n s a lv e s w i t h w h a t y o u ’r e s t a ti n g fr o m p a r a g r a p h 2 2 .5 o n p a g e 6 , a n d p l e a s e s u m m a r is e f o r u s w h a t y o u ’r e c o n v e y i n g t h e r e i n . M R R O B E R TO G O N S A LV E S : Counsel could I just on that point on p a g e 2 . 4 .. .( i n t e r v e n ti o n ) A D V P H I L L I P M O K O E N A S C : Ye s , y e s . M R R O B E R TO G O N S A LV E S : I j u s t w a n t e d t o r e f e r to t h e m i n u t e s o f t h e 6 t h o f M a y 2 0 1 6 i f I m a y. 20 A D V P H I L L I P M O K O E N A S C : O h y e s , y e s y o u m a y. M R R O B E R TO G O N S A LV E S : S o C h a ir y o u w il l s e e o n p a g e 2 1 4 it e m 9 w h ic h r e fe r s to r e s o lu t io n n u m b e r 8 a n d t h e th ir d b u l l e t p o i n t i t s a y s th e S A d i r e c to r s r e q u e s te d a c o p y o f t h e B E X r e p o r t s u b m i t t e d t o T F R m a d e i t c l e a r th a t w e a s t h e s h a r e h o ld e r s h a v e n o t a p p r o v e d th e B E X c o n tr a c t s o I t h i n k t h e i m p o r t a n t a s w e l l is t h a t e v e n t h o u g h th e r e w a s a Page 155 of 206 23 MAY 2019 – DAY 97 B o a r d r e s o l u t i o n y o u w il l s e e la t e r o n w e t h o u g h t a s s h a r e h o ld e r s in t h e c o m p a n y t h a t it r e q u ir e d a s h a r e h o ld e r s r e s o l u ti o n a s w e ll b e c a u s e i t w a s o u t o f t h e o r d i n a r y c o u r s e o f t h e b u s in e s s a s s ti p u l a te d i n t h e M I o f t h e c o m p a n y. A D V P H I L L I P M O K O E N A S C : Ye s , y e s . N o w I w a s j u s t a b o u t t o r e f e r y o u to p a r a g r a p h 2 2 . 5 f o r y o u t o p r o c e e d w i t h th e e v id e n c e fr o m t h a t paragraph. M R R O B E R TO G O N S A LV E S : S o I t h i n k C h a ir I h a v e a lr e a d y c o v e r e d t h is s l ig h tl y b u t th e i m p o r t a n t t h in g i s th a t d e s p i te t h e o b j e c t io n s t h e y 10 c o n tr o ll e d th e b o a r d , t h e S R R C d ir e c to r s , t h e C N R d ir e c t o r s a n d t h e y w e n t a h e a d a n d s i g n e d th e c o n t r a c t w i t h B E X o n t h e 2 3 r d o f A p r il 2 0 1 5 a n d y o u w i ll n o t e t h a t th a t B E X e n ti ty t h a t t h e y s i g n e d , w h i c h i s A n n e x u r e 8 , is s i g n e d w it h a c o m p a n y c a l le d B u s in e s s Ex p a n s i o n S tr u c t u r e d Pr o d u c t s P ty L i m i te d s o it ’s n o t th e o r ig in a l e n ti ty, t h e B E X S tr u c t u r e d Pr o d u c ts P t y L i m i t e d a n d t h e r e g is tr a ti o n o f t h is c o m p a n y is a 2 0 0 9 c o m p a n y r e g i s t r a t io n a s o p p o s e d t o th e B E X s t r u c t u r e d p r o d u c ts w i t h a 2 0 0 0 r e g is tr a ti o n n u m b e r. A D V P H I L L I P M O K O E N A S C : Ye s . C H A I R P E R S O N : A n d th a t’s th e d o r m a n t c o m p a n y t h a t y o u w e r e ta lk in g 20 a b o u t? M R R O B E R TO G O N S A LV E S : T h a t ’s q u i t e 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 : N o w w i ll y o u p l e a s e t u r n to R G 8 , y o u w ill fi n d i t fr o m p a g e 2 1 6 , b e fo r e I r e f e r y o u to th e r e l e v a n t p o r t io n s o f t h a t d o c u m e n t c o u l d y o u p l e a s e i d e n t if y t h a t d o c u m e n t? M R R O B E R TO G O N S A LV E S : C h a ir t h is i s t h e a c t u a l a g r e e m e n t Page 156 of 206 23 MAY 2019 – DAY 97 s ig n e d , y o u w il l s e e s ig n e d w it h B u s in e s s E x p a n s i o n S tr u c t u r e d P r o d u c ts w h ic h th e y r e f e r t o a s B E X a n d i t s d a t e d A p r i l 2 5 2 0 1 5 . A D V P H I L L I P M O K O E N A S C : Ye s , i f y o u t u r n o v e r to p a g e 2 1 7 y o u w i ll see from the paragraph that says “whereas” if you can read for us point A and please comment on the contents of that paragraph. M R R O B E R TO G O N S A LV E S : S o C h a ir y o u w il l s e e t h a t t h is c o m p a n y n e v e r o p e r a t e d , i t h a d a t u r n o v e r o f l e s s t h a n R 5 m i ll io n , i t w a s e ffe c t iv e l y a d o r m a n t c o m p a n y. H o w e v e r i n t h is a g r e e m e n t s i g n e d b e t w e e n B E X a n d C R S A i n th e i n t r o d u c ti o n i t s a y s B E X a p r o f e s s i o n a l 10 s e r v ic e a d v is o r y b u s in e s s t h a t s p e c ia li s e s i n b u s i n e s s e n t e r p r i s e o n t o o p t i m is a ti o n u s i n g f in a n c ia l m o d e l li n g , d e r iv a t i v e s a n d e n g in e e r i n g t e c h n iq u e s w i th i t s lo n g s u b s is ti n g r e la ti o n s h i p s i n t h e t e r r it o r y o f S o u th A f r ic a a n d i t g o e s o n a n d o n . O b v i o u s l y a s a d o r m a n t c o m p a n y i t h a d n o a c t iv i t ie s a n d h a d n e v e r d o n e a n y t h in g . ADV PHILLIP MOKOENA SC : Th is w a s f a ls e t h i s w a s i n c o r r e c t , t h i s w a s f a ls e ? M R R O B E R TO G O N S A LV E S : A b s o l u te in 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 : N o w if I m a y r e f e r y o u t o p a g e 2 2 2 o f t h e same document. 20 M R R O B E R TO G O N S A LV E S : S o r r y c o u n s e l w h ic h p a g e ? ADV PHILLIP MOKOENA SC : 222. M R R O B E R TO G O N S A LV E S : 2 2 2 ? A D V P H I L L I P M O K O E N A S C : Ye s , a r e y o u t h e r e ? M R R O B E R TO G O N S A LV E S : Ye s I a m t h a n k y o u . ADV PHILLIP MOKOENA SC : I f y o u c a n a ls o ta k e th e C h a ir t h r o u g h Page 157 of 206 23 MAY 2019 – DAY 97 p a r a g r a p h 6 . 2 a n d 6 . 3 a n d c o m m e n t o n w h a t is s ta t e d i n t h o s e paragraphs. M R R O B E R TO G O N S A LV E S : S o C h a i r u n d e r 6 .2 s o th e i n i t ia l c o n tr a c t h a d h a d a b e n c h m a r k o f R 2 8 0 m i ll i o n a n d th e f e e w a s a n y t h in g a b o v e R 2 8 0 m il li o n , t h is c h a n g e d t o R 5 8 0 m il li o n a n d I w il l r e a d i t o u t . S o h e r e it s a y s t h e c o m p a n y a g r e e s t h a t B E X w ill b e e n ti tl e d to a n a g e n c y c o m m i s s io n e q u iv a l e n t t o t h e d i ff e r e n c e b e t w e e n t h e p r ic e e x c l u d in g VAT a w a r d e d to t h e c o m p a n y b y T F R a n d a p r o j e c t b e n c h m a r k c o s t o f R 5 8 0 m il li o n e x c l u d in g VAT. 10 F o r e x a m p le i f t h e p r i c e a w a r d e d is R 6 8 0 m il li o n th e n B E X w i l l b e e n ti tl e d t o a n a g e n c y c o m m i s s io n o f R 1 0 0 m il li o n e x c l u d i n g VAT, t h a t i s R 6 8 0 m i l li o n le s s R 5 8 0 m il li o n . T h e n e x t p a r a g r a p h s a y s t h e c o m p a n y w i ll b e e n t i tl e d t o t h e p r o j e c t b e n c h m a r k c o s t o f R 5 8 0 m i ll io n i r r e s p e c ti v e o f w h e t h e r th e to t a l p r o j e c t v a l u e is n e g o ti a te d l o w e r t h a n t h e R 6 8 0 m il li o n b y T F R . ADV PHILLIP MOKOENA SC: Ye s a n d y o u r c o m m e n t o n t h e s e paragraphs? M R R O B E R TO G O N S A LV E S : S o i t is q u i t e i n t e r e s ti n g t o s e e t h a t th e b e n c h m a r k h a d c h a n g e d fr o m R 2 8 0 t o R 5 8 0 fo r s ta r t e r s a n d I th i n k t h a t p r o b a b ly 20 had a lot to do with th e pressure th a t the minority s h a r e h o l d e r s a n d d ir e c t o r s p u t o n t h e m b u t ir r e s p e c t iv e i t s ti ll t a l k s a b o u t, r e f e r s to a p o t e n t ia l f e e o f R 1 0 0 m i ll io n t o a c o m p a n y c a l l e d B E X t h a t i s a d o r m a n t c o m p a n y. ADV PHILLIP MOKOENA SC : T h is d o r m a n t c o m p a n y th a t y o u a r e t a lk in g a b o u t d o y o u k n o w a s t o w h e t h e r d i d it h a v e d ir e c t o r s , h o w m a n y . . .( i n te r v e n t io n ) Page 158 of 206 23 MAY 2019 – DAY 97 M R R O B E R TO G O N S A LV E S : C h a ir w e d o s o i f w e c a n i t’s o n A n n e x u r e s 9 a n d 1 0 s o th e fir s t o n e p e r h a p s o n p a g e 2 2 9 , t h is w a s a t t h a t b o a r d m e e ti n g , I t h i n k i t w a s o n t h e 8 t h o f A p r il o r th e 1 0 t h o f A p r il 2 0 1 5 , th is w a s p r e s e n te d t o u s s o r t o f b y t h e C h in e s e d i r e c t o r s , a n d it ’s B E E v e r i f ic a t i o n c e r ti f ic a t e o f e x e m p t io n f o r m i c r o e n t e r p r i s e s , s o t h i s is f o r B u s in e s s E x p a n s i o n S t r u c t u r e d P r o d u c ts P ty L i m i te d a n d i t s a y s a t t h e b o t t o m y o u w il l s e e “ c o m p a n y i d e n t if ic a ti o n s t a tu s e x e m p t m i c r o e n t e r p r i s e ” th a t is t u r n o v e r o f R 5 m il li o n a n d b e l o w a n d t h e n i f y o u lo o k a t A n n e x u r e 1 0 w h ic h is p a g e 2 3 1 w e ’v e g o t c o r e 1 4 . 3 fr o m C I P C , 10 c e r t if ic a te o f c o n fir m a t i o n a n d h e r e w e w il l s e e th e r e ’s t h e a c t iv e d ir e c t o r s o f t h e c o m p a n y is o n e M a r k S h a w a n d M a r k S h a w w a s a p p o i n t e d b y t h e c o m p a n y o n t h e 1 5 t h o f A p r il 2 0 1 5 , s o i t s e e m e d t h a t t h e c o m p a n y a s e s t a b l is h e d s o m e ti m e i n 2 0 0 9 a s a d o r m a n t c o m p a n y a n d o n th e 1 5 t h o f A p r i l 2 0 1 5 M a r k S h a w w a s a p p o i n t e d a s a d ir e c to r a n d o n t h e 2 5 t h o f A p r i l t h is c o m p a n y s i g n e d t h e a g e n c y a g r e e m e n t w i t h C N R S o u th A fr ic a . A D V P H I L L I P M O K O E N A S C : A n d th a t ’s t h e c o m p a n y t h a t w a s g o i n g to b e e n t i tl e d t o th a t h u g e a m o u n t o f th e r e l o c a ti o n f e e ? M R R O B E R TO G O N S A LV E S : C o r r e c t , i n i ti a l ly t h e f e e o f 3 7 0 m i ll i o n b u t 20 it w a s c h a n g e d d o w n to 1 0 0 m i ll io n . ADV PHILLIP MOKOENA SC : Ye s , n o w m a y I r e f e r y o u b a c k t o y o u r s t a te m e n t a n d p le a s e ta k e u s fr o m p a g e s e v e n p a r a g r a p h 2 5 a n d p l e a s e m a k e u s t o u n d e r s t a n d t h e d i ff e r e n t a m o u n t s t h a t a r e r e f le c te d t h e r e in a n d t h e ir s ig n i f ic a n c e . M R R O B E R TO G O N S A LV E S : J a s o I th i n k i t g o e s t o t h e p o in t t h a t B E X Page 159 of 206 23 MAY 2019 – DAY 97 w a s e n ti t le d to a fe e o f a n y t h i n g o v e r R 2 8 0 m ill i o n . F o r s ta r t e r s w e d i d n o t k n o w w h e r e t h e R 2 8 0 m il li o n c a m e f r o m . O n t h e 2 1 A p r i l 2 0 1 5 t h e c o m p a n y e m a i le d u s a c a lc u l a ti o n w h ic h i s a t ta c h e d a s A n n e x u r e 11 s h o w i n g u s c a lc u l a ti o n s f o r s u p p o r ti n g a n a m o u n t o f R 2 8 7 m ill i o n . A t t h a t s t a g e o b v i o u s ly w e h a d n o t e v e n s e e n . When we saw the BEX c o n tr a c t a n a m o u n t r e fe r r e d t o o f R 2 8 0 m il li o n w e h a d n o i d e a w h e r e t h a t a m o u n t h a d c o m e fr o m . A D V P H I L L I P M O K O E N A S C : Ye s . M R R O B E R TO G O N S A LV E S : A n d o n t h e 2 1 A p r il f o r th e fi r s t ti m e w e 10 s a w s o m e c a lc u la t io n s s u p p o r t in g a n a m o u n t o f R 2 8 7 m i ll i o n . ADV PHILLIP MOKOENA SC : M a y b e l e t u s g o t o th o s e c a l c u l a t i o n s . C h a ir i t i s R G 11 t o b e f o u n d o n p a g e 2 3 3 . M R R O B E R TO G O N S A LV E S : C h a i r i t is o n p a g e s 2 3 3 t o 2 3 5 . A D V P H I L L I P M O K O E N A S C : Ye s . M R R O B E R TO G O N S A LV E S : S o u n fo r t u n a te ly i t is a l o n g A 3 p a g e i t is s o r t o f p r i n t e d i n th r e e A 4 p a g e s . B u t y o u w il l s e e q u i te a n a m a t e u r is h d o c u m e n t t h a t s a y s f o r e x a m p le p o in t 1 i n c r e a s e l o g i s tic s c o s t s R 4 5 1 0 0 m il li o n . T h e n in c r e a s e d c o s t f o r s e t u p f a c il i ti e s in D u r b a n a n d tr a v e l in g R 2 7 3 0 0 m il li o n e tc e t e r a . A n d t h e r e a r e e i g h t li n e it e m s a n d 20 t h e t o t a l o f th a t l in e i t e m is R 2 8 7 m ill i o n a n d s o m e c h a n g e . A D V P H I L L I P M O K O E N A S C : Ye s . M R R O B E R TO G O N S A LV E S : A n d C h a ir if I m a y j u s t a d d w h a t I fi n d f a s c in a ti n g is th is w a s e m a il e d t o u s b y t h e c o m p a n y c l a i m in g t h a t t h e r e l o c a ti o n c l a i m s h o u l d b e R 2 8 7 m il li o n . B u t u l t i m a te ly Tr a n s n e t p a i d t h e m R 6 4 7 m i ll io n w h ic h is e v e n m o r e a b s u r d . Page 160 of 206 23 MAY 2019 – DAY 97 CHAIRPERSON : [coughing] excuse me . Yo u r c a lc u l a ti o n o f t h e r e l o c a ti o n c o s ts w a s a b o u t R 9 m i ll io n , is t h a t r i g h t ? M R R O B E R TO G O N S A LV E S : C h a i r R 9 .7 m il li o n . CHAIRPERSON : R 9 . 7 m il li o n . S o t h is c o m p a n y a t t h i s s t a g e in e x p l ic a b ly s a y s R 2 6 , 3 m i ll io n w e l l it h a s g o t s o m e w h a t e v e r i t s a y s h e r e b u t y o u s a y u l ti m a t e ly i t w a s 6 0 0 a n d s o m e t h i n g m i ll i o n ? M R R O B E R TO G O N S A LV E S : S o C h a ir j a o u r – w e i n c r e a s e d t h e t e n d e r p r ic e b y 9 . 