Maladministration is off the rails at Prasa, finds Madonsela

Thuli Madonsela. (Delwyn Verasamy, MG)

Thuli Madonsela. (Delwyn Verasamy, MG)

It is like we heard it all before.

A state-owned entity showed systemic failure to comply with supply chain management policy, tenders worth billions were improperly awarded, people were hired and fired as it were and services were terminated without following procedure.

This time it was rails agency Prasa and the transport department has admitted that the situation in the company is worrying.

Public protector Thuli Madonsela described Prasa as a “strategic and important organ of state” as she revealed a litany of findings against the company on Monday.

Those fingered were foremost the now former Prasa chief executive Lucky Montana, board members who were conflicted, and senior Prasa officials involved in the awarding of tenders.

Madonsela wants Montana to be held liable and Prasa to correct deficiencies in the supply chain management process and review some of its policies in that regard.

She wants the acting chief executive to ensure procurement processes and HR processes are followed and that national treasury considers commissioning a forensic investigation on all Prasa contracts or tenders valued above R10-million issued between April 1 2012 and June 30 2015.

Madonsela wants transport minister Dipou Peters to tighten the ropes and make sure consequences are felt.

Peters and her department said they were still studying the report but noted that at face value there are several areas of grave concern that the board of Prasa needs to attend to urgently.

The department wants Prasa to put in place the necessary internal control measures in the medium to long term.    

“The board of Prasa has a constitutional and fiduciary obligation to ensure prudent management of state resources. The board equally has a responsibility to follow up on reported incidents of maladministration, unethical conduct and/or irregularities of whatever nature, shape or size,” it said in a statement.

In her report – aptly dubbed “derailed” – Madonsela detailed how supply chain management policy was violated when a tender awarded to Siyangena Technologies, worth R1.95-billion, to install high-speed passenger gates at the Doornfontein and Nasrec train stations was improperly extended.

This, Madonsela said, constituted maladministration and improper conduct, as was the case when Prasa improperly extended a tender worth R256-million, which was awarded to Siemens, to install a communications system which was extended beyond Gauteng to the whole country.

In a finding against Montana – who was fired in July – Madonsela found that he acted in breach of the Constitution and Promotion of Administrative Justice Act when he terminated the contracts of seven cleaning companies in 2012. She also found that constituted maladministration, abuse of power and improper conduct.

Montana was off the hook when it came to a tender worth R3.7-million awarded to security company Sidas Security without a tender process being followed which was actually awarded by Prasa’s Chris Moloi.

“Prasa’s failure to take action against the authorised official, who approved the submission for the appointment of Sidas Security, constitutes maladministration and improper conduct,” her report reads.

Then there was an unlawful tender awarded and then extended for R27-million to Vimtsire Security Services. Madonsela found that it shouldn’t have been awarded nor extended.

Madonsela seemed to have gone for the jugular in condemning Prasa’s  improper appointment of media company KG Media to produce its Hambanathi Magazine.

Interestingly, KG Media is owned by ANC NEC member and MP Pule Mabe who was previously employed by Prasa.

There was no competitive bid hence the awarding of the tender was unlawful but worst still, Montana extended the contract, which was under investigation at the time, for another three years.

The contract from 2012 to 2015 was worth R16.7-million.

“His (Monatana) actions in this regard, constitute gross maladministration and improper conduct. Such conduct is not only unlawful but also displays disconcerting disregard for the rule of law,” Madonsela said.

At the same time Madonsela found that Montana improperly appointed Joel Chimanda’s company AR Chimanda Consulting as special adviser at a cost of R2-million.

Montana further cost Prasa R3.5-million when he suspended seven employees without following proper disciplinary procedures. This resulted in fruitless and wasteful expenditure.

In her report, Madonsela further found that Montana terminated the services of five executives between 2008 and 2013 without following proper procedures.

Included in her findings was that Prasa improperly awarded a R3.8-million tender to develop Johannesburg’s Park Station to ARUP, which was a company associated with a Prasa board member.

These findings are yet another glaring display of how state entities are in disarray and face a leadership crises.

“The transactions investigated and related findings reveal a culture of systemic failure to comply with the SCM policy, particularly involving failure to plan for bulk procurement, test the market appropriately for competitive pricing and to manage contracts, which culture may have cost Prasa millions in avoidable expenditure and preventable disruption of services,” Madonsela summed it up.

Worst still, Madonsela said she believed there seemed to be a culture of hiding and covering up of possible maladministration which was worrying.

“If the pattern is not arrested it has the potential to derail the effective and efficient procurement of goods and services to support Prasa operations and consequently service delivery by this important national asset,” she said.

The DA said it would ensure that the recommendations of the public protector were adhered to.

“The confirmation of gross mismanagement at the parastatal by the public protector adds Prasa to the growing list of state-owned enterprises, including Eskom and SAA, that are costing the South African economy billions while failing to provide the infrastructure needed for economic growth,” party leader Mmusi Maimane said in a statement.

Prasa board chairperson Popo Molefe said they would study the report before commenting.

Montana has said that he will challenge the public protector’s report.



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