/ 23 July 2015

Inside Prasa’s dirty battles

Inside Prasa's Dirty Battles

Explosive emails and fierce SMS exchanges reveal the depth of the ugly battle for state contracts at the Passenger Rail Agency of South Africa (Prasa), with politicians, board members, agency executives and connected businesspeople all part of a toxic mix paralysing the parastatal.

They point to the fact that a disputed tender given to a member of the ANC’s Progressive Business Forum (PBF), alleged political interference in Prasa’s internal affairs through a Cabinet minister, and a donation by a Prasa supplier to Prasa board chairperson Popo Molefe’s charity are all part of the implosion at the highest level of the agency.

The Mail & Guardian has had sight of fiery email communications between axed Prasa group chief executive Lucky Montana, board members and Molefe. The M&G has also seen SMS exchanges between Transport Minister Dipuo Peters and Montana in which Peters appears to put  pressure on Montana to pay a Prasa supplier who is a member of the ANC-aligned PBF (see below).

A heated email spat between Montana and a board member, William Steenkamp,  was triggered by Steenkamp’s query about the delayed payment to a security company, SA Fence & Gate, which was contracted by Prasa to install fencing at all its depots across the country. 

The director of SA Fence & Gate, Moya Nape, who this week confirmed that he had made a donation to Molefe’s charity golf day, tried to influence the minister, Molefe and the board to get involved in expediting the payment. In an email dated June 5 2015, Steenkamp asked Montana to prioritise paying the company, which had threatened legal action against Prasa.   

“I am not sure what the situation is and what the reasons surrounding the non/delay in payment are, but could someone please pay attention to this matter because I don’t want to get involved in outstanding payment issues,” wrote Steenkamp. 

Meddling in management issues
Molefe, who was copied in the email, agreed the matter should be prioritised. But this did not go down well with Montana, who responded in an email dated June 8 2015 by accusing the board of meddling in management issues. 

He said the delay was not about money, but about a contractual dispute.  “This is not a payment issue, as you suggested in your email. I personally made interventions in the past to assist the supplier, but I am now convinced that Prasa is being taken for granted by a supplier who is unable to meet its obligations,” Montana wrote.

Montana also rejected Steenkamp’s suggestion that the matter should be prioritised: “Does the board intend to get involved on an urgent basis whenever there are disagreements between Prasa management and suppliers?

“I urge directors to stop engaging directly with suppliers and [they] should also not elevate the interests of individual suppliers to the level of the board,” Montana said.

This prompted an angry response from Steenkamp, who accused Montana of believing he was bigger than the board. 

“I believe that I have had enough of the contemptuous, disrespectful, insulting, offensive and grossly undermining tone with which you are consistently engaging the board of control and individual directors, because it has become a norm in your daily interactions with the board,” his email  read. 

Exploiting any opportunity
Steenkamp accused Montana of exploiting any opportunity to attack the board: “I will not be dictated to by your office as to who I am allowed to see and not see, whether it is inside or outside of Prasa, since I have fiduciary duties to perform – unless I am meeting people who are detrimental to Prasa’s interests, then it is a different matter.

“The fact that you exploit any opportunity to attack the board or individual directors has reached a point where I believe we have to enter into serious discussions regarding our relationship with you, because this cannot be allowed to continue since it is totally unsustainable and seriously harmful to the company,” Steenkamp said. 

He added: “Prasa is not about the [group chief executive] – we can no longer be seen as a board of control that is seized with constantly massaging grossly inflated egos and personalities,” said Steenkamp.

The M&G understands SA Fence & Gate was awarded a tender in 2012 for R209-million, which was paid by Prasa. The company then billed Prasa for an extra R45-million in accrued costs.

Montana told the M&G that the same company later requested R58-million from Prasa for an extension of the contract. This was apparently granted by an executive manager at Prasa’s technical division, Palello Lebaka, who served as acting group chief executive in January while Montana was on leave.

Procurement procedures
On his return Montana terminated the contract, saying the increased scope of the fencing project did not follow proper procurement procedures. Lebaka was later disciplined for this. 

In his email, Montana implied the board members were pushing for payment to be made to SA Fence & Gate because of personal interests. He pleaded with them to allow the management to deal with the dispute: “We know why the  interest of this specific service provider becomes a matter of top priority,” he said.

It is not the first time that Molefe and Steenkamp have served in a state parastatal that reports to Peters. The pair also served as board members of PetroSA when Peters was energy minister.

