The process of replacing Portia Derby as the group CEO of Transnet has hit a roadbump as attempts by the board to make acting CEO Michelle Phillips’s appointment permanent are being thwarted by politicians, sources say.
Business Times has been informed by three well-placed sources in and out of Transnet that the board, which presented a list of three preferred candidates for three empty posts to public enterprises minister Pravin Gordhan, is in favour of confirming Phillips as the permanent replacement for Derby.
According to two of the insiders, the board favours Russell Baatjies — acting CEO of the biggest business unit, Transnet Freight Rail (TFR) — to be made permanent in that post. And it wants former Transnet CFO Mohammed Mahomedy, who acted briefly as acting group CEO after Brian Molefe left Transnet, to be reinstated as CFO.
Phillips, who was named acting incumbent after Derby resigned in September, has been praised for stabilising the ports and logistics firm and driving the implementation of its turnaround plan.
However, Business Times understands that some members of the ANC deployment committee are intent on blocking the appointments, having expressed transformation concerns as none of the three are black Africans. It is understood that some in the deployment committee are pushing hard for former Transnet COO Mlamuli Buthelezi to replace Derby. Buthelezi was one of four executives suspended in 2019 over alleged misconduct. He later received a payout to leave.
One insider said some in the deployment committee have suggested that the post of group COO, which was scrapped under Derby, be reinstated and Phillips take over that role instead.
We always know that people will speculate, and it is very inappropriate and will tarnish this process if we were to talk about the names
— Andile Sangqu
“Buthelezi has lobbied hard. Some of these guys [deployment committee members] are against confirming Michelle. The optics will not look good.”
Another well-placed source in the organisation said “politicians” were pushing for Buthelezi to take over instead of Phillips. The insider said the board had been alerted that there could be resistance to Baatjies taking over at TFR. The board is supposed to have the final say on appointments below group CEO.
“But the COO position is very strategic, it’s a powerful position and she [Phillips] would do a very good job there,” said the insider.
Gordhan confirmed on Friday that the board had completed its process. He said once government processes were complete, an announcement would be made. “Let the process be concluded, then there will be a transparent announcement,” the minister said.
ANC spokesperson Mahlengi Bhengu-Motsiri did not respond to a request for comment.
Speaking to Business Times on the sidelines of the Investing in African Mining Indaba, board chair Andile Sangqu said Transnet would not be drawn into speculation.
He said the process to appoint the executives was thorough.
“We always know that people will speculate, and it is very inappropriate and will tarnish this process if we were to talk about the names. All we can say is it has been a very rigorous process and we have tried our best to look at what the company requires, the skills, the competence, the depth, and everything that is required in terms of competence to turn the company around. So, we will not be drawn into speculation into what are the names that have been bandied around.”
He said the TFR CEO is a prescribed officer who is appointed by the board in consultation with the minister, and the board has also made recommendations to Gordhan on filling that role.
Sangqu said the board expected Gordhan to make an announcement by the end of the month.
“We believe the minister will work to give us guidance. In terms of this window, he has got his own processes and we think he will be able to announce at the end of February.
“I am happy to say we are on course, we understand this is a critical element driving the recovery plan, so now we are in a position to make these appointments. The sooner we can start building sufficient momentum the sooner we can work on the recovery plan.”
Sangqu said the board had resolved to create the position of group COO. This was to meet the need for more streamlining and co-ordination and the alignment of Transnet’s internal operations including the terminal business, Transnet National Port Authority, the group’s engineering business, and TFR.
“We want to make sure we have extensive engagements with customers, lenders and the broader stakeholders and that is why it is important that we do not overload the role of our group CEO. We need to make sure that as much as we have to manage the external environment and internal environment, there is a dedicated focus on addressing integral parts of the business and being able to put the company on a better and solid trajectory.”
The position of group COO has been advertised and applicants have until Friday to apply.
He said the board is trying to stabilise Transnet by increasing rail volumes, fixing equipment at the ports and clearing backlogs.
“We are trying to bring in the new; in other words driving policy reform and transformation and broadening the participation of the private sector, creating competition and also allowing efficiencies.”
Bonginkosi Mabaso, chief commercial officer of TFR, said the division — critical for key economic industries that include mining and agriculture — was being turned around.
He said the company was losing throughput and therefore revenue because of theft, vandalism, out-of-order locomotives and dated infrastructure.
“Those are the issues that are resulting in TFR not generating the kind of revenue that it is supposed to. While we sort out these big strategic issues, the primary focus remains how do we make the best of the network, locos and the people that we have. Having done that we are starting to see a glimpse of positive light in terms of our performance, particularly our coal line.”
Mabaso said in the three months to December TFR moved no less than 1Mt of coal a week. Partnerships with the private sector were also bearing fruit.
“We recently announced we had signed a mutual co-operation agreement with the coal industry and the basis of it is they will procure some of the parts that we require while we continue our processes. Last weekend we received the first batch of batteries and there are compressors that the industry is procuring via Richards Bay Coal Terminal; those will inject a renewed supply of spares that will bring locomotives back into operation.”
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