7 m il li o n f o r a l l 2 3 2 l o c o m o t iv e s . C H A I R P E R S O N : Ye s . 10 M R R O B E R TO G O N S A LV E S : T h e c o m p a n y s u b m i t t e d s o m e t h in g f o r R 2 8 7 m il li o n . C H A I R P E R S O N : Ye s . M R R O B E R TO G O N S A LV E S : A n d t h a t is o b v i o u s l y w h e n t h e y e n t e r e d in t o t h e in i ti a l – w h e n t h e y h a d d is c u s s i o n s w i th B E X i n i t ia ll y a n d th e d r a f t a g r e e m e n t w e g o t r e fe r r e d to a b e n c h m a r k o f R 2 8 0 m i ll io n . S o i t s e e m s t h a t t h i s is w h e r e th e R 2 8 0 m il li o n c a m e fr o m . CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : A n d s o t h is is t h e ir o w n c a lc u l a ti o n s e n t b y th e c o m p a n y o f a p o t e n t i a l c l a i m th a t t h e y t h o u g h t t h e y h a d o f R 2 8 7 20 m il li o n b u t u l ti m a t e l y Tr a n s n e t p a i d R 6 4 7 m il li o n t o t h e c o m p a n y. ADV PHILLIP MOKOENA SC : F r o m a n a m o u n t w h ic h y o u s a y i t w a s R 9 . 7 a n d it w a s a l r e a d y f a c to r e d i n – i n t o th e a m o u n t t h a t w a s s u p p o s e d to b e p a i d to t h e c o n s o r ti u m ? M R R O B E R TO G O N S A LV E S : T h a t is q u it e c o r r e c t C h a ir. ADV PHILLIP MOKOENA SC : N o w fo r n o w w e a r e n o w s it t in g a t a n Page 161 of 206 23 MAY 2019 – DAY 97 a m o u n t o f R 2 8 0 m il li o n w h i c h y o u a r e u n a b l e y o u r s e l f to g i v e m e a n i n g or sense to it as to how it was arrived at? M R R O B E R TO G O N S A LV E S : A b s o l u t e ly C h a ir. I m e a n y o u c a n s e e o n p a g e s 2 3 3 t o 2 3 5 a v e r y p o o r ly c o n s tr u c t e d s c h e d u le s u p p o r ti n g a n a m o u n t o f R 2 8 7 m il li o n . A D V P H I L L I P M O K O E N A S C : D o y o u k n o w i f t h e r e w a s a n y th i n g th a t s ig n if ic a n tly c h a n g e d fr o m w h e n t h e r e lo c a ti o n a m o u n t w a s 9 . 7 f o r i t to a r r iv e to b e R 2 0 8 th a t c o u l d a t l e a s t y o u k n o w e x p l a in o r j u s t if y t h is amount? 10 M R R O B E R TO G O N S A LV E S : C h a i r I – I h a v e n o d o u b t t h a t w h e n t h e c o m p a n y a r r iv e d a t B a y h e a d th e y m a y h a v e f o u n d t h a t th e f a c ili t y m a y b e is n o t w h a t t h e y e x p e c t e d a n d th o u g h t t h a t th e y – t h e r e w a s a n a m o u n t t h a t th e y c o u l d p o s s ib ly c l a i m . I f t h a t w a s th e c a s e i t w o u l d b e v e r y e a s y t o p r o v e w h a t i t is a n d Tr a n s n e t s h o u l d h a v e g iv e n u s t h e a n s w e r s a n d s a i d , t h e c o m p a n y i s e n t i tl e d t o a c l a i m f o r t h is s p e c i f ic r e a s o n . F o r e x a m p l e m a y b e t h i s p i e c e o f e q u ip m e n t d o e s n o t e x is t a n d w e s a i d i t d i d e x is t a n d s o w e n e e d t o – y o u h a d to a c q u i r e th e e q u ip m e n t y o u r s e l f s o w e n o w n e e d t o r e i m b u r s e y o u . B u t n o t h in g o f t h a t s o r t h a p p e n e d . S o I c a n n o t s e e a n y ju s ti fi c a t io n w h e n w e 20 s u b m i tt e d a fi x e d fi n a l p r i c e t h a t i n c l u d e d a n a m o u n t f o r r e l o c a t i o n a s w e h a d c a lc u l a te d to g e th e r w i t h C N R o f R 9 .7 m il li o n a n d i n c l u d e d t h a t in th e f i n a l p r ic e o f t h e l o c o m o tiv e s h o w w e w e r e e n t i tl e d t o a n y th i n g ? B e a r i n g i n m i n d t h a t w e a r e s h a r e h o ld e r s i n t h e c o m p a n y. W e w o u ld lo v e t o g e t a r e i m b u r s e m e n t o f a n a m o u n t . W e j u s t c o u l d n o t s e e a n y ju s t i fic a ti o n f o r i t. Page 162 of 206 23 MAY 2019 – DAY 97 ADV PHILLIP MOKOENA SC : J a m a y I r e fe r y o u b a c k to y o u r s t a te m e n t ? P a g e 7 a n d p r o c e e d t o d e a l w i t h p a r a g r a p h 2 6 b e c a u s e i t a p p e a r s t h a t t h a t a m o u n t fo r 2 8 0 d o e s n o t e n d t h e r e b u t f o r s o m e r e a s o n it g e ts i n c r e a s e d ? M R R O B E R TO G O N S A LV E S : S u r e s o C h a ir w h a t a c t u a ll y h a p p e n e d i s t h a t a c o n tr a c t w a s s i g n e d i t i s in A n n e x u r e 1 2 o n p a g e 2 3 8 a n d t h i s w a s a c o n tr a c t s i g n e d b e tw e e n C N R , S o u t h A fr ic a a n d T F R in r e s p e c t o f t h i s r e l o c a ti o n a ll o w a n c e o r c l a i m . I t w a s s i g n e d in J u ly 2 0 1 5 a n d C o u n s e l I d o n o t k n o w i f y o u w a n t m e t o g o i n to t h e a m o u n t s n o w ? 10 A D V P H I L L I P M O K O E N A S C : Ye s l e t u s g o – m a y b e le t u s d o t h a t – l e t u s a li g n th a t w i th y o u – w it h A n n e x u r e R G 1 2 o n p a g e 2 3 8 . M R R O B E R TO G O N S A LV E S : S u r e . A D V P H I L L I P M O K O E N A S C : Ye s . M R R O B E R TO G O N S A LV E S : S o – C h a ir t h e n o n p a g e 2 3 9 y o u w il l s e e t h a t th e c l a i m n o w h a s g o n e – m o v e d fr o m th is R 2 8 7 m i ll io n t h a t w e w e r e r e f e r r i n g t o t o a n a m o u n t o f R 7 1 9 m i lli o n a n d t h e n C N R a r e q u i te g r a c i o u s in o ff e r i n g a s e t tl e m e n t d is c o u n t o f 1 0 % a m o u n ti n g t o R 7 1 m il li o n t o T F R a n d th a t th e n e t t a m o u n t … CHAIRPERSON : 20 I a m s o r r y, I a m s o r r y. Yo u h a v e l o s t m e . A D V P H I L L I P M O K O E N A S C : P a g e 2 3 9 C h a ir. CHAIRPERSON : A n d m a y b e i n p a r t b e c a u s e I h a v e b e e n t h i n k in g a b o u t w h a t y o u t e ll in g m e . Th e s e k i n d s o f a m o u n t s t h a t w e r e ju s t c la i m e d a n d p a i d . O k a y w h e r e a r e w e ? A D V P H I L L I P M O K O E N A S C : C h a ir 2 3 9 . P a g e 2 3 9 t h a t is w h e r e t h e – T h a t is w h e r e M r G o n s a lv e s is . M r G o n s a lv e s w h i l e th e C h a ir is Page 163 of 206 23 MAY 2019 – DAY 97 s h o c k e d a b o u t t h o s e a m o u n t s c o u ld y o u p l e a s e b e s l o w a n d ta k e u s through the contents of 239? M R R O B E R TO G O N S A LV E S : S u r e . S o … CHAIRPERSON : H o p e f u l ly s o m e b o d y e l s e w il l c o m e a n d – a n d s a y t h e r e w a s n o r e a s o n to b e s h o c k e d t h is w a s a l l j u s ti f ie d . M R R O B E R TO G O N S A LV E S : C h a i r w e h a v e r e q u e s t e d t h a t fr o m T F R . C H A I R P E R S O N : Ye s . M R R O B E R TO G O N S A LV E S : Tr a n s n e t a lr e a d y a n d fr o m C N R . C H A I R P E R S O N : Ye s . 10 M R R O B E R TO G O N S A LV E S : A n d n o o n e h a s g iv e n u s a s a t is f a c t o r y a n s w e r. C H A I R P E R S O N : Ye s . T h a n k y o u . 2 2 9 y o u s a i d Mr M o k o e n a ? ADV PHILLIP MOKOENA SC : 239. CHAIRPERSON : 239. A D V P H I L L I P M O K O E N A S C : 2 3 9 y e s C h a ir. C H A I R P E R S O N : O k a y. M R R O B E R TO G O N S A LV E S : S o C h a ir t h is is t h e a g r e e m e n t th a t w a s e v e n t u a l ly s i g n e d b e tw e e n C N R S o u t h A fr i c a a n d T F R i n r e s p e c t o f t h e r e l o c a ti o n a ll o w a n c e a n d y o u w il l s e e t h a t it w a s s i g n e d b y J e ff o n p a g e 20 2 4 9 , b y J e ff Wa n g o n b e h a l f o f C N R a n d b y A n o j S in g h o n b e h a l f o f Tr a n s n e t. T h e v e r s i o n t h a t w e h a v e i n t h is fi l e is o n ly b e in g s a y – s ig n e d b y J e ff Wa n g w e d o n o t h a v e t h e v e r s io n t h a t w a s s i g n e d b y A n o j S i n g h a s w e ll . A D V P H I L L I P M O K O E N A S C : B u t c a n y o u c o n fi r m t h a t y o u a r e a w a r e o f th e s i g n e d v e r s i o n w h ic h w a s s ig n e d o n b e h a l f o f Tr a n s n e t b y A n o j Page 164 of 206 23 MAY 2019 – DAY 97 S i n g h a n d o n b e h a l f o f t h e c o n s o r t iu m b y M r J e ff Wa n g ? M R R O B E R TO G O N S A LV E S : C o r r e c t C h a ir y o u w il l s e e la t e r o n t h a t S iy a b o n g a G a m a c o n fir m s th a t th is is a c c e p te d . A D V P H I L L I P M O K O E N A S C : Ye s . M R R O B E R TO G O N S A LV E S : S o C h a ir g o i n g b a c k to p a g e 2 3 9 i f I m a y ? Yo u w il l s e e in t h e f ir s t – a t t h e b o t t o m o f th e fir s t p a r a g r a p h th e c o s t h a s n o w b a l l o o n e d fr o m t h is 9 . 7 t o t h e R 2 8 7 m i ll io n t o n o w R 7 1 9 m il li o n a n d … C H A I R P E R S O N : I t i s o k a y l e t m e – th a t is 2 3 9 ? 10 A D V P H I L L I P M O K O E N A S C : I t i s u n d e r t h e h e a d in g ‘ S u m m a r y ’ C h a ir ? C H A I R P E R S O N : E x e c u tiv e S u m m a r y ? A D V P H I L L I P M O K O E N A S C : E x e c u tiv e S u m m a r y. C H A I R P E R S O N : Ye s o k a y. ADV PHILLIP MOKOENA SC: Maybe if we – what we can do Mr G o n s a lv e s if y o u c a n r e a d i t ? M R R O B E R TO G O N S A LV E S : S u r e . ADV PHILLIP MOKOENA SC : A n d t h e n t h e r e a f te r y o u c a n c o m m e n t a b o u t i t s o t h a t a t l e a s t w e a r e a b l e to f o l l o w y o u r e v i d e n c e . CHAIRPERSON : Ja. 20 M R R O B E R TO G O N S A LV E S : S o C h a i r I w il l r e a d th e fir s t t w o p a r a g r a p h s u n d e r t h e E x e c u tiv e S u m m a r y. “ We have been requested to a n a ly s e the cost in c r e a s e f o r t h e l o c o m o ti v e d e l iv e r y a n d lo c o m o t iv e f a c to r y r e lo c a t io n i n t e r m s o f m a n u f a c t u r in g f a c il it y r e l o c a ti o n f o r C la s s 4 5 D lo c o m o t iv e s u p p ly p r o j e c t . Page 165 of 206 23 MAY 2019 – DAY 97 T h e d e c is i o n to r e l o c a te fr o m Pr e t o r i a , G a u t e n g t o D u r b a n K w a Zu lu N a ta l w il l c o s t a n e s t i m a te d R 7 1 9 m il li o n b u t th e p r e c i s e a m o u n t is R 7 1 9 0 9 0 5 4 8 . 0 0 . O f t h is a m o u n t w e a r e h a p p y t o o ff e r s e t tl e m e n t d is c o u n t of 10% a m o u n t in g to R71 909 054.00 t h e r e f o r e t h e r e d u c e d a m o u n t d u e to C N R a f t e r d e d u c ti n g t h e s e t t le m e n t d is c o u n t a m o u n ts to R 6 4 7 m il li o n – R647 m ill i o n th e exact amount R 6 4 7 1 8 1 4 9 4 .0 0 .” 10 ADV PHILLIP MOKOENA SC : Ye s . And yo ur comment on these paragraphs bearing in mind the 9.7? M R R O B E R TO G O N S A LV E S : So ja so Counsel you are quite correct. C h a ir th e a m o u n t w e n t fr o m 9 . 7 to a n e m a il t h a t w e g o t s u p p o r t in g R 2 8 7 m i ll io n w h i c h s e e m s to t i e in w i th t h e i n i t ia l d r a f t B E X c o n tr a c t w h e r e t h e r e is a b e n c h m a r k o f R 2 8 0 m il li o n a n d t h e n th is b a l l o o n e d to R 7 1 9 m i ll io n b u t C N R w a s s o g r a c i o u s a s to g iv e a 1 0 % d is c o u n t t o T F R s o t h a t t h e a m o u n t r e d u c e d t o R 6 4 7 m ill i o n . ADV PHILLIP MOKOENA SC : amount. 20 Th e y w e r e i n d e e d g r a c io u s w it h th a t I f y o u m a y r e f e r b a c k to p a g e 7 o f y o u r s ta t e m e n t a n d s u m m a r i s e t h e c o n t e n ts o f p a r a g r a p h 2 7 M r G o n s a lv e s . M R R O B E R TO G O N S A LV E S : J a I t h i n k w h a t w e m e n t io n i n g h e r e i s t h a t t h e – a s a l lu d e d t o e a r l ie r o n i s t h a t t h e b e n c h m a r k i n t h e fir s t d r a f t B E X c o n tr a c t a ll u d e d to a n a m o u n t o f – r e f e r r e d to a n a m o u n t o f R 2 8 0 m i ll io n a n d i n t h e s i g n e d c o n tr a c t w it h B E X I a m u s i n g t h e te r m B E X l o o s e ly b e c a u s e t h e r e w e r e t w o d i ff e r e n t c o m p a n i e s w i th t w o Page 166 of 206 23 MAY 2019 – DAY 97 d i ff e r e n t r e g is tr a ti o n n u m b e r s b u t th a t a m o u n t – t h a t b e n c h m a r k th e n in c r e a s e d t o R 5 8 0 m il li o n . ADV PHILLIP MOKOENA SC: Ye s . And you may proceed with your evidence. CHAIRPERSON : O k a y. O k a y s o I a m s o r r y. Where is the R580 m il li o n ? M R R O B E R TO G O N S A LV E S : S o … C H A I R P E R S O N : T h a t fi g u r e ? M R R O B E R TO G O N S A LV E S : I f y o u g o t o A n n e x u r e 8 I t h in k i t is C h a ir 10 y o u w il l s e e u n d e r th e f e e s e c t io n i t s h o u l d b e C l a u s e 6 . A D V P H I L L I P M O K O E N A S C : P a g e 2 1 6 C h a ir. M R R O B E R TO G O N S A LV E S : 2 2 2 . C H A I R P E R S O N : Ye s t h a n k y o u a n d t h e n g o t o – d o I g o t o 2 1 7 ? A D V P H I L L I P M O K O E N A S C : Tr ip l e 2 , 2 2 2 . M R R O B E R TO G O N S A LV E S : I t h i n k 2 2 2 i s t h e b e s t p a g e . A D V P H I L L I P M O K O E N A S C : Ye s . M R R O B E R TO G O N S A LV E S : J a 2 2 2 . CHAIRPERSON : Oh where we were just now? M R R O B E R TO G O N S A LV E S : C o r r e c t . 