Transnet on Monday reported a significant increase of irregular expenditure to R8.1bn in 2017/2018, up from R692m in the previous financial year, triggering a qualified audit.
Chief financial officer (CFO) Mohammed Mahomedy told Fin24 that the sharp rise in irregular expenditure was due to the company reviewing contracts from as far back as 2009 and identifying the procurement issues in these results.
Mahomedy said the company adopted stricter reporting processes for 2018 but he could not comment on previous years as he was only appointed CFO in May.
The state freight and ports company released its financial results in Kempton Park with a cloud hanging over three executives – CEO Siyabonga Gama, chief advanced manufacturing officer Thamsanqa Jiyane, and supply chain manager Lindiwe Mdetshe who have until Monday afternoon to explain to the board why they should not be suspended.
At the results presentation Mahomedy explained that the increase in irregular expenditure was due to breaches in the Public Finance Management Act (PFMA) relating to procurement.
Siyabonga Gama acknowledged that the state-owned company’s (SOC) reputation has “suffered” around allegations of corruption and said that most of these issues relate to third parties being paid by Transnet suppliers.
He said that more than 22 investigations are currently underway and the parastatal is working with the Special Investigating Unit (SIU) and the Hawks.