South Africa: Lawyers Dump Prasa After Failure to Pay R19 Million

16 January 2020

Werksmans Attorneys, a law firm that has been representing the Passenger Rail Association of South Africa (PRASA) in many court battles to regain stolen money and terminate contracts with corrupt contractors, has withdrawn its services. This follows PRASA's failure to pay Werksmans R19 million in outstanding fees, according to an explosive letter by David Hertz, chairman of Werksmans, addressed to Bongiziwe Mpondo, the Administrator of PRASA.

The payment, according to the letter, is more than six months overdue. The letter is dated 16 January, but this appears to be an error because GroundUp was leaked a copy of it earlier.

The letter states that the counsel (the advocates) representing PRASA in the Siyangena matter have been "released from their respective briefs". PRASA was directed by a judge to file court papers in this matter by 17 January. Werksmans has already, on 14 January, filed withdrawal (here and here) as PRASA's representatives in cases involving Siyangena in the Pretoria High Court.

"The disastrous effect of this will be that the Siyangena matter will not proceed on an opposed basis on the allocated dates with the result that PRASA's application will in all likelihood be dismissed by default," writes Hertz.

"Ultimately, PRASA will be called upon to pay in excess of R6 billion to the very persons and entities who have been identified as the key role players in the corruption frenzy at PRASA which was highlighted both by the former Public Protector and in Werksmans' investigations which precipitated PRASA taking this matter to court."

Siyangena is an information technology and security company hired in 2010 under PRASA's former Chief Executive Officer Lucky Montana to improve access security at railway stations. PRASA applied to court to get Siyangena's contract set aside in March 2018, supported by activist group #UniteBehind.

In affidavits submitted to court last year, PRASA accused Siyangena of installing outdated, overpriced and ineffective security systems, including spending millions on automated gates that don't work. PRASA told the courts that the contracts had been awarded without proper tender procedures.

PRASA has reportedly paid R3 billion already to Siyangena. However the company is trying to get billions more from PRASA. The matter is set for a court hearing on 24 February.

A second litigant mentioned in Hertz's letter is Auswell Mashaba, former director of Swifambo Rail Leasing. Swifambo was responsible for delivering trains imported from Spain to PRASA. Notoriously, these did not fit South African railway tracks. In 2017 the Gauteng High Court ruled that Swifambo had received the contract through a corrupt tender process, and that the contract should be set aside. This decision was upheld by the Supreme Court of Appeals (SCA) in 2018. Swifambo went into liquidation shortly after.

In August last year, Mashaba lodged an application to avoid being held financially responsible for the botched contract.

The Werksmans letter highlights that if this liquidation process against Mashaba is set aside, and PRASA fails to oppose the application this "may result in PRASA losing an interim dividend of approximately R80 million".

The letter mentions that Werksmans had already "achieved tremendous success in PRASA's fight against corruption aggregating to in excess of R4 billion thus far" including the "successful defeat of fake doctor Mtimkulu".

Daniel Mthimkhulu was a former PRASA executive involved in the Swifambo train scandal. He was ordered to pay over R5 million to PRASA by the High Court last year after it was revealed that he lied about his qualifications to obtain a senior position at PRASA.

The letter says that "several hundred matters" that Werksmans' Western Cape office has been working on "will be affected by our unavoidable decision to withdraw as PRASA's attorneys on record".

Hertz writes that "unless all our accounts which are already overdue ... are discharged within five days ... we will regrettably have to institute appropriate proceedings against PRASA for the recovery of all amounts owing."

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