20 A D V P H I L L I P M O K O E N A S C : Ye s . CHAIRPERSON : Okay I see it here. Thank you. M R R O B E R TO G O N S A LV E S : S u r e C h a ir. C H A I R P E R S O N : B u t a s w e t a lk a b o u t t h e s e f ig u r e s I a s k e d y o u e a r li e r o n w h a t j u s ti fi c a t i o n o r w h a t Tr a n s n e t s a i d w h e n y o u p u t y o u r s u g g e s t io n o r p r e f e r e n c e t o t h e m t h a t th e m a n u f a c t u r in g s h o u l d h a p p e n Page 167 of 206 23 MAY 2019 – DAY 97 in G a u t e n g . Yo u s a i d th e y s a id s o m e t h i n g l ik e t h e y w a n t e d t o s p e e d – a s y o u u n d e r s to o d t h e ir a r g u m e n t w h y d id th a t – w h y w a s th a t necessary? M R R O B E R TO G O N S A LV E S : C h a ir I th i n k i t i s p o s s i b ly a c a p a c i ty is s u e . T h e r e is o n ly s o m a n y l o c o m o t iv e s t h a t c a n b e m a n u f a c t u r e d . S o i f y o u h a v e g o t t w o f a c i li t ie s I k n o w t h a t t h e y w a n t e d t o e x p e d i te th e p r o d u c t io n o f t h e l o c o m o ti v e s . S o i f y o u c o u l d o n ly m a k e f o r e x a m p l e 1 2 l o c o m o ti v e s i n a m o n t h i n o n e f a c il i ty s a y i n K o e d o e s p o o r t i f y o u split 10 it b e tw e e n Koedoespoort in Bayhead you could make 24 lo c o m o t iv e s in a m o n t h . S o i t w o u l d b e e x p e d i te d t h a t w a s o n e r e a s o n I k n o w t h a t t h e y m e n t io n e d . T h e o th e r r e a s o n th a t w a s m e n t io n e d w a s ju s t a tr a n s f e r o f s k il ls . H a v i n g s k i ll s i n b o th K o e d o e s p o o r t a n d B a y h e a d t o m a n u f a c t u r e l o c o m o ti v e s s o y o u w o u l d h a v e t h e s k il ls i n t w o d i ff e r e n t lo c a t io n s . C H A I R P E R S O N : B u t i f o n e l o o k e d a t t h e c o s ts a n d le t u s l e a v e i t a t – a t y o u r fi g u r e o f 9 , s o m e t h in g m il li o n . A D V P H I L L I P M O K O E N A S C : Ye s . C H A I R P E R S O N : D i d it s e e m – d i d th is s e e m t o j u s t i f y a ll t h o s e c o s ts t o y o u , a ll o f t h a t? 20 M R R O B E R TO G O N S A LV E S : C h a ir o b v i o u s l y w e w e r e n o t i n v o lv e d i n Tr a n s n e t’s d e c is i o n m a k in g . C H A I R P E R S O N : Ye s . M R R O B E R TO G O N S A LV E S : I d o u n d e r s t a n d t h a t th e r e m a y b e a n a r g u m e n t w h y h e w o u l d w a n t t o s p li t it a n d d i v e r s if y a r is k fr o m a g e o g r a p h ic p e r s p e c t iv e . Page 168 of 206 23 MAY 2019 – DAY 97 CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : S k i lls t r a n s f e r n o t h a v in g a l l y o u r r is k i n o n e fa c i li ty if s o m e t h in g h a d to g o w r o n g a t K o e d o e s p o o r t . CHAIRPERSON : Hm. MR R O B E R TO G O N S A LV E S : At least you c o u ld c o n ti n u e m a n u f a c t u r in g i n B a y h e a d e tc e te r a . S o I u n d e r s t a n d th a t . I w a s n o t – w e w e r e n o t i n v o lv e d i n th a t . CHAIRPERSON : Ja. M R R O B E R TO G O N S A LV E S : It w a s j u s t g iv e n t o u s . 10 CHAIRPERSON : J a i t w o u l d j u s t d e p e n d o n t h e fi n e r d e t a i ls I w o u ld i m a g i n e – f in e r d e t a il s o f a r o u n d t h a t d e c i s io n . I g u e s s a lw a y s s u b j e c t t o h o w m u c h i t is g o i n g t o c o s t t o d o t h a t . M R R O B E R TO G O N S A LV E S : C h a i r i f … C H A I R P E R S O N : P r o b a b ly i f y o u – i f y o u a r e a s t a t e e n ti ty i t is n o t l ik e y o u j u s t u s in g y o u r o w n m o n e y. B u t a s y o u s a y th e r e m a y b e – t h e r e m a y b e v a l u e w h ic h – o n w h i c h o n e c a n n o t p u t r a n d s a n d c e n ts o r r a n d v a l u e i f y o u ta lk a b o u t e x p a n s io n o f s k i ll s a n d s o o n . B u t o f c o u r s e a s I s a y s u b j e c t w h a t th e c o s ts w i ll b e . O b v i o u s ly a l s o o n e w o u l d l o o k a t lo n g t e r m b e n e f it s o f th a t – o f s p l i tt i n g y o u k n o w. O k a y a lr ig h t . 20 M R R O B E R TO G O N S A LV E S : C o r r e c t C h a i r. A D V P H I L L I P M O K O E N A S C : B u t c o u l d t h e r e h a v e b e e n a ju s ti fi c a t io n f o r t h e a m o u n t o f 9 .7 t o b e c o m e 2 8 0 a n d u lt i m a t e ly 6 4 7 ? M R R O B E R TO G O N S A LV E S : Mr C h a ir … ADV PHILLIP MOKOENA SC: W h a te v e r th e r e a s o n t h a t m i g h t b e p r o ffe r e d ? Page 169 of 206 23 MAY 2019 – DAY 97 M R R O B E R TO G O N S A LV E S : C h a ir a b s o lu t e ly n o t . S o t h e d e c is i o n w a s m a d e th a t C N R S o u t h A fr ic a h a d t o m a n u f a c t u r e a n d a s s e m b l e i n Bayhead. It was done. W e i n c r e a s e d t h e p r ic e th a t w e b i d o n t h e lo c o m o t iv e s b y R 9 . 7 m il li o n t a k i n g in t o a c c o u n t t h e a d d i ti o n a l c o s t a n d s o m e o f t h e s a v i n g s a n d w e w e r e – i t w a s p a i d f o r i n b u il t - in i n a f ix e d p r i c e c o n t r a c t . E v e n i f t h e a m o u n t w a s R 2 8 7 m ill i o n h a d b a l lo o n e d t o R 2 8 7 m i ll io n f r o m R 9 m i ll io n w h i c h I t h i n k s o u n d s a b s u r d b y a n y s tr e t c h o f i m a g i n e w e h a d n o b a s is f o r a c l a i m i n m y m i n d a n d u n ti l s o m e o n e c o u l d j u s t i fy t h a t a n d s h o w u s w e – y o u k n o w w e j u s t c o u l d n o t a c c e p t 10 it . ADV PHILLIP MOKOENA SC : I m e a n s u r e l y a s a s h a r e h o l d e r w o u ld h a v e lo v e d t h a t t h i s m o n e y m u s t b e p a i d t o y o u r c o m p a n y to t h e c o n s o r ti u m to b e n e f i t t h e c o n s o r t i u m b u t i n y o u r c l e a r c o n s c i e n c e y o u s a y t h a t t h e r e c o u l d n o t h a v e b e e n j u s t if ic a ti o n f o r th e c o m p a n y t o r e c e i v e s u c h a m o u n t fr o m Tr a n s n e t . M R R O B E R TO G O N S A LV E S : N o C h a ir i t i s I m e a n – it m a y s o u n d a b s u r d f o r a s h a r e h o l d e r to t u r n a r o u n d a n d s a y w e d o n o t w a n t t h e R 6 4 7 m i ll io n t h a t w e h a v e p a id w e d o n o t b e l ie v e w e a r e e n t it l e d to i t b u t t h a t i s p r e c is e l y w h a t w e d i d . 20 C H A I R P E R S O N : Ye s b u t i t is – i t i s w h a t m a k e s y o u t o r e j e c t i t is t h e f a c t t h a t i t i s i m p r o p e r. I f y o u t h o u g h t i t w a s p r o p e r b y a ll m e a n s y o u w o u ld w e l c o m e i t I h a v e n o d o u b t . B u t th e p r o b l e m w a s t h a t y o u t o o k t h e v i e w t h a t t h is w a s i m p r o p e r. M R R O B E R TO G O N S A LV E S : C h a i r I t h i n k y o u h it t h e n a i l o n th e h e a d . CHAIRPERSON : Hm. Page 170 of 206 23 MAY 2019 – DAY 97 M R R O B E R TO G O N S A LV E S : So if it was a proper claim and it had ju s t i fic a ti o n f o r i t w e w o u l d h a v e b e e n h a p p y. C H A I R P E R S O N : Ye s . M R R O B E R TO G O N S A LV E S : A n d th e o n l y w a y w e c o u l d f i n d o u t w a s t o a p p r o a c h Tr a n s n e t a n d s a y th is i s w h a t w e h a v e b e e n p a id R 6 4 7 m il li o n . If w e a r e e n t i tl e d t o it f a n t a s ti c . W e s ti ll g o t a p r o b le m w i th t h e B E X is s u e b u t t h a t is a n o t h e r i s s u e . B u t a r e w e e n t i tl e d to t h e R 6 4 7 m il li o n , c a n y o u h e l p u s i n t h a t r e s p e c t ? ADV PHILLIP MOKOENA SC : 10 Ye s . M ay I refer you back to your w i t n e s s s t a te m e n t w i t h p a r ti c u la r r e f e r e n c e t o p a g e 8 a n d p l e a s e i f y o u m a y c o m m e n t fr o m p a r a g r a p h 2 8 a n d s h a r e w i t h u s w h a t y o u a r e c o n v e y in g i n th a t p a r a g r a p h a n d a ls o p a r a g r a p h 2 9 ? M R R O B E R TO G O N S A LV E S : S u r e . So perhaps Chair I can just read t h is b e c a u s e I th i n k i t i s q u i t e i m p o r t a n t . A D V P H I L L I P M O K O E N A S C : Ye s . M R R O B E R TO G O N S A LV E S : “ I t w a s n o t c l e a r t o u s a s th e m in o r i ty n o n - e x e c u t iv e C R R C d ir e c t o r s w h y h a v in g n e g o ti a te d th e t e r m … ” C H A I R P E R S O N : O k a y, o k a y is i t p a g e 7 ? 20 ADV PHILLIP MOKOENA SC : Page 8. CHAIRPERSON: Page 8. ADV PHILLIP MOKOENA SC : Paragraph 28. C H A I R P E R S O N : Ye s o k a y th a n k y o u . M R R O B E R TO G O N S A LV E S : S u r e s o C h a ir I w i ll s t a r t a g a i n . “ I t w a s n o t c l e a r t o u s a s th e m in o r i ty n o n - e x e c u t iv e Page 171 of 206 23 MAY 2019 – DAY 97 C R R C d ir e c to r s w h y h a v i n g n e g o t i a t e d t h e t e r m s o f an agreement w i th Tr a n s n e t as extensive and c o m p le x a s a l o c o m o ti v e s u p p ly a g r e e m e n t a n d d e s p i te h a v i n g a c c e s s to c o n s i d e r a b le r a i l r o ll in g e x p e r i e n c e w i th t h e s h a r e h o ld e r b a s e C N R S o u t h A fr ic a n e v e r th e l e s s fe l t i t n e c e s s a r y to a p p o i n t a n in t e r m e d i a r y s u c h a s B E X w h ic h a p p e a r s t o h a v e b e e n a n e w ly f o r m e d c o m p a n y w i t h n o tr a d in g h is t o r y and 10 l it t le or manufacture, no background maintenance or in a s s e m b ly, o p e r a ti o n of lo c o m o t iv e s o r a n y o th e r e x p e r ie n c e i n t h e r a i l in d u s tr y to agreement n e g o t ia t e [ w h ic h we a second d ir e c t ly s u b s e q u e n tly rel ated n o te d was r e fe r r e d t o a v a r ia t io n o r d e r w i th Tr a n s n e t a n d f u r th e r m o r e t o d o s o o n s u c h s i g n i fic a n tl y g e n e r o u s terms to BEX.” ADV PHILLIP MOKOENA SC : W h i l e y o u a r e t h e r e m a y b e le t u s c o m p le t e t h a t t h o u g h t b y r e f e r r in g y o u t o R G 1 4 o n p a g e 2 6 1 a n d if y o u c a n i d e n ti f y t h e d o c u m e n t a n d a l s o s u m m a r is e th e c o n t e n ts o f t h a t 20 d o c u m e n t a n d p l e a s e p r o ff e r y o u r c o m m e n t o n i t ? M R R O B E R TO G O N S A LV E S : Sure. S o C h a ir t h i s is a d o c u m e n t s ig n e d o n t h e 2 3 J u ly 2 0 1 5 b y th e a c t i n g G r o u p E x e c u ti v e S iy a b o n g a G a m a o f Tr a n s n e t a n d i t is a d d r e s s e d t o J e ff Wa n g o f C N R a n d i n s u m m a r y w h a t t h e l e t t e r s a y s is th a t i t s e r v e s t o c o n f ir m th e a c c e p ta n c e o f t h e v a r i a ti o n o r d e r o f t h e a m o u n t o f R 6 4 7 m i ll io n o f Page 172 of 206 23 MAY 2019 – DAY 97 w h ic h th e p r o p o s e d p a y m e n t t e r m s w a s 5 0 % p a y a b le w i t h i n fo u r t e e n d a y s w h i c h i s R 3 2 3 m il li o n a n d I a m r o u n d i n g th e n u m b e r s a n d 5 0 % p a y a b le in 2 4 e q u a l i n s ta l m e n ts o f R 1 3 . 4 m il li o n . a d d o n my p a r a g r a p h 2 8 ? C h a ir i f I m a y j u s t W h a t w e – w h a t I w a s r e f e r r i n g to t h e r e is t h a t t h e l o c o m o tiv e s u p p l y a g r e e m e n t is a d o c u m e n t o f o v e r 5 0 0 p a g e s a n d i t t o o k w e e k s o n e n d to n e g o t i a t e . A s i m il a r d o c u m e n t w a s n e g o ti a te d w i th Tr a n s n e t E n g in e e r i n g a ls o o v e r 5 0 0 p a g e s . T h i s w a s d o n e w i t h i n t h e c o n s o r t iu m w e h a d l o ts o f e x p e r i e n c e e s p e c i a ll y a m o n g s t t h e B E p a r tn e r s . 