/ 15 July 2016

ANC ‘riff-raff’ fingered in Prasa scandal

Anc 'riff Raff' Fingered In Prasa Scandal

For years, Prasa was a “farm” where cadres went to “harvest”, said Popo Molefe, the chairperson of the embattled state rail agency in an interview this week. This statement comes as he anticipates the “worst-ever” report from the auditor general.

The turmoil at Prasa has become so fraught since it was discovered two years ago that billions of rands had been siphoned off, misused and stolen that, for several months, Molefe and two of his colleagues were provided with bodyguards. A forensic investigation has so far uncovered a total R12.6-billion worth in contracts irregularly awarded and about R30-million paid to staff who misrepresented their credentials.

The contentious contracts include those for the Afro 4 000 locomotives, provided by a shell company, Swifambo Rail Leasing, and its Spanish partner Vossloh, the comprehensive security systems installed by Siyangena Technologies and four other deals awarded to Siyaya Consulting Engineers relating to signalling, telecommunications and the modernisation of Prasa depots. The embattled Prasa chief laid much of the parastatal’s woes at the feet of “riff-raff” government leaders who have their “fingers deep in the honey pot”.

Many of his concerns relate to the R172-billion still left in Prasa’s purse, intended for its extensive multiyear renewal programme. Reluctant to be drawn on names, citing pending legal procedures, Molefe stopped short of stating that the “vast rot in the broken system that is Prasa” relates to the leadership style and business interests of President Jacob Zuma, his family and friends. But he did say “patronage has become a dominant factor” in the pursuit of “crass materialism” with some ANC members calling the shots. Since Molefe’s appointment as board chairperson in July 2014, former group chief executive Lucky Montana left office about six months before his contract was up.

So far, several investigations, including one by the public protector, point towards him as being a central figure in the Prasa scandal. The public protector called for a forensic investigation of all Prasa contracts worth more than R10-million and awarded after 2012.

The law firm Werksmans has been paid about R70-million to date to conduct this investigation and some investigators have described the findings so far as “wholesale looting”. Molefe’s detractors claim the investigation is unnecessary, irregular and expensive. But clear evidence of criminality and irregularity, in some cases involving senior Prasa staff, suggest otherwise. “We spent millions to save billions,” Molefe said, justifying the expense.The evidence gathered during the Werksmans investigation has been handed to the auditor general (AG) and law enforcement agencies.

More will follow. “That is why the next audit report due at the end of this month will probably be the worst. Things that have been hidden have been brought to the AG. There was a cover-up and now we are opening it up. We are trampling on many toes. Many people are angry.”

Further fallout from this investigation was a board decision to provide bodyguards for Molefe, a board colleague, William Steenkamp, and a former acting chief executive, Nathi Khena. “The bodyguards were necessitated by the desperation of those we were investigating,” Molefe said.

The Mail & Guardian has seen the security contract showing that Prasa coughed up R3.5-million to Black Hawk Business Solutions, headed by controversial apartheid Special Branch member Calla Botha.The contract ran from July 2015 to January 2016, and included alternative accommodation for the three for the first month.

The fee also included the debugging of a Prasa boardroom. This week, sitting in the comfort of his office at his investment company Leroka, in Sandton, Molefe said he hadn’t realised what he was letting himself in for when he accepted the position as chairperson. “I didn’t really follow Prasa at the time. I wasn’t aware of the real issues.”

But, after discovering that his home had been placed under surveillance and that there was intense lobbying to get rid of him, he finally understood it. “I have been sent to a broken organisation where the rot has been allowed to deepen for years.” Molefe’s comparison of Prasa as “a farm where the people came to harvest” means “a lot of [Prasa] managers have been compromised in the process”.

The extensive investigation caused a detrimental and paralysing resistance from within Prasa as well as from outside roleplayers and successful bidders. In the past few months, several virulent dossiers have been doing the rounds, targeting mainly Molefe and the Prasa board, with politicians and journalists being lobbied to initiate a regime change in state rail agency.

