HIGH COURT RULES IN FAVOUR OF MINISTER OF PUBLIC ENTERPRISES
18 SEPTEMBER 2018 - The Gauteng Division of the High Court in Pretoria, today dismissed an application by Mr Seth Radebe, a former Transnet director, who had sought an order to set aside the decision by the Minister of Public Enterprises, Mr Pravin Gordhan, to remove him from the Transnet board.
The Ministry of Public Enterprises welcomes the judgment [a copy of which is attached]; in particular the emphasis it places on the need to urgently restore good corporate governance at State-Owned Companies like Transnet, given their position and role in the South African economy.
Judge Hans J. Fabricius flatly rejected this application and described it as “rather vague”.
1. The Court observed a lack of decisive actions by the previous board against Transnet employees implicated in corruption, specifically in the 1 064 Locomotives tender. The Court accepted legal arguments that investigation reports by Werksmans Attorneys and Professor H E Wainer were“incomplete” but maintained this “did not mean that they were inconclusive and could not be acted upon”.
2. “Objectively speaking, there was sufficient evidence emanating from these reports to compile a charge sheet. There were also no good reason not to suspend certain individuals as a precautionary measure,” Judge Fabricius ruled.
Radebe argued, amongst others, that Minister Gordhan’s decision to remove him as one of the last three directors on the previous Transnet board by14 May this year, was a racist act.
Radebe was the only former director who approached the court to seek such relief.
The High Court dismissed his arguments in their entirety.
3. “I cannot find that the Minister’s decision [to remove Radebe] was racially motivated or that it could even be regarded as racial discrimination, seen either subjectively or objectively. In my view, the Minister took the relevant facts into account and made a rational decision based thereon. He kept in mind the parlous position of the South African economy, and the role Transnet had to play therein,” Judge Fabricius ruled.
4. “The Minister’s views [for replacing the previous Transnet board] were explained wholly and adequately in my opinion, and there is no basis for impugning the Minister’s character, as has been unfortunately done in these proceedings, by calling into question his academic qualifications, competence and understanding of his constitutional duties.”
The Court further rejected Radebe’s arguments that he is entitled to a board position by virtue of his academic qualification.
5. “The Applicant [Radebe] himself caused this untenable situation. As its Chair of the Audit Committee, not only did he fail to forthwith take remedial steps, but he appeared to labour under the wrong impression that because he was a qualified Chartered Accountant, that this status entitled him to a position on the Board, when he had not exhibited… the qualities which enabled him to instill confidence and trust that he could exert his position to carry out his judiciary functions, as he was enjoined to do in terms of proper corporate governance,” Judge Fabricius ruled.
The Court accepted Minister Gordhan’s argument that the previous board also failed Transnet, in that:
6. “It took no decision to set aside the irregular contracts, or at the very least, to halt further payments being made to four entities still in the process of executing their contracts for the procurement of the 1 064 Locomotives. There was also a complete failure to act swiftly and decisively against errant employees.”
7. The Court found that Radebe’s arguments of Minister Gordhan being “a lay person and pharmacist” who is not appropriately qualified for his current position in the Executive, reflects an attitude that is “contemptuous” towards the Minister as the Shareholder representative for Government in Transnet.
8. On 23 May this year, Cabinet approved a new Transnet board with Mr Popo Molefe as Chairman. In welcoming the judgment, the Ministry reiterated that directors of SOCs must be held “to a high standard of corporate governance and accountability”.
“Today’s judgment confirms our belief that the previous board failed to demonstrate an appreciation of the seriousness of allegations of maladministration and corruption or the ability to deal with these decisively in order to protect the institution.
“Mr Radebe’s litigation has always been frivolous, vexatious and devoid of fact and truth. It was rightfully dismissed by the High Court,” the Ministry of Public Enterprises said.
Statement issued by Adrian Lackay, Ministry of Public Enterprises, 18 September 2018
