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Union says Prasa boss went off the rails

Lucky Montana, the group chief executive of the Passenger Rail Agency of South Africa (Prasa), has been accused of tender irregularities amounting to more than R1-billion and organising an unauthorised trip to Cape Town for his friends and associates.

The damning allegations against Montana are contained in a dossier seen by the Mail & Guardian, which was compiled by the South African Trade and Allied Workers’ Union (Satawu).

Although it has not been proved that Montana has committed any wrongdoing, the union has demanded that he be suspended pending an independent forensic investigation because it believes he might interfere with an internal investigation.

According to the dossier, Montana allegedly went on a joyride to Cape Town with 10 female companions in September 2009 on a Premier Classe train and returned to Johannesburg by air. The trip is said to have cost R170 000.

Montana is also alleged to have awarded Siemens an R800-million tender in 2009 for passenger communication systems that was advertised only in Gauteng but awarded nationally.

The dossier further alleges that he awarded another R800-million contract to Rainbow Construction for Doornfontein station in Johannesburg, but it was extended to other stations without following proper tender processes.

The union claims Montana also awarded celebrity consultant Ezra Ndwandwe R10-million as a change management consultant without following procurement policies.

Ndwandwe said on Thursday there was nothing untoward in his remuneration and that he had delivered on his mandate.

ANCYL treasurer drew salary from Prasa
Between 2008 and 2009 ANC Youth League treasurer Pule Mabe apparently continued to draw a salary from Prasa long after he had left the rail agency to assume his full-time position at Luthuli House. Montana is alleged to have misled the board on the matter by claiming that Mabe was no longer on the agency’s payroll, despite being paid a salary for a year.

Mabe could not be reached for comment on Thursday afternoon and was believed to be attending a national executive committee meeting of the youth league.

The dossier claims that Brand Leadership, a company owned by businessman Thebe Ikalafeng, was awarded a branding contract worth R19-million without proper procedures being followed. The initial quote was for R9-million, but it was later increased to R19-million.

The union’s dossier also accuses Montana of colluding with current and former directors of the agency board who benefited from contracts and tenders from the agency while serving their terms.

Responding to questions from the M&G on Thursday, Ikalafeng said he did not know Montana personally and that his company had submitted its tender “like everybody else and we won it and delivered our professional services, rebranding the company ahead of the 2010 Fifa World Cup.

“There was no improper conduct I know about. I take exception to any unfounded allegations. We are a professional firm with a public record of delivery in branding and related services.

“Prasa was procured through a public tender published in the Sunday Times and legal contract of services agreed. Our delivery spanned developing [a] new brand from [the] SA Rail Commuter Corporation to Prasa, identity and activation across five business units and the World Cup, which resulted in Prasa moving 1.2-million people out of 3.2-million that went to the World Cup. Similarly, my personal reputation is a matter of public record.”

Cadiz, a subsidiary company of Makana that belongs to Sifiso Buthelezi, chairperson of the agency’s board, is advising it on the rolling stock recapitalisation project. Through the programme the agency will acquire a new fleet of passenger rail coaches over a 20-year period — at an estimated cost of R137-billion — as well as new depots and signalling, among other critical infrastructure.

Montana denies allegations
On Thursday the agency’s chief strategy officer, Tiro Holele, speaking on behalf of Montana, dismissed the allegations contained in the dossier as unfounded and “preposterous”.

He confirmed that the agency had seen the Satawu dossier and was consulting its lawyers.

“The investigation can come and they won’t find anything against the chief executive. The policy prescription within Prasa stipulates that all procurement of goods and services above R350 000 goes out on open tender to the market. It is not true that Prasa awarded tenders, including for signalling to Siemens SA, of R1-billion without any procurement process. In fact, all signalling projects have gone out on open tender to the market. Everyone who claims that Prasa has violated its supply chain management policy should come forward and prove those allegations,” said Holele.

“The allegations made regarding other major projects, such as the procurement of the fuel supplies, the construction of the Bridge City rail link and station, the speed gates installation et cetera, are untrue because all the these tenders have been issued in accordance with Prasa’s supply chain management policy.”

Asked about the union’s allegations that friends and associates of the chief executive were lining up to benefit from the fleet-renewal programme, Holele said there was no way Montana could dictate who benefited from the programme.

“The rolling stock fleet-renewal programme is led by an intergovernmental steering committee comprising national treasury, the department of transport, the department of trade and industry and the department of public enterprises. There is no way Montana will have carte blanche control of this massive infrastructure investment programme on his own.”

Holele said Montana’s trip to Cape Town was not unusual because he regularly took visitors on complimentary trips around the country to showcase South Africa’s world-class rail systems and infrastructure.

The president of the railworkers union, Ephraim Mphahlele, said the dossier had been handed to labour federation Cosatu’s Corruption Watch and the office of the Finance Minister Pravin Gordhan.

Mphahlele said the union was also in the process of handing the dossier to public protector Thuli Madonsela and the Hawks.

“The allegations contained in this dossier are serious and they ought to be investigated through an independent forensic investigation process for the purpose of determining the extent to which the state resources are looted at Prasa,” said Mphahlele.

“We believe that [Montana] is directly liable for wasteful expenditure, fraudulent activities and even reckless trading and the abuse of authority and the violation of the [Public Finance Management Act] and the National Treasury Act.

“As we speak, the financial liquidity of Prasa has been fundamentally eroded to the extent that Prasa is unable to pay service providers. To this end our members in the cleaning companies at various train stations have not been paid their salaries for the past five months, because Prasa could not pay the companies they are working for. We believe that the only remedial action would be to suspend the chief executive while having a forensic investigation.”

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Charles Molele
Guest Author

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