A DAMNING investigation report into the affairs of TransNamib has stated that the Ministry of Public Enterprises should take disciplinary action against chief executive officer (CEO) Johny Smith.
In an independent investigation report seen by The Namibian, Ernst & Young (EY) recommended disciplinary action against Smith’s actions, such as unauthorised bonus payments.
EY said it is not convinced that Smith is able to turn around TransNamib’s current woes.
“We have not been provided with or been able to obtain sufficient supporting evidence that convinces one to believe that the current executive oversight and management of TransNamib would result in the envisaged turnaround of the entity,” the report reads.
TransNamib spokesperson Abigail Raubenheimer on Tuesday said any questions related to the leaked document should be channelled through the Ministry of Public Enterprises.
“We have not received a finalised report and thus cannot comment, so I need to refer your queries to the ministry,” she said.
At the time of going to print, the public enterprises ministry did not respond to questions sent to them.
Efforts to contact acting minister Iipumbu Shiimi proved futile as calls went unanswered, while his deputy, Maureen Hinda-Mbuende, urged employees to speak out on corrupt activities at parastatals.
“Look at what happened in the case of Air Namibia. Public enterprises employees should speak out against corruption, because job security is in their hands,” she said.
The national rail services operator has been ailing over the years, with many financial and operational woes.
About a month ago the company’s former board chairperson, Lionel Matthews, said the Ministry of Finance needs to optimally deploy N$175 million to the parastatal in the short term for it to be able to carry out some of its activities.
These funds are needed for the current situation and proposed solutions, the purchase of shunting locomotives, wagons and tankers, and to release some locomotives for mainline use.
“There appears to be little evidence of improved operational or property management, downsizing/rightsizing, any revenue enhancement initiatives,” EY states.
EY says certain previous and ongoing disciplinary actions against employees and former employees did not provide conclusive evidence of any wrongdoing.
“However, we did find that most of the affected employees we managed to interview shared the view that they were victimised and targeted by the CEO, the executives for human capital (Webster Gonzo) and property management (Alynsia Platt) due to the fact that they were found to oppose the general approach followed with regards to operations, property management and the procurement of certain services,” the report states.
The firm says there has been some manipulation of key lease agreements, which happened under the auspices of Platt.
“We also found several inconsistencies in respect of how lease amounts for properties were determined and how inflationary and other cost implications were factored into annual rent increases.
“Furthermore, we could not find evidence to confirm that regular property inspections were conducted,” the report reads.
A source close to the matter says customers have been saying they are paying for properties, but the money does not reach the company.
There are suspicions that some properties are being sold off.
MORE RED FLAGS
Another high-priority concern raised is TransNamib’s current commitments.
“All existing rail transport agreements should, where possible, be reconsidered, reviewed and/or renegotiated with the relevant clients with the view to enable TransNamib to improve their revenue and cash-flow position as a matter of urgency,” the report reads.
EY suggests that the ministry or the board institute disciplinary action against those executives and employees who have failed to provide effective oversight.
“And to manage the rail transport agreements, challenge questionable deductions from expected revenue, and to ensure the timeous reconciliation and collection of all revenue due,” the firm states.
The report states there is concern relating to the non-payment of VAT and penalties due by TransNamib in terms of their rail operation.
“The Ministry of Public Enterprises and/or the board could consider determining the full extent of the potential losses incurred and to report any perceived prima facie fraud and theft to the Namibian Police and the Namibia Revenue Agency for further investigation,” the report recommends.
The railway company’s trains have also had a number of overturning incidents in the last year.
“The Ministry of Public Enterprises and/or the board could consider the relevant disciplinary action for his [Smith’s] role in the facilitation of the ostensible payment of performance bonuses to the selected executives and himself despite their knowledge of the dire financial position of this entity all the time,” the investigation report reads.
A source close to the matter told The Namibian that Smith, Gonzo and Platt, as well as another executive who resigned during that period, paid themselves bonuses, while the company had no money in 2019.
Initially, the board allegedly in principle approved these bonuses to those executives who do not receive a thirteenth cheque, but can be compensated with performance bonuses.
According to the source, the board stated that these bonuses cannot exceed N$700 000 and may only be paid if funds are available.
The source further stated that Gonzo wrote a letter to motivate these bonuses, which was approved by Smith.
This has allegedly led to the company being unable to pay employees’ income tax, pension and medical aid.