REPORTABLE IRREGULARITY IN TERMS OF THE AUDITING PROFESSION ACT

On 15 February 2010, the Company's external auditors, Deloitte & Touche, reported an alleged reportable irregularity in terms of Section 45(1) of the Auditing Profession Act to the Independent Regulatory Board for Auditors.

The alleged irregularity relates to the conclusion of a locomotive contract amounting to R867 million by the Chief Executive of Transnet Freight Rail (a division of Transnet Limited) contrary to the Board of Directors' resolution, resulting in alleged irregular expenditure as contemplated by the Public Finance Management Act, Act 1 of 1999, (as amended) and fruitless and wasteful expenditure in the amount of R18 million. In addition, there are certain outstanding matters that could increase this amount.

The Board of Directors is confident that appropriate corrective action has been taken and that the alleged irregularity is no longer taking place. The corrective action taken includes the allocation of engineering work to Transnet Rail Engineering as required by the Board resolution and also the institution of a disciplinary process against the Chief Executive of Transnet Freight Rail. In addition, the Board is satisfied that all reasonable steps have been taken to prevent loss to the Company.

Transnet remains committed to complying with the highest standards of corporate ethics and good governance.

Statement issued by Transnet spokesman John Dludlu on behalf of the Board of Directors, February 23 2010

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