10 W e h a d A z o n R a il t h e r e . We had a guy c a l l e d J u l i u s N o b a n d a fr o m N a n e t t a , L i n o n ta n d o . W e h a d G lo b a l R a il w i t h t o n s o f r a il e x p e r ie n c e . W o m e n i n R a i l. Yo u h a d K a d ie s As a lv e s . W e h a d n e g o t i a t e d a l l th e s e a g r e e m e n ts . W e n o w h a d a p o s s ib le c l a i m fr o m Tr a n s n e t r e l a t e d t o th e s e a g r e e m e n ts w h y d i d t h e y n o t e n g a g e w i t h u s , w h y d i d t h e y n o t i n f o r m u s , w h y d i d t h e y n o t le t u s d o t h e c a l c u l a ti o n s i f t h e r e w a s a c a l c u l a t i o n ? W h y w o u l d t h e y a p p o i n t a c o m p a n y B E X t h a t h a s g o t n o tr a d in g h is t o r y th a t h a s n e v e r tr a d e d a n d p a y t h e m u lt i m a t e ly a n a m o u n t o f R 6 7 m i lli o n b u t a t o n e s ta g e c o u l d h a v e p o s s ib ly b e e n a n a m o u n t o f R 3 7 0 m il l io n . C H A I R P E R S O N : W e l l y o u h a v e ju s t s a i d i n e ff e c t t h a t y o u h a d e n o u g h 20 r e l e v a n t e x p e r ti s e a n d e x p e r i e n c e t o d o w h a t e v e r c a l c u la t io n s n e e d e d t o b e d o n e a n d w h y d id t h e y n e e d B E X j a ? D o y o u w a n t t o c o m p a r e th e e x p e r t is e a n d e x p e r i e n c e t h a t y o u r t e a m o r y o u r c o n s o r ti u m h a d c o m p a r e d to B E X ’s a n d I k n o w th a t y o u s a id t h e y w e r e a d o r m a n t c o m p a n y a n d s o o n b u t j u s t t a lk , c o n tr a s t t h e t w o f o r m e ? M R R O B E R TO G O N S A LV E S : J a s o I t h i n k C h a ir w h a t w e a r e s a y i n g i s Page 173 of 206 23 MAY 2019 – DAY 97 B E X i s a d o r m a n t c o m p a n y. T h e y a b s o lu t e l y h a v e n o e x p e r i e n c e i n t h i s . T h e y d o n o t k n o w a n y th i n g a b o u t t h e lo c a l s u p p ly a g r e e m e n t . They w e r e n o t i n v o lv e d i n a n y o f t h e n e g o ti a ti o n s o n t h e r e l o c a ti o n t o B a y h e a d e tc e te r a . W i t h i n o u r c o n s o r t i u m t h e r e a s o n w h y C N R s e l e c te d u s a s a c o n s o r t i u m w a s b e c a u s e o f t h e e x t e n s iv e e x p e r ie n c e th a t m a n y o f t h e p a r tn e r s i n t h e c o n s o r t iu m h a d i n t h e r a il i n d u s tr y. Why would t h e y n o t t u r n t o u s a n d s a y w e t h i n k w e h a v e g o t a p o s s i b le c l a i m f r o m B a y h e a d f o r w h a te v e r r e a s o n f r o m Tr a n s n e t f o r th e r e lo c a t io n t o B a y h e a d w e d o n o t b e li e v e th a t w e d o b u t le t u s a s s u m e t h a t t h e r e w a s 10 a b a s i s f o r i t c a n y o u a s s i s t u s i n p u t t in g t o g e th e r s o m e c a lc u l a t io n o r formulate a claim for us? Instead they turned around to a company c a l l e d B E X t h a t is a s w e k n o w a d o r m a n t c o m p a n y t e n d a y s e a r li e r th e y a p p o i n t e d t h e d ir e c t o r, n o tr a d i n g h is t o r y e tc e t e r a . T h a t j u s t d o e s n o t m a k e c o m m e r c ia l s e n s e w h a t s o e v e r. C H A I R P E R S O N : H o w m a n y d i r e c t o r s d i d t h is c o m p a n y h a v e w i t h w h o m t h e y c o n c l u d e d t h is c o n tr a c t B E X ? M R R O B E R TO G O N S A LV E S : S o C h a ir i f I c a n ta k e y o u I t h i n k i t i s Annexure 12 or 13. CHAIRPERSON : Hm. And I 20 M R R O B E R TO G O N S A LV E S : A n n e x u r e 1 0 . CHAIRPERSON : About 10? M R R O B E R TO G O N S A LV E S : A n n e x u r e 1 0 n o , n o s o r r y. CHAIRPERSON : Oh Annexure 10. M R R O B E R TO G O N S A LV E S : J a y o u w i ll s e e … ADV PHILLIP MOKOENA SC : Page 231. Page 174 of 206 23 MAY 2019 – DAY 97 M R R O B E R TO G O N S A LV E S : 2 3 1 y e s . CHAIRPERSON : Thank you. M R R O B E R TO G O N S A LV E S : O n e d i r e c to r M a r k S h a w a p p o i n t e d o n t h e 1 5 A p r il 2 0 1 5 . T h e B E X a g r e e m e n t w a s s ig n e d o n t h e 2 5 A p r i l 2 0 1 5 . S o o n e d ir e c t o r s e e mi n g l y. CHAIRPERSON : Hm. Ja. A D V P H I L L I P M O K O E N A S C : H e m ig h t h a v e b e e n e x p e r ie n c e d C h a ir ? CHAIRPERSON : He? A D V P H I L L I P M O K O E N A S C : H e m ig h t h a v e b e e n e x p e r ie n c e d ? 10 C H A I R P E R S O N : H e m ig h t h a v e h a d e x p e r ie n c e y e s , y e s . A D V P H I L L I P M O K O E N A S C : Ye s . CHAIRPERSON : A n d a v e r y r e le v a n t e x p e r t is e . W e ll m a y b e th e w i t n e s s m u s t t e l l u s w h e t h e r t h e y d i d a n y c h e c k o n w h a t t h a t d ir e c t o r ’s p r o f e s s i o n a l a n d p r a c ti c a l e x p e r i e n c e w a s ? W h a t e x p e r ie n c e o r q u a li fi c a t io n s h e h a d t h a t m a y b e – m a y h a v e b e e n r e l e v a n t t o th is k in d o f p r o j e c t ? A r e y o u a b l e t o s h e d li g h t o n t h a t ? M R R O B E R TO G O N S A LV E S : N o C h a ir. T h e o n ly li g h t I c a n s h e d o n h e r e is o n th e – in t h e fir s t a g r e e m e n t p u t in fr o n t o f u s t h e A n n e x u r e 5 a g r e e m e n t I a m g o i n g t o c a l l i t w h i c h is t h e B E X s tr u c t u r e d p r o d u c ts 20 t h a t 2 0 0 0 c o m p a n y I b e li e v e t h a t s u c h a c o m p a n y d o e s e x is t a n d e ffe c t iv e l y if I m a y u s e t h e te r m t h e y h ij a c k e d t h e c r e d e n ti a ls o f t h i s c o m p a n y a n d p u t a d o c u m e n t in fr o n t o f u s th a t p u r p o r te d to s h o w th a t B E X h a d e x p e r ie n c e in s i m i la r a c t iv it i e s . T h e r e a li t y is t h a t w h e n w e a s k e d f o r th e d o c u m e n ts a n d t h e y b r o u g h t u s th e d o c u m e n ts b y t h a t ti m e t h e a g r e e m e n ts h a d a lr e a d y b e e n s ig n e d a n d s o t h e r e w a s a l m o s t Page 175 of 206 23 MAY 2019 – DAY 97 we could do. When they showed us the Sipsey document and the BE C e r t i fi c a t e d o c u m e n t i t d i d n o t t a k e – i t t o o k a f e w s e c o n d s t o r e a li s e t h a t th is w a s a s h a m c o m p a n y a n d s a i d s o r i g h t in fr o n t o f th e m . G e n t l e m e n d o y o u r e a l is e t h a t t h e r e i s o n e d i r e c to r t h a t is ju s t r e c e n t ly b e e n a p p o i n t e d a n d t h is c o m p a n y h a s n e v e r tr a d e d . I t h a s g o t a t u r n o v e r le s s th a n R 5 m il li o n . O b v io u s ly t h e y c o u ld n o t r e s p o n d in a n y m e a n i n g f u l w a y to t h a t . CHAIRPERSON : But was your understanding that they were shocked b y t h i s th e y j u s t h a d n o t d o n e t h e ir h o m e w o r k b e fo r e d e c id i n g t h a t th e y 10 w o u ld h a v e t h is a r r a n g e m e n t w i th t h i s c o m p a n y, c o n t r a c t w i th t h is company? O r w a s y o u u n d e r s t a n d in g t h a t th e y k n e w a n d t h e y m a y h a v e h a d o t h e r r e a s o n s t o c o n t in u e a n d c o n c l u d e th e c o n tr a c t w i th them? M R R O B E R TO G O N S A LV E S : S o C h a ir c e r ta i n ly w h e n t h e y p r e s e n te d u s a t th e b o a r d m e e t in g w i t h t h e s e d o c u m e n ts a n d w e c o u n t e d i m m e d i a t e ly w h e n w e s a w th a t i t w a s a ff e c t iv e ly a d o r m a n t c o m p a n y, a s h a m c o m p a n y t h e y – t h e y n e v e r d e f e n d e d i t i n a n y w a y. Th e y n e v e r e x p r e s s e d a n y s h o c k i n a n y w a y. I k i n d o f s e n s e d t h a t t h e y w e r e a w a r e w h a t th e y w e r e d e a li n g w i th o r w h o th e y w e r e d e a li n g w i th . 20 CHAIRPERSON : Ye s th a n k y o u . I f t h e y w e r e a w a r e th a t m ig h t m e a n t h a t th e y m a y h a v e b e e n u p t o s o m e th in g t h a t w a s n o t p r o p e r. A r e y o u a b l e t o in d i c a t e w h a t y o u t h i n k ? Why would they – why would they w a n t t o l e t a c o m p a n y w it h n o e x p e r i e n c e , w i t h r e a lly t h a t h a d b e e n d o r m a n t a n d w i t h o n e d i r e c t o r t h a t h a d o p e r a t e d o n t h e b a s is o f a t u r n o v e r o f l e s s th a n R 4 m i lli o n w a n t i t t o h a n d le h u n d r e d s o f m il li o n s Page 176 of 206 23 MAY 2019 – DAY 97 o r r a n d s ? W h y w o u l d th a t b e b e n e fic i a l to t h e m ? M R R O B E R TO G O N S A LV E S : S o C h a ir t h e b e n e f it t o t h e m w a s th a t B E X a c ti n g a s a n a g e n t w a s a b l e t o p r o c u r e R 6 4 7 m i ll io n fr o m Tr a n s n e t w h ic h th e y c l a i m t h a t t h e y c o u l d n o t a n d f o r B E X t o b e a b l e to f a c ili t a t e t h a t B E X g o t p a i d a n a m o u n t o f R 6 7 m i ll i o n . S o r e m e m b e r th a t w h a t t h e ir c l a i m w a s a t o n e s t a g e R 2 8 0 m ill i o n . L e t u s j u s t – l e t u s a s s u m e t h a t i t is a c o r r e c t c a l c u l a t i o n d o n e b y t h e c o m p a n y th e y u l ti m a t e l y r e c e i v e R 6 4 7 m i ll io n t h r o u g h th e a s s is t a n c e o f B E X a n d f o r t h a t B E X w a s p a i d R 6 7 m il li o n . 10 CHAIRPERSON : But how could a com pany with no experience or e x p e r t is e i n th is s e c t o r t h a t y o u w e r e i n v o l v e d in b e a b l e t o g e t I d o n o t h o w m a n y in d i s ti n c t ] I m e a n h u n d r e d s a n d h u n d r e d s o f m il li o n s o r r a n d s a b o v e w h a t a c o n s o r t iu m w i th a l o t o f r e le v a n t e x p e r tis e a n d e x p e r i e n c e c o u l d g e t , h o w c o u ld t h a t b e p o s s i b l e ? M R R O B E R TO G O N S A LV E S : C h a ir t h a t i s th e m i ll i o n d o ll a r q u e s ti o n . T h a t is p r e c is e ly th e s a m e q u e s t io n w e a s k e d . C H A I R P E R S O N : I m e a n i f – i f w e t a l k i n g a b o u t f o r e x a m p le a c c o u n t i n g a n d a u d i t i n g b u s i n e s s a n d – a n d o n e b u s in e s s w a n ts to b u y a n o th e r o n e o r s o m e a r r a n g e m e n t , I w o u ld n o t h a v e m u c h e x p e r i e n c e a n d i f y o u 20 – if y o u to o k – y o u a C h a r t e r e d A c c o u n t a n t y o u w o u l d d o fa r b e t t e r t h a n I c o u ld e v e r d r e a m t o d o t o n e g o t ia t e a n y t h i n g b e c a u s e y o u h a v e a n a p p r e c ia t io n o f v a r io u s f e a t u r e s o f th e b u s i n e s s a n d c e r t a i n n u a n c e s and understandings. So how could come in with no experience, no k n o w l e d g e , n o e x p o s u r e to t h e s e c t o r a n d b e a b l e t o d o th a t b e t t e r t h a n you? Page 177 of 206 23 MAY 2019 – DAY 97 M R R O B E R TO G O N S A LV E S : C h a i r w e c o u l d n o t a g r e e m o r e w i th y o u . CHAIRPERSON : Hm - but you say you – you never checked whether t h e s in g l e D ir e c t o r w h a t h is o r – w a s i t a h e o r s h e ? W h a t h i s o r h e r p r o f e s s i o n a l b a c k g r o u n d is . W a s i t a C h a r t e r e d A c c o u n ta n t l ik e y o u o r w a s i t s o m e b o d y w it h M a tr ic o n ly ? Wa s i t s o m e b o d y w i th i n a n y t h i n g t h a t o n e c a n r e ly o n m a y b e t o – t o e x p l a i n t h i s p h e n o m e n a l s u c c e s s in t h e n e g o ti a ti o n s ? M R R O B E R TO G O N S A LV E S : No. C h a ir w e – w e d e m a n d e d a f e w ti m e s … 10 CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : T h a t w e m e e t w i th B E X . CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : T h a t w a s n e v e r f o r th c o m i n g … CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : Fo r o b v io u s r e a s o n s . CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : W e a s k e d t h e q u e s ti o n o f th e m h a v e y o u e v e r m e t w i th B E X . T h e y c la i m e d t h a t t h e y h a d m e t w i t h B E X . CHAIRPERSON : Hm. 20 M R R O B E R TO G O N S A LV E S : S o w e d e m a n d e d t h e s a m e t h in g . We w a n t to s e e C V s , c r e d e n ti a ls … CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : Etcetera. None of that ever – we never r e c e i v e d a n y o f th a t . CHAIRPERSON : Hm. Page 178 of 206 23 MAY 2019 – DAY 97 ADV PHILLIP MOKOENA SC: May you please return back to your s t a te m e n t p a g e 8 a n d s u m m a r i s e f o r u s w h a t y o u r s t a te m e n t fr o m p a r a g r a p h 2 9 w h i c h I b e li e v e i t i s q u i t e i m p o r t a n t . M R R O B E R TO G O N S A LV E S : Ja. S o I th in k p a g e 2 9 – p a r a g r a p h 2 9 w e a r e s a y i n g th a t e v e n th o u g h t h e v a r i a ti o n o r d e r is f i n a n c i a ll y b e n e fic i a l . W e t h in k th a t th e L o c o m o ti v e S u p p ly A g r e e m e n t a lr e a d y e n v is a g e s t h a t w e – th e o p e r a ti o n s a r e g o i n g t o b e a t B a y h e a d a n d i t is a fix p r ic e c o n t r a c t a n d a n a m o u n t o f R 9 .7 m i ll io n h a s a lr e a d y b e e n in c l u d e d f o r a l l 2 3 2 lo c o m o t iv e s . S o w e c a n n o t s e e h o w w e a r e e n t i tl e d 10 to any amount. A D V P H I L L I P M O K O E N A S C : Ye s . CHAIRPERSON : M a y b e I s h o u l d ju s t s a y s o m e t h i n g . I s h o u l d n o t b e m is u n d e r s t o o d . I t a l k e d a s w e a r e ta lk in g a b o u t w h a t e x p e r ie n c e t h e B E X D i r e c t o r h a d . I s a id m a y b e it w a s ju s t s o m e b o d y w it h M a tr ic . I d o n o t m e a n t h a t p e o p l e w i th M a tr ic – y o u k n o w - c a n n o t h a v e e x p e r i e n c e a n d e x p e r t is e . S o I j u s t w a n t t o – to – I w a s j u s t c o m p a r i n g f o r e x a m p l e y o u a r e ta lk in g a b o u t in t h e e x a m p l e I g a v e o f fi n a n c i a l C h a r t e r e d A c c o u n ta n ts o r g e t ti n g – y o u k n o w – f o r th a t y o u w o u ld n e e d – I w o u l d i m a g i n e – y o u k n o w - t o b e o n a t le a s t t h e s a m e l e v e l a s t h e 20 p e o p l e i n th a t s e c to r b u t c e r t a in ly th e r e a r e m a n y p e o p l e e v e n w i th o u t M a tr ic w h o a r e v e r y g o o d i n t h e ir j o b s a n d w h o h a v e l o t o f i m p o r t a n t and relevant experience. a n y w a y. S o I d o n o t w a n t t o b e m is u n d e r s t o o d i n I w a s j u s t c o m p a r i n g w i t h a s i t u a ti o n w h e r e y o u n e e d s o m e b o d y w i th c e r t a i n – y o u k n o w – a c a d e m ic q u a li f ic a t i o n s i n t h a t sector but maybe you might be given some body who does not have that Page 179 of 206 23 MAY 2019 – DAY 97 w h e n t h a t i s e s s e n ti a l . S o t h a t is w h a t – s o I t h o u g h t I m u s t ju s t e x p l a i n th a t . M R R O B E R TO G O N S A LV E S : O k a y, C h a ir. CHAIRPERSON : Thank you. M R R O B E R TO G O N S A LV E S : U n d e r s t o o d . ADV PHILLIP MOKOENA SC: Ye s – b u t w h a t e x p e r ti s e w o u l d b e r e q u ir e d f o r o n e to r e a l ly n e g o t i a t e s u c h a tr a n s a c ti o n ? M R R O B E R TO G O N S A LV E S : C h a ir I t h i n k y o u w o u l d – to – to n e g o ti a te th a t o n e w o u l d h a v e – n e e d q u i t e a b i t o f r a il e x p e r i e n c e 10 e s p e c i a l ly e x p e r i e n c e i n t h e m a n u f a c tu r i n g a n d a s s e m b l y o f – a n d u n d e r s t a n d w h a t t h e b a s is o f t h e c la i m c o u l d b e . Does it relate to lo g i s t ic s ? D o e s i t r e l a t e to t r a i n i n g ? D o e s i t r e l a t e to t h e f a c ili t ie s , th e e q u ip m e n t e tc e t e r a ? S o o n e w o u l d h a v e t o b e p r e t ty k n o w le d g e a b l e a b o u t t h e r a il i n d u s tr y a n d m a n u f a c t u r i n g a n d s u p p ly c h a i n – y o u k n o w – p r o c e s s e s t o b e a b l e t o c a l c u l a te a n a m o u n t . ADV PHILLIP MOKOENA SC: Ye s . N o w th e m i n o r i ty s h a r e h o ld e r i s a ls o – d i d h a v e r e g a r d t o t h a t v a r ia t io n o r d e r a n d t h e y m a d e c e r t a i n o b s e r v a t i o n s a s y o u d o fr o m p a g e 9 p a r a g r a p h 3 1 . I f y o u c a n p l e a s e s u m m a r i s e w h a t i s w r i t te n th e r e in . 