Transnet, SUI welcome Special Tribunal judgement ordering former exec to pay back millions

Transnet and the Special Investigating Unit have welcomed the Special Tribunal’s judgment ordering a former Transnet executive to pay back over R26 million in secret payments to Transnet. The court found evidence of impropriety in the relationship between former Transnet executive for Capital Projects Linyenga Herbert Msagala and IGS Consulting Engineering Services and its sole Director Sipho Sithole.

A series of contracts amounting to over R160 million were awarded to IGS between January 2015 and December 2016.

The court found that during that time secret payments were made to Msagala amounting to more than R26 million.

Msagala was subsequently dismissed following an internal disciplinary hearing at Transnet.

SIU Spokesperson Kaizer Kganyago, says, “This sends a clear message to those who want to be corrupt especially in the public sector to understand that we will get to the bottom of it and we will deal harshly if they are found.”

Between January 2015 and December 2016, IGS was contracted to Transnet, including to construct a 715-kilometre pipeline to transport liquid petroleum from Durban to Heidelberg in Gauteng.

The matter was brought before the Special Tribunal in July last year, following an investigation by the Special Investigations Unit and Transnet into the New Multi Product Pipeline – a project which the SIU say IGS Consulting Engineering Services was paid over R160 million.

The project was managed by Msagala, who at the time was employed by Transnet as its Group Head for Capital Projects.

The SIU argued that Msagala received a series of payments from IGS and Sithole through illegal conduct.

Judge Lebogang Modiba delivered her judgement during a virtual sitting.

“Msagala received the said amount without any requisite disclosures to Transnet. Therefore, the amount constitutes secret profits giving rise to Transnet‘s right to disgorge the profits. The plaintiffs have also made a proper case against IGS and Sithole. They have elected not to participate in these proceedings. As such, they have not disputed the documentary evidence in the form of IGS records including bank statements and cashed cheques.”

Judge Modiba described as compelling witness evidence including that of Viven Govender, Chief Forensic Investigator at the SIU, which showed, through bank statements presented in court, how between 2015 and 2016 monies moved from Transnet to IGS and then to Msagala.

“The Msagala Investment Trust account issued in November 2015 reflect the first deposit into this account in the amount of half a million in cash. By 31 December 2016, over R24 million had been deposited into this account. Almost R16 million was deposited in cash. The deposits attracted deposit fees in the amount of R197 000.”

Judge Modiba found that assets bought from this money included several properties totalling more than R15 million.

“Msagala has never purchased so many immovable within such a short period of time before he started receiving payments from from IGS. Msagala acquired 36 cars between February 2016 and January 2017.”

Msagala’s version is that he earned this income from his other businesses, which he had been running since 2009 over and above his Transnet salary.

But Judge Modiba found it improbable that Msagala would earn such substantial amounts of cash and waited six years before he opened a bank account and deposited the income from his businesses.

In May 2020, following an SIU investigation, Transnet instituted disciplinary action against Msagala after an SIU lifestyle audit revealed that he was living excessively and beyond his Transnet remuneration. He was charged with various acts of misconduct arising from his relationship with IGS and Sithole and subsequently dismissed.