EXCLUSIVE: Gupta ‘negotiator’ and the R4bn Transnet IT deal

Johannesburg – The value of a Transnet contract awarded to information technology (IT) company T-Systems ballooned from just under R1.7bn to nearly R3bn after known Gupta associate Salim Essa allegedly became a backchannel “negotiator” for the German multinational.

Former Transnet chief financial officer (CFO) Anoj Singh, who has come under fire for his ties to the Guptas, also allegedly played a key role in Transnet’s decision to extend T-Systems’ contract instead of putting it out to tender.

T-Systems’ initial five-year contract to supply Transnet with IT data services was supposed to have come to an end in 2014. But the contract was extended for a period of two years, a decision that earned the company nearly R1.3bn in additional revenue.

And thanks to an ongoing dispute over the contract, the company will earn up to R900m in further revenue while the row drags on, according to T-Systems’ own records.

By the time the latest contract extension expires in May 2018, T-Systems will, therefore, have earned just under R4bn from a 2010 contract valued at only R1.7bn.

T-Systems has admitted to News24 that it considered appointing Essa as a “sales agent” in 2014, but the company says it eventually decided against it.

T-Systems also strongly denies that Essa influenced or played any role in Transnet’s handling of the data services contract, or that it ever paid Essa to represent the company in relation to any of its work with Transnet.

But sources familiar with the interactions between the IT firm and the parastatal say that Essa in 2013 and 2014 attended meetings with Transnet staff as a “negotiator”, supposedly on behalf of T-Systems.

During this time, Transnet was not only considering putting the IT data services contract up for tender but was evaluating a tender for network services.

The latter contract ultimately landed rival IT firm Neotel in an embarrassing kickbacks mess involving Gupta-linked “letterbox” company Homix following a series of exposés by amaBhungane.

The ‘intermediary’

Three sources with direct knowledge of the deal, two from within Transnet and one from the local IT sector, all say that Essa was on the scene as a “negotiator” for T-Systems when Transnet decided to extend the data services contract and while the network tender was underway.

“During the network tender, Essa showed up and said he represented T-Systems as an intermediary. When it became clear that the tender would instead be awarded to Neotel, Essa returned to the negotiating table, this time introducing himself as a representative of Neotel,” says one source.

The source says Essa took on a similar role as a supposed T-Systems “negotiator” when the data services contract was about to come to an end.

One of the two other sources told News24 that Transnet started to prepare a tender process near the end of 2013, seeing as T-Systems’ contract was set to expire at the end of the following year.

“The tender was ready to roll [be issued] in November 2013 and was being insisted on by procurement (Transnet’s procurement division). But in January 2014, T-Systems was awarded the two-year extension, which was set to commence in 2015,” says the source.

The Transnet insider claims that the Transnet board gave those who had worked on the tender “no reasons” for extending T-Systems’ contract, and that the decision “bypassed every process that exists in Transnet”.

Two of News24’s sources also independently indicated that Transnet’s decision to extend the tender in 2014 came as a result of orders from Singh.

“I recall Anoj motivating [for] an extension on the basis of urgency and that in the interim they (Transnet) would finalise the tender,” says one of the sources.

Singh did not want to discuss the matter.

“Please refer all questions to Transnet for a response, thank you,” he wrote in a WhatsApp message.

Gupta links

T-Systems says it didn’t know that proceeds from its work with Transnet or other state-owned companies would be channelled to companies or people linked to the Guptas.

But information sourced from the #GuptaLeaks, along with earlier media reports, shows that companies chosen by T-Systems as its local empowerment partners were very familiar with the controversial family.

In 2014, as the R1.3bn T-Systems contract extension kicked into gear, the IT firm appointed Sechaba Computer Services as a supplier development partner as part of Transnet’s empowerment requirements.

Apart from being one of the companies identified by amaBhungane as having paid money into an account of the Gupta-linked Homix, Sechaba also paid money to Zestilor, another of T-Systems’ then BEE suppliers. At the time, Zestilor was owned by Zeenat Osmany, Essa’s wife.

The #GuptaLeaks show that Zestilor first wanted to buy a 51% stake in Sechaba before the two companies concluded a “management fee” deal that would earn Zestilor R200 000 a month.

In June 2015, Santosh Choubey, a Sahara Computers employee, sent a document to Tony Gupta titled “Sale of Shares Zestilor – Sechaba”. The document proposed a purchase of a 51% stake in Sechaba by Zestilor.

Source: News24