20 M R R O B E R TO G O N S A LV E S : Ja. C h a ir s o e v e n t h o u g h C N R h a d s ig n e d th e a g r e e m e n t w i t h B E X w e t h o u g h t w e w o u l d le t t h e m k n o w th a t w e t h o u g h t t h i s is o u t s i d e t h e o r d i n a r y c o u r s e o f b u s i n e s s a n d in t e r m s o f t h e M e m o r a n d u m o f In c o r p o r a ti o n it r e q u i r e s 7 0 p e r c e n t o f t h e s h a r e h o l d e r s t o a g r e e o n a tr a n s a c ti o n o n a g r e e m e n t a n d b e c a u s e C N R h o l d s 6 6 p e r c e n t o f th e s h a r e s 3 0 p e r c e n t h e l d b y ( i n d is t in c t ) , 2 Page 180 of 206 23 MAY 2019 – DAY 97 p e r c e n t b y G l o b a l a n d 2 p e r c e n t b y C a d iz th a t i f w e c o u l d e l e v a t e t h i s t o a s h a r e h o l d e r l e v e l w e w o u l d v o te a g a in s t i t … A D V P H I L L I P M O K O E N A S C : Ye s . M R R O B E R TO G O N S A LV E S : A n d t h e ir r e s p o n s e w a s w e h a v e t a k e n le g a l o p in i o n t h a t t h is is i n o r d i n a r y c o u r s e o f b u s i n e s s . A D V P H I L L I P M O K O E N A S C : S o c l e a r ly t h e y d i d n o t w a n t t o h e e d th e a d v ic e t h a t y o u a r e g iv in g t h e m a g a i n s t – y o u k n o w – h a v i n g to a c c e p t t h is a m o u n t fr o m Tr a n s n e t ? M R R O B E R TO G O N S A LV E S : C h a ir t h a t i s c o r r e c t . T h e y k n e w t h a t t h e 10 m i n o r i ty D i r e c t o r s a lr e a d y v o t e d n o a t t h e B o a r d l e v e l a n d i f i t w e n t to a s h a r e h o l d e r m e e t i n g th e y w o u ld v o te i n t h e s a m e w a y. S o t h e y w o u l d o n ly g e t 6 6 p e r c e n t a n d n o t 7 0 p e r c e n t a n d th e r e f o r e t h e y w o u l d n o t g e t t h e s h a r e h o ld e r r e s o l u ti o n s i g n e d . A D V P H I L L I P M O K O E N A S C : Ye s . I n o r d e r to c o n t e x t u a l is e w h a t y o u a r e s a y i n g c a n I r e f e r y o u to R G 1 5 – 1 - 5 C h a ir. I t is o n p a g e 2 6 3 . M a y b e y o u w i ll b e a b l e to e x p la i n m u c h m o r e c le a r ly t o th e C h a ir w h a t y o u a r e tr y in g t o e x p la in to u s n o w b y h a v in g r e g a r d t o th is d o c u m e n t . P l e a s e id e n ti fy t h a t d o c u m e n t fir s t. M R R O B E R TO G O N S A LV E S : 20 So C h a ir t h is is the MOI – the M e m o r a n d u m o f I n c o r p o r a ti o n – f o r C N R R o l li n g S t o c k S o u t h A fr ic a . A D V P H I L L I P M O K O E N A S C : A n d i f I m a y r e f e r y o u to p a g e 2 6 5 w i t h p a r t ic u l a r r e f e r e n c e t o p a r a g r a p h 4 .1 . 3 .2 7 . I f y o u c a n r e a d it a n d g iv e y o u r p e r s p e c t iv e o n th a t c l a u s e . M R R O B E R TO G O N S A LV E S : S o C h a ir t h i s is a c l a u s e o u t o f t h e M O I a n d t h e s e a r e a ll t h e is s u e s - a n d t h e r e a r e 3 0 o f t h e m – t h a t r e q u ir e i f Page 181 of 206 23 MAY 2019 – DAY 97 y o u l ik e t h e m a j o r i ty o f t h e s h a r e h o l d e r s t o a p p r o v e a n d 4 . 1 .3 . 2 7 h a s o n e o f t h e i te m s t h e r e a s : “ T h e c o n c l u s io n o f a n y c o n tr a c t o u ts i d e th e o r d i n a r y c o u r s e o f t h e b u s i n e s s is a n it e m t h a t w o u ld r e q u ir e t h e m a jo r i ty o f y o u r s h a r e h o ld e r s … ” W h i c h is 7 0 p e r c e n t . “ … to a g r e e o n i t. ” A D V P H I L L I P M O K O E N A S C : Ye s a n d s u b s e q u e n t t o t h a t t h e m i n o r i ty s h a r e h o l d e r a ls o d i d w r i te a l e tt e r t o t h e c o m p a n y e x p r e s s i n g t h e ir 10 c o n c e r n s . A m I c o r r e c t? M R R O B E R TO G O N S A LV E S : C h a i r t h a t is q u i t e c o r r e c t. That is in c l u d e d a s A n n e x u r e 1 6 f r o m – o n p a g e 2 6 7 . A D V P H I L L I P M O K O E N A S C : C h a ir it is p a g e 2 6 7 . I f y o u m a y t u r n t o that – that page Mr Gonsalves. F o r t h e i m p o r t a n c e o f t h is le t t e r a n d w h a t i s c o n t a i n e d t h e r e i n C h a ir m a y t h r o u g h y o u r i n d u l g e n c e r e q u e s t t h e w i t n e s s t o r e a d i t a s i t a ls o f in d s i t s e l f l a te r o n w h e n - w h e n t h e w i t n e s s te s ti fi e s a b o u t r e p o r ti n g th e m a t te r to t h e H a w k s . M R R O B E R TO G O N S A LV E S : S o C h a ir th e – t h e l e tt e r is d a t e d 8 J u n e 2 0 1 6 . T h a t i s w h e n th e l a s t p e r s o n s i g n e d it a n d i t is a d d r e s s e d 20 t o t h e B o a r d o f D ir e c to r s o f C N R a n d to t h e m o t h e r c o m p a n y – C R R C . I t i s q u i t e i m p o r t a n t. S o w e a ls o s e n t i t t o C h in a a n d t h e h e a d i n g is “ T h e A p p o i n t m e n t o f B E X E x p a n s i o n S t r u c t u r e d P r o d u c ts ( P t y ) L t d ” . T h e r e a r e 1 9 p o i n t s i n t h e l e t te r. I t h o u g h t if I m a y j u s t h i g h li g h t w h ic h I thought A D V P H I L L I P M O K O E N A S C : Ye s , y o u m a y d o t h a t . Page 182 of 206 23 MAY 2019 – DAY 97 M R R O B E R TO G O N S A LV E S : A r e t h e r e l e v a n t p o i n ts . A D V P H I L L I P M O K O E N A S C : Ye s , y e s . M R R O B E R TO G O N S A LV E S : S o i n p a r a g r a p h 4 o f th a t l e t t e r I r e a d out: “ I t h a s a ls o c o m e t o o u r a tt e n ti o n t h a t d e s p i t e a l l t h e B o a r d D ir e c t o r s n o m i n a te d b y t h e m in o r it y s h a r e h o l d e r s o f C N R S o u th A f r ic a t h e N o n C R R C D ir e c t o r s e x p r e s s in g serious reservations and o ffe r i n g c o n s id e r a b l e o p p o s i ti o n t o th e a p p o i n t m e n t o f B E X . T h e D ir e c t o r s n o m i n a te d b y C R R C …” 10 I n o t h e r w o r d t h e C R R C D ir e c to r s . “ …n e v e r t h e l e s s p r o c e e d e d t o v o t e i n f a v o u r o f s u c h a p p o i n t m e n t. ” We then – if you could turn over the page – Clause 8 or paragraph 8 of t h e le t t e r. “ At t h e B o a r d M e e ti n g o f 1 0 A p r il 2 0 1 5 th e N o n C R R C D i r e c t o r s o b j e c te d s tr o n g l y to t h e c o m p a n y e n t e r in g in t o a n a g r e e m e n t w i t h B E X a n d r e q u e s t e d t h a t th e d e s c e n t b e e x p r e s s ly n o t e d a n d m i n u t e d . ” 20 The next paragraph: “ N o t w it h s t a n d i n g the objections of Non CRRC D ir e c t o r s C N R S o u t h A fr ic a n e v e r t h e l e s s p r o c e e d e d t o s i g n a n a g r e e m e n t w i th B E X a s o p p o s e d t o B E X S tr u c t u r e d P r o d u c t s ( P ty ) L td o n 2 3 A p r i l 2 0 1 5 .” A n d t h e n p a r a g r a p h 1 6 r i g h t a t th e b o t t o m o f p a g e 2 6 8 . Page 183 of 206 23 MAY 2019 – DAY 97 “ Al t h o u g h t h e s e c o n d a g r e e m e n t … ” T h a t is a s e c o n d a g r e e m e n t w i t h Tr a n s n e t. “ …c o n c l u d e d w it h Tr a n s n e t maybe f in a n c i a lly b e n e fic i a l fo r C N R S o u th A f r ic a i t r e m a in s u n c l e a r w h y o r h o w s u c h a g r e e m e n t w a s c o n c l u d e d g iv e n t h a t th e L o c o m o t iv e S u p p l y A g r e e m e n t e n v is a g e s a n d p r o v i d e s f o r C N R S o u th A fr ic a to e s t a b li s h i ts o p e r a ti o n s a t t h e B a y h e a d D e p o t a n d f o r t h e s u p p l y o f lo c o m o t iv e s to t a k e p l a c e B a y h e a d o n a fix e d 10 p r i c e b a s i s .” A n d t h e n p a r a g r a p h 1 7 is – i t i s t h e o n e th a t I r e fe r r e d t o a b o u t s h a r e h o l d e r a p p r o v a l b e i n g r e q u ir e d b e c a u s e w e b e li e v e i t i s o u ts id e the ordinary course of business and then perhaps and most important or very important aspect of this letter paragr aph 19: “ F u r t h e r m o r e w e b e li e v e th a t t h i s m a t t e r t o b e o f s ig n if ic a n t i m p o r t a n c e a n d a s s u c h w e w il l b e s c h e d u li n g a m e e ti n g w i t h Tr a n s n e t t o d i s c u s s t h e m a t t e r.” ADV PHILLIP MOKOENA SC: 20 Ye s . Wa s t h is l e t t e r r e a c t e d t o b y t h e m a jo r i ty s h a r e h o l d e r s ? D i d t h e y r e a c t? D i d t h e y … ? M R R O B E R TO G O N S A LV E S : C h a i r n o t – n o t in a n y m e a n s w h a ts o e v e r a n d th a t is s o r t o f b e i n g t y p ic a l o f t h e ir b e h a v i o u r w h e n e v e r w e r a is e d a n is s u e t h e r e h a s b e e n o n r e s p o n s e . ADV PHILLIP MOKOENA SC: Ye s . N o w d i d y o u p r o c e e d t o h a v e th e m e e ti n g i n s tr u c t io n w i t h th a t le t t e r w i t h Tr a n s n e t in o r d e r t o r a is e t h e Page 184 of 206 23 MAY 2019 – DAY 97 s a m e is s u e s ? M R R O B E R TO G O N S A LV E S : A b s o l u t e ly C h a ir. S o o n 1 6 A u g u s t 2 0 1 6 R o w le n v o n G e r ic k e … A D V P H I L L I P M O K O E N A S C : P a r a g r a p h 3 4 C h a ir p a g e 9 . M R R O B E R TO G O N S A LV E S : P a g e 9 j a . CHAIRPERSON : Thank you. M R R O B E R TO G O N S A LV E S : R o w le n v o n G e r ic k e fr o m So Global together on w it h 16 August 2016 S t a n W h it i n g fr o m G lo b a l , L u l a m il e X a te r e p r e s e n t in g E n d i n a m ix a n d I r e p r e s e n t in g C a d iz 10 w e m e t w i t h S iy a b o n g a G a m a w h o is t h e G r o u p C h i e f E x e c u tiv e O ffi c e r w i t h G a r r y P i t a 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 a n d w e m e t w i t h N d i p h i w e S il i n g a w h o is t h e G r o u p L e g a l a n d C o m p l ia n c e O ffi c e r to d is c u s s th is . A D V P H I L L I P M O K O E N A S C : Ye s a n d w h a t h a p p e n e d i n th a t m e e t i n g ? M R R O B E R TO G O N S A LV E S : W e l l w h a t i s q u i te in t e r e s ti n g is t h a t a t t h a t s t a g e w e h a d n o t s e e n th e v a r i a ti o n o r d e r th a t h a d a lr e a d y b e e n s ig n e d b y A n o j S i n g h a n d w e h a d n o t s e e n t h e a c c e p t a n c e le t t e r o f t h e v a r ia t io n o r d e r s ig n e d b y S iy a b o n g a G a m a a s w e ll . S o w e w e n t i n to t h a t m e e ti n g j u s t r a is in g o u r is s u e s a b o u t t h e B E X c o n tr a c t , h o w i t w a s 20 e n t e r e d i n t o , th e a m o u n t th a t w a s c l a i m e d a n d w h a t o u r b e li e f w a s t h a t there was no commercial substance to it. C H A I R P E R S O N : W e ll i n y o u r s ta t e m e n t y o u d o n o t s e e m t o d e a l m u c h w i t h th e c o n te n t o f t h a t m e e t in g – th e d i s c u s s io n . I k n o w y o u h a v e j u s t m a d e t w o s e n t e n c e o r s o . I f y o u a r e a b l e t o i t w o u ld b e g o o d i f y o u c a n t e ll m e m o r e . T h i s is w h a t y o u s a i d a n d t h a t is w h a t th e Tr a n s n e t Page 185 of 206 23 MAY 2019 – DAY 97 d e l e g a ti o n s a i d o r M r G a m a i f h e w a s t h e o n ly o n e . O h , n o t h e w a s n o t t h e o n ly fr o m Tr a n s n e t . T h e r e w a s a d e l e g a ti o n . M R R O B E R TO G O N S A LV E S : C o r r e c t . CHAIRPERSON : Th e e x c h a n g e – th e is s u e s y o u r a is e d – y o u k n o w. Yo u to l d u s t h e is s u e s w e r e o f c o n c e r n t o y o u . D id y o u r a is e th e s a m e is s u e s ? M R R O B E R TO G O N S A LV E S : A b s o l u te ly. C H A I R P E R S O N : Ye s a n d w h a t w a s th e i r r e s p o n s e ? M R R O B E R TO G O N S A LV E S : S o … 10 C H A I R P E R S O N : M a y b e i f y o u c a