Transport Minister Dipuo Peters, pictured with Cyril Ramaphosa, is said to have leaned on Prasa management to pay a firm with funding links to the ANC. (David Harrison, M&G)

Molefe, who is the only one authorised to speak on behalf of the board, this week denied that the board ever discussed the SA Fence & Gate tender or knew anything about it. This was despite him being copied in all of the email correspondence and acknowledging it. 

“It is absolute rubbish,” he said, adding that it was Prasa management that had dealt with the tender.

No ‘valid reasons’
SA Fence & Gate’s Nape said he had had no problems with Prasa until the contract was terminated “without valid reasons. We never knew people were unhappy. No one ever raised a concern that they were not happy with what we were doing,” Nape told the M&G.

He said he was very surprised when the contract was terminated “because they did not pay the accrued money … which was not part of the bill of quantity”, Nape said.

The M&G has, however, seen a letter from Prasa technical head Saki Zamxaka to SA Fence & Gate, which notes that the company was told many times that it was not performing in accordance with the schedule. 

“Prasa regards your failure to perform in accordance with your revised schedule as a material breach of the terms of the agreement. Your contract therefore ends on June 10 2015 and will not be extended,” the letter reads. 

At the same time, it appears that Peters meddled in the matter. An SMS exchange between Peters and Montana suggests the minister put pressure on Montana to appease Nape and pay his company because he was a member of the PBF, which makes donations to the ruling party.

Normal complaint
Peters’s spokesperson, Tiyani Rikhotso, said it was normal for businesses to complain to the minister about nonpayment.

“This wasn’t the first or only time the minister has shared correspondence with the former [chief executive] of Prasa or any of the heads of the group’s subsidiaries. Whenever she receives complaints of an operational nature about Prasa, she forwards that to the department’s representative on the board of directors of Prasa and the executives at Prasa,” he said.

Nape made a donation to Molefe’s fundraising golf day hosted in April. Both confirmed the donation, but denied that there was a conflict of interest. 

 “It is true they sponsored T-shirts. But the money never comes to me. [It] went straight to the supplier. Even the president has a golf day and many companies donate. It has nothing to do with tenders,” Molefe said.

Nape said: “It was a different story. It was a charity thing that everyone can do. It is not a personal thing. We were supporting charity.”

Early resignation
Montana’s detractors claim that his falling-out with the board was as a result of his early resignation. Montana’s contract was to have come to an end in April 2016, but he had decided to leave on December 1. He later tried to reverse his resignation, which the board rejected.

Relations further deteriorated when Molefe announced last week that the board had decided to dismiss Montana immediately. Montana described the decision as grossly unlawful and illegal. 

Part of the incomplete R254-million fencing project. (Oupa Nkosi, M&G)

In a week of drama, both Molefe and Montana were instructed by Peters to cancel their separate scheduled press conferences last Friday. Molefe obeyed but Montana went ahead, although he stopped short of providing details. 

That evening, Peters convened an urgent meeting with the board at which she instructed them to reverse the dismissal.

The board apparently refused.

Conspiracy to commit murder
On Wednesday this week, Molefe opened a case of conspiracy to commit murder after allegations of a plot to kill him emerged. They are contained in an unidentified document leaked to the media by Molefe’s supporters.

The document claims the assassination plot was discussed during a meeting by the ANC’s military veterans association, attended by Deputy Defence and Military Veterans Minister Kebby Maphatsoe. He was unavailable for comment but reportedly denied the allegations.

It also alleges that Montana has been mobilising members of the South African Transport and Allied Workers’ Union (Satawu) to push for the dismissal of Molefe, Peters and the entire Prasa board. The document claims Montana paid the travel costs of union leaders who crisscrossed the country to address Satawu structures.

This week, Molefe threatened to cancel a R120-million tender that Prasa awarded to Blackstar Communications, owned by former Satawu employee Vincent Masoga. Satawu’s investment company, Bashumi Trust, and the Food and Allied Workers Union hold minority shares in Blackstar. Molefe said this was the reason for the enmity towards him.

Montana dismissed claims that he was mobilising workers against Molefe as “nonsensical”. He said Molefe’s assertion of a plot to kill him was laughable and a tactic to divert attention from Prasa issues.

“We are not a banana republic where people are killed because we disagree on issues,” said Montana.

Satawu general secretary Zenzo Mahlangu said Molefe is a “lunatic” and that the union stands by its call for him and the board to resign. 