“The inclination is to try to protect the de facto situation, to keep what is current, to cover up, to not co-operate with anyone who wants to fix things,” said Molefe. “[But] not everyone [in Prasa] is like that. There are a number of good people. But many more in strategic positions have been compromised. You will see who and how as the [criminal and civil] court cases unfold. We will get there.

“That is why people want me out – to stop the investigations.”

Molefe has also initiated a staff vetting process in which qualifications, particularly those of managers, are being checked. It has not been concluded because of a “lack of co-operation”. In the process, Molefe has made few friends.

His contentious relationship with Minister of Transport Dipuo Peters and the battle for a new group chief executive have recently been in the spotlight. But he denied there was any “tension and differences” between him and Peters. He described her as a “very religious person who upholds the values of our movement and wants to do good. I was her leader in the struggle for freedom. I have known the minister for many years.”

They have also not disagreed on appointing the new chief executive. But he did not agree with Peters when she wanted to delay Montana’s sacking. “Now we know Montana used that period to destroy records of the company. He knew what he had been doing; we didn’t know.

”At the time, Peters insisted she had to consult the Cabinet, Molefe says. The ANC’s deployment committee also got involved, which irked him. The acrimonious relationship between Molefe and Montana reached its peak last year when a flurry of criminal complaints and countercomplaints were laid with the Hawks. Despite the elite anticorruption unit’s assurance that “the Prasa investigations are moving very smoothly and they are not being motivated by politics”, there has been no clear progress.

Law enforcement agencies are dragging their feet with the wide-ranging criminal investigation, Molefe said. “We are aware that their arms are being twisted.” But the Hawks spokesperson, Brigadier Hangwani Mulaudzi, dismissed the claim and said it is “incredibly embarrassing and insulting” for him to suggest the Hawks boss, Lieutenant General Berning Mthandazo Ntlemeza, is “linked to any lobbying from the ANC to stall investigations”.

Molefe is threatening to initiate a private prosecution if the politically crippled law enforcement agencies refuse to prosecute the culprits. “There is no leader in the ANC who will attempt to talk to me and tell me to do the wrong thing, because they know me very well. They will not try that,” he said defiantly. “My life does not depend on being the chairperson of Prasa. The only thing keeping me here is the rot I have seen, I don’t want to run away from it. I am not going to run away. If they push me out, I will go on talking about it. If the police don’t want to act, we’ll have a private prosecution.”

A litany of allegations of corruption

The public protector, Thuli Madonsela, in her report following an investigation into Prasa, said: “The transactions investigated and related findings reveal a culture of systemic failure to comply with the supply chain management policy, particularly involving fail-ure 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.”

The current forensic investigation has already flagged billions of rands in alleged irregular spending. Those implicated so far have denied any wrongdoing. The deals in question include:

  • Locomotives were irregularly procured from Swifambo Rail Holdings, a “shelf company solely created for the purpose” of winning the R3.5-billion deal to supply Prasa with new locomotives. Investigations have since found they were too high and unsuitable for the South African rail network;
  • Siyaya Consulting Engineers bagged more than R5.8-billion in deals from Prasa, but it has been exposed by the German government-owned rail company Deutsche Bahn International for irregularly using its official logo to imply a partnership between them. Siyaya was awarded several tenders on the back of this relationship with DBI;
  • Managers and directors of other companies that were awarded major contracts are alleged to be connected to the former Prasa chief executive Lucky Montana;
  • Daniel Mtimkulu, Prasa’s “fake head engineer”, is accused of launching companies through “friends and girlfriends” to receive maintenance contracts, and no proper supply chain management processes were followed, Popo Molefe, Prasa’s board chairperson, has said. Beeld newspaper last year revealed that Mtimkulu had faked his qualifications; and
  • Businessperson Patricia Norris landed lucrative refurbishment contracts without having the capacity or skills to deliver on the deal. Rapport newspaper previously revealed how Montana lived in houses owned by Norris.

Pauli van Wyk