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Locomotive 1443, "Chaka"

HRASA decides not to acquire the Class 1B locomotive no. 1443, "Chaka".

03 January 2013

In February 2012, members of the then HRASA Board became aware that the future of the North British-built Class 1 locomotive “Chaka”, ex SAR No 1443 (stored at the Gledhow Mill in KwaZulu-Natal) was in some peril as its owners, North British Locomotive Preservation Group of the UK (NBLPG), was having second-thoughts about retaining ownership due to extremely high relocation costs.

HRASA was also aware that, along with two other remaining Class 1 locos, this example was an invaluable and irreplaceable heritage asset worthy of all efforts that could be made to save it. During communications between the two organisations, NBLPG, revealed that it was also disposed towards saving the loco and, given its own mandate, wanted to ensure that, if sold, the loco went to a “public benefit” organisation with the same or similar credentials and objectives to itself.

Recently, there have been rumours circulating and criticism expressed surrounding these discussions and the alleged acquisition by HRASA. The HRASA Board therefore wishes to inform the Association’s members about the events surrounding this matter and to set the records straight. 

The HRASA Board states that neither the Board nor any member of it concluded any offer to purchase this loco. The offer made by NBLPG was still under consideration by the Board when the alleged purchase was announced.

The confidentiality under which the discussions progressed was in accordance with normal business practice. HRASA’s Board refutes any and all allegations made of poor corporate governance, any impropriety in actions or favouritism, as alleged by some critics. The Board’s sole and honourable intentions were, in good faith: (a) to ensure the preservation of this loco as an important national heritage asset and (b) if at all possible, to restore this loco to running order or, if that was not possible, with this loco’s help, another example of the class. This is not a scrapping, as alleged, and precedents do exist for this course of action.

In the course of these discussions, NBLPG advised HRASA that it would first try to raise the funds to relocate the locomotive. This led to the matter becoming almost dormant for quite some time. The memberships of both organisations were not informed during the negotiations so as to ensure that the discussions leading up to any solution were conducted in confidence and with the intention not to prejudice any solution. This is normal business practice and was also in accordance with the wishes of NBLPG, which would need to seek its own Board’s approval for any final solution devised before making its own announcement.

On 22 November, NBLPG issued a press release announcing its intention to sell the locomotive. The HRASA Board was not copied when this release was circulated, which was at the time when the HRASA chairman was hospitalised for a fortnight due to an accident that required surgery.

On 17 December 2012, HRASA’s Board received a written offer from NBLPG to sell the loco to HRASA as it stood. Because it was to be sold into preservation with HRASA, the NBLPG offer price was what NBLPG had paid the Gledhow Mill for the locomotive originally – considerably below its scrap value.

So, as to prevent HRASA simply scrapping it and pocketing the profit to NBLPG's detriment, a condition was included that prevented its scrapping in situ. Nonetheless, HRASA had no intention to scrap the loco. Instead, to HRASA, this seemed to be an offer too good to be true; one that would ensure the future for this loco and in which HRASA could proudly play its part.

The December 2012 NBLPG newsletter read: "Class 1B 4-8-0 No 1443 has been put up for sale to help raise funds for our other locomotive projects. The latest news on the sale is that HRASA (the Heritage Railway Association of Southern Africa) has been offered first refusal on the locomotive at the original price we paid back in June 2009."

Unfortunately due to the year-end holidays, these processes never reached a final conclusion. The initial draft agreement had been drawn up and presented by NBLPG, but that remained unsigned pending a HRASA Board decision. However, before any such offer could be ratified and accepted by HRASA, it would be necessary for the HRASA Board to convene and discuss it in some considerable detail. Despite the sense of urgency imbued, no immediate resolution could or would be given to conclude such a deal without lots of introspection and the removal of any emotional zeal. It must be emphasised that the Board is always keenly aware of its fiduciary responsibilities and good corporate governance.

In this respect, the HRASA Board was already aware of many possible issues and problems surrounding such an acquisition. Some of issues considered by the Board included, if the deal went ahead, where the loco could be housed, its security, what the cost of removal would be and what would be needed to restore this Class 1 example? Could and should this loco be used to contribute towards the restoration of another similar loco perhaps in better condition, but not necessarily owned by HRASA? Some ideas were looked at and proposals were discussed, but no immediate decisions taken. To make any decisions, a definitive survey and report on the condition and completeness of this loco and its siblings would be needed – a survey that could only be carried out in the first months of 2013.

Notwithstanding the aforementioned, before the Board could have considered going before the members on this matter, it needed to be reasonably certain that there would be a roadmap available for this acquisition and to ensure at least one Class 1 loco could be made operational with some reasonable chance of success and completion. HRASA’s Board was determined that this would not be just a window-dressing, cosmetic preservation project which could end up with yet another “scrap” loco, this time owned by HRASA.

Was HRASA’s Board ever serious about this project? Yes it was right up until the NBLPG offer was made. As with all things naïve, this seemed like a very good project with considerable merits; one which would benefit both HRASA and the nation. Then, as in good governance environments, a further evaluation was made resulting in the decision to withdraw, taken even before the critics took aim. The HRASA Board never acted recklessly in this. It pursued a business opportunity in the usual way until sufficient facts had been gathered to make an informed decision.

Following extensive discussions and the evaluation of several options, the HRASA Board of Directors has informed NBLPG that it has decided not to pursue the purchase and acquisition of this locomotive. HRASA has also informed NBLPG that it will not exercise its “right of first refusal” which would, in turn, clear the way for NBLPG to seek other solutions and offers. HRASA has not laid down any conditions in respect of its withdrawal.

In its letter to NBPLG, HRASA has re-emphasised its on-going concern for the future of this loco and as well as advising NBLPG of the provisions of the National Heritage Resources Act, including the fact that SAHRA recognises and works closely with HRASA over the listing and management of such railway heritage assets.

Whilst not taking possession of this locomotive, HRASA remains very concerned about its future and will continue to do all within its power and will give support to whoever takes up the slack to try to ensure that this locomotive is indeed preserved. It would be a sad day indeed if the locomotives of this class were to become extinct.

NERINA SKUY

CHAIRMAN

For and on behalf of the HRASA Board of Directors.