Mahlangu denied Molefe’s accusations that this move was prompted by the union’s links with Blackstar.

“Satawu does not have a company called Blackstar Communications,” he said. Bashumi Trust has an 11% share in the company, but Mahlangu denied any conflict of interest. 

Blackstar’s Masoga said Molefe called him last Friday, threatening to cancel his contract if Satawu did not stop criticising him and the board. 

“[During the telephone conversation] he accused me of failing to talk to Satawu or Cosatu to tell the guys to shut up. He said as long as Satawu is not shutting up, Prasa won’t do business with [Blackstar],” said Masoga.

Molefe denied that he had discussed business with Masoga. “I said: ‘I can’t keep quiet about you when you are campaigning against me’,” he said. On Thursday, Molefe appeared to backtrack on his threat about cancelling the Blackstar tender, saying there was nothing wrong with it. 

“All I am saying is that it has come to my attention that Bashumi, a Satawu investment company, has an interest in Blackstar and that I now understand why they are waging a campaign … not about the interests of their members but against the board,” Molefe said.

SMSes show how Dipuo Peters pressured Lucky Montana

The following are the SMS exchanges between the expelled group chief of the Passenger Rail Agency of South Africa (Prasa), Lucky Montana, and Transport Minister Dipuo Peters, between May 11 and 13. 

Dipuo Peters
Lucky, there is one of your service providers, a PBF [Progressive Business Forum] member who alleges that you owe their company, SA Signs [sic] and Gates. They say you owe them R28-million or R29-million or so. Contact them. Thanks. Dipuo Peters

Lucky Montana
Dear Minister. I have followed up with the CEO of Prasa Technical, who is responsible for the fencing project. Apparently SA Fence and Gate had applied for extension of time on their fencing project with Prasa. The request for extension should first be considered and approved by the Prasa Corporate and Tender Committee [CTPC].

Apparently SA Fence and Gate insist that they be paid before their extension of time is formally approved. This will be in breach of our procurement procedures and such payment will constitute irregular expenditure. The CEO of Prasa Technical, Saki Zamxaka says he has been in contact with Mr Moya Nape and indicated that payments will only be effected once approvals had been obtained.

I will also follow up with our procurement team on how far they are with the CTPC approval process and also make contact with Mr Moya to update him on the matter. However, we are unable to pay before proper procurement processes had been finalised.

Kind regards, LM

SMS messages from Moya Nape to Dipuo Peters, May 13, which she forwarded to Montana
Good afternoon Minister.

Did you manage to check with the Man cause it’s really a problem for us suppliers [to] now stop supplying material cause [we] owe them.

Many Thanks

Second SMS from Nape to Peters, May 13
Minister, how can Govt owe Suppliers R30m and think that life it’s normal.

We have workers and suppliers [and] need to pay them[.] [O]ur relationship with our suppliers it’s Sour now they are taking us to the Lawyers etc.

Reason I cut off am driving.

We couldn’t finish the project on time cause they stop our project for 5 months last year without even paying us. Other people get paid even. Why? They are not telling you the Truth.

We are really tired to talk to this people same as December they didn’t pay us and paid us in February after taking [the] legal route again. Why? Why must we suffer like this they rather take their contract if this is how [they] are going to treat our business.

Thanks Minister. The statements by Moya are rather unfortunate. He calls me a liar after I had tried to assist him and his company. In fact, I went to the Braamfontein project site with him after he brought to my attention some of the challenges. Moya is also aware that they are not fully innocent.

On our part, Prasa had disciplined and dismissed one of the Executive Managers at Prasa Technical for, amongst other [reasons], increasing the scope of their fencing project without proper procedures and approval.

I had to take the matter to the Board and request for approval to increase the scope of the project and the associated costs.

Prasa could have taken the route to immediately cancel the contract but searched for a win-win solution.

The delays are not due to inefficiency on the part of Prasa but primarily about us trying to clean the mess created by what others may describe as “collusion” between his company and the dismissed Executive from Prasa Tech.

They contributed to the problem by ordering light equipment without the proper approval of Prasa as required by their contract. In fact, SA Fence and Gate had requested a huge variance which we rejected.

If Moya feels so strongly about us treating them unfairly, I suggest SA Fence and Gate exercise their legal rights. A court of law would probably order Prasa to cancel the contract. I realise this is the price you pay for trying to solve the problem and helping your own people.

I am so disappointed with the fact that he reports Prasa to the Minister but does not re[p]ort the full facts, including their role in this matter.

Kind regards. LM