Retrenchment inevitable at TransNamib – board

A report compiled by the TransNamib board has stated that retrenchment is inevitable, as it places blame on the government for the company’s inability to pay its creditors and employees’ pension along with their medical aid.

The company failed to keep up with its financial commitments, with its water cut for the past two weeks while medical aid and pension fund contributions have not been paid.

During a meeting the board had with its employees yesterday, TransNamib board member Johanna Hatutale said retrenchment is inevitable as per their integrated business plan, because they are unable to maintain costs.

“Retrenchment is inevitable as per [TransNamib’s] ISBP (integrated strategic business plan) to cut heavy costs,” the board report states.

TransNamib’s water supply was suspended two weeks ago due to its N$8-million debt, while employees’ medical aid contributions have not been paid for the past three months.

The company spends between N$3 million and N$4 million per month on roughly 700 employees.

Renaissance Health Medical Aid Fund on Monday wrote a letter informing TransNamib workers of the suspension.

According to the board, one of the causes of this financial constraint is shareholders’ defaulting on payments.

“And this has put the institution in a position where it is unable to pay creditors or employees’ pension funds,” Hatutale said.

On Wednesday, TransNamib spokesperson Abigail Raubenheimer said the company is aware of the letter from the medical aid company.

“We are aware of the communication circulating to TransNamib employees with regards to the medical aid and the company is busy addressing the issue,” she said

Ministry of Finance and Public Enterprise spokesperson Wilson Shikoto yesterday said: “We are engaged in discussions with TransNamib to fully understand the extent of the problem and find ways of solving it.”

Budget books show that TransNamib has not received any allocation since the 2021/2022 financial year.

The company will get N$50 million only in the next financial year.

“TransNamib only has funds to focus on rail at the moment,” the board member said.

The parastatal has also not yet received any payments for the loan it secured last year.

TransNamib received a N$2,6 billion loan from the Development Bank of Namibia and Development Bank of Southern Africa.

“Though this loan has been secured, we need to understand that it is to fund the purchasing of new equipment like wagons. We are still looking at a period of close to 18 months to secure the equipment.

“This loan does not solve the current financial constraints that TransNamib is experiencing” Hatutale said.

The board has also cleared their executives after an independent investigation report by Ernst & Young (EY) recommended disciplinary action against specifically three executives for actions such as unauthorised bonus payments.

The executives’ bonuses were approved by the previous board.

A damning investigation report into the affairs of TransNamib had recommended that the then Ministry of Public Enterprises take disciplinary action against former chief executive officer Johny Smith.

The EY report also mentioned the executives for human capital (Webster Gonzo) and property management (Alynsia Platt).

The firm says there has been some manipulation of key lease agreements, which happened under the auspices of Platt. TransNamib executives claim the report was written with half information

“The EY report was written with only half information and there it is unsubstantial,” Hatutale added.

The board reminded the employees that the company lost about 50% of its income during the Covid-19 lockdown.

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.

*Matter of Fact

IN an article published on Friday, 21 July, under the headline ‘Retrenchment inevitable at TransNamib – board’, we reported on a meeting held between the company’s board and representatives of the Namibia Transport and Allied Workers Union. The story cited TransNamib board member Johanna Hatutale, among others, saying retrenchments at the national rail company are inevitable as per their business plan because they are unable to contain costs. In terms of this article, The Namibian failed to apply its usually high journalistic standards and work according to the media code of ethics, in that we failed to give the TransNamib management and Hatutale the opportunity to comment on what sources alleged was said in the meeting. We unreservedly apologise for this. TransNamib has since said that the story contains untruths. The Namibian has offered both TransNamib and Hatutale the right of reply to clarify what should be corrected in the article.