n y o u c a n g iv e th e i r r e s p o n s e t o t h e d i ff e r e n t is s u e s . M R R O B E R TO G O N S A LV E S : S u r e . CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : S o C h a ir w e r a i s e d t w o is s u e s . O n e w a s t h a t th e r e l a ti o n s h i p b e t w e e n th e m i n o r i ty s h a r e h o l d e r s a n d C N R w a s n o t id e a l . M a i n l y b e c a u s e o f c o r p o r a t e g o v e r n a n c e is s u e s . CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : That the Chinese did not seem to u n d e r s t a n d t h a t w e t o o k c o r p o r a te g o v e r n a n c e s e r i o u s l y a n d s o t h a t 20 w a s t h e o n e is s u e . CHAIRPERSON : Huh-uh. M R R O B E R TO G O N S A LV E S : A n d y o u w ill s e e i t is r e fe r r e d t o l a te r o n in … CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : In t h e p a p e r s … Page 186 of 206 23 MAY 2019 – DAY 97 CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : A n d t h e n t h e s e c o n d i s s u e w a s B E X . W e s a i d t h a t t h e c o m p a n y w a n ts t o e n g a g e o r h a s e n g a g e d w i t h B E X a n d t o p a y th e m a f e e i n r e s p e c t o f t h e r e l o c a ti o n a ll o w a n c e . We do not b e li e v e t h a t w e a r e e n t i tl e d t o a r e lo c a t io n a ll o w a n c e . We may be m is s i n g s o m e t h i n g . T h e r e m a y b e s o m e t h i n g in th e l o c o m o ti v e s u p p ly a g r e e m e n t w h i c h is a 5 0 0 p a g e d o c u m e n t t h a t e n t i tl e s u s to a c l a i m … CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : T h a t w e a r e n o t a w a r e o f . Wa s Tr a n s n e t 10 aware of this claim? CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : D o th e y k n o w w h e t h e r w e a r e e n ti tl e d t o a n a m o u n t ? C a n th e y ju s t i fy th e a m o u n t ? CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : So perhaps we do not have the problem w i t h t h e a m o u n t t h a t is b e i n g c l a i m e d fr o m Tr a n s n e t a n d th e n w e h a v e o n ly g o t a p r o b l e m w it h B E X . CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : T h e ir r e s p o n s e w a s s u r p r is e fr o m – fr o m 20 Tr a n s n e t’s p e r s p e c ti v e . CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : W i t h h i n d s ig h t t h e r e s h o u l d n o t h a v e b e e n a n y s u r p r i s e b u t y o u w i ll s e e w h y a n d – I m e a n – t h e r e w a s e v e n a c o m m e n t I t h i n k t h a t th e C E O m a d e th a t th is a l a r m i n g b e c a u s e p e r h a p s a s i m i la r a m o u n t c o u l d h a v e b e e n p a i d t o o t h e r O E M s … Page 187 of 206 23 MAY 2019 – DAY 97 CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : A n d s a i d t h e r e f o r e t h is h a d t o b e in v e s t i g a t e d . CHAIRPERSON : Hm. S o – s o y o u s a y t h e ir – w e ll d i d y o u t e l l t h e m o n e th e r e i s g o i n g t o b e n o r e l o c a t i o n h e r e ? D id y o u – d i d y o u … ? M R R O B E R TO G O N S A LV E S : W e to ld t h e m t h a t ( i n t e r v e n e s ) . CHAIRPERSON : Ja and what – what did they say? Th a t t h e y i n s is t t h a t th e r e w a s g o i n g t o b e r e lo c a t io n o n t h e ir u n d e r s t a n d i n g ? M R R O B E R TO G O N S A LV E S : N o . S o lo o k w e – s o l e t u s m a y b e c l a r i fy 10 t h e r e l o c a ti o n . S o … CHAIRPERSON : Ja. M R R O B E R TO G O N S A LV E S : R 9 .7 m i ll io n w a s a n i n c r e a s e i n t h e p r ic e - i n th e t e n d e r p r ic e b e c a u s e m a n u f a c tu r i n g n o lo n g e r w a s g o i n g t o b e a t K o e d o e s p o o r t b a s e d o n o u r in i ti a l t e n d e r c a lc u l a ti o n s a n d i t w a s going to be at Bayhead … CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : And once that was agreed to and – and f o r m u l a t e d in t o th e fi n a l p r ic i n g … CHAIRPERSON : Hm. 20 M R R O B E R TO G O N S A LV E S : I t w a s s i g n e d o n a fix e d p r ic e c o n tr a c t b a s is . CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : S o w e to l d t h e m - t h a t is e x a c t ly w h a t w e told them. CHAIRPERSON : Hm. Page 188 of 206 23 MAY 2019 – DAY 97 M R R O B E R TO G O N S A LV E S : S o w e d i d n o t t h i n k t h a t w e w e r e e n t it l e d to an amount. CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : B u t w e a ls o s a i d t h a t i t is p o s s i b l e … CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : T h a t w e a r e e n t i tl e d t o a n a m o u n t a n d w e ju s t d o n o t k n o w w h a t t h e b a s i s o f t h a t a m o u n t is a n d h o w i t is c a l c u l a te d a n d o n w h a t b a s is in t h e l e g a l a g r e e m e n ts w e c a n c l a i m t h a t amount … 10 CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : A n d p e r h a p s w e h a d m is s e d s o m e t h i n g … CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : A n d i t w a s a s i m p le r e s p o n s e – a s i m p le a n s w e r a n d s o m e o n e c a n r e fe r u s t o t h e L o c o m o ti v e S u p p ly A g r e e m e n t a n d s a y i n te r m s o f C l a u s e 3 2 o r w h a t e v e r i t is y o u a r e e n ti t le d to a r e l o c a ti o n a ll o w a n c e u n d e r th e s e c ir c u m s t a n c e s . CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : S o w e a s k e d t h e m p l e a s e p r o v id e t h a t t o u s a n d t h e y u n d e r to o k t h a t t h e y w o u ld l o o k in t o i t a n d t h e y r e q u e s t e d 20 u s t o g iv e t h e m c o p i e s o f a ll t h e d o c u m e n ts w h ic h w e d i d s u b s e q u e n t ly y o u w il l s e e . C H A I R P E R S O N : H m . A t th a t ti m e w h e n y o u m e t w i t h t h e m w h e r e w e r e t h e s e c o s ts ? I m e a n – t h e y h a v e b e e n m o v in g u p . Wa s it a r o u n d w h a t fi g u r e w e r e t h e y a t t h a t t i m e i f y o u a r e a b l e t o r e m e m b e r ? M R R O B E R TO G O N S A LV E S : I think it comes later on. Page 189 of 206 I do not – at 23 MAY 2019 – DAY 97 t h a t s t a g e I th in k w e w e r e s t il l t a l k i n g a b o u t th e te r m o f R 8 0 m i ll io n . CHAIRPERSON : O k a y, o k a y b u t y o u a r e s a y in g th a t a t t h a t m e e ti n g t h e y w e r e n o t a b le to t e ll y o u w h y y o u w e r e e n ti tl e d t o – t o th a t amount? M R R O B E R TO G O N S A LV E S : A b s o lu t e l y n o t . Th e y s a id t h e y w o u ld in v e s t i g a t e i t . C H A I R P E R S O N : O k a y. S o – s o i t w a s n o t e v e n a s i tu a ti o n w h e r e t h e y w o u ld t e ll y o u s o m e th in g b u t y o u – a n e x p l a n a ti o n w h i c h y o u f in d u n a c c e p t a b l e . T h e y s i m p l y s a i d t h e y w o u l d i n v e s ti g a te ? 10 M R R O B E R TO G O N S A LV E S : T h a t is c o r r e c t C h a ir. CHAIRPERSON : W h ic h m e a n s t h e y d i d n o t – t h e y – th e y m i g h t n o t h a v e b e e n a w a r e . Th a t is o n e w a y o f i n te r p r e ti n g . T h a t t h e y m i g h t n o t h a v e b e e n a w a r e b u t t h a t is d i ff ic u l t t o s a y b e c a u s e t h e y - t h e y w o u l d o r m a y b e t h e y w o u l d in v e s t i g a t e b y t a lk i n g t o p e o p l e w h o w e r e m u c h m o r e i n v o lv e d m a y b e . M R R O B E R TO G O N S A LV E S : Ja. S o C h a ir w e a s s u m e d w h e n w e l e f t t h e m e e ti n g w e a s s u m e d t h a t t h e y w e r e n o t a w a r e o f th is . C H A I R P E R S O N : Ye s . M R R O B E R TO G O N S A LV E S : T h a t is th e i m p r e s s i o n t h a t w e g o t . 20 C H A I R P E R S O N : Ye s , y e s . M R R O B E R TO G O N S A LV E S : B u t w e c a n s e e f r o m t h e e v i d e n c e t h a t … CHAIRPERSON : Ja. M R R O B E R TO G O N S A LV E S : The v a r i a ti o n v a r ia t io n o r d e r h a d a l r e a d y b e e n s i g n e d … C H A I R P E R S O N : Ye s . Page 190 of 206 – a c c e p ta n c e of th e 23 MAY 2019 – DAY 97 M R R O B E R TO G O N S A LV E S : By t h e C E O . C H A I R P E R S O N : S o – s o t h a t m e e ti n g t h e v a r ia t io n h a d b e e n s i g n e d ? M R R O B E R TO G O N S A LV E S : Ye s b u t w e h a d n o t s e e n i t . C H A I R P E R S O N : Yo u h a d n o t s e e n i t ? M R R O B E R TO G O N S A LV E S : T h a t is c o r r e c t C h a ir. CHAIRPERSON : But if they had signed – if it had been signed then t h e y s h o u l d b e - t h e y s h o u l d h a v e b e e n a w a r e o f t h e ju s t i fi c a t io n - i f there was one? M R R O B E R TO G O N S A LV E S : C o r r e c t C h a i r, c o r r e c t . 10 CHAIRPERSON : And do you remember who – who had signed on b e h a l f o f Tr a n s n e t ? M R R O B E R TO G O N S A LV E S : S o th e … CHAIRPERSON : The variation. M R R O B E R TO G O N S A LV E S : Th e v a r i a ti o n o r d e r w a s s i g n e d b y Anoj Singh … C H A I R P E R S O N : Ye s . M R R O B E R TO G O N S A LV E S : A n d t h e a c c e p t a n c e o f t h e v a r i a t i o n o r d e r w a s s i g n e d b y S iy a b o n g a G a m a . S o w e c a n r e f e r t h a t to ( i n t e r v e n e s ) . CHAIRPERSON : 20 Ja. N o a s l o n g a s y o u – y o u k n o w t h a t t o b e th e c a s e . S o c e r ta i n ly M r G a m a w h o w a s a t t h a t m e e ti n g h a v i n g s i g n e d h e o u g h t t o h a v e k n o w n w h a t j u s t if ic a ti o n t h e r e w a s a n d h e – I t a k e i t – h e w o u ld h a v e k n o w n t h a t a t s o m e s t a g e t h o s e c o s ts h a d b e e n e s t i m a te d a t 9 - s o m e t h i n g m il li o n . S o n o w a t t h a t s t a g e th e y h a d g o n e u p t o 2 0 0 - s o m e t h i n g m il li o n . M R R O B E R TO G O N S A LV E S : C h a i r t h a t is q u i te c o r r e c t . Page 191 of 206 23 MAY 2019 – DAY 97 CHAIRPERSON : Hm. S o u n l e s s h e h a d s ig n e d w i th o u t i n t e r r o g a t i n g t h o s e a m o u n t s w h i c h – w h ic h w o u l d n o t b e g o o d i n t e r m s o f l o o k in g a ft e r – p r o t e c ti n g Tr a n s n e t – Tr a n s n e t ’s i n t e r e s ts a s w e ll . M R R O B E R TO G O N S A LV E S : J a . C h a ir t h a t is q u i t e c o r r e c t . I f y o u g o to page 261 … A D V P H I L L I P M O K O E N A S C : Ye s . C H A I R P E R S O N : H u h - u h . Ye s . A D V P H I L L I P M O K O E N A S C : A n d i m p o r ta n tly o n t h a t p a g e is th e d a t e . W h a t is th e d a t e o f t h a t le t t e r ? 10 M R R O B E R TO G O N S A LV E S : Ja correct. C h a ir the date is 2 3 J u ly 2 0 1 5 … C H A I R P E R S O N : Ye s . M R R O B E R TO G O N S A LV E S : A n d o u r m e e ti n g w i th t h e Tr a n s n e t E x e c u t iv e s w a s o n 1 6 A u g u s t 2 0 1 6 . C H A I R P E R S O N : O h i t w a s l o n g a f t e r. I m e a n a t l e a s t a b o u t a m o n t h o r s o . Ye s . M R R O B E R TO G O N S A LV E S : H u h - u h . 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 : le t u s – l e t u s … 20 M R R O B E R TO G O N S A LV E S : CHAIRPERSON : And then … A D V P H I L L I P M O K O E N A S C : C h a ir j u s t - ju s t t o c l a r i fy. M R R O B E R TO G O N S A LV E S : CHAIRPERSON : Ja. A D V P H I L L I P M O K O E N A S C : T h o s e d a t e s . T h e m e e ti n g t o o k p l a c e … Page 192 of 206 23 MAY 2019 – DAY 97 M R R O B E R TO G O N S A LV E S : T h e 1 6 t h . A D V P H I L L I P M O K O E N A S C : O n th e 2 3 r d . Th e m e e ti n g t o o k p la c e o n 16 August 2016. M R R O B E R TO G O N S A LV E S : 2 0 1 6 . S o i t is a y e a r a l m o s t – m o r e th a n a y e a r la t e r. A D V P H I L L I P M O K O E N A S C : I t i s m o r e t h a n a y e a r l a te r. C H A I R P E R S O N : O h , m o r e t h a n a y e a r la t e r ? A D V P H I L L I P M O K O E N A S C : Ye s . C H A I R P E R S O N : O h . I th o u g h t i t w a s a m o n t h – t h e s a m e y e a r. 10 ADV PHILLIP MOKOENA SC: S o t h e r e w a s n o d o u b t th a t w h e n y o u m e t w i t h Mr G a m a a n d t h e d e l e g a t e f r o m Tr a n s n e t a lr e a d y a v a r i a ti o n o r d e r w h i c h y o u h a v e r e f e r r e d t h e C h a ir t o o n p a g e 2 6 1 h a s a lr e a d y been signed by Mr Gama? M R R O B E R TO G O N S A LV E S : 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 : R e f le c ti n g t h e a m o u n t th a t y o u i n fo r m e d t h e C h a ir a b o u t ? M R R O B E R TO G O N S A LV E S : C o r r e c t . 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 d i d t h e y e v e r c o m e b a c k t o y o u ? T h e y s a id t h e y w o u ld i n v e s ti g a t e . 