29 November 2017

South Africa: Illicit Contracts With Prasa Kept Under Wraps By Treasury

Photo: SA Govt
(file photo).

Up to R2.5-billion have been lost in illicit contracts with the Passenger Rail Agency of South Africa (Prasa) which National Treasury has kept under wraps for almost a year.

National Treasury has kept the lid on almost 200 investigations into Prasa contracts which show that up to R2.5-billion was siphoned off in contracts which should never have been signed.

The investigations, into contracts worth R10-million or more, were ordered by former Public Protector Thuli Madonsela following her 2015 report on mismanagement at Prasa. The Treasury parcelled them out to 13 different auditing and legal firms.

The documents, leaked to GroundUp by the UniteBehind Coalition, paint a picture of incompetence, corruption and mismanagement on a grand scale.

There are more red flags in the 1,000-odd pages of reports than at a Moscow May Day parade. Read all the forensic reports here.

Investigations into contracts worth R10-million or more were ordered by former Public Protector Thuli Madonsela.

The reports detail in page after page contraventions of Prasa's own Supply Management Policy and the Public Finance Management Act, irregularities in procurement, improper constitution of Bid Evaluation Committees, irregular expenditure and absence of proper documentation from Prasa.

The names of then chief executive, Lucky Montana, chief procurement officer Dr Joseph Phungula and head of security Kabelo Mantsane crop up again and again.

Also mentioned is Deputy Minister of Finance Sfiso Buthelezi, then chair of the board. Frequently the board is found to have been derelict in its duty. GroundUp emailed Buthelezi for comment but received a response that he is out of the country.

In one in five cases (39 out of 193) the investigators recommend that criminal proceedings be launched.

The auditors list companies owned by a single person benefiting from tens of millions of rand, forged signatures, rigged tender awards, bid committee meetings where all the members somehow gave the bidders identical scores, contracts awarded without quotes from the companies, and contracts awarded to companies apparently created just to get the contract.

At least one company was awarded a contract even though its managers had not attended the compulsory briefing session.

Security companies were paid millions to guard stations and vital equipment, and safeguard commuters, yet continually extended contracts are riddled with irregularities. One security company was not even registered with the Private Security Industry Regulatory Authority.

In many cases the auditors note that because of the time lapse between the contract and their investigation they have not been able to check whether the work was done properly or at all.

Of the investigations into 193 contracts worth over R10-million that Prasa entered into between 2012 and 2016, only eight got the all clear from the auditors. In the R9.1-billion paid to contractors, the investigators found irregular expenditure of up to R2.5-billion, if money in all the contracts labelled irregular is included.

Lindikhaya Zide, acting group CEO, who was company secretary during the period, did not respond to an invitation from GroundUp to comment. The Treasury did not respond to questions about why the reports had not been released.

More on This

Treasury Covering Up Grand-Scale Corruption At Rail Agency

For almost a year, National Treasury has kept the lid on almost 200 investigations into PRASA contracts which show that… Read more »

See What Everyone is Watching

Copyright © 2017 Notes from the House. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 600 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.