/ 29 August 2016

Auditor general report shows Prasa has R13.9-billion in irregular expenditure

Mail & Guardian investigative reporter Pauli Van Wyk looks at tender irregularities and court battles between Prasa and locomotive provider
Mail & Guardian investigative reporter Pauli Van Wyk looks at tender irregularities and court battles between Prasa and locomotive provider

In a press briefing on Monday, Prasa painted a gloomy picture of its financial stability. The auditor general’s probe into rail agency has yet to be released, but it shows for the current financial year is that there has been R13.9-billion in irregular expenditure.

Of the R13.9-billion in irregular expenditure, R9.8-billion came from the previous financial year. Collins Letsoalo, acting group CEO of Prasa, was speaking after the company had received the auditor general’s unqualified report into Prasa’s finances, but the report must be reviewed in Parliament before it is released. Despite the biilions on irregular expenditure, Letsoalo said that the report shows Prasa’s books are above board.

“The auditor general audited our books and found them to be sound,” Letsoalo said.

The rail agency has been plagued by financial hiccups in recent years, which have led to allegations of corruption, fraud and poor governance in Prasa’s previous board. Currently, Letsoalo says that there is an intention to appoint a CEO, but there is still too much financial instability in the Prasa for a new CEO to come into office.

As the train service attempts to sweep up its grievances, Dr Popo Molefe, chairperson of Prasa’s board, filed an explosive affidavit on Friday where he claimed that R80-million from Prasa’s deal with shell company Swifambo Train Leasing has been stashed into ANC pockets.

However, Letsoalo says that it’s unreasonable to expect Prasa to ask its service providers where they spend their money, but that Prasa’s books were clear of providing any political funding.

“What I can show you, is that there’s no money of Prasa’s that was paid into any political party’s account. That one I can assure you because we do financials and we did this,” Letsoalo said.

“It’s not a business of mine to find out who paid what when. That money you can use it for what you want,” he added.

Locomotives were bought from Swifambo for Prasa’s new train fleet, but the deal is currently being investigated and the locomotives are sitting in Braamfontein in Johannesburg until a decision has been reached. The locomotives are too tall to be used on South African train tracks, and Prasa is now trying to get the money returned. There was a R3.5-billion tender awarded to Swifambo.

The deal was made in 2013, but Prasa is battling to improve its system so that passengers can travel in safer and more reliable conditions than the service currently provides. Most of Prasa’s trains were acquired in the 1980s, and are now too old and do not have the capacity to provide for 53-million South Africans, Letsoalo said. Government has now given Prasa R170-billion to fix old assets over the next 20 years.

But in his affidavit, Molefe says that the tender award was corrupt even before it was handed to Swifambo. A deal was then struck between Swifambo’s director, Auswell Mashaba, and Maria Gomes, an Angolan entrepreneur who is friends with President Zuma, that 10% of the locomotive deal with Prasa would go into the ANC.

The auditor general’s full report is expected to be released after it is tabled in Parliament. In the meantime, Letsoalo says that Prasa will release a “turnaround plan” by the end of October 2016, which will detail how the rail agency is planning to stabilise itself.