20 D id t h e y e v e r c o m e b a c k t o y o u a n d le t y o u k n o w t h a t th is i n c r e a s e d a m o u n t t h a t y o u t h o u g h t y o u w e r e n o t e n ti t le d to y o u – y o u w e r e a c tu a lly e n t i tl e d t o i t b y v ir t u e o f A , B , C , D ? M R R O B E R TO G O N S A LV E S : S o C h a i r y o u w i ll s e e in m y s t a t e m e n t a couple of things happened. S o a f t e r w e m e t w e – w i t h – w it h t h e E x e c u t iv e s in p e r s o n o n 1 6 A u g u s t o n 1 3 S e p te m b e r 2 0 1 6 - a n d t h a t is paragraph 35. Page 193 of 206 23 MAY 2019 – DAY 97 ADV PHILLIP MOKOENA SC: 35. C H A I R P E R S O N : Ye s . M R R O B E R TO G O N S A LV E S : W e p h y s i c a l ly m e t w i th N d i p h i w e S i li n g a a n d h a n d e d h i m 8 4 p a g e s o f d o c u m e n ts a r o u n d th e B E X i s s u e th a t w e had and … C H A I R P E R S O N : I a m s o r r y w h a t d o c u m e n ts w e r e t h o s e ? M R R O B E R TO G O N S A LV E S : A l l t h e B E X i s s u e s … C H A I R P E R S O N : O h , o k a y. M R R O B E R TO G O N S A LV E S : M o s t o f t h e d o c u m e n ts t h a t … 10 C H A I R P E R S O N : Ye s . M R R O B E R TO G O N S A LV E S : Th a t w e h a d a t t h a t s t a g e r e l a ti n g t o BEX. C H A I R P E R S O N : C o r r e s p o n d e n c e a n d m in u te s a n d s o o n . M R R O B E R TO G O N S A LV E S : M in u t e s … CHAIRPERSON : Ja. M R R O B E R TO G O N S A LV E S : ( In d is ti n c t) d o c u m e n t s e tc e t e r a . C H A I R P E R S O N : O k a y. M R R O B E R TO G O N S A LV E S : H m . CHAIRPERSON : 20 A n d S il in g a h a d b e e n o n e o f t h e p e o p l e w h o h a d a tt e n d e d th e A u g u s t m e e ti n g ? M R R O B E R TO G O N S A LV E S : C h a i r t h a t is q u i te c o r r e c t . C H A I R P E R S O N : Ye s , o k a y. M R R O B E R TO G O N S A LV E S : A n d t h e n N d i p h i w e S i li n g a c a ll e d m e o n 1 2 O c to b e r 2 0 1 6 a n d in f o r m e d m e th a t t h e y w e r e c o n d u c t i n g t w o a u d i ts – i n t e r n a l a u d i t s a n d t h e o n e – t o f i n d o u t t w o t h in g s . Page 194 of 206 One why 23 MAY 2019 – DAY 97 Tr a n s n e t E n g in e e r i n g h a d n o t b e e n p a i d p a r t o f t h e R 6 4 7 m il li o n . A D V P H I L L I P M O K O E N A S C : Ye s e x p l a i n t h a t to u s . C H A I R P E R S O N : J a , w h a t - w h a t is th a t n o w ? M R R O B E R TO G O N S A LV E S : So Tr a n s n e t Engineering is a s u b c o n tr a c t o r … CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : To C N R S o u t h A f r ic a . C H A I R P E R S O N : Ye s . M R R O B E R TO G O N S A LV E S : T h e y b u i l d t h e b o d i e s a n d t h e b o g i e s … 10 CHAIRPERSON : Hm. M R R O B E R TO G O N S LV E S : A n d t h e y p r o b a b ly m a k e u p 2 5 p e r c e n t … CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : O f t h e b u il d p r i c e . CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : S o w h a t h e w a s i m p l y i n g w a s t h a t i f C N R S o u th A fr ic a w a s e n t i tl e d t o a c l a i m o f R 6 4 7 m ill i o n … CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : T h e n Tr a n s n e t E n g i n e e r i n g m a y b e w a s e n t i tl e d a s a s u b c o n tr a c t o r … 20 CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : To a p o r ti o n o f t h a t a m o u n t … CHAIRPERSON : Hm. M R R O B E R TO G O N S A LV E S : A n d h is o t h e r q u e s ti o n w a s – s o a t t h is s t a g e I m u s t j u s t c o r r e c t m y s e l f . W e k n e w i t w a s 6 4 7 m il li o n . I t w a s n o t 2 8 0 . W e a r e t a lk i n g a b o u t 6 4 7 m ill i o n . Page 195 of 206 23 MAY 2019 – DAY 97 A D V P H I L L I P M O K O E N A S C : Ye s . M R R O B E R TO G O N S A LV E S : B e c a u s e t h is 2 0 1 6 – is h o w t h e fo u r – R 6 4 7 m il li o n w a s a r r iv e d a t a s t h e y th o u g h t i t h a d l o o k e d li k e c e r t a i n a m o u n ts h a d b e e n d u p lic a t e d . Th a t w a s a te l e p h o n ic d is c u s s i o n w e had with him. ADV PHILLIP MOKOENA SC: A n d t h e n w h a t h a p p e n e d a ft e r t h a t t e l e p h o n ic d i s c u s s io n s ? M R R O B E R TO G O N S A LV E S : T h e n n o t a l o t u n ti l … CHAIRPERSON : 10 I a m s o r r y. S o o n – o n – s o p a r a g r a p h 3 6 r e v e a ls t h a t t h e y d i d a c tu a lly c o m e b a c k to y o u . A f t e r th e m e e ti n g o f A u g u s t t h e y d i d c o m e b a c k t o y o u o r y o u h a d i n t e r a c ti o n s a n d i n te r ms o f t h o s e in t e r a c ti o n s S il in g a – w a s S ili n g a a m a le o r f e m a l e ? M R R O B E R TO G O N S A LV E S : A m a l e . CHAIRPERSON : Mr S i li n g a in d i c a t e d t h a t t h e y w e r e i n v e s ti g a ti n g h a v i n g c o n d u c t e d a u d i ts t o e s t a b l is h a m o n g o t h e r s h o w t h e R 6 4 7 m il li o n h a d b e e n a r r iv e d a t. S o b y th is ti m e w h ic h w a s a y e a r l a t e r – o v e r a y e a r l a t e r – t h e a m o u n ts h a d – t h e a m o u n t h a s g o n e u p to 6 0 0 - s o m e t h i n g m il li o n . M R R O B E R TO G O N S A LV E S : 6 4 7 m il li o n , q u i te c o r r e c t . 20 C H A I R P E R S O N : Ye s , o k a y. ADV PHILLIP MOKOENA SC: A n d w h a t – w h a t tr a n s p ir e d a f te r t h a t m e e ti n g w it h M r Si li n g a ? M R R O B E R TO G O N S A LV E S : T h e n o n … CHAIRPERSON : B u t I a m s o r r y. I may – I may have – I may have m is r e p r e s e n t e d a n d y o u m a y h a v e a g r e e d – w r o n g l y a g r e e d . A f t e r y o u r Page 196 of 206 23 MAY 2019 – DAY 97 A u g u s t m e e ti n g , 2 0 1 6 i s th e p o s it i o n t h a t f o r t h e r e s t o f t h a t y e a r t h e y never came back to you? M R R O B E R TO G O N S A LV E S : S o o n th a t – w e m e t o n 1 6 A u g u s t 2 0 1 6 . C H A I R P E R S O N : Ye s . M R R O B E R TO G O N S A LV E S : O n 1 3 S e p te m b e r 2 0 1 6 w e m e t w i t h th e m a g a in . C H A I R P E R S O N : O h t h a t w a s s t ill … M R R O B E R TO G O N S A LV E S : J a . C H A I R P E R S O N : O k a y, a lr ig h t . 10 M R R O B E R TO G O N S A LV E S : A n d w e g a v e th e m a l l t h e p h y s i c a l in f o r m a ti o n … C H A I R P E R S O N : O k a y, o k a y. M R R O B E R TO G O N S A LV E S : A n d t h e n w e h a d t h e c o n v e r s a ti o n o n 1 2 O c to b e r 2 0 1 6 w h e r e t h e y i n f o r m e d u s t h a t t h e y w e r e d o in g t h is – t h e s e in v e s t i g a t io n s . CHAIRPERSON : O k a y, o k a y. S o i n o t h e r w a y o r a n o t h e r y o u g o t to k n o w t h a t t h e y w e r e i n v e s t ig a ti n g ? M R R O B E R TO G O N S A LV E S : C o r r e c t . C H A I R P E R S O N : J a , o k a y. 20 M R R O B E R TO G O N S A LV E S : T h a n k y o u C h a ir. ADV PHILLIP MOKOENA SC: N o w d u r in g t h e s e m e e ti n g s t h a t w h e n y o u m e t w i t h M r S il in g a a n d a t t h e t i m e w h e n y o u m e t w i t h th e d e l e g a ti o n o f Tr a n s n e t w a s i t e v e r d i s c l o s e d t o y o u t h a t t h e r e w a s a – a v a r ia t io n o r d e r t h a t w a s a lr e a d y s i g n e d to t h is a m o u n t ? M R R O B E R TO G O N S A LV E S : C h a ir a b s o l u te ly Page 197 of 206 not. We o n ly 23 MAY 2019 – DAY 97 d is c o v e r e d th a t l a t e r o n . W e g o t t h a t f r o m H o g a n L o v e l ls l a te r o n . ADV PHILLIP MOKOENA SC: Ye s . Then you may proceed. That is n o w a f t e r y o u h a v e m e t w it h M r S il i n g a o n 1 2 O c t o b e r 2 0 1 6 w h a t happens? M R R O B E R TO G O N S A LV E S : S o o n 1 2 O c t o b e r M r S i li n g a c a l le d m e a n d – t h a t is t h e – a n d i n fo r m e d m e a b o u t t h e t w o a u d i ts . A D V P H I L L I P M O K O E N A S C : Ye s . M R R O B E R TO G O N S A LV E S : T h a t t h e y w e r e d o in g . A D V P H I L L I P M O K O E N A S C : S u b s e q u e n t to t h a t ? 10 M R R O B E R TO G O N S A LV E S : A n d s u b s e q u e n t t o th a t o n 8 D e c e m b e r M r Si li n g a i n f o r m e d u s t h a t – h e s e n t u s a n e m a i l s a y i n g th a t T r a n s n e t h a s a p p o in t e d H a r o l d J a c o b s o f W e r k s m a n s t o i n v e s ti g a te th e B E X m a t t e r a n d t h a t M r J a c o b s w o u l d b e c o n ta c ti n g u s f o r i n t e r v ie w s . ADV PHILLIP MOKOENA SC : Proceed. M R R O B E R TO G O N S A LV E S : And what happened is on 1 4 D e c e m b e r 2 0 1 6 w e m e t w i th W e r k s m a n s t e a m a n d s h a r e d a ll t h e in f o r m a ti o n t h a t w e h a d o n t h e B E X m a t t e r w i t h t h e m . ADV PHILLIP MOKOENA SC: A n d w h a t w a s t h e o u tc o m e o f t h a t m e e ti n g ? D i d th e y p r o d u c e a n y r e p o r t s u b s e q u e n tly ? 20 M R R O B E R TO G O N S A LV E S : No. They – they were – we kept on a s k in g t h e m w h e r e t h e y w e r e p r o g r e s s i n g . I t h i n k t h e n e x t c o n ta c t w i th t h e m i s w e s e n t t h e m a n e m a il a t t h e e n d o f J a n u a r y 2 0 1 7 a s k i n g th e m w h a t th e s t a t u s w a s o f t h e i n v e s t ig a ti o n s a n d th e y – t h e y s t a te d th a t i t was ongoing. ADV PHILLIP MOKOENA SC: Ye s . Wa s t h e r e a n y o t h e r s u b s e q u e n t Page 198 of 206 23 MAY 2019 – DAY 97 e n g a g e m e n t w i t h Tr a n s n e t ? M R R O B E R TO G O N S A LV E S : A fe w t i m e s w e – w e w o u ld h a v e p h o n e d M r Si li n g a j u s t t o f i n d o u t w h a t th e s ta t u s w a s , w h e t h e r w e c o u l d a s s is t t h e m i n a n y w a y, h o w t h e i n v e s ti g a ti o n s w e r e p r o g r e s s i n g . ADV PHILLIP MOKOENA SC: Ye s . N o w fr o m p a r a g r a p h 4 0 y o u r e fe r t o a le t t e r w h ic h y o u r e c e iv e d fr o m M r S il in g a . Can you take us t h r o u g h th e c o n te n ts o f s a m e t h e r e o n p a r a g r a p h 11 ? What was he c o n v e y in g to t h e m a i n s h a r e h o l d e r s ? M R R O B E R TO G O N S A LV E S : 10 So that is Annexure 18. So what h a p p e n e d w a s in i ti a l ly t h e c o m p a n y r e q u e s t e d t h a t L u l a m il e X a te s ig n a le t t e r th a t t h e c o m p a n y a d d r e s s e d t o Tr a n s n e t . I n t h e i n i ti a l d r a f t t h a t t h e y p u t in fr o n t o f L u l a m il e th e r e w a s a r e fe r e n c e i n t h e r e t h a t w e h a d r e s o l v e d t h e B E X m a t t e r a n d L u l a m i le r e fu s e d t o s i g n i t a n d h a d i t r e m o v e d , a n d t h e n s i g n e d th e l e t te r, a n d t h e l e t te r b a s i c a ll y s a i d t h a t t h e r e la t io n s h i p b e t w e e n C N R a n d t h e m i n o r i t y s h a r e h o l d e r s s e e m t o b e i m p r o v i n g , t h e y w e r e g e t ti n g a b e tt e r u n d e r s t a n d in g a n d a p p r e c ia t e o f w h a t w e m e a n t b y c o r p o r a te g o v e r n a n c e a n d t h a t w e h a d d i r e c to r s fi d u c i a r y d u ti e s a n d r e s p o n s i b i li t ie s . I n r e s p o n s e t o t h a t l e t t e r M r S i li n g a s e n t u s a l e t te r w h i c h i s 20 a tt a c h e d I t h i n k o n p a g e 2 7 7 .. .( i n t e r v e n ti o n ) ADV PHILLIP MOKOENA SC : Ye s , b u t y o u d i d r e p r o d u c e i ts c o n te n ts fr o m p a g e 11 , C h a ir c o n t e n ts a r e o n p a g e 11 . M R R O B E R TO G O N S A LV E S : Correct. A n d in – w h a t Mr S il in g a r e q u e s ts it s a y s , i n e s s e n c e th e l e tt e r s e e m s to a d v i s e t h a t a l l d i ff e r e n c e s b e t w e e n t h e s h a r e h o l d e r s o f C N R R o ll in g S t o c k S o u t h Page 199 of 206 23 MAY 2019 – DAY 97 A fr ic a h a v e b e e n r e s o lv e d a n d th e r e n o w e x is t s a g o o d w o r k i n g r e l a ti o n s h i p b e t w e e n th e p a r t ie s a n d h e s a y s i n t h e n e x t p a r a g r a p h : “ As a d ir e c t r e s u lt o f t h e d i ffe r e n c e s t h a t e x i s te d b e t w e e n t h e s h a r e h o l d e r s y o u l a id a c o m p l a in t a g a i n s t w h a t y o u s u s p e c t e d t o b e a n u n t o w a r d c o n d u c t b y t h e e n ti ty a n d / o r s o m e o f i ts s h a r e h o l d e r s i n r e la t io n t o t h e r e lo c a t io n c o s t to a p l a n t i n Durban. Tr a n s n e t t h r o u g h it s e x te r n a l a t to r n e y s i n i t ia t e d in v e s t i g a t io n w h ic h is s t il l a t i ts in i ti a l s t a g e s . I n li g h t o f th e t o n e o f t h e a t ta c h e d l e t te r w e w o u l d b e p le a s e d t o h e a r fr o m 10 y o u w h e th e r t h e r e s o lv e d d i ff e r e n c e d i n c l u d i n g th e is s u e s r a i s e d in y o u r c o m p l a i n t i n t h e c ir c u m s t a n c e s Tr a n s n e t w o u ld lik e t o k n o w w h e t h e r y o u a r e s ti ll p u r s u i n g w i th d r a w i n g th e c o m p la i n t .” ADV PHILLIP MOKOENA SC: A n d d i d th e m i n o r i ty s h a r e h o ld e r s r e a c t t o t h i s l e tt e r. M R R O B E R TO G O N S A LV E S : C h a ir w e r e s p o n d e d t o t h e l e t t e r a n d w e b a s ic a lly s a i d w e w o u l d lik e t o r e m i n d y o u t h a t th e r e w e r e t w o i t e m s t h a t w e r a is e d i n a m e e t i n g w i t h y o u , t h e f ir s t i s s u e r e l a ti n g t o t h e r e l a ti o n s h i p a n d c o o p e r a t io n b e t w e e n C N R a n d t h e s h