Transnet: Former CEO seeks R3.8m incentive payout

[Steve Appleton]

From Business Day, 2 August 2011: http://www.businessday.co.za/articles/C ... ?id=149689

Now former acting Transnet CEO Wells seeks R3.8m payout.

LINDA ENSOR
Published: 2011/08/02 06:49:31 AM

CAPE TOWN — Former acting Transnet group CEO Chris Wells is demanding R3.8m from the parastatal as an outstanding long-term incentive award. Transnet disputes this and intends to defend itself in court, says its annual report, tabled in Parliament last week. However, Transnet spokesman Mboniso Sigonyela yesterday said so far there had been only an exchange of letters.

Last year, Mr Wells received a long-term incentive payment of R8.9m and a short-term one of R2.8m in addition to his R4.6m salary, said the report. It also showed that Transnet Freight Rail CE Siyabonga Gama in 2010-11 not only got R10m in salary, post-retirement benefit fund contributions and other payments despite not being at work for most of the year, but R2.5m as an incentive bonus.

Mr Gama was suspended in September 2009 over the award of a tender beyond his authority. He was fired in June last year and reinstated in February .

Democratic Alliance MP Pieter van Dalen condemned the incentive payments to Mr Gama. They made a "mockery" of incentive schemes, which were meant to reward employees who went the extra mile, he said. Also of concern was Transnet’s fruitless, wasteful and irregular expenditure amounting to R8.3bn related to the awarding of contracts.

The annual report noted that the long-term incentive scheme — from which Mr Gama benefited — was intended to drive the implementation of the Transnet corporate strategy, retain key talent, "as well as to encourage performance and reward performance above target".

Mr van Dalen called on the Transnet board to explain to Parliament why Mr Gama had been paid such an exorbitant sum while he was under suspension.

In Mr Gama’s defence, Transnet chairman Mafika Mkwanazi said in his chairman’s statement in the report that the board had decided to reappoint Mr Gama on the grounds that his dismissal was "very harsh, especially given that he had not been found guilty of corruption or dishonesty".

Mr van Dalen described the millions spent on Mr Gama as "an ineffective and inefficient use of scarce state resources that could have been directed towards the provision of services or the development of infrastructure". Mr Mkwanazi should appear before Parliament’s public enterprises committee "to explain exactly how and why this fruitless expenditure was allowed to occur".

He found it "worrying" that the annual report omitted references to fruitless, wasteful or irregular expenditure below R25m as such amounts were considered "immaterial" by the auditors. These individual sums — investigated by the group executive committee — amounted to R183m and included 110 cases involving R47m in fruitless and wasteful expenditure, 73 instances of criminal conduct involving losses of R134m, and four cases of irregular expenditure amounting to a net R2.2m.