a r e h o l d e r s , a n d 20 w e w o u l d li k e to r e p o r t t h a t s ig n i f ic a n t p r o g r e s s h a s b e e n i n t h i s r e s p e c t a n d n o w I ’ m r e a d i n g d ir e c t ly : “ T h e s e c o n d i s s u e r e la t e d t o th e B E X i s s u e a n d t h e i m p a c t o n the m i n o r i ty d ir e c t o r s and th e o r i g in a l draft of the a b o v e m e n ti o n e d C N R S A l e t te r m a d e r e f e r e n c e t o th e B E X is s u e b u t t h i s w a s r e m o v e d b y M r X a ti a s t h e m i n o r i ty d ir e c t o r s Page 200 of 206 23 MAY 2019 – DAY 97 a n d m i n o r i ty s h a r e h o ld e r s h a d d e l ib e r a te n o t e n g a g e d w i t h t h e C N R o n t h i s is s u e , g iv e n th a t th e Tr a n s n e t is u n d e r g o i n g i ts in v e s t i g a t io n . W e th e r e f o r e r e s p e c t fu ll y e n c o u r a g e y o u t o c o n ti n u e a l o n g t h is r o a d u n til a s a t is f a c to r y o u tc o m e is r e a c h e d a n d w ill c o n ti n u e to c o o p e r a te f u l ly w i th y o u in t h is r e s p e c t .” ADV PHILLIP MOKOENA SC : S o i t w a s c le a r a n d u n a m b i g u o u s t h a t in a s f a r a s i t r e l a t e d t o th e m i n o r i ty s h a r e h o l d e r s t h e is s u e p e r t a i n in g to B E X w a s s ti ll a l iv e a n d i t w a s s t il l p e r s is t in g w i th t h e c o m p l a i n t. 10 M R R O B E R TO G O N S A LV E S : T h a t ’s q u i te c o r r e c t C h a ir a n d w e c o n ti n u e d to r e q u e s t t h a t th e y c o n ti n u e w i t h t h e i n v e s ti g a ti o n . ADV PHILLIP MOKOENA SC : Ye s , a n d t h e n w h a t h a p p e n e d a f t e r t h is e x c h a n g e o f c o r r e s p o n d e n c e ? C H A I R P E R S O N : B e f o r e t h a t e x c e p t fo r t h e f a c t t h a t y o u m a y h a v e g o t t o Tr a n s n e t ’s a t t e n ti o n , Tr a n s n e t ’s a t t e n t io n p o s s i b l e w r o n g d o in g b y y o u r c o - d ir e c t o r s a s m i n o r i ty d ir e c t o r s a n d t h e y i n r e g a r d t o a b u s in e s s r e l a ti o n s h i p o r c o n tr a c t b e t w e e n Tr a n s n e t a n d y o u r c o m p a n y w h y w o u l d Tr a n s n e t b e i n t e r e s te d i n w h e t h e r a n y d is a g r e e m e n ts a m o n g y o u r s e lv e s h a v e b e e n r e s o lv e d b e c a u s e th e m a j o r it y a n d t h e m i n o r i ty, d o y o u 20 k n o w ? M y o w n th i n k i n g i s th a t i f y o u b r o u g h t t o t h e ir a t te n ti o n th a t f o r a r g u m e n t ’s s a k e , le t u s s a y w h a t y o u b r o u g h t to t h e ir a t t e n t io n w a s c o r r u p ti o n t h e y w o u l d b e o b l ig e d t o l o o k a t i t b e c a u s e t h e y s h o u l d n ’ t b e p a r t y to a n y c o r r u p t io n a n d n o b o d y s h o u l d h a v e e n g a g e d i n c o r r u p ti o n r e l a ti n g to a n y b u s i n e s s t h e y w e r e d o i n g , th a t i s Tr a n s n e t b u t o th e r t h a n th a t w h y s h o u l d i t b e t h e ir b u s i n e s s w h e t h e r y o u w e r e g e t t in g Page 201 of 206 23 MAY 2019 – DAY 97 a l o n g o r n o t , b e c a u s e I g u e s s i f y o u ’r e n o t g e t ti n g a l o n g r e s u l ts i n y o u n o t b e i n g a b l e t o d o – c a r r y o u t y o u r c o n t r a c t u a l o b li g a t io n s t h e n t h e y s h o u l d j u s t s a y l o o k i f y o u d o n ’t – a s l o n g a s y o u p e r fo r m w e a r e n o t c o n c e r n e d a b o u t y o u r o w n i s s u e s a m o n g y o u r s e lv e s , b u t i f i t a ff e c t s p e r f o r m a n c e i n te r m s o f t h e c o n tr a c t w e m ig h t h a v e t o t e r m i n a te i t a n d g iv e i t t o s o m e b o d y e ls e w h o is g o in g t o p e r f o r m . W h y a r e y o u – o n e g e t s t h e i m p r e s s io n fr o m t h e ir le t t e r a s i f y o u s a i d t o t h e m y e s w e h a v e r e s o l v e d o u r i s s u e s th a t w o u l d m e a n th e y m u s t n ’t c o n t in u e to f in d o u t w h e t h e r t h e r e w a s a n y t h i n g u n t o w a r d th a t h a d b e e n d o n e b y a n y b o d y 10 fr o m t h e c o m p a n y ? M R R O B E R TO G O N S A LV E S : C h a i r I t h i n k y o u ’r e a b s o lu t e c o r r e c t , I t h i n k t h e o b j e c ti v e o f t h e le t t e r w a s t o g iv e Tr a n s n e t g r o u n d s n o t t p u r s u e t h e B E X m a t t e r a n y f u r t h e r. CHAIRPERSON : B u t a m I r i g h t t h a t in t h e ir l e t te r th e y s e e m t o b e c o n c e r n e d a b o u t w h e t h e r y o u a r e s o r ti n g o u t o u r i s s u e s ? M R R O B E R TO G O N S A LV E S : J a , r e m e m b e r t h a t C h a ir t h a t w h e n w e w e n t t o h i m th e m w e r e tw o is s u e s th a t w e r a is e d , o n e w a s s h a r e h o l d e r is s u e s a n d l ik e t h e r e la t io n s h i p w a s n ’ t i d e a l a n d t h e s e c o n d o n e w a s t h e B E X i s s u e , a n d I th i n k w h a t . . .( in t e r v e n ti o n ) 20 CHAIRPERSON : Ye s b u t w h y d id y o u – w h y s h o u l d t h e s h a r e h o ld e r is s u e s c o n c e r n t h e m , w h y d i d y o u t a k e th a t o n e t o t h e m ? M R R O B E R TO G O N S A LV E S : I think there as a bit of a debate as to C h a ir w h e t h e r w e r a is e d w i t h Tr a n s n e t o r n o t, w e j u s t s a w t h e m a s a s ig n if ic a n t s t a k e h o ld e r a n d w e h a d a b i t o f i m p a s s e w i t h C N R a n d w e w e r e tr y in g t o s e e w h e th e r Tr a n s n e t c o u l d a s s is t i n t h a t p r o c e s s a n d Page 202 of 206 23 MAY 2019 – DAY 97 t h e y m a d e i t c le a r C h a ir th a t th e y d i d n ’ t w a n t t o g e t i n v o lv e d . CHAIRPERSON : Oh they made that clear? MR R O B E R TO G O N S A LV E S : Ja in t h e r e la t io n s h i p and the s h a r e h o l d e r s is s u e s , w e h a d to r e s o r t t h a t – s o r t t h a t o u t o u r s e l v e s . C H A I R P E R S O N : J a o k a y. ADV PHILLIP MOKOENA SC: N o w fl o w in g fr o m th a t d i s c u s s i o n w i th t h e C h a ir M r G o n s a lv e s I m e a n le t u s a s s u m e f o r th e m o m e n t th a t t h e r e s h a r e h o l d e r s d i ff e r e n c e s w e r e a mi c a b ly r e s o l v e d w i t h i n th e c o n s o r ti u m it s e l f w h a t w o u l d j u s t i fy Tr a n s n e t fr o m n o t in v e s ti g a t i n g h o w t h i s 10 a m o u n t e s c a l a t e d fr o m 9 . 7 , 2 8 0 6 4 7 0 0 0 b e i n g a n S O E ? M R R O B E R TO G O N S A LV E S : C h a ir I w o u l d h a v e t h o u g h t i t w a s a t o p p r i o r i ty a n d y o u w i ll s e e t h a t i n t e r n a l l y t h e y s a i d t h e r e w a s a n in v e s t i g a t io n , I d o n ’ t k n o w w h a t t h e o u t c o m e o f t h a t is o r w a s , a n d t h e n t h e y r e q u e s t e d W e r k s m a n s to d o a n i n v e s ti g a ti o n , I t h i n k u l ti m a t e l y W e r k s m a n s p r o d u c e d a r e p o r t a n d I d o n ’ t k n o w w h e th e r t h e B E X m a t t e r w a s d e a l t w i th i n th a t r e p o r t o r n o t b u t c e r t a i n l y w e w e r e c o n c e r n e d a t t h e p a c e a t w h ic h y o u k n o w d e v e l o p m e n t s w e r e m o v i n g . ADV PHILLIP MOKOENA SC : And do you know as to who were the a u d it o r s o f th e c o n s o r ti u m a t t h is s t a g e ? 20 M R R O B E R TO G O N S A LV E S : C N R S o u t h A fr i c a ? ADV PHILLIP MOKOENA SC : Ye s . M R R O B E R TO G O N S A LV E S : KPMG. ADV PHILLIP MOKOENA SC : Were they engaged at any stage p e r t a in in g t o t h e s e is s u e s , I m e a n th e s e a r e s e r io u s ir r e g u l a r i t ie s , t h is is s e r i o u s m a t te r s o f c o n c e r n t h a t w e r e r a i s e d b y t h e m i n o r i t y ? Page 203 of 206 23 MAY 2019 – DAY 97 M R R O B E R TO G O N S A LV E S : S ir t h e o n l y t i m e t h a t K P M G g o t in v o lv e d w a s t h a t w e h e a r d t h a t t h e r e w a s a r e p o r ta b l e ir r e g u la r i ty i n r e s p e c t o f th is b u t w e o n l y h e a r d t h a t a b i t l a t e r. ADV PHILLIP MOKOENA SC : Ye s c a n y o u d e a l t h e n w it h y o u r e v i d e n c e fr o m p a r a g r a p h 4 2 , p a g e 1 2 Mr C h a ir. M R R O B E R TO G O N S A LV E S : M r C h a ir fr o m a ti m e li n e p e r s p e c t iv e t h is is a l m o s t s o r t o f s i x m o n t h s l a t e r, I r e c e i v e d a c a ll fr o m D a is y Z a n g , ( i n d i s ti n c t) s h e is o n e o f t h e e m p l o y e e s a t C N R S o u th A fr ic a a n d she mentioned to me that KPMG had informed them that they were 10 c o n s i d e r in g i s s u i n g a r e p o r t o f ir r e g u l a r i ty a n d t h a t r e p o r t o f i r r e g u l a r i ty if I c a n r e f e r is t h e s e c o n d R I , i t’s th e s e c o n d R e p o r t a b l e Ir r e g u la r i ty b e c a u s e u n b e k n o w n t o u s a t t h a t s t a g e t h e y h a d a lr e a d y r e p o r t e d o n t h e B E X i s s u e a s a r e p o r t a b l e ir r e g u l a r i ty. ADV PHILLIP MOKOENA SC: A n d t h e n w h a t h a p p e n e d a f t e r s h e , a f te r t h e c a ll . M R R O B E R TO G O N S A LV E S : S o I c a ll e d Fr e d Va n E c k e n s t e in , t h e K P M G p a r tn e r, t o f in d o u t a b o u t th is r e p o r t a b le ir r e g u l a r i ty a n d o n t h a t c a l l h e m e n t io n e d t o m e t h a t t h is w a s n ’ t th e f ir s t o n e t h a t h e h a d a lr e a d y is s u e d a r e p o r ta b le ir r e g u la r i ty a n d b u t o b v i o u s ly I d i d n ’ t k n o w 20 t h a t w a s i n c o n n e c ti o n w i th . ADV PHILLIP MOKOENA SC : Ye s . N o w i f I m a y r e f e r y o u t o R G 2 0 , it ’s o n p a g e 2 8 1 C h a ir, i t ’s a v e r y l e n g t h y le t t e r i f y o u m a y id e n ti fy t h a t le t t e r a n d s u m m a r is e f o r t h e C h a ir w h a t i t s o u g h t t o c o n v e y a n d w h a t w a s t h e p u r p o s e o f th a t l e t te r ? M R R O B E R TO G O N S A LV E S : S o C h a ir t h is l e t te r is d a te d t h e 4 t h o f Page 204 of 206 23 MAY 2019 – DAY 97 S e p te m b e r 2 0 1 7 , i t ’s a le t t e r fr o m H o g a n L o v e ll s a d d r e s s e d t o K P M G , t o t h e p a r tn e r, Fr e d Va n E c k e n s t e in , a n d i t ’s a le t t e r s u p p o r ti n g w h y K P M G s h o u l d n o t c o n s id e r t h e B E X is s u e t o b e a r e p o r t a b l e ir r e g u l a r i ty, s o o n c e K P M G h a d r e p o r t e d th a t t h i s w a s a r e p o r t a b le ir r e g u l a r it y, th e B E X i s s u e , t h e c o m p a n y th e n e n g a g e d H o g a n L o v e ll s t o d r a f t a r e s p o n s e t o K P M G a n d th is i s t h e r e s p o n s e i n A n n e x u r e 2 0 . ADV PHILLIP MOKOENA SC : Ye s , d i d t h e m in o r it y s h a r e h o l d e r s a g r e e w i t h t h e s e n t i m e n t s a c c o r d in t h a t le t te r ? M R R O B E R TO G O N S A LV E S : 10 C h a ir a b s o l u te ly n o t, w e h a d n o k n o w l e d g e a t th a t s ta g e t h a t t h e r e w a s e v e n a r e p o r t a b l e ir r e g u l a r i ty a n d th a t H o g a n L o v e ll s h a d b e e n e n g a g e d t o r e p o r t a n d w o r k o n – t o r e s p o n d to t h e r e p o r ta b l e i r r e g u l a r i ty. ADV PHILLIP MOKOENA SC : J a , m a y I r e f e r y o u b a c k to y o u r s t a te m e n t , p a g e 1 2 , a n d c o m m e n c e fr o m p a r a g r a p h 4 5 o f y o u r s t a te m e n t to s h a r e w i t h u s w h a t y o u ’ r e c o n v e y in g in t h a t p a r a g r a p h . M R R O B E R TO G O N S A LV E S : S o o n t h e 2 2 n d o f S e p te m b e r 2 0 1 7 I w r o t e to Fr e d v a n Ec k e n s t e in , th e K P M G p a r t n e r, I th a n k e d h i m f o r th e c a l l , I s a i d th a t h e h a d m e n t io n e d t o m e o n th e c a ll th a t t h e r e w a s a p r e v i o u s r e p o r t a b l e ir r e g u la r i ty a s w e l l , I t o l d h i m t h a t n o n e o f t h e 20 S o u th A f r i c a n d ir e c to r s , m y s e l f , L u l a m il e X a t e o r R o w l e n v o n G e r i c k e w a s a w a r e o f t h a t a n d I a s k e d h i m fo r – to g iv e u s a n y c o r r e s p o n d e n c e o n i t a n d t h a t c o r r e s p o n d e n c e I s u b s e q u e n t ly g o t fr o m H o g a n L o v e l ls a n d I r e q u e s te d a m e e t in g w i t h h i m a s s o o n a s p o s s i b l e b e t w e e n o u r s e lv e s a n d t h e m a n a g e m e n t o f t h e c o m p a n y. ADV PHILLIP MOKOENA SC : Ye s , C h a ir I s e e t h a t i t ’s fo u r o ’c l o c k , Page 205 of 206 23 MAY 2019 – DAY 97 w o u ld t h i s b e a n a p p r o p r i a t e ti m e t o a d j o u r n , e v e n i f w e c a n s t a r t a t te n t o m o r r o w w e s h o u l d b e a b l e t o d e a l a n d c o m p l e t e w i th t h e e v i d e n c e o f M r G o n s a lv e s a n d t h e o t h e r s h o r t w i t n e s s t h a t w e m i g h t h a v e . CHAIRPERSON : W e w il l t a k e – w e w il l a d j o u r n f o r t o d a y a n d w e w il l r e s u m e to m o r r o w a t te n , s o d o c o m e b a c k . W e a d jo u r n I N Q U I RY A D J O U R N S TO 2 4 M AY 2 0 1 9